[*1]

Supreme Court, Kings County, February 9, 2023

APPEARANCES OF COUNSEL

Larkin Farrell LLC (David Fair of counsel) for petitioner.[*2]

Issue Presented

The no-fault insurance regulations provide that a master arbitrator may vacate a hearing arbitrator’s^[FN1] award where it is “incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65-4.10 [a] [4]). Considering this, does it constitute an error of law where the hearing arbitrator{**78 Misc 3d at 892} makes a finding of medical necessity without adhering to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]) and its progeny case law which hold that in the context of a summary judgment motion by an insurer asserting lack of medical necessity for a health service, the health service provider must submit expert medical opinion evidence which specifically refers to and either discusses or rebuts the insurer’s expert medical opinion evidence?

Background

This is a special proceeding—pursuant to CPLR article 75—commenced by American Transit Insurance Company (ATIC) seeking an order and judgment vacating a no-fault insurance master arbitration award of Victor D’Ammora, Esq. (dated Aug. 24, 2022), which affirmed the arbitration award of Lester Hill, Esq. (dated May 14, 2022), granting respondent Right Choice Supply, Inc.’s (Right Choice) claim for no-fault insurance compensation for health service expenses.^[FN2] Arbitrator Hill awarded the $4,737.90 sought by respondent Right Choice for providing supplies to its assignor^[FN3] (Assignor), who claimed to have been injured in a motor vehicle accident on January 30, 2020.

The arbitration was organized by the American Arbitration Association (AAA), which has been designated by the New York State Department of Financial Services to coordinate the mandatory arbitration provisions of Insurance Law § 5106 (b), which provides: [*3]

“Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party [‘no-fault insurance’] {**78 Misc 3d at 893}benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.”

The arbitration was assigned case No. 17-21-1226-7577^[FN4] by the AAA. At oral argument before this court on January 25, 2022, petitioner ATIC appeared and argued that the above-referenced arbitration awards should be vacated. Respondent Right Choice has neither submitted opposition nor appeared in this special proceeding.

The record evidence submitted in this article 75 proceeding reveals that Arbitrator Hill conducted a hearing on May 13, 2022, at which Walter Pisary, Esq., appeared for Right Choice and Helen Cohen, Esq., appeared for ATIC. At issue were four bills from Right Choice submitted to ATIC for payment pursuant to the no-fault insurance system set forth in Insurance Law article 51 and the Department of Financial Services’ no-fault regulations set forth at 11 NYCRR part 65. Pertinent details of the four bills are as follows: date of service May 21, 2020, $548.08, provision of cane and hinged knee brace; dates of service May 25, 2020-June 21, 2020, $1,839.78, rental of knee CPM (continuous passive motion) device and provision of synthetic sheepskin pad; dates of service May 25, 2020-June 14, 2020, $1,365.00, rental of Game Ready compression unit; and dates of service May 25, 2020-June 7, 2020, $985.04, rental of DVT (deep vein thrombosis) prevention device.

Only one Form NF-10 denial of claim was included in the record—denying payment of the $548.08 bill for the cane and hinged knee brace on the grounds of lack of causation and fees not being in accordance with the fees schedule. Apparently, with respect to the other three bills, ATIC relied on a defense that additional verification it had sought was never provided.

Arbitrator Lester Hill’s Award

In that part of Arbitrator Hill’s award containing his findings, conclusions, and basis, he wrote: “The basis of the respondent’s timely denial based upon a lack of medical necessity is{**78 Misc 3d at 894} the peer report by Dr. Matthew Skolnick.”^[FN5] This was followed by citations to case law concerning a prima facie showing of entitlement to no-fault benefits: the prescribed statutory billing forms had been mailed and received and the payment of no-fault benefits were overdue. He found that respondent’s submission of its “NF-10 denial of claim form established that the insurer received the claim referenced therein as having been submitted by the provider and that the insure[r] did not pay the claim.” (NYSCEF Doc No. 3, arbitration award at numbered page 2.)

There then ensued a discussion of law concerning denials of claim and a defense of lack [*4]of medical necessity. Arbitrator Hill discussed the medical evidence before him. Noteworthy was the fact that Assignor underwent left knee surgery on May 21, 2020. As a result, the latter was provided with supplies, as noted above. “The claim for the knee brace was denied based upon the peer report by Dr. Slotnick.^[FN6] With respect to the claim for the continuous passive motion device [and synthetic sheepskin pad], [Game Ready] compression unit, and DVT device, the respondent asserts that the claims are not verified.” (Id. at numbered page 3.)

Arbitrator Hill noted that in a prior arbitration award of his—in AAA case No. 17-21-1190-2706—ATIC had relied on the same peer review from Dr. Skolnick which was submitted in the arbitration at issue. In this other case, Arbitrator Hill found the left knee surgery to be medically necessary.

Continuing with his analysis, Arbitrator Hill mentioned that Dr. Skolnick had relied in part on a review of intraoperative photos by Dr. Howard Levin. Arbitrator Hill discussed competing medical evidence, including a report by Dr. Anjani Sinha, which was submitted in support of medical necessity. (Id. at numbered pages 3-4.)

Arbitrator Hill found as follows regarding the bill for the cane^[FN7] and hinged knee brace:{**78 Misc 3d at 895}

“I find that the respondent has not demonstrated by sufficient factual basis and medical rationale that the knee brace prescribed to the EIP post surgery was medically unnecessary. With respect to the surgery itself I find that the best source of information is the surgeon, who noted in his postsurgical diagnosis of tears of the medial and lateral menisci. This is particularly the case with this EIP where the EIP presented a positive McMurray’s sign, the test for meniscal injury and an MRI that noted a tear of the medial meniscus. Putting these facts together it would appear that the most reasonable conclusion is that the EIP did suffer from a meniscal injury from the motor vehicle accident as there was no history nor any medical records to indicate that the EIP had a prior history of injury to the left knee. The peer report provides no factual basis to conclude that the surgery was not causally related to the motor vehicle accident other than the conclusion in the report of Dr. Levin that there were no meniscal tears. Therefore, based upon the evidence submitted, I find that the applicant has demonstrated that the surgery was medically necessary and causally related to the motor vehicle accident. I find that the respondent has not demonstrated that the knee brace following the surgery was medically unnecessary.” (Id. at numbered page 4.)[*5]

As for the other three bills, Arbitrator Hill found as follows:

“With respect to the claims for the continuous passive motion device, compression unit, and DVT device, the respondent, upon receipt of the claims requested verification, specifically, a letter of medical necessity and the pertinent medical records and stated that the claim was delayed pending the examination under oath of the EIP.

“On October 21, 2020, the applicant provided the documentary verification, specifically, a letter of medical necessity and the pertinent medical reports. The applicant further inquired [as to] the status of the examination under oath of the EIP.

“There is no evidence submitted by either party that an examination under oath of the EIP was scheduled or attempted to be scheduled.{**78 Misc 3d at 896}

“Without evidence that there was an examination under oath [which] was timely scheduled, the respondent’s position that the claims are not verified is without merit.” (Id.)

Right Choice’s arbitration claim was granted in its entirety by Arbitrator Hill, who awarded $4,737.90 in medical expenses plus interest and an attorney’s fee (id. at numbered pages 5-6).

Master Arbitrator Victor D’Ammora’s Award

Master Arbitrator D’Ammora set forth the issues in dispute as follows:

“The issues before the lower arbitrator were whether the Respondent properly denied the claim for various devices and durable medical equipment based upon (1) the lack of medical necessity and/or causation; and (2) unverified claims. The lower arbitrator allowed the claim. The Respondent seeks to overturn the award of the lower arbitrator.

“The issue before me is whether Arbitrator Hill’s decision to allow the claim was arbitrary, capricious or incorrect as a matter of law.” (NYSCEF Doc No. 4, master arbitration award at numbered page 1.)

Master Arbitrator D’Ammora set forth case law to the effect that the standard of his review was limited to whether the hearing (“lower”) arbitrator’s review was supported by evidence or another reasonable basis or was arbitrary or capricious, irrational, and without a plausible basis. He noted that a master arbitrator’s review did include whether the hearing arbitrator’s award was incorrect as a matter of law, but he was constrained in reviewing the facts adduced by the evidence. (Id. at numbered page 2.)

As for the cane and hinged knee brace ($548.08 bill),

“Arbitrator Hill conducted a hearing and reviewed all of the evidence including the medical documentation. Arbitrator [Hill] considered the peer review of Dr. Skolnick, the intraoperative photo review of Dr. Levin and the rebuttal of Dr. Sinha. Based upon the medical evidence Arbitrator Hill determined that the devices and equipment were medically necess[ar]y and causally related. And as such [he] allowed the claim” (id.).[*6]

As for the unprovided verification defense (regarding the other three bills), “Arbitrator Hill further determined that the {**78 Misc 3d at 897}Respondent had failed to show that an EUO of the EIP was scheduled or attempted to be scheduled. And as such there is no merit to . . . the position that the claims were not verified.” (Id.)

Master Arbitrator D’Ammora stated that Arbitrator Hill’s conclusions and findings were within his discretion and based on his interpretation of the evidence. It did not constitute reversible error. “This Master Arbitrator cannot conduct a de novo review and substitute my interpretation and view of the evidence for that of Arbitrator Hill. In particular, as here, Arbitrator Hill’s determination is rational and supported by the record.” He concluded, “I cannot conclude on the basis of the record before me that Arbitrator Hill’s decision was incorrect as a matter of law or arbitrary and capricious. Therefore, I must affirm the award.” (Id.)

ATIC’s Petition to Vacate

ATIC’s petition to vacate asserted that “[t]he arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (NYSCEF Doc No. 1, petition ¶ 35), in that “Arbitrator . . . Hill . . . failed to follow well settled law” (id. ¶ 37). The petition went on to argue that Dr. Howard Levin’s review of the intraoperative photos concluded that there was no tear resulting from the subject motor vehicle accident; any change was degenerative and not traumatically induced (id. ¶ 39).^[FN8] ATIC’s evidence submitted to the hearing arbitrator “clearly satisfied its burden” (id. ¶ 41). Ultimately the medical provider—Right Choice in this instance—had to prove by a preponderance of the evidence that its services were medically necessary, claimed ATIC; the petition to vacate cited to Dayan v Allstate Ins. Co. (49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]), and Park Slope Med. & Surgical Supply, Inc. v Travelers Ins. Co. (37 Misc 3d 19, 22 n [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]) (id. ¶ 42). “In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer{**78 Misc 3d at 898} review,” maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]) (id. ¶ 43). Right Choice failed to offer any rebuttal at all, and certainly did not meaningfully refer to Dr. Skolnick’s peer review, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (id. ¶ 45).

ATIC reiterated in several paragraphs of its petition that a health service provider seeking no-fault medical expense compensation must meaningfully refer to and rebut an insurer’s peer reviewer’s conclusions (id. ¶¶ 51-54). “This proposition is widely accepted as ‘well settled’ law in the industry” (id. ¶ 55).

“In this case the arbitrator also ruled for Respondent [Right Choice] despite the fact that Respondent failed to offer a rebuttal. In doing so the arbitrator failed to [*7]follow well settled law. As such, this Court should vacate the arbitration award for the same reasons the Appellate Term reversed the trial courts in Pan Chiropractic, Eastern Star Acupuncture, Jaga Med. Servs., P.C. and High Quality Medical.” (Id. ¶ 58.)

The petition concluded by asserting that Arbitrator Hill ignored ATIC’s “evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant [Right Choice]” (id. ¶ 62). Therefore, ATIC’s rights were prejudiced by the arbitrator’s partiality “and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated” (id. ¶ 63). The relief sought was vacatur of the awards of both Arbitrator Hill and Master Arbitrator D’Ammora—that they “have no force or effect” (id. ¶ 64).

ATIC has not addressed that part of Arbitrator Hill’s findings with respect to the three bills concerning which ATIC asserted that verification was unprovided. As such, I deem ATIC to have abandoned any effort to vacate that part of Master Arbitrator D’Ammora’s award which affirmed Arbitrator Hill regarding the bills in the amounts of $1,839.78, $1,365.00, and $985.04. Therefore, the discussion which follows relates to the $548.08 bill for the cane and knee brace dispensed on May 21, 2020, to Assignor—whether to vacate Master Arbitrator D’Ammora’s award insofar as that bill is concerned.{**78 Misc 3d at 899}

As noted above, respondent Right Choice has not appeared in this special proceeding, either with written opposition or oral argument. Nonetheless this petition must be adjudicated—in this instance solely on the papers and record submitted by petitioner ATIC.

No-Fault Insurance Arbitration

In order to determine this petition to vacate an arbitration award, some discussion of the nature of no-fault insurance arbitration is necessary. When the No-Fault Law was first enacted by the Legislature in chapter 13 of the Laws of 1973 to take effect February 1, 1974, section 675 of the Insurance Law was added. In subdivision (2) thereof, insurers were required to provide claimants with an arbitration option for disputes involving liability for first-party (no-fault) benefits. This provision was amended in chapter 892 of the Laws of 1977, when several changes were made to the 1973 version of the No-Fault Law.^[FN9] The provision regarding arbitration in section 675 was amended to add the following language:

“An award by an arbitrator may be vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent [of insurance]. The grounds for vacating or modifying an arbitrator’s decision by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The decision of an arbitrator shall be binding except where vacated or modified by a master arbitrator. The decision of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute an action in a court of competent [*8]jurisdiction to adjudicate the dispute de novo.” (L 1977, ch 892, § 13.)

