[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, July 20, 2016

APPEARANCES OF COUNSEL

Nightingale Law, P.C., Glen Cove (Michael S. Nightingale of counsel), for appellant.

Law Offices of Melissa Betancourt, P.C., Brooklyn (Melissa Betancourt of counsel), for respondent.

Ordered that the order is reversed, with $30 costs, and defendant’s motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint, asserting that it had timely and properly denied plaintiff’s claim based on improper billing. The claim form, which had been submitted to defendant by plaintiff under her Social Security number, indicated that the services had been performed by her employee, Dr. Samuel Theagene. Plaintiff’s counsel described plaintiff as an “unincorporated solo practitioner,” conceded that plaintiff uses her own Social Security number when billing no-fault carriers, and contended that such use is proper even when billing for services of an employee. The Civil Court, in an order entered September 8, 2014, denied defendant’s motion, finding, among other things, that there were questions of fact regarding the relationship between plaintiff and the treating doctor. We reverse.

A billing provider seeking to recover no-fault benefits for services rendered to an assignor must provide, at the bottom of the claim form, a taxpayer identification number either in the form of a Social Security number or an employer identification number. Social Security numbers are used to identify individual persons, while employer identification numbers are used to identify employers (see 26 CFR 301.6109-1 [a] [1] [ii]). “An individual . . . who is an employer or who is engaged in a trade or business as a sole proprietor should use an employer identification number” (26 CFR 301.6109-1 [a] [1] [ii] [D]), since an employer identification number is required if the taxpayer “[p]ay[s] wages to one or more employees” (Internal Revenue Service Publication No. 334 [Tax Guide for Small Business], ch 1 [2015]). Thus, it is permissible for a billing provider operating{**54 Misc 3d at 45} as a sole proprietor to use his or her own Social Security number on the claim form if it is the billing provider who rendered the services in question. However, where, as here, a doctor bills for services rendered by a treating provider in that doctor’s employ, it is impermissible for the doctor to bill using his or her own Social Security number.

As defendant demonstrated that the claim form submitted by plaintiff was for services performed by plaintiff’s employee, that the claim form was submitted under plaintiff’s Social Security number, and that the denial of claim form based upon improper billing was mailed within 30 days of defendant’s receipt of the claim form, defendant established its entitlement to summary judgment.

Accordingly, the order is reversed and defendant’s motion for summary judgment dismissing the complaint is granted.

Elliot, J.P., Weston and Solomon, JJ., concur.

13672/13

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

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

Papers Submitted:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

11 NYCRR 65-1.1provides as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

Accordingly, it is hereby

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

This constitutes the Decision and Order of the Court.

All applications not specifically addressed are DENIED.

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

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, April 11, 2016

APPEARANCES OF COUNSEL

The Rybak Firm, PLLC, Brooklyn (Damin J. Toell of counsel), for appellant.

Conway, Farrell, Curtin & Kelly P.C., New York City (Jonathan T. Uejio of counsel), for respondent.

Ordered that the order is reversed, without costs, the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground of lack of insurance coverage is denied, and the matter is remitted to the Civil Court for a determination of the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground of lack of medical necessity for the services rendered.

In this action by a New York City provider to recover assigned first-party no-fault benefits for services rendered to its assignor, who had allegedly sustained injuries in a New York City motor vehicle accident on July 29, 2009, defendant^[FN*] moved for summary judgment dismissing the complaint on the{**51 Misc 3d at 72} grounds that no coverage existed and that there was a lack of medical necessity for the services rendered. In support of its motion, defendant argued, among other things, that the Civil Court failed to obtain personal jurisdiction over defendant; that a conflict-of-law analysis required the application of Michigan law; and that there was a lack of coverage for the vehicle involved in the accident, as a Michigan court had issued an order, entered on default, in a declaratory judgment action, declaring the policy to be invalid at its inception due to the rescission of the insurance policy based on fraud and/or misrepresentation by the insured in procuring the Michigan policy. By order entered April 2, 2014, the Civil Court granted defendant’s motion, implicitly finding that personal jurisdiction over defendant had been acquired and holding that Michigan law controlled, pursuant to which an insurer may rescind an [*2]insurance policy and declare it void at its inception despite the fact that the claimant is an innocent third party. This appeal by plaintiff ensued. It is noted that plaintiff raises no issue regarding the Civil Court’s determination that Michigan law controls.