Nothing in the Governor’s Bill Jacket for chapter 892 of the Laws of 1977 comments on the provision adopting master arbitration review of hearing arbitrators’ decisions.{**78 Misc 3d at 900}

The provisions regarding no-fault insurance arbitration remained in the recodification of the Insurance Law enacted in chapters 367 and 805 of the Laws of 1984. The arbitration provisions were set forth in section 5106, and subsections (b) and (c) now read as follows:

“(b) Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent. Such simplified procedures shall include an expedited eligibility hearing option, when required, to designate the insurer for first party benefits pursuant to subsection (d) of this section. The expedited eligibility hearing option shall be a forum for eligibility disputes only, and shall not include the submission of any particular bill, payment or claim for any specific benefit for adjudication, nor shall it consider any other defense to payment.

“(c) An award by an arbitrator shall be binding except where vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent. The grounds for vacating or modifying an arbitrator’s award by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.”

Insofar as is here relevant, the no-fault insurance regulations promulgated by the Superintendent of Insurance provided that a master arbitrator may vacate or modify a hearing arbitrator’s award where it “was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65.18 [a] {**78 Misc 3d at 901}[4] [filed June 8, 1988, eff July 1, 1988]). This regulatory language was carried over into the revised regulations promulgated in 2002, in 11 NYCRR 65-4.10 (a) (4). A master arbitrator may also vacate or modify a hearing arbitrator’s award under certain other grounds too (see 11 NYCRR 65-4.10 [a]).^[FN10][*9]

Discussion

The provision that a master arbitrator may vacate or modify a hearing arbitrator’s award due to an error of law is one of several grounds but is the main gravamen of ATIC’s petition. ATIC argued that in finding medical necessity for the supplies dispensed by Right Choice on May 21, 2020, Arbitrator Hill{**78 Misc 3d at 902} failed to follow well-settled law that a health service provider opposing an insurer’s prima facie case of lack of medical necessity must submit a rebuttal meaningfully referring to and rebutting the insurer’s peer reviewer’s conclusions. As such, affirmance by Master Arbitrator D’Ammora was improper and both awards should be vacated pursuant to CPLR 7511 (b) (1) (iii). ATIC also argued that Arbitrator Hill’s award “was arbitrary and capricious, without rational basis and incorrect as a matter of law” (NYSCEF Doc No. 1, petition ¶ 61). ATIC argued further, among other things, that the weight of the evidence clearly favored its position that the subject supplies were not medically necessary (id. ¶ 60).

While Arbitrator Hill referred to a “rebuttal” of Dr. Anjani Sinha in his award (NYSCEF Doc No. 3, arbitration award at numbered page 3), by definition it was not a rebuttal. Dr. Matthew Skolnick’s peer review was dated October 20, 2020 (NYSCEF Doc No. 6, ATIC’s arbitration submission at 26), and Dr. Sinha’s report was dated March 4, 2020 (id. at 86). Therefore, the latter report could not be deemed a rebuttal meaningfully referring to and rebutting the peer reviewer’s conclusions on a later date. Dr. Sinha’s report is certainly not labeled a “rebuttal.” Applicant did have other supporting evidence in the record, none of which would be considered a formal rebuttal.^[FN11] Based on the record evidence submitted by ATIC in [*10]support of its petition, I agree that no rebuttal was submitted to Arbitrator Hill to formally rebut Dr. Skolnick’s conclusions. But did Right Choice’s failure to submit a formal rebuttal mandate vacatur by Master Arbitrator D’Ammora or by this court? Did it constitute an error of law pursuant to 11 NYCRR 65-4.10 (a) (4), as claimed by ATIC?

One of the difficulties in assessing ATIC’s claim is that the no-fault regulation enabling a master arbitrator to vacate a hearing arbitrator’s award due to an error of law is unclear exactly as to what is meant by “incorrect as a matter of law” (11 NYCRR 65-4.10 [a] [4]). We know that procedural or factual errors are not encompassed: “(procedural or factual errors committed in the arbitration below are not encompassed within{**78 Misc 3d at 903} this ground)” (id.). However, what does constitute an error of law? Does it mean that the hearing arbitrator failed to comply with a statute or a regulation? Or does this encompass case law also? If it encompasses case law, does that mean any deviation from a conclusion of law of any court warrants vacatur of the hearing arbitrator’s award? From a trial court? From just appellate courts? Does a conclusion of law in one case suffice to establish the “law” referred to in 11 NYCRR 65-4.10 (a) (4) or must there be a series of cases formulating “well settled law,” the phrase utilized in paragraph 37 of the petition?^[FN12] Clearly this regulatory provision could benefit from clarification from the New York State Department of Financial Services (successor to the Department of Insurance) in the form of an amendment to 11 NYCRR 65-4.10 (a) (4).^[FN13]

ATIC’s claim that the necessity for a rebuttal meaningfully referring to the peer reviewer’s conclusions derives from a long line of decisions of the Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts (at one time just the 2d and 11th Districts) over a period of years. One of the earlier decisions in this regard was in A. Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co. (16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2007]). The decision held that the insurer may rebut the inference of medical necessity through a peer review and, if the peer review is not rebutted, the insurer is entitled to denial of the claim. This was within the context of the defendant insurer’s cross-motion for summary judgment against the plaintiff medical provider. Shortly afterwards, Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co. (18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2007]) cited to A. {**78 Misc 3d at 904}Khodadadi Radiology, P.C.‘s requirement that a peer review establishing a prima facie case of lack of medical necessity necessitated a rebuttal from the medical provider in order to avoid summary judgment being granted against it.

This concept of a rebuttal being required from a health service provider to avoid summary judgment where the medical provider’s peer review made out a prima facie case of lack of medical necessity was enhanced in Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]), the case chiefly relied upon by ATIC. In Pan Chiropractic, P.C., the said Appellate Term established the requirement that on a motion by the insurer for summary judgment against the medical provider, if the peer review sets forth a factual basis and medical rationale for the conclusion of lack of medical necessity, the medical provider must rebut it with an affidavit which “meaningfully refer[s] to, or discuss[es], the determination of defendant’s doctor” (Pan Chiropractic, P.C., 2009 NY Slip Op 51495[U], *2); without the provider submitting such an affidavit, the insurer is entitled to summary judgment dismissing the complaint.

Since Pan Chiropractic, P.C. was decided on July 9, 2009, by the Appellate Term for the 2d, 11th and 13th Judicial Districts, that court has cited it at least 100 times when reviewing trial court orders on summary judgment motions, according to Westlaw. The Appellate Term for the 9th and 10th Judicial Districts has also cited it (e.g. B.Y., M.D., P.C. v Progressive Cas. Ins. Co., 26 Misc 3d 135[A], 2010 NY Slip Op 50144[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2010]). Therefore, this principle of law exists throughout the Second Department and is binding, at least on all trial courts within it. The requirement of a rebuttal from a health service provider which meaningfully refers to or discusses the determination of the no-fault insurer’s peer review doctor has basically been repeated in practically the same or similar language, per this court’s review of all cases citing to Pan Chiropractic, P.C., although in some instances the Appellate Term merely referred to rebutting the peer review without the words “meaningfully refers to, or discusses” (e.g. BLR Chiropractic, P.C. v American Tr. Ins. Co., 35 Misc 3d 141[A], 2012 NY Slip Op 50882[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]; Crotona Hgts. Med., P.C. v New York Cent. Mut. Fire Ins. Co., 34 Misc 3d 155[A], 2012 NY Slip Op 50401[U] [App Term, 2d Dept, 2d, 11th &{**78 Misc 3d at 905} 13th Jud Dists 2012]). In Neomy Med., P.C. v American Tr. Ins. Co. (35 Misc 3d 135[A], 2012 NY Slip Op 50769[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), the court found that the plaintiff’s supervising physician’s affidavit “failed to justify with specificity the additional studies” and therefore “did not rebut the conclusions set forth in the peer review report”; the words “meaningfully refers to, or discusses” were not used. The term “meaningfully rebut” was used in New Life Med., P.C. v GEICO Ins. Co. (35 Misc 3d 146[A], 2012 NY Slip Op 51061[U], *1-2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). In Yklik, Inc. v Electric Ins. Co. (36 Misc 3d 131[A], 2012 NY Slip Op 51287[U], *1-2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), the term used was “failed to meaningfully refer to, let alone rebut,” without the word “discuss.”

The Pan Chiropractic, P.C. holding regarding the need for a rebuttal which meaningfully referred to, or discussed, the determination of the no-fault insurer’s peer review doctor was extended in connection with independent medical examination (IME) reports submitted by an insurer to establish lack of medical necessity, in High Quality Med., P.C. v Mercury Ins. Co. (29 Misc 3d 132[A], 2010 NY Slip Op 51900[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]) and MIA Acupuncture, P.C. v GEICO Ins. Co. (29 Misc 3d 132[A], 2010 NY Slip Op 51899[U] [App Term, 2d Dept, 2d, 11th[*11]& 13th Jud Dists 2010]). Subsequent decisions of that court continued to hold likewise regarding an insurer’s IME report.

It is noteworthy that in one case, Pan Chiropractic, P.C. was cited for the principle of law that an insurer made out a prima facie case of entitlement to summary judgment dismissing the complaint on the ground of lack of medical necessity through submission of a sworn peer review. The court held that the burden shifted to the health service provider to raise a triable issue of fact, but it continued by stating that a sworn letter of medical necessity by a health service provider was “sufficient to raise a triable issue of fact as to the medical necessity of the services rendered” (Quality Psychological Servs., P.C. v Mercury Ins. Group, 27 Misc 3d 129[A], 2010 NY Slip Op 50601[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]). This constituted a departure from the case law that a health service provider had to submit a rebuttal which meaningfully referred to or discussed the determination of the no-fault insurer’s peer review doctor. However, in a subsequent case, Gentle Care{**78 Misc 3d at 906} Acupuncture, P.C. v GEICO Ins. Co. (30 Misc 3d 126[A], 2010 NY Slip Op 52226[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]), the court acknowledged that the health service provider submitted an affidavit of medical necessity for the purpose of rebutting the insurer’s IME reports but it rejected it because it did not meaningfully refer to, let alone rebut, the IME reports’ conclusions (see also Gentle Care Acupuncture, P.C. v GEICO Ins. Co., 36 Misc 3d 131[A], 2012 NY Slip Op 51290[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). A “letter of medical necessity” did not “meaningfully refer to, let alone rebut” the insurer’s psychologist’s conclusions in All Boro Psychological Servs., P.C. v Progressive Northeastern Ins. Co. (38 Misc 3d 142[A], 2013 NY Slip Op 50252[U], *1-2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]).

The plaintiff’s doctor’s affidavit in Neomy Med., P.C. v GEICO Ins. Co. (34 Misc 3d 144[A], 2012 NY Slip Op 50145[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]) sufficiently demonstrated the existence of a question of fact as to medical necessity but the court did not indicate whether it meaningfully referred to or discussed the insurer’s peer review (see also Bay Plaza Chiropractic, P.C. v Praetorian Ins. Co., 38 Misc 3d 126[A], 2012 NY Slip Op 52315[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]).

Not only must a health service provider’s affidavit refer to the insurer’s IME report, but the rebuttal component must not be conclusory (Flushing Traditional Acupuncture, P.C. v GEICO Ins. Co., 36 Misc 3d 156[A], 2012 NY Slip Op 51772[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]); from this one can infer that the rebutting evidence must also discuss the IME report’s conclusions.

It is clear that whatever medical evidence is submitted in response to the peer review, it must “rebut” the latter’s conclusions and meaningfully refer to it (see Promed Durable Equip., Inc. v GEICO Ins., 41 Misc 3d 19, 21 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]; Jamaica Med. Supply, Inc. v GEICO Gen. Ins. Co., 39 Misc 3d 141[A], 2013 NY Slip Op 50760[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]; Park Slope Med. v Praetorian Ins. Co., 39 Misc 3d 141[A], 2013 NY Slip Op 50761[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]).

This court’s review of the cases citing to Pan Chiropractic, P.C. revealed that in more recent years, the word “discuss” was replaced by “rebut” in the decisions of the Appellate Term, {**78 Misc 3d at 907}Second Department, 2d, 11th and 13th Judicial Districts. Either way, the health service provider still must “meaningfully refer” to the peer review or the IME report. As for discussing it, a lower court decision still required it in 2021 (see Heavenly Points Acupuncture v Integon Natl. Ins. Co., 73 Misc 3d [*12]1201[A], 2021 NY Slip Op 50895[U], *2 [Civ Ct, Queens County 2021]).

The case law discussed extensively above was from the Appellate Term in the Second Department when reviewing appeals from orders on summary judgment motions. By comparison, the Appellate Term in the First Department has not used the phraseology of “meaningfully referring” and either “discuss” or “rebut” in all of its relevant decisions. In Darlington Med. Diagnostics, P.C. v Praetorian Ins. Co. (34 Misc 3d 148[A], 2012 NY Slip Op 50226[U] [App Term, 1st Dept 2012]), the court held that if a chiropractor’s peer review setting forth a factual basis and medical rationale for his conclusion that diagnostic testing lacked medical necessity established a prima facie showing of entitlement to judgment for an insurer, the plaintiff medical provider failed to raise a triable issue of fact where its submitted affidavit by a physician—whose field of practice was unspecified—contained no indication that its generic conclusions were based upon either a medical examination of the injured person or a review of the injured person’s medical records. An operative report of the claimant’s principal was insufficient to rebut the peer review where it consisted of conclusory, fill-in-the-blanks findings (see Synergy Med. v Praetorian Ins. Co., 40 Misc 3d 127[A], 2013 NY Slip Op 51047[U] [App Term, 1st Dept 2013]). A medical affidavit detailing the assignor’s complaints of pain and restricted range of motion, and opining that an MRI was necessary to rule out disc herniations, was sufficient to raise a triable issue of fact as to medical necessity (see AP Diagnostic Med., PC v Chubb Indem. Ins. Co., 41 Misc 3d 126[A], 2013 NY Slip Op 51647[U] [App Term, 1st Dept 2013]).

Further, where an insurer made a prima facie showing of entitlement to judgment through the submission of an IME report of its examining acupuncturist who set forth a factual basis and medical rationale for the conclusion that the assignor’s injuries were resolved and that no further acupuncture treatment was needed, the acupuncture provider failed to raise a triable issue concerning medical necessity where its principal, who while broadly describing his approach to the practice of{**78 Misc 3d at 908} traditional Chinese medicine, failed to set forth any allegations as to the assignor’s claimed injuries or the medical necessity of the acupuncture treatments at issue (see Utica Acupuncture, P.C. v Interboro Ins. Co., 39 Misc 3d 139[A], 2013 NY Slip Op 50643[U] [App Term, 1st Dept 2013]).

However, the Appellate Term, First Department, did at one point begin to use phraseology holding that a health service provider had to meaningfully respond to prima facie evidence from the insurer. In Premier Health Choice Chiropractic, P.C. v Praetorian Ins. Co. (41 Misc 3d 133[A], 2013 NY Slip Op 51802[U], *1 [App Term, 1st Dept 2013]), the court held that a doctor’s report “did not meaningfully refer to, let alone rebut, the contrary findings made by defendant’s peer reviewer” (emphasis added). Further, the same court held in Rummel G. Mendoza, D.C., P.C. v Chubb Indem. Ins. Co. (47 Misc 3d 156[A], 2015 NY Slip Op 50900[U] [App Term, 1st Dept 2015]) that if the insurer’s examining doctor’s IME report and follow-up report set forth a factual basis and medical rationale for her conclusion that the assignor’s injuries were resolved and that there was no need for further physical therapy treatment, an affidavit of the health service provider’s treating physical therapist which failed to meaningfully address the contrary findings made by the defendant’s examining doctor, including the normal results of the range of motion testing of the assignor’s cervical and lumbar spine, was insufficient to raise a triable issue of fact. The words “meaningfully rebut” were used in Mingmen Acupuncture Servs., PC v Global Liberty Ins. Co. of N.Y. (61 Misc 3d 128[A], 2018 NY Slip Op 51358[U], *1 [App Term, 1st Dept 2018]) and Forest Drugs v Global Liberty Ins. Co. of N.Y. (61 Misc 3d 147[A], 2018 NY Slip Op [*13]51708[U], *1 [App Term, 1st Dept 2018]).

Interestingly, no Appellate Term, First Department decision has cited to the Appellate Term, Second Department’s Pan Chiropractic, P.C. decision.

The foregoing review of Appellate Term decisions was performed to determine what constitutes settled law governing a motion for summary judgment in the context of a health service provider’s having to refute a prima facie case of lack of medical necessity established through an insurer’s submission of a sufficient peer review or IME report. Therefore, this court now holds that in such context, well-settled case law holds that the health service provider must submit expert opinion evidence, whether it is a “rebuttal,” affidavit, affirmation, or letter {**78 Misc 3d at 909}of medical necessity, which meaningfully refers to and either discusses or rebuts the conclusions of the insurer’s expert witness. Nothing submitted by Right Choice to Arbitrator Hill, according to the record, referred to Dr. Skolnick’s peer review. Had the dispute at bar been a motion for summary judgment, ATIC would have prevailed. Dr. Skolnick’s peer review made out a prima facie case of lack of medical necessity, and Right Choice did not submit expert medical evidence which referred to it; neither did Right Choice’s evidence discuss it or specifically rebut it.

The instant dispute, however, does not concern a motion for summary judgment. It concerns an arbitration. And that triggers an inquiry into whether Arbitrator Hill’s determination to accord probative value to Right Choice’s evidence lacking a formal rebuttal referencing the peer review was incorrect as a matter of law (11 NYCRR 65-4.10 [a] [4]), and whether in turn, Master Arbitrator D’Ammora’s affirmance must be vacated.

Most non-no-fault insurance arbitration awards cannot be vacated due to an error of law (see Matter of Sprinzen [Nomberg], 46 NY2d 623, 629-630 [1979]). No-fault insurance arbitrations are different; an error of law can be the basis for reversal—by a master arbitrator. This is because, as discussed above, 11 NYCRR 65-4.10 (a) (4), in the no-fault insurance regulations promulgated by the Superintendent of Financial Services (previously Superintendent of Insurance), lists “incorrect as a matter of law” as a ground for vacating or modifying a hearing arbitrator’s award. In that sense, the master arbitrator’s review is broader than that of a court, since a court will not vacate an arbitration award due to an error of law (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 211-212 [1981]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 800, 802 [2d Dept 2019]).

Determination

[1] With regard to case law, this court now holds that the phrase “incorrect as a matter of law” in 11 NYCRR 65-4.10 (a) (4) is to be construed to refer to settled or established court decisions on issues which do not relate to the admissibility, probative value, credibility, or evaluation of evidence when analyzing issues of fact. “[I]ncorrect as a matter of law” (11 NYCRR 65-4.10 [a] [4]) refers to substantive issues.

In part, this court’s present determination is based on the additional provision in 11 NYCRR 65-4.10 (a) (4) which{**78 Misc 3d at 910} provides that “procedural or factual errors committed in the arbitration below are not encompassed within this ground.” The reference to “factual errors” conveys impliedly that when it comes to assessing evidence for the purpose of fact-finding, an arbitrator has wider latitude and should not be required to comply with settled or established law concerning what specific evidence suffices to refute the opposing party’s evidence. This court also takes into account the general proposition that the admissibility of evidence and the [*14]determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award”]; Central Sq. Teachers Assn. v Board of Educ. of Cent. Sq. Cent. School Dist., 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software Intl., 232 AD2d 336, 338 [1st Dept 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis”]). In light of this case law with respect to the admissibility of evidence and the determination of issues of fact in arbitration, 11 NYCRR 65-4.10 (a) (4)’s “matter of law” should be limited in its breadth.

That “incorrect as a matter of law” (11 NYCRR 65-4.10 [a] [4]) refers to substantive issues—not evidentiary ones—is supported by case law. “If, however, the master arbitrator vacates the arbitrator’s award based upon an alleged error of a rule of substantive law, the determination of the master arbitrator must be upheld unless it is irrational” (Golden Earth Chiropractic & Acupuncture, PLLC v Global Liberty Ins. Co. of N.Y., 54 Misc 3d 31, 33-34 [App Term, 2d Dept, 9th & 10th Jud Dists 2016] [emphasis added and citations omitted]).

In Matter of Global Liberty Ins. Co. v McMahon (172 AD3d 500 [1st Dept 2019]), the Court held that it was incorrect as a matter of law for the hearing arbitrator to not consider the American Medical Association’s CPT Assistant newsletter, which is incorporated by reference in the New York Workers’ Compensation Medical Fee Schedule, in determining whether the no-fault insurer paid the proper fee to the medical provider. Issues regarding application of fee schedules in no-fault arbitration clearly are substantive ones. Similarly, an arbitrator’s{**78 Misc 3d at 911} failure to apply well-settled case law regarding fees for a licensed acupuncturist involved a substantive issue, which is a matter of law pursuant to 11 NYCRR 65-4.10 (a) (4) (Allstate Ins. Co. v Natural Healing Acupuncture, P.C., 39 Misc 3d 1217[A], 2013 NY Slip Op 50645[U] [Civ Ct, Kings County 2013]). Whether an insurer’s defense of fraudulent incorporation is precluded by a late denial of claim form involves an issue of law, based on case law (see Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]); it is obviously a matter of substantive no-fault insurance law. A hearing arbitrator’s assessment of medical necessity in the absence of a denial of claim asserting lack of medical necessity is incorrect as a matter of law (see Matter of Liberty Mut. Ins. Co. v Spine Americare Med., 294 AD2d 574 [2d Dept 2002]), and this too would be a substantive issue.

In contrast, an arbitrator’s task of determining whether a service is medically necessary entails making a finding of fact—not a conclusion of law. A substantive issue is not involved. Case law regarding the analysis of evidence, such as Pan Chiropractic, P.C. v Mercury Ins. Co. and its progeny, would not be controlling.

Finally, this court notes that the well-settled case law holding that the health service provider must submit expert opinion evidence which meaningfully refers to and either discusses or rebuts the conclusions of the insurer’s expert witness was rendered in the context of summary judgment motions. A court’s assessment of reviewing these motions entails scrutinizing the evidence to determine whether there is a lack of a material issue of fact. No-fault arbitrations are not summary judgment motions. They entail making final determinations, akin to a bench trial where the trial court hears the evidence and makes its own findings of fact. Decisions on [*15]summary judgment motions concerning evidence—as opposed to substantive issues—do not repose within the ambit of a “matter of law” (11 NYCRR 65-4.10 [a] [4]).

Having held that in the circumstance of case law, the phrase “incorrect as a matter of law” (id.) applies to issues of substantive law—not to the admissibility, probative value, credibility, or evaluation of evidence when analyzing issues of fact—this court further holds that when determining an issue of medical necessity, a no-fault hearing arbitrator is not required to apply the well-settled case law holding that the health service provider must submit expert opinion evidence which meaningfully{**78 Misc 3d at 912} refers to and either discusses or rebuts the conclusions of the insurer’s expert witness.^[FN14]

Accordingly, in this article 75 proceeding, Arbitrator Hill’s award, which clearly did not apply the well-settled case law Pan Chiropractic, P.C. v Mercury Ins. Co. and its progeny, was not incorrect as a matter of law within the purview of 11 NYCRR 65-4.10 (a) (4). Master Arbitrator D’Ammora’s award approved Arbitrator Hill’s review of the evidence. Master Arbitrator D’Ammora noted that his review of Arbitrator Hill’s award had to consider whether it was incorrect as a matter of law, citing to 11 NYCRR 65-4.10 (a) (4) (NYSCEF Doc No. 4, master arbitration award at numbered page 2). By affirming Arbitrator Hill’s award, Master Arbitrator D’Ammora conveyed that he did not find that it was incorrect as a matter of law.

[2] This court must next determine whether to sustain Master Arbitrator D’Ammora’s award. The standard for article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law is whether it is so irrational as to require vacatur (see Matter of Smith [Firemen’s Ins. Co.], 55 NY2d 224, 232 [1982]; Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 170 AD3d 1168 [2d Dept 2019]; Matter of Acuhealth Acupuncture, P.C. v New York City Tr. Auth., 167 AD3d 869 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). In the case at bar, Master Arbitrator D’Ammora’s review of the legal issue presented by ATIC was not irrational. As this court found, the Pan Chiropractic, P.C. line of cases need not be followed by no-fault hearing arbitrators. Hence, in terms of the legal issue, Master Arbitrator D’Ammora’s award was actually correct, let alone not irrational.

With respect to the factual issues reviewed by Master Arbitrator D’Ammora, the proper standard of his review was whether Arbitrator Hill reached his decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (Matter of Petrofsky [All{**78 Misc 3d at 913}state Ins. Co.], 54 NY2d 207 [1981]). Here, with respect to the $548.08 bill, Master Arbitrator D’Ammora noted that the hearing arbitrator considered Dr. Skolnick’s peer review, Dr. Levin’s intraoperative photo review, and a report of Dr. Sinha. The supplies were found medically necessary and causally related, and the hearing arbitrator allowed the claim.

“Arbitrator Hill’s conclusions and findings regarding the lack of medical[ ] necessity and the verification defense were in his discretion and interpretation of the evidence. It cannot be [*16]regarded as reversible error within this Master Arbitrator’s purview. This Master Arbitrator cannot conduct a de novo review and substitute my interpretation and view of the evidence for that of Arbitrator Hill. In particular, as here, Arbitrator Hill’s determination is rational and supported by the record.” (NYSCEF Doc No. 4, master arbitration award at numbered page 2.)