[1] Despite defendant’s assertions that it does not write insurance policies or conduct business in New York, it is uncontroverted that defendant’s New York certificate of authority states that defendant is licensed to engage in specified insurance business in New York. Consequently, defendant was authorized to do business in New York State, and, pursuant to Insurance Law § 1212 (a), an insurer authorized to do business in the state must appoint the Superintendent of Insurance as its agent for service of process “in any proceeding against it on a contract delivered or issued for delivery, or on a cause of action arising, in this state” (emphasis added). Inasmuch as the cause of action in the case at bar arose in New York, we find that the service of process upon the Superintendent of Insurance was sufficient to acquire jurisdiction over defendant (see Insurance Law § 1212 [b]).

[2] Michigan law allows for the rescission of a motor vehicle insurance policy based on fraud or a material misrepresentation in the application for insurance (see Titan Ins. Co. v Hyten, 491 Mich 547, 817 NW2d 562 [2012]; Gagnon v Citizens Ins. Co., 2013 WL 331548, *6, 2013 Mich App LEXIS 178, *15-16 [Ct App, July 30, 2013, docket No. 301188], appeal denied 494 Mich 883, 834 NW2d 503 [2013]; Lake States Ins. Co. v Wilson, 231 Mich App 327, 586 NW2d 113 [1998]). However, Michigan{**51 Misc 3d at 73} has generally denied an insurer’s right to rescind a policy of insurance in order to avoid payment of no-fault benefits to an innocent third party (see Gagnon v Citizens Ins. Co., 2013 WL 331548, *6, 2013 Mich App LEXIS 178, *15-16; Great Lakes Cas. Ins. Co. v Auto Owners Ins. Co., 2010 WL 2595102, *1, 2010 Mich App LEXIS 1213, *2-3 [Ct App, June 29, 2010, docket No. 290871]; Lake States Ins. Co. v Wilson, 231 Mich App at 331, 586 NW2d at 115).

Contrary to the determination of the Civil Court, the holding of the Supreme Court of Michigan in Titan did not abrogate the innocent third party rule. In Gagnon, the plaintiff sought to recover no-fault personal injury protection benefits and the Court of Appeals of Michigan held that the innocent third party rule prohibited the insurer from rescinding the policy. The court distinguished Titan by holding that although the Supreme Court in Titan stated that an insurer is not precluded from availing itself of a remedy to avoid liability under an insurance policy on the ground of fraud in the application for insurance even when the claimant is a third party, “the insurer in Titan sought to reform an insurance policy by reducing the excess liability coverage limits available to innocent accident victims to the statutory minimum; it did not seek to completely avoid liability under the policy” (Gagnon v Citizens Ins. Co., 2013 WL 331548, *6, 2013 Mich App LEXIS 178, *19).

In view of the foregoing, we find that defendant cannot rely on a lack of coverage defense to withhold payment of no-fault benefits to plaintiff for the medical services it rendered to its assignor, who was an innocent third party. We note that since the Civil Court did not determine the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground that there was a lack of medical necessity for the services rendered, the matter is remitted to the Civil Court for a determination of that branch of defendant’s motion.

Accordingly, the order is reversed, the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground of lack of insurance coverage is denied, and the matter is remitted to the Civil Court for a determination of the remaining branch of defendant’s motion.

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

Footnotes

Footnote *:In his affidavit in support of defendant’s motion, the general counsel for Auto Club Insurance Association states that “ACIA is also known as AAA Michigan.” However, defendant was not so described in the summons and complaint.

602913/15

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Accordingly, it is hereby

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

This constitutes the Decision and Order of the Court.

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

Footnotes

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

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, December 14, 2015

APPEARANCES OF COUNSEL

The Rybak Firm