Judicial review of a master arbitrator’s authority to vacate a hearing arbitrator’s award derives from section 675 (presently section 5106) of the Insurance Law and involves the question of whether the master arbitrator exceeded his power (Matter of Smith [Firemen’s Ins. Co.], 55 NY2d 224, 231 [1982]). Master Arbitrator D’Ammora did not exceed his power when he reviewed the factual findings of Arbitrator Hill. He applied the correct standard of review when he wrote, “I cannot conclude on the basis of the record before me that Arbitrator Hill’s decision was incorrect as a matter of law or arbitrary and capricious” (NYSCEF Doc No. 4, master arbitration award at numbered page 2). Indeed, Arbitrator Hill’s factual finding that the supplies at issue—the cane and knee brace—were medically necessary was neither arbitrary nor capricious. As indicated above, he found that the best source of information was the surgeon, who noted in his postoperative report that there were tears of the medial and lateral menisci. The MRI noted a tear of the medial meniscus. With no evidence of prior injury to the knee, the most reasonable conclusion was that Assignor did suffer from a meniscal injury from the motor vehicle accident. The surgery was necessary and so too were the supplies. (NYSCEF Doc No. 3, arbitration award at numbered page 4.) Master Arbitrator D’Ammora was correct when he found that Arbitrator Hill’s factual determination was rational and supported by the record (NYSCEF Doc No. 4, master arbitration award at numbered page 2). This court finds that{**78 Misc 3d at 914} Master Arbitrator D’Ammora’s review of that factual determination was neither arbitrary and capricious, irrational, or without a plausible basis (see Matter of Petrofsky [Allstate Ins. Co.]).

ATIC’s petition in this article 75 proceeding cited the four applicable grounds delineated in CPLR 7511 for vacating an arbitration award where a party participated in the arbitration:

“if the court finds that the rights of that party were prejudiced by: (i) corruption, fraud or misconduct in procuring the award; or (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or (iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.” (NYSCEF Doc No. 1, petition ¶ 33.)

This court finds that ATIC failed to establish that there was corruption, fraud, or misconduct in procuring the award; that there was partiality on the part of either arbitrator; that either arbitrator exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or that there was a failure to follow the procedure of article 75.

Any requested relief not expressly addressed herein has nonetheless been considered and is hereby expressly rejected. [*17]

Conclusion

Accordingly, it is hereby ordered, adjudged, and decreed that ATIC’s petition is denied and the master arbitration award of Victor D’Ammora, Esq., which affirmed the arbitration award of Lester Hill, Esq., is confirmed in its entirety.

Footnotes

Footnote 1: The term “hearing arbitrator” is used herein instead of “arbitrator” to avoid confusion with the term “master arbitrator.”

Footnote 2: The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Lester Hill, Esq. and/or Master Arbitrator Vic D’Ammora, Esq.” (NY St Cts Elec Filing [NYSCEF] Doc No. 2, notice of petition), but it must be deemed to seek vacatur of just the master arbitration award inasmuch as the latter is the final determination of the arbitration process. The no-fault regulations provide that “court review pursuant to an article 75 proceeding” is from the “decision of a master arbitrator” (11 NYCRR 65-4.10 [h] [1] [i]). In fact, a party may not appeal from an arbitration award without first seeking master arbitration (Matter of Staten Is. Hosp., 103 AD2d 744 [2d Dept 1984]). Naturally, if the hearing arbitrator’s award is imperfect, a master arbitration award affirming it would likewise be imperfect and subject to vacatur.

Footnote 3: Health service providers obtain standing to pursue no-fault insurance compensation in arbitration by virtue of having received an assignment of benefits from the respective person claiming to have been injured in a covered motor vehicle accident; such person is often denoted an “assignor.”

Footnote 4: Paragraph 28 of the petition describes the AAA case No. as 99-21-1226-7577, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA case No. 17-21-1226-7577.

Footnote 5: The peer review of Dr. Skolnick, referenced in the Form NF-10 denial of claim and attached to it, opined lack of medical necessity in addition to lack of causation from the accident of record (NYSCEF Doc No. 6, ATIC’s arbitration submission at 4, 29).

Footnote 6: The reference to Dr. Slotnick is obviously a typographical error; the arbitrator meant Dr. Skolnick.

Footnote 7: Although Arbitrator Hill did not mention the cane in his award, he did award compensation for it, as per Part A in the conclusion of his award: he awarded $548.08 for the bill for date of service May 21, 2020, which bill was for the cane and the knee brace. It is clear that his findings concerning the knee brace applied likewise to the cane (NYSCEF Doc No. 3, arbitration award at numbered page 5).

Footnote 8: To the extent that ATIC’s petition argued that the intraoperative photo review by Dr. Howard Levin had to be rebutted by Right Choice, it is rejected. ATIC’s denial of the $548.08 bill referred only to the “attached peer review by Dr. Matthew D. Skolnick, M.D.” (NYSCEF Doc No. 6, ATIC’s arbitration submission at 4). An insurer must stand or fall upon the defense upon which it based its refusal to pay and cannot create new grounds (Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219, 220-221 [2d Dept 1999]).

Footnote 9: Among the more substantial changes in the 1977 legislation were the adoption of fee schedules to limit medical expenses and modifying the threshold categories to be able to sue for pain and suffering.

Footnote 10: 11 NYCRR 65-4.10 (a) provides as follows:

“Grounds for review. An award by an arbitrator rendered pursuant to section 5106(b) of the Insurance Law and section 65-4.4 or 65-4.5 of this Subpart may be vacated or modified solely by appeal to a master arbitrator, and only upon one or more of the following grounds:

“(1) any ground for vacating or modifying an award enumerated in article 75 of the Civil Practice Law and Rules (an article 75 proceeding), except the ground enumerated in CPLR subparagraph 7511(b)(1)(iv) (failure to follow article 75 procedure);

“(2) that the award required the insurer to pay amounts in excess of the policy limitations for any element of first-party benefits; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of an appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

“(3) that the award required the insurer to pay amounts in excess of the policy limitations for any element of additional first-party benefits (when the parties had agreed to arbitrate the dispute under the additional personal injury protection endorsement for an accident which occurred prior to January 1, 1982); provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

“(4) that an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground);

“(5) that the attorney’s fee awarded by an arbitrator below was not rendered in accordance with the limitations prescribed in section 65-4.6 of this Subpart; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart.”

Footnote 12: As it turns out, there is no issue of whether the hearing arbitrator incorrectly applied law embodied in a statute or regulation, but if he had it would obviously constitute an error of law. The case law sought to be applied by ATIC in the subject article 75 petition was embodied in a long series of court decisions of the Appellate Term, so any issue of applying case law from just one decision or from a trial court is academic in this instance.

Footnote 13: In fact, since this decision involves interpretation of the Department of Financial Services’ no-fault regulations, a copy of it will be transmitted by this court to the Superintendent of Financial Services. This court encourages other justices who determine article 75 petitions seeking review of no-fault arbitration awards to likewise transmit copies of their decisions to said Superintendent and, perhaps, a process for their transmission by New York’s court system to the Superintendent could be implemented. For sure, this would assist the Superintendent to fulfill her responsibilities to promulgate procedures governing the no-fault arbitration system (see Insurance Law § 5106 [b], [c], [d]).

Footnote 14: This is not to say that a hearing arbitrator is prohibited from applying the well-settled case law which began with Pan Chiropractic, P.C. Since it is not deemed a “matter of law,” as the term is used in 11 NYCRR 65-4.10 (a) (4), an arbitrator is free to apply it or not.

Index No. 656455/2022

Law Office of Jaffe & Velazquez, LLP, New York, NY (Carl J. Gedeon of counsel), for plaintiff.

Rybak Law Firm, PLLC, Brooklyn, NY (Oleg Rybak of counsel), for defendants Lifeline Medical Imaging, P.C. and 334 Grand Concourse Medical, P.C.

No appearance for defendant Autumn PT, P.C.

In this no-fault-insurance-coverage action, plaintiff, Country-Wide Insurance Company, moves for summary judgment under CPLR 3212 against defendants Lifeline Medical Imaging, P.C., Autumn PT, P.C., and 334 Grand Concourse Medical, P.C., all medical-provider assignees of the eligible injured person (defendant Steven Henderson) that have appeared in this action. Lifeline Medical and 334 Grand Concourse (represented by the same counsel) have filed opposition papers. Autumn PT has not. The summary-judgment motion is denied without prejudice.

Country-Wide seeks a declaration of no coverage on the ground that Henderson failed twice to appear for duly scheduled examinations under oath (EUOs), vitiating coverage both for himself and for his assignees. In opposition, Lifeline Medical/334 Grand Concourse (opposing defendants) raise three main categories of arguments: (i) Country-Wide has not shown the EUOs were timely and properly scheduled; (ii) Country-Wide has not provided sufficient justification for having requested the EUOs; and (iii) Country-Wide moved for summary judgment prematurely before defendants could obtain discovery.

This court disagrees with the arguments made by opposing defendants with respect to the timeliness of Country-Wide’s EUO requests. As this court recently observed, many of those arguments are foreclosed by existing Appellate Division precedent (see Country-Wide Ins. Co. v Duff, 2022 NY Slip Op 51289[U], at *1 [Sup Ct, NY County Dec. 20, 2022]); and the remaining arguments are unpersuasive.

The court reaches a different conclusion about the issue of Country-Wide’s justification for asking Henderson to appear for EUOs. The governing regulations provide that a no-fault insurer must have a “specific objective justification supporting the use of such examination.” (11 NYCRR 65-3.5 [e].) If a medical-provider assignee defending a no-fault-coverage action questions whether the insurer had a proper basis for seeking the EUO, the insurer must identify its justification for the EUO request;^[FN1] in the “absence of any justification for the EUO,” the insurer cannot “establish, as a matter of law, that it complied with the governing regulations.” (Country-Wide Ins. Co. v Delacruz, 205 AD3d 473, 474 [1st Dept 2022]; accord Kemper Independence Ins. Co. v AB Med. Supply, Inc., 187 AD3d 671, 671 [1st Dept 2020].)

The affidavit of Country-Wide’s no-fault supervisor (Jessica Mena-Sibrian), submitted as part of Country-Wide’s opening motion papers, offers two justifications for seeking Henderson’s EUO: (i) “material facts surrounding the accident required clarification”; and (ii) “there is also a lapse of time between the date of the accident and the time the claimant first seeks treatment.” (NYSCEF No. 27 at ¶ 10.) The conclusory assertion that Country-Wide needed clarification about the facts of the accident, with no indication of what facts needed to be clarified, or why, is not sufficient. (See Country-Wide Ins. Co. v Delacruz, 71 Misc 3d 247, 251-252 [Sup Ct, NY County 2021], affd 205 AD3d 473.)

With respect to the lapse of time asserted by the Mena-Sibrian affidavit, that affidavit does not identify the basis of her knowledge for that assertion. Nor do the documents submitted by Country-Wide remedy this gap. At most, Country-Wide has provided the NF-3 treatment bills on which it relies to establish the timeliness of its EUO request, which reflect that approximately nine weeks elapsed between the date of the accident and the dates of treatment for which payment was being sought. (See NYSCEF NO. 30 at 1-2.) But Country-Wide has not shown that those bills were the first NF-3 forms it received from one of Henderson’s treating providers, or that the dates of service on the NF-3 bills submitted by Country-Wide were the earliest dates of treatment. Additionally, Country-Wide’s attorney affirmation submitted on reply, professing to rely on the Mena-Sibrian affidavit, offers an entirely different set of justifications, namely that “medical or lost earnings claim is extensive, but collision is a minor impact with minimal property damage to vehicles,” and that the “police report indicated no one involved sustained any injury and/or medical treatment at scene was refused.”^[FN2] (NYSCEF No. 71 at ¶ 39.) Given Country-Wide’s failure on this motion to identify and document a consistent justification for its EUO request, Country-Wide is not entitled on this record to summary judgment.

For similar reasons, this court agrees with opposing defendants that Country-Wide’s summary-judgment motion must be denied under CPLR 3212 (f) as premature. The record reflects that Country-Wide moved for summary judgment only two months after opposing defendants filed their answer and served discovery requests, without Country-Wide’s having provided the discovery being sought. (See NYSCEF Nos. 13 [discovery request], 34 [notice of motion].) The “reason for the EUO request is a fact essential to justify opposition to plaintiff’s summary judgment motion” that is “exclusively within the knowledge and control of the movant.” (American Tr. Ins. co. v Jaga Med. Servs., P.C., 128 AD3d 441, 441 [1st Dept 2015].) As a result, a summary-judgment motion brought before the insurer has responded to a discovery request seeking that reason—as true here—is premature. (AB Med. Supply, 187 AD3d at 671; accord Delacruz, 205 AD3d at 473.)

As noted above, defendant Autumn PT has not opposed Country-Wide’s summary-judgment motion. At the same time, this court’s conclusion that the summary-judgment motion is premature and that defendants must be afforded a sufficient opportunity to obtain discovery from Country-Wide applies equally to Autumn PT as to the opposing defendants. Country-Wide’s request for summary judgment is therefore denied as against Autumn PT, in addition to opposing [*2]defendants (Lifeline Medical and 334 Grand Concourse).

Accordingly, it is

ORDERED that Country-Wide’s motion for summary judgment is denied without prejudice; and it is further

ORDERED that Country-Wide serve a copy of this order with notice of its entry on Lifeline Medical, 334 Grand Concourse, and Autumn PT.

Footnotes

Footnote 1:The assignee may raise the issue of the insurer’s EUO justification whether or not the eligible-injured-person assignor asked the insurer to provide that justification when the insurer first noticed the assignor’s EUO. (See Country-Wide Ins. Co. v Delacruz, 205 AD3d 473, 474 [1st Dept 2022].) Country-Wide’s assertion that any objection to the basis for the EUO has been waived is thus foreclosed by Appellate Division precedent. (See NYSCEF No. 71 at ¶ 58.) And that a no-fault insurer “need not provide a copy of its internal guidelines for requesting an EUO” (id. at ¶ 57) does not excuse the insurer from making “a more limited disclosure of the specific facts that, applied to those internal standards in a given case, prompted the insurer to request an EUO.” (Kemper Independence Ins. Co. v Accurate Monitoring, LLC, 73 Misc 3d 585-590 [Sup Ct, NY County 2021] [internal quotation marks omitted].)

Footnote 2:Country-Wide has not submitted the police report on this motion.

Index No. 655628/2021

Law Office of Jaffe & Velazquez, LLP, New York, NY (Carl J. Gedeon of counsel), for plaintiff.

Rybak Law Firm, PLLC, Brooklyn, NY (Oleg Rybak of counsel), for defendants Chohayea Duff, Maria Shiela Masigla-Buslon, D.PT., Energy Chiropractic, P.C., Kings Rehab Acupuncture, P.C., AB Medical Supply Inc., Strategic Medical Initiatives, P.C., and M. Bulson Physical Therapy, P.C.

This is a no-fault-insurance-coverage action. On motion sequence 001, plaintiff, Country-Wide Insurance Company, moves without opposition for default judgment under CPLR 3215 against nonappearing defendants Quality Custom Medical Supply, Inc., Atlas Radiology P.C., Zhong Qing Zhou L.A.C., and Guy Brewer Pharmacy, Inc., all medical-provider assignees of the eligible injured person, defendant Chohayea Duff.

On motion sequence 002, Country-Wide moves for summary judgment under CPLR 3212 against appearing defendants Duff and the remaining medical-provider assignees. The motion is opposed by all appearing defendants except Jamaica Hospital Medical Center Diagnostic and Treatment Center Corp.

Country-Wide’s default-judgment and summary-judgment motions are granted.

DISCUSSION

1. Default Judgment (Mot Seq 001) A party moving for default judgment must establish proper service, default, and the facts constituting the moving party’s claims. Country-Wide has established proper service on the four defendants who are the subject of its default-judgment motion, none of which have appeared. And Country-Wide has provided affidavits from its employees, supported by attached documentation, establishing that Country-Wide timely and properly requested that Duff appear for an independent medical examination (IME), and that Duff twice failed without justification to appear for scheduled IMEs. That suffices to establish Country-Wide’s claim for default judgment purposes.

2. Summary Judgment (Mot Seq 002) Country-Wide’s summary-judgment motion papers, based on the same affidavits and exhibits as its default-judgment motion, establishes prima facie that Country-Wide is entitled to judgment as a matter of law. And this court concludes that the opposing defendants fail to raise a dispute of material fact warranting trial.

Defendants, relying on an outdated and boilerplate affirmation of counsel, raise three principal legal arguments, and one factual one.^[FN1] (See NYSCEF No. 60.) None of defendants’ legal arguments has merit—indeed, they are foreclosed by controlling appellate precedent that counsel for defendants does not even acknowledge, much less address.^[FN2]

First, defendants contend that Country-Wide has not shown that Country-Wide’s initial IME request was timely relative to when Country-Wide received Duff’s NF-2 application for no-fault benefits. But the triggering date that begins the IME-request period is not receipt of the NF-2 benefits application, but instead receipt of NF-3 claims for payment submitted by treating providers. (See 11 NYCRR 65-3.5 [a]-[b]; Unitrin Direct Ins. Co. v Beckles, 188 AD3d 620, 621 [1st Dept 2020] [explaining that a timely request for an IME must be made within 15 days of receipt of an NF-3 medical-provider claim].)

Second, defendants assert that Country-Wide has failed to meet its (putative) obligation to show that its initial IME request was timely relative to the first bill it received from each treating medical provider. But Country-Wide is not required to make that showing. Rather, as the Appellate Division, First Department has held, the nonappearance coverage defense applies to any claim received by a no-fault insurer, rather than being “determined on a bill by bill basis.” (PV Holding Corp. v AB Quality Health Supply Corp., 189 AD3d 645, 646 [1st Dept 2020].) The insurer is required only to show that a request for an IME or examination under oath (EUO) is made within 15 days of receipt “of a medical provider claim (NF-3).” (Beckles, 188 AD3d at 61 [emphasis added]; see also Unitrin Advantage Ins. Co. v Dowd, 194 AD3d 507, 507 [1st Dept 2021] [holding that as long as an EUO was timely and properly requested of an assignee relative to a claim, the failure to appear for the EUO will “void[] the policy ab initio as to all claims” by the assignee].^[FN3] )

Third, defendants claim that Country-Wide’s motion fails because it has not shown when it made its initial IME request relative to receiving NF-3 claims from defendants, in particular. Again, that showing is not required. As the First Department held in 2020, if a no-fault insurer establishes that the eligible injured person failed twice to appear an IME scheduled within 15 days of receipt of an NF-3 bill, “summary judgment is properly awarded to the insurer with respect to further coverage obligations and reimbursement of outstanding medical bills with respect to all treating providers.” (Beckles, 188 AD3d at 621 [emphasis added].) This rule follows from the basic principle that medical-provider assignees stand in the shoes of their eligible-injured-person assignor. If an assignor’s claim is properly denied due to IME nonappearances, then the claims of all assignees are subject to denial, whether or not the IME was requested based on a given assignee’s requests for payment.

In addition to the legal arguments discussed above, defendants also raise the factual argument that Country-Wide has not properly authenticated the NF-3 forms on which Country-Wide relies to show the timeliness of its IME request. This court disagrees. Country-Wide has [*2]provided an affidavit from its no-fault supervisor that identifies several claims it has received from different providers, specifying the provider, the date received, the dates of service, and the amount of the bill. (NYSCEF No. 54 at ¶ 9.) Country-Wide has provided copies of those bills. (See NYSCEF No. 58.) And Country-Wide’s affirmation of counsel represents that the documents contained at NYSCEF No. 58 are copies of the bills that Country-Wide received. (NYSCEF No. 43 at ¶¶ 21-22.) These sworn representations, taken together, are sufficient.

Finally, defendants contend that Country-Wide’s summary-judgment motion is premature under CPLR 3212 (f) because discovery remains outstanding. This court is not persuaded. To be sure, in some circumstances it may be the case that an insurer’s early summary-judgment motion in a no-fault-coverage action is premature because it forecloses the provider defendants from obtaining discovery necessary to oppose the motion. (See Country-Wide Ins. Co. v Evans, 2022 NY Slip Op 33966[U], at *2 [Sup Ct, NY County Nov. 21, 2022] [denying insurer’s summary-judgment motion as premature].) But here, the record reflects that defendants served discovery requests on Country-Wide in November 2021 (simultaneous to their filing of the answer); and that within a week of service, defendants had not only received responses to those requests, but written back to Country-Wide objecting to them as incomplete. (See NYSCEF Nos. 19-20.) A year then elapsed before Country-Wide moved for summary judgment. (See NYSCEF No. 41 [notice of motion].) This court is not aware of any effort by defendants during that year to obtain additional discovery from Country-Wide—for example, through moving to compel, or simply requesting a discovery conference with the court. Given defendants’ ample opportunity to obtain discovery in these circumstances, Country-Wide’s summary-judgment motion is not premature.

Country-Wide’s default-judgment motion against the defaulting defendants (mot seq 001) is granted without opposition. The branch of Country-Wide’s motion seeking summary judgment against defendant Jamaica Hospital Medical Center Diagnostic and Treatment Center Corp. (mot seq 002) is granted without opposition. The branch of Country-Wide’s motion seeking summary judgment against the remaining defendants (mot seq 002) is granted.

Settle Order.

Footnotes

Footnote 1:All defendants opposing summary judgment are represented by the same counsel (the Rybak Firm, PLLC) and have filed one set of opposition papers.

Footnote 2:Country-Wide has not requested sanctions under 22 NYCRR 130-1.1. But this court is troubled by the extent to which defendants’ counsel repeatedly make the same rejected arguments in no-fault-coverage litigation, seemingly without regard to whether those arguments have any merit in existing law or are reasonable arguments for a change in that law. This is the second time in two years that this court has felt obliged to take the time to walk through why counsel’s arguments are (still) foreclosed by binding precedent. (See Country-Wide Ins. Co. v Ware, 2021 NY Slip Op 50506[U], at *2-3 [Sup Ct, NY County May 28, 2021].) The court hopes that a third such decision will not be required in the future.

Footnote 3:The First Department’s decision in Dowd reversed a decision of the undersigned on which defendants rely. (See NYSCEF No. 60 at ¶ 25, citing 2020 NY Slip Op 50594[U] [Sup Ct, NY County May 21, 2020].) Defendants do not mention that reversal.

Index No. 159039/2021

Law Office of Daniel J. Tucker, Brooklyn, NY (Megan Harris of counsel), for plaintiff.

Law Offices of Dominick W. Lavelle, Locust Valley, NY (Emily K. Lavelle of counsel), for defendant Shawarbi Graves.

No appearances for remaining defendants.

In this no-fault-insurance-coverage action, plaintiff, American Transit Insurance Company, moves for default judgment against the eligible injured person, defendant Shawarbi Graves, and a number of medical-provider assignees of defendant Graves. Plaintiff’s motion is denied as to defendants Graves, Dr. Ronald P. Mazza, Nassau Health Care Corp., and Nassau University Medical Center; and granted as to [*2]defendants Hector Melgar, PT P.C., Orthopro, Services, Inc., Prompt Medical Spine Care, PLLC, and Stand-Up MRI of Carle Place, P.C.^[FN1]

To obtain default judgment under CPLR 3215, a plaintiff must establish proper service on the defendant, the defendant’s default, and the facts constituting plaintiff’s claims. American Transit cannot show proper service on Graves, Mazza, Nassau Health Care, or Nassau University Medical Center.

American Transit commenced this action on October 1, 2021. (NYSCEF No. 1.) American Transit therefore was required to serve defendants within 120 days from that day. (See CPLR 306-b.) The 120th day of the period, January 29, 2022, was a Saturday, making American Transit’s deadline January 31. (See General Construction Law § 25-a.) But American Transit’s affidavits of service reflect that it did not serve Mazza, Nassau Health Care, and Nassau University Medical Center until February 4, 2022. (See NYSCEF No. 4 at 3, 5, 7 [affidavits of service].) And American Transit did not serve Graves until February 22, 2022.^[FN2] (NYSCEF No. 4 at 1.)

The length of these delays in service is not significant. But American Transit did not, then or later, seek additional time to serve these four defendants. Nor do American Transit’s papers on the current motion address this issue. (See NYSCEF No. 11 [affirmation of counsel].) This court may not sua sponte dismiss American Transit’s claim against these four defendants for untimely service (Daniels v King Chicken & Stuff, Inc., 35 AD3d 345, 345 [2d Dept 2006]); but absent proper service, no basis exists to grant default judgment against them, either.^[FN3]

The other defendants (Melgar, Orthopro, Prompt Medical, and Stand-Up MRI), were each timely served in December 2021. (See NYSCEF No. 3.) None of these defendants have answered or sought additional time to answer. And American Transit has provided the facts constituting its claims against these defendants. American Transit’s motion papers establish for default-judgment purposes that it timely requested and scheduled an independent medical examination, as required by 11 NYCRR 65-3.5; and that Graves twice failed without good cause to appear for the duly scheduled examinations. (See Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [1st Dept 2011].)

Accordingly, it is

ORDERED that the branch of American Transit’s motion seeking default judgment under CPLR 3215 against Melgar, Orthopro, Prompt Medical, and Stand-Up MRI is granted without opposition, and American Transit is directed to settle order with respect to judgment against those defendants; and it is [*3]further

ORDERED that the branch of American Transit’s motion seeking default judgment under CPLR 3215 against Graves, Mazza, Nassau Health Care, and Nassau University Medical Center is denied; and it is further

ORDERED that if American Transit does not bring a renewed motion for default judgment against defendants Mazza, Nassau Health Care, and Nassau University Medical Center within 30 days of entry of this order, the action will be dismissed as against those defendants.

Footnotes

Footnote 1:Plaintiff settled its claims against the remaining defendant, Advanced Orthopaedics, P.L.LC. (NYSCEF No. 29), and does not seek relief against it on this motion.

Footnote 2:American Transit served Graves by leave-and-mail under CPLR 308 (2), on February 19, 2022, and February 22, 2022, respectively. (See NYSCEF No. 4 at 1.)

Footnote 3:In any event, American Transit has not properly established that Graves defaulted. Given leave-and-mail service, Graves’s time to appear and respond expired 40 days from the filing of the affidavit of service, which occurred here on June 15, 2022. (See NYSCEF No. 4; CPLR 308 [2]; CPLR 320 [a].) Graves’s deadline to appear and respond, therefore, was July 25, 2022. Graves filed an answer on July 26, 2022. (NYSCEF No. 8.) Although that answer was one day late, American Transit did not serve a notice of rejection; nor separately argue in its default-judgment motion—filed on August 7, 2022—that Graves’s answer was late. As a result, American Transit waived Graves’s one-day default. (See U.S. Bank N.A. v Lopez, 192 AD3d 849, 850 [2d Dept 2021].) For that matter, even absent waiver, this court would be inclined to grant Graves a retroactive one-day enlargement of time under CPLR 2004, were that enlargement requested.

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, December 9, 2022

APPEARANCES OF COUNSEL

Hollander Legal Group, P.C. (Allan S. Hollander and Jennifer B. Ettenger of counsel) for appellant.

Kopelevich & Feldsherova, P.C. (David Landfair of counsel) for respondent.

Ordered that the order, insofar as appealed from, is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant appeals from so much of an order of the Civil Court as denied defendant’s motion which had sought summary judgment dismissing the complaint on the ground that plaintiff’s assignor had failed to appear for duly scheduled examinations under oath (EUOs).

Contrary to defendant’s contention on appeal, defendant’s motion failed to establish that defendant had timely denied plaintiff’s claims after plaintiff’s assignor failed to appear at both an initial and a follow-up EUO (see Island Life Chiropractic Pain Care, PLLC v 21st Century Ins. Co., 74 Misc 3d 17 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021]; Quality Health Supply Corp. v Nationwide Ins., 69 Misc 3d 133[A], 2020 NY Slip Op 51226[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]). Upon receipt of the claim forms at issue on March 18, [*2]2018, the first EUO was scheduled, by letter sent to assignor’s counsel on March 26, 2018, for April 9, 2018. Neither the assignor nor her counsel appeared on April 9, 2018. On April 12, 2018, defendant sent a letter scheduling the “final date” for the EUO for May 8, 2018. Neither the assignor nor her counsel appeared on May 8, 2018. On May 10, 2018, defendant sent a letter scheduling an EUO for June 6, 2018. The assignor did not appear, but apparently on that day, defendant received a call from the assignor’s counsel, asking for the EUO to be scheduled for June 13, 2018. On June 7, 2018, defendant sent a letter scheduling an EUO for June 13, 2018. On June{**77 Misc 3d at 17} 13, 2018, the assignor again did not appear. For each of these four scheduled dates, defendant’s counsel put a statement on the record documenting the nonappearance. On June 23, 2018, defendant issued a denial of the relevant claims, which denial states, “The claimant failed to attend an [EUO] scheduled on 4/9/18, 5/8/18, 6/6/18 and 6/13/18, which is a breach of the above policy condition . . . .” Defendant argues on appeal that this denial was timely because it was issued within 30 days of the June 13, 2018 failure to appear.

A no-fault claim must be paid or denied “within 30 calendar days after the insurer receives proof of claim” (11 NYCRR 65-3.8 [a] [1]; see e.g. New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512 [2006]), which period may be tolled by timely and proper requests for verification, including an EUO request. Here, defendant properly commenced a toll of its time to pay or deny these claims by sending an EUO scheduling letter within 15 business days of its receipt of the claim forms (see 11 NYCRR 65-3.5 [b]).^[FN*] Defendant also properly continued the toll by sending a follow-up letter within 10 days of the April 9, 2018 failure to appear, giving the assignor a second opportunity to provide the requested EUO on May 8, 2018 (see 11 NYCRR 65-3.6 [b]). The assignor did not appear on May 8, 2018. As we have held before,

“[w]here, as here, no other verification request is outstanding, the 30-day period for an insurer to pay or deny a claim (see 11 NYCRR 65-3.8 [a] [1]) based upon a failure to appear for an EUO begins to run on the date of the second EUO nonappearance, when an insurer is permitted to conclude that there was a failure to comply with a condition precedent to coverage” (Quality Health Supply Corp. v Nationwide Ins., 69 Misc 3d 133[A], 2020 NY Slip Op 51226[U], *1-2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020] [citation omitted][*3][Quality]).

In view of the foregoing, once the assignor failed to appear on{**77 Misc 3d at 18} May 8, 2018, defendant’s 30-day time period to pay or deny the claims at issue began to run, making defendant’s deadline to pay or deny those claims June 7, 2018.

In spite of the rule set forth in Quality, defendant argues that its June 23, 2018 denial was timely. Defendant notes that, under the no-fault regulations, insurers are not to treat their insureds in an adversarial fashion (see 11 NYCRR 65-3.2 [b]). Defendant asserts that it was acting in good faith in scheduling a third EUO due to confusion as to the date of the first EUO and that the fourth EUO was scheduled at the request of the assignor’s counsel. Thus, defendant contends, the facts herein are distinguishable from Quality. In any event, defendant argues, it should not be limited to offering a claimant only two opportunities to appear for an EUO.

While we agree that there is nothing in the no-fault regulations preventing an insurer from offering a claimant more than two opportunities to appear for an EUO, that issue is distinct from whether an insurer has properly continued a toll of its time to pay or deny a particular claim (see 11 NYCRR 65-3.6 [b]). For example, had the assignor appeared on June 6, 2018, the third scheduled date, or June 13, 2018, the fourth scheduled date, defendant could have properly conducted the EUO. However, the toll of defendant’s time to pay or deny the claims at issue ended on May 8, 2018, when the assignor failed to appear for the second scheduled EUO, and any denial based upon a precludable defense—like the defense that the assignor failed to appear for duly scheduled EUOs—would have had to have been issued by June 7, 2018, in order to be timely.

Neither the May 10, 2018 letter scheduling the EUO for June 6, 2018, nor the June 7, 2018 letter scheduling the EUO for June 13, 2018, continued the toll because the no-fault regulations only contemplate one follow-up request for verification (see 11 NYCRR 65-3.6 [b]) and that follow-up request was made on April 12, 2018, in a letter that scheduled a “final date” for the EUO for May 8, 2018. Once the assignor’s second and “final” opportunity to appear for an EUO was scheduled for May 8, 2018, to further toll defendant’s time to pay or deny the claims past June 7, 2018, the parties could have rescheduled that examination for a later date (see Progressive Health Chiropractic, P.C. v American Tr. Ins. Co., 55 Misc 3d 142[A], 2017 NY Slip Op 50603[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2017]; Five Boro Psychological Servs., P.C. v Utica Mut. Ins. Co., 41 Misc 3d 140[A], 2013 NY Slip Op 52005[U] [App{**77 Misc 3d at 19} Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]; see also Nationwide Affinity Ins. Co. of Am. v George, 183 AD3d 755 [2020]). However, rather than claiming that there was a rescheduling of a scheduled EUO that would have continued the toll past June 7, 2018, defendant clearly treated each of the four scheduled EUOs as a nonappearance, choosing to deny the claim after the fourth one. The no-fault regulations do not permit an insurer to indefinitely extend the toll to pay or deny a claim beyond a second nonappearance by scheduling successive additional EUOs and then arbitrarily choosing when to end its toll.

As defendant has not demonstrated that its June 23, 2018 denial was timely, it has not established that it is not precluded from raising the assignor’s nonappearance at duly scheduled EUOs as a defense (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2009]). [*4]Thus, its motion for summary judgment dismissing the complaint was properly denied.

Accordingly, the order, insofar as appealed from, is affirmed.

Aliotta, P.J., Weston and Buggs, JJ., concur.

Footnotes

Footnote *:Indeed, here defendant had initially sent a letter on March 12, 2018, prior to receiving the claims at issue, which letter scheduled an EUO for April 8, 2018. Upon realizing that April 8, 2018, was a Sunday, defendant sent the March 26, 2018 letter changing the date of the EUO to April 9, 2018. It is noted that the March 12, 2018 pre-claim EUO scheduling letter was also sufficient to commence a toll for the bills subsequently received on March 18, 2018 (see ARCO Med. N.Y., P.C. v Lancer Ins. Co., 34 Misc 3d 134[A], 2011 NY Slip Op 52382[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]).

Index No. 151954/2022

Rivkin Radler LLP, Uniondale, NY (Vincent J. Pontrello of counsel), for plaintiffs.

No appearance for defendant.

In this action, plaintiffs seek a declaratory judgment relating to no-fault insurance coverage. Unlike the typical no-fault declaratory-judgment action, plaintiffs do not seek relief against a range of medical providers who have each claimed benefits for treatment provided following a particular covered automobile collision. Instead, plaintiffs have brought this action against one provider, addressing benefits claims for treatment provided following dozens of collisions. (See NYSCEF No. 1 at ｶ 1 [verified complaint]; NYSCEF No. 2 [listing claims].)

Plaintiffs allege that they denied each of these claims because defendant failed in each instance to appear for a properly requested examination under oath (EUO). (NYSCEF No. 1 at ｶｶ 26-32.) They allege that these EUOs were aimed at ascertaining whether defendant is ineligible to collect no-fault benefits under 11 NYCRR 65-3.16 (a) (12) due to, among other things, being controlled by nonphysicians in willful violation of New York law. (Id. at ｶｶ 23-24; see Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 33 NY3d 389, 403-405 [2019] [*2][discussing this ground for denying no-fault claims].)

Plaintiffs now move without opposition for default judgment under CPLR 3215. The motion is denied.

DISCUSSION

Plaintiffs’ motion papers establish that defendant was properly served; and defendant has not appeared. The question is thus whether plaintiffs’ verified complaint, standing alone, provides proof of the facts constituting plaintiff’s claim. (See CPLR 3215 [f].) It does not.

A plaintiff denying a provider’s claim for no-fault benefits based on asserted failures to appear for an EUO must demonstrate that the EUO was timely and properly requested. (See Liberty Mut. Ins. Co. v Carranza, 2021 NY Slip Op 50284[U], at *1-2 [Sup Ct, NY County Apr. 7, 2021], citing American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) Plaintiffs have not satisfied these requirements.

Plaintiffs’ verified complaint alleges only that “[e]ach request was timely made,” that plaintiffs then “issued a timely denial on the prescribed denial on the prescribed NF-10 form,” and that these denials “were timely, proper, and consistent with the No-Fault Laws.” (NYSCEF No. 1 at ｶｶ 27, 31, 32.) Given the dozens of bills, EUO requests and follow-up requests, and denials involved (see NYSCEF No. 2 [list of claims]), these conclusory statements are insufficient. That is particularly true since plaintiffs have not submitted any evidence that the many EUO requests, follow-up requests, and denials in question were not simply generated by plaintiffs, but also correctly addressed and mailed to defendant. Plaintiffs do provide a lengthy, detailed chart of bills and EUO requests, organized by the underlying benefits claim. (See id.) That chart, however, omits the most important date for purposes of assessing timeliness—the date on which plaintiffs received the bills. (See id.; 11 NYCRR 65-3.5 [b] [requiring insurers to request EUO-based verification within 15 business days of receiving a provider bill].)

Additionally, the complaint alleges that defendant has “systematically failed and/or refused to appear for an EUO” on many occasions over the past year. (NYSCEF No. 1 at ｶ 29.) This allegation treats a failure to appear and a refusal to appear as interchangeable. But that is not necessarily so. For example, a provider may properly condition its appearance at an EUO on receiving the insurer’s specific objective justification for requesting the EUO under 11 NYCRR 65-3.5 (e). (See Kemper Independence Ins. Co. v Accurate Monitoring, LLC, 73 Misc 3d 585, 586-587, 589 [Sup Ct, NY County 2021].) Plaintiffs’ motion papers do not address whether defendant ever made that kind of request—or, if it did, what the response was.^[FN1] Similarly, [*3]although plaintiffs allege that each EUO request to defendant “endeavored to select places and times for the EUO that would be convenient to [defendant] and advised that a change of time, date, manner and location would be considered if requested” (NYSCEF No. 1 at ｶ 28), plaintiffs do not say whether defendant ever did request a change of that type for logistical/convenience reasons, and, if so, how plaintiffs responded.

Moreover, plaintiffs have not indicated whether any of defendant’s claims for treatment—or other benefits claims arising out of the numerous collisions underlying defendant’s treatment bills—have given rise to other no-fault proceedings by or against plaintiffs. It would be somewhat curious, given the sheer number of insurance claims appearing in plaintiffs’ EUO-request chart, if this action were the very first time that litigation involving one of those claims has arisen—possible, but curious. And if this action were not the first time that one of the no-fault claims identified in the chart has led to litigation, plaintiffs’ declaratory-judgment claims here would be subject to an obvious claim-preclusion objection.

Claim preclusion, to be sure, is an affirmative defense. (See CPLR 3211 [a] [5].) Plaintiffs thus were not required to rule it out in their complaint. For the same reason, the absence of any allegation addressing claim-preclusion-related issues is not itself grounds to deny plaintiffs’ default-judgment motion. But that absence does underscore the comparative thinness of plaintiffs’ motion papers compared to the typical showing in a no-fault coverage action—particularly given the number of claims and bills involved and the amount of money at stake.

The difficulty in this action is that plaintiffs’ true grievance appears to be their conclusion that defendant is not providing legitimate medical services and is ineligible under 11 NYCRR 65-3.16 (a) (12) to receive no-fault benefits. But this action does not pursue and support that grievance through seeking a declaration that speaks directly to defendant’s putative lack of eligibility. Instead, plaintiffs are seeking, in effect, to achieve that same result by relying on many asserted EUO-nonappearances to obtain a declaratory judgment supporting en masse plaintiffs’ denials of defendant’s treatment bills.

Proceeding in this manner might be simpler and more efficient from plaintiffs’ perspective than bringing many individual declaratory judgment actions, each premised on a particular failure of defendant to appear for an EUO. As reflected in the discussion above, though, the flip side of plaintiffs’ efficiency gains is that this court loses the information and documentation it needs to properly evaluate plaintiffs’ claims about defendant’s repeated EUO-nonappearances. (Cf. Travelers Indemnity Co. v Parisien, 2020 NY Slip Op 51561[U], at *3-4 [Sup Ct, Suffolk County Dec. 29, 2020] [expressing concern in a no-fault declaratory-judgment action about 13 different sets of treatment bills that “[u]ltimately, in the guise of convenience, plaintiffs are, in effect, seeking to circumvent the statutorily prescribed procedures that govern disputes between no-fault insurers and no-fault health services providers over the validity of reimbursement claims and the health services provider’s eligibility”].) In these circumstances, on this record, this court is loath to grant plaintiffs the default judgment that they seek.

At the same time, the court does not rule out the possibility that plaintiffs could still provide the details (and supporting documents) about their EUO requests needed to show that defendant repeatedly failed without justification to appear for timely and properly scheduled EUOs. The court thus sees no basis at this time to dismiss plaintiffs’ action altogether.

Accordingly, it is

ORDERED that plaintiffs’ motion for default judgment under CPLR 3215 is denied [*4]without prejudice; and it is further

ORDERED that if plaintiffs do not bring a renewed default-judgment motion within 60 days of entry of this order, the action will be administratively dismissed; and it is further

ORDERED that plaintiffs serve a copy of this order with notice of its entry on defendant by certified mail, return receipt requested, directed to defendant’s last-known address.

Footnotes

Footnote 1: Although the issue is not squarely presented by the current motion, plaintiff’s complaint does not provide that justification either. It alleges only that “various facts and circumstances . . . called into question” defendant’s eligibility to collect no-fault benefits and the legitimacy of defendant’s treatment and billing, without identifying any of those facts and circumstances. (NYSCEF No. 1 at 24.) That would not be sufficient under 11 NYCRR 65-3.5 (e), were the issue to be contested. (See Kemper Independence, 73 Misc 3d at 589 n 4; Country-Wide Ins. Co. v Delacruz, 71 Misc 3d 247, 251 [Sup Ct, NY County 2021], affd 205 AD3d 473, 473-474 [1st Dept 2022].)

Index No. 654090/2020

Correia, Conway & Stiefeld, White Plains, NY (Richard Ahrens of counsel), for plaintiff.

Law Office of Gregory A. Goodman, P.C., Jericho, NY (Gregory Goodman of counsel), for defendant NYC Axis Chiropractic PC.

Gerald Lebovits, J.

In this no-fault insurance coverage action, plaintiffs Liberty Mutual Insurance Company and American States Insurance Company (together, Liberty Mutual) move for default judgment against the eligible injured person, defendant Edwine Brutus; and against non-appearing defendants I Am Supplies Inc., MZY Acupuncture PC, Nexray Medical Imaging PC, Sedation Vacation Perioperative Medicine PLLC and Way to Rehab PT PC, all medical-provider assignees of Brutus.

Appearing defendant NYC Axis Chiropractic PC cross-moves for summary judgment against Liberty Mutual. NYC Axis also cross-moves for sanctions, on the ground that Liberty Mutual erroneously named it in the initial default judgment motion and then failed to withdraw the motion quickly enough as against NYC Axis.

Liberty Mutual’s unopposed motion for default judgment is granted. The branch of NYC Axis’s cross-motion seeking sanctions is denied. The branch of NYC Axis’s cross-motion for summary judgment is granted in part and denied in part.

DISCUSSION

I. Liberty Mutual’s Default-Judgment Motion

To obtain default judgment under CPLR 3215, a movant must establish proper service on the subjects of the motion, defaults by those parties, and the facts constituting movant’s claim. Here, Liberty Mutual has established proper service and defaults. Additionally, Liberty Mutual has established, through affidavits and supporting documentation, the facts constituting its claim.

In particular, Liberty Mutual has shown that it timely asked Brutus to appear for an examination under oath (EUO) about whether he had been truthful and accurate on his application for insurance (see NYSCEF No. 24 [EUO scheduling letters]). Liberty Mutual has also demonstrated that Brutus appeared for his EUO but failed to respond fully to timely served post-EUO document requests. (See NYSCEF No. 27 [EUO transcript]; NYSCEF No. 28 [post-[*2]EUO document requests].) Liberty Mutual has provided an affidavit from one of its investigators representing that her investigation, coupled with Brutus’s EUO testimony, indicated he lived at a different address from the one he had used on his application. (NYSCEF No. 23.) And Liberty Mutual has provided an affidavit from one of its underwriters representing that had Brutus provided his true home address on the insurance application, the premium would have been almost double what he was charged. (NYSCEF No. 29.)

These facts, taken together, suffice to establish a prima facie case that Brutus committed a material misrepresentation in applying for insurance from Liberty Mutual. (See Starr Indem. & Liab. Co. v Monte Carlo, LLC, 190 AD3d 441, 441-442 [1st Dept 2021] [“A misrepresentation in an insurance application is material . . . if, had the true facts been known, either the insurer would not have issued the policy or would have charged a higher premium.”]; cf. Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999] [noting that the “affidavit of facts” supporting a default-judgment motion for default judgment must “establish a prima facie case” for relief].) This material misrepresentation, in turn, is a proper basis to deny claims for benefits brought by Brutus or his assignees. (See Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293, 298-299 [2d Dept 2000].)

Liberty Mutual’s motion for default judgment is granted.

II. NYC Axis’s Cross-Motion

A. The Branch of the Cross-Motion Seeking Sanctions

Liberty Mutual’s default-judgment motion initially sought judgment against NYC Axis, in addition to the other defendants named in the motion. (See NYSCEF No. 14 at 2 [notice of motion].) The attorney affirmation submitted in support of the motion stated that NYC Axis was in default because it did not timely answer. (See NYSCEF No. 15 at 4 ¶ 18.) But although NYC Axis’s answer was untimely, Liberty Mutual did not reject that answer when it was filed, thereby waiving Liberty Mutual’s right to act on the default. (See U.S. Bank N.A. v Lopez, 192 AD3d 849, 850 [2d Dept 2021].)

Liberty Mutual filed its motion on Friday, December 3, 2021. (NYSCEF No. 14.) The motion was returnable on January 4, 2022; it required under CPLR 2214 (b) that opposition papers be filed by December 28, 2021. (Id. at 1-2.) On Saturday, December 4, NYC Axis filed a letter to demand that Liberty Mutual withdraw its motion as against NYC Axis within five days or face a sanctions motion. (NYSCEF No. 37.) On Thursday, December 9, NYC Axis filed this cross-motion for summary judgment under CPLR 3212 and for sanctions under 22 NYCRR 130-1.1. (NYSCEF No. 39 [notice of cross-motion].) On December 16—less than two weeks after the motion was filed—Liberty Mutual withdrew the motion as against NYC Axis, conceding that seeking judgment against NYC Axis was an error. (NYSCEF No. 48.)

NYC Axis argues at length on reply that it should be awarded sanctions against Liberty [*3]Mutual anyway. (See NYSCEF No. 53 at 3-8.) This argument is groundless. Liberty Mutual did not, as NYC Axis asserts, act with “obstinacy” in “refus[ing] to withdraw its motion” (id. at ¶¶ 19, 25)—it merely did not withdraw the motion as rapidly as NYC Axis would have preferred. Additionally, given the timing, NYC Axis was not, as it suggests, “compelled . . . to seek judicial intervention to protect [its] client’s rights” against Liberty Mutual’s motion (id. at ¶ 14). Instead, NYC Axis chose to resort to motion practice only four business days after Liberty Mutual filed its default-judgment motion, and nearly three weeks before NYC Axis’s opposition papers would have been due. No basis for § 130-1.1 sanctions against Liberty Mutual exists on these facts.

NYC Axis also cross-moves for summary judgment on the merits, contending that it is entitled to payment on 10 bills for treatment (plus attorney fees) because Liberty Mutual did not timely deny them, and because the assertedly untimely denials were improper in any event.

The cross-motion is granted in part and denied in part. This court concludes that Liberty Mutual was required to pay or deny these 10 bills within 30 days of receiving the necessary verification. (See subsection II.B.1, infra.) Eight of the 10 bills were undisputedly denied. With respect to those eight bills, NYC Axis has not shown as a matter of law that the bills were untimely denied, or that the denials were substantively improper (See paragraph II.B.2.a, infra). With respect to the remaining two bills, NYC Axis has shown that Liberty Mutual failed to timely deny one of them, for $26.41. (See paragraph II.B.2.b, infra.) NYC Axis is thus entitled to summary judgment only on that one bill. It is not entitled to attorney fees as the prevailing party.

NYC Axis argues that it is entitled as a matter of law to payment on the treatment bills it submitted to Liberty Mutual because those bills were not denied (or paid) within 30 days after Liberty Mutual received proof of NYC Axis’s claim, as required by 11 NYCRR 65-3.8 (a) and (c). The first issue this court must address, therefore, is whether the timeliness requirements of § 65-3.8 governed Liberty Mutual’s denial of these bills to begin with.

A no-fault insurer “that fails to deny a claim within the 30—day period is generally precluded from asserting a defense against payment of the claim.” (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008] [internal quotation marks omitted].) A narrow but important exception to this preclusion rule exists where the ground for denying the claim (or the defense to a later claim for payment) is a lack of coverage: If “the insurance policy does not contemplate coverage in the first instance . . . requiring payment of a claim upon failure [*4]to timely disclaim” would improperly “create coverage where it never existed.”^[FN1] (Id. [internal quotation marks omitted].)

The ground for Liberty Mutual’s denial of NYC Axis’s claims is that Brutus, NYC Axis’s assignor, made material misrepresentations in his application for no-fault insurance. Such material misrepresentations ordinarily will “void[] the policy ab initio,” thereby retroactively eliminating coverage altogether. (Starr Indem., 190 AD3d at 442.) A different rule applies, however, in the specific context of automotive insurance, including no-fault.

In that context, Vehicle and Traffic Law (VTL) § 313 is understood to “supplant an insurance carrier’s common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation,” mandating instead “that the cancellation of a contract pursuant to its provisions may only be effected prospectively.” (Liberty Mut. Ins. Co. v McClellan, 127 AD2d 767, 769 [2d Dept 1987].) This rule derives from the principle that “compulsory automobile liability insurance is not the concern solely of the insured and . . . insurer,” but “exists also for the protection of the public.” (Id. at 769-770.) Preventing an auto insurer from retroactively canceling a policy “protects innocent third parties who may be injured due to the insured’s negligence” and might otherwise struggle to obtain compensation for their injuries—contrary to the core purpose of compulsory auto insurance. (Kaplun, 274 AD2d at 298.)

Courts applying this rule against rescission have stressed that the rule does not leave an auto insurer “without means of redress” should it conclude that a policy was fraudulently obtained. (Id.) An insurer may argue that “the insured’s misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured.” (Id. at 298-299.) For that matter, the insurer may raise the same argument with respect to a claim under the policy by an insured’s medical provider assignees, which stand in the insured’s shoes and “deal[] with the assignor-insured at [their] peril in accepting an assignment of the insured’s no-fault benefits.” (AB Med. Servs. PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8, 11 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists]; accord Central Radiology Services v. Commerce Ins Co., 2011 NY Slip Op 50948[U], at *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists May 23, 2011] [holding that when the insurer established that the insured-assignor was ineligible for coverage for having misrepresented his state of residence in obtaining insurance, the provider-assignee, standing in the insured’s shoes, could not recover from the insurer either].)

That an insurer may raise the insured’s material misrepresentations as a ground for denying claims by the insured or the insured’s assignees presents the question whether the insurer may do so outside 30-day regulatory window for paying or denying the claims set by 11 NYCRR 65-3.8. This is permissible only if denying a claim on material-misrepresentation grounds—but without rescinding the policy outright—is, in substance, raising a lack-of-coverage defense to the claim, rendering untimely-denial preclusion inapplicable.

There are strong arguments that a material-misrepresentations denial should be treated as being based on a lack-of-coverage defense. In raising the insured’s material misrepresentations as a ground for denial, the insurer is contending that the insured (or its assignee) is claiming the benefit of coverage that the insured should not have at the price it paid. This is the same basic contention that underlies an insurer’s argument that it should be permitted to vitiate coverage by rescinding a policy as fraudulently obtained. True, particular policy considerations in the automotive-insurance context foreclose outright rescission. Those considerations, though, are particular to the interests of third parties (and the public at large); they do not affect the relationship between insurer and insured, nor the arguments against denying the insured the benefit of a fraudulently obtained policy.

Put differently, a material-misrepresentation defense is not based on a breach of a policy condition, does not challenge the validity of the claimed charges, and does not call into doubt the right of an assignee to bring the claim. Thus, without speaking in coverage-related terms, it is difficult to explain why the material-misrepresentation defense should defeat a claim for a non-excluded loss within the scope of the policy. (See Fair Price Med. Supply, 10 NY3d at 565 [explaining that the preclusion analysis “entails a judgment” whether “the defense [is] more like a ‘normal’ exception from coverage (e.g., a policy exclusion), or a lack of coverage in the first instance (i.e., a defense ‘implicating a coverage matter'”] [alteration omitted].^[FN2] )

Nonetheless, the Appellate Division, Second Department, has held, without elaborating, that an insurer is precluded from denying a claim on the basis of a material misrepresentation if the denial does not comply with the time limits set by 11 NYCRR 65-3.8. (See Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603, 604-605 [2d Dept 2011].) Liberty Mutual has provided no contrary precedents of the Appellate Division, First Department, and this court’s research has not uncovered any. This court is therefore bound by the Second Department’s decision in GMAC Insurance Company Online. (See D’Alessandro v Carro, 123 AD3d 1, 6 [1st Dept 2014].) The timeliness requirements of § 65-3.8 apply to Liberty Mutual’s denial here of [*5]NYC Axis’s bills.

Because the pay-or-deny deadlines of 11 NYCRR 65-3.8 apply here, this court must go on to determine whether Liberty Mutual met that deadline with respect to the 10 treatment bills at issue on NYC Axis’s cross-motion for summary judgment.

It is undisputed that eight of the 10 bills were denied by Liberty Mutual. NYC Axis argues that those eight denials were untimely. Liberty Mutual contends that the denials were timely, taking into account the tolling effect of Liberty Mutual’s verification requests to Brutus. This court agrees with Liberty Mutual about these bills. NYC Axis also argues that Liberty Mutual has not provided sufficient support for its proffered material-misrepresentation ground for denying the first eight bills. This court finds NYC Axis’s argument unpersuasive.

As for the two remaining bills, NYC Axis contends that those bills were never denied at all. Liberty Mutual argues both that they were denied, and that the denials were timely. This court agrees with Liberty Mutual about one of the bills, and with NYC Axis about the other.

Title 11 NYCRR 65-3.8 (a) (1) provides that “[n]o-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to [11 NYCRR] 65-3.5.” Section 65-3.8 (c) provides that “[w]ithin 30 calendar days after proof of claim is received, the insurer shall either pay or deny the claim in whole or in part.” Timely verification requests may therefore toll the insurer’s deadline to pay or deny a treatment bill submitted by a medical-provider-assignee. (See Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903, 903-904 [2d Dept 2007].) For purposes of that deadline, a denial is deemed to have been made when mailed by the insurer, not when received by the provider. (See Westchester Med. Ctr. v A Cent. Ins. Co., 114 AD3d 937, 937 [2d Dept 2014].)

Liberty Mutual first asked Brutus for garaging-related verification information in the beginning of August 2019, and its verification efforts continued through October 2019—thereby encompassing the period in which NYC Axis submitted the bills at issue. (See NYSCEF No. 24 at 1 [EUO scheduling letters]; NYSCEF No. 57 at 1 [verification correspondence from Brutus to Liberty Mutual]; NYSCEF No. 40 at 11 [NYC Axis affirmation in support of cross-motion, charting all the relevant dates for each bill at issue.)

As a result, the question is whether Liberty Mutual’s verification requests to Party A (injured-assignor Brutus) between August and October 2019 tolled the time for it to pay or deny the bills submitted by Party B (provider-assignee NYC Axis) during that period. NYC Axis [*6]argues that verification requests to A may not toll the time to pay or deny B’s claims (see NYSCEF No. 40 at ¶¶ 38, 47); Liberty Mutual argues that they may do so (see NYSCEF No. 49 at ¶¶ 35-37). This court has not been provided with, and has not itself found, Appellate Division precedent discussing this particular question. Considering the matter for itself, this court agrees with Liberty Mutual.

Liberty Mutual’s verification requests to Brutus were aimed at uncovering whether he had materially misrepresented facts in his insurance application—a ground for denying Brutus’s claims that would apply equally to claims submitted by NYC Axis as Brutus’s assignee.^[FN3] (See Long Is. Radiology v Allstate Ins. Co., 36 AD3d 763, 765 [2d Dept 2007] [explaining that because an “assignee stands in the shoes of an assignor . . . and thus acquires no greater rights than its assignor,” a lack-of-medical-necessity defense to a claim that may be raised by the insurer against the assignor is also available against provider assignees] [internal quotation marks omitted]; accord American States Ins. Co. v Huff 119 AD3d 478, 479 [1st Dept 2014] [same, in context of EUO-nonappearance defense].) Because Liberty Mutual’s verification requests to Brutus also related to whether Liberty Mutual could (or could not) deny NYC Axis’s claims, the requests tolled Liberty Mutual’s deadline to respond to NYC Axis’s claims under § 65-3.8. The alternative rule, under which Liberty Mutual would have to pay NYC Axis’s claims even as Liberty Mutual was formally seeking information that might support denial of those claims, makes little sense.

NYC Axis also argues that Liberty Mutuals’ pay-or-deny deadline for NYC Axis’s bills was not tolled by letters Liberty Mutual sent to NYC Axis advising that its decisions on those bills would be delayed due to the need to verify the claims. (See NYSCEF No. 40 at ¶¶ 36-39.) True, but irrelevant. The letters advising of Liberty Mutual’s verification efforts may not have tolled the time to pay or deny—but the verification efforts themselves did under § 65-3.8.

Liberty Mutual sent four verification requests to Brutus. The initial EUO request, sent on August 2, 2019, was made before Liberty Mutual received any bills for treatment, making it proper under Mapfre Ins. Co. of NY v Manoo (140 AD3d 468, 469 [1st Dept 2016]). (See NYSCEF No. 24 [EUO requests]; NYSCEF Nos. 25-26 [provider bills].) The EUO was adjourned, and a later EUO scheduled, by letter sent on August 13. (NYSCEF No. 24 at 12.) The EUO was held on September 5 (see NYSCEF No. 27 at 4 [EUO transcript]); and Liberty Mutual sent Brutus a post-EUO document request four days later on September 9. (See NYSCEF No. 28 at 1.) After Brutus failed to respond, Liberty Mutual sent a follow-up request within 40 calendar days of the initial document request, as required by 11 NYCRR 65-3.6 (b).

Liberty Mutual’s counsel has represented, in correspondence with the court (copied to all [*7]parties), that Liberty Mutual received Brutus’s response to the follow-up document request (dated October 23, 2019) on November 1, 2019. (NYSCEF No. 57 [document response]; NYSCEF No. 58 [representation about timing of receipt].) Liberty Mutual’s motion papers indicate (albeit without saying expressly) that it did not then request further supplementation from Brutus of that document response. (See NYSCEF No. 15 at ¶ 29 [affirmation in support of default judgment].) As a result, under 11 NYCRR 65-3.8 (a) (1) and (c), Liberty Mutual had 30 calendar days from November 1 to pay or deny NYC Axis’s claims. The 30th day of that period fell on a Sunday, so Liberty Mutual’s deadline to mail the denials was December 2, 2019. (See General Construction Law § 25-a.)

Liberty Mutual has not provided denial-by-denial proof of when it mailed each denial to NYC Axis. But as NYC Axis itself acknowledges, the denial letters are dated either November 21, 2019, or November 22, 2019—at least 10 days prior to the denial deadline. (See NYSCEF No. 40 at 11.) Liberty Mutual has also submitted a detailed affidavit of one of its claims managers, representing that Liberty Mutual’s mailing procedures ensure that claim-denial letters are mailed out no later than the next business day after the date on the letter. (See NYSCEF No. 33 at ¶¶ 7, 11-13.) If the denial letters here were mailed consistent with this procedure—and NYC Axis has not provided reason to believe otherwise—the denials were timely. At a minimum, on this record NYC Axis has not shown as a matter of law that the denials were untimely.

In the alternative, NYC Axis asserts that Liberty Mutual has not adequately supported the material-misrepresentation justification on which these denials relied. (See NYSCEF No. 40 at 13-14.) This assertion misconstrues the governing legal standard. NYC Axis is correct that Liberty Mutual’s showing (affidavits from an underwriter and an investigator) would be insufficient to establish materiality as a matter of law on a motion by Liberty Mutual for summary judgment. But Liberty Mutual has not moved for summary judgment—NYC Axis has. Liberty Mutual’s evidence is sufficient at least to raise a dispute of fact about materiality. (See Carpinone v Mutual of Omaha Ins. Co., 265 AD2d 752, 754 [3d Dept 1999] [explaining that the “materiality of an applicant’s misrepresentation is ordinarily a factual question unless the insurer proffers clear and substantially uncontradicted evidence concerning materiality”].)

The remaining two bills pertain to treatment rendered on July 8, 2019, and August 13, 2019. (See id.) NYC Axis asserts that Liberty Mutual never denied two bills. (See id.) Liberty Mutual contends that it sent denials of the bills (see NYSCEF No. 49 at ¶ 31), providing a supplemental affidavit from its claims manager to that effect. (See NYSCEF No. 52 at ¶¶ 8-10.)

A denial of the bill for the July 8 treatment does appear in the record, explaining that the bill was denied because a peer review concluded that the services billed for were not medically necessary. (See NYSCEF No. 30 at 266-275.) But this court has not found a denial of the bill for treatment on August 13 (or, for that matter, a delay letter pertaining to that bill) in Liberty Mutual’s voluminous motion papers. Therefore, NYC Axis is entitled to summary judgment [*8]solely with respect to the August 13 bill—a $26.41 invoice for a follow-up outpatient visit (NYSCEF No. 26 at 15-17).

NYC Axis contends that it should also be entitled to attorney fees incurred in defending this action. This court disagrees. To be sure, an insured that prevails in a declaratory-judgment coverage action brought against it by the insurer may recover attorney fees. (See U.S. Underwriters Ins. co. v City Club Hotel, LLC, 3 NY3d 592, 597-598 [2004].) And it is immaterial that NYC Axis is an assignee of the insured: As assignee NYC Axis stands in the shoes of the assignor.^[FN4] The court is not persuaded, though, that NYC Axis is, in fact, the prevailing party.

To be a prevailing party for attorney-fee purposes, one must “prevail on the central claims advanced, and receive substantial relief in consequence thereof.” (Sykes v RFD Third Ave. I Assoc., LLC, 39 AD3d 279, 279 [1st Dept 2007].) The dispute between Liberty Mutual and NYC Axis on this motion involves 10 bills. This court has concluded that NYC Axis is entitled to payment on only one of those 10—and for an amount, $26.41, that is a miniscule fraction of the total sum sought by NYC Axis. That is not substantial relief.

Accordingly, for the foregoing reasons it is

ORDERED that Liberty Mutual’s motion for default judgment against the nonappearing defendants named in the motion is granted, and Liberty Mutual is directed to settle order with respect to judgment against those defendants; and it is further

ORDERED that the branch of NYC Axis’s cross-motion seeking sanctions against Liberty Mutual is denied; and it is further

ORDERED that the branch of NYC Axis’s cross-motion seeking summary judgment on the question whether NYC Axis is entitled to payment on ten bills for treatment rendered to the alleged injured person, defendant Brutus, is granted only to the extent that this court declares that NYC Axis is entitled to payment from Liberty Mutual in the amount of $26.41 for treatment rendered to Brutus on August 13, 2019, and otherwise denied; and it is further

ORDERED that the branch of NYC Axis’s cross-motion seeking summary judgment on its claim for attorney fees arising from its defense of this action is denied.

Footnotes

Footnote 1:In the Appellate Division, First Department, this exception is most frequently invoked with respect to claim-denials based on the alleged injured person’s having failed twice to appear for examinations under oath (EUOs) or independent medical examinations (IMEs). (See e.g. Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [1st Dept 2011] [holding that an injured person’s “failure to appear for IMEs” properly requested “by the insurer . . . is a breach of a condition precedent to coverage under the no-fault policy, and therefore fits squarely within the [lack-of-coverage] exception to the preclusion doctrine”]; Allstate Ins. Co. v Pierre, 123 AD3d 618, 618 [1st Dept 2014] [same, with respect to EUOs].)

Footnote 2:Compare e.g. Bayshore Physical Therapy, 82 AD3d at 560 (holding that denial of a claim based on the injured person’s failure to appear for a properly requested IME is not subject to untimeliness preclusion because that failure breached a condition precedent to the injured person’s coverage under the policy), with Nationwide Affinity Ins. Co. of Am. v Jamaica Wellness Med., P.C., 167 AD3d 192, 196-197 (4th Dept 2018) (holding instead that denial of a claim for failure to appear at an IME is subject to untimeliness preclusion because that failure breached only a condition precedent to payment under the policy for a covered loss, not a condition precedent to the existence of coverage itself).

Footnote 3:This scenario thus differs from one in which the verification sought by an insurer from Provider-Assignee C (information going, for example, to the validity of C’s billing for treatments it provided to Injured-Assignor A) would not affect whether Provider-Assignee D was entitled to payment for different treatments that D provided to A. In that circumstance, the insurer’s verification requests to C would not toll the insurer’s time to pay or deny D’s bills.

Footnote 4:Because Brutus, the injured assignor in this case, is the insured under the underlying no-fault policy, this case is not controlled by Fiduciary Ins. Co. of Am. v Medical Diagnostic Servs., P.C. (150 AD3d 498, 498-499 [1st Dept 2017]) and Hertz Vehs., LLC v Cepeda (156 AD3d 440, 441 [1st Dept 2017]). In those cases, the injured assignors were merely passengers in an insured vehicle, rather than being the insureds themselves. As a result, the insurers there did not owe the injured assignors (or their medical-provider assignees) a duty to defend—or a corollary duty under City Club Hotel to pay attorney fees arising from an unsuccessful declaratory-judgment coverage action brought by the insurers. Not so here.

Decided on August 15, 2022

Supreme Court, New York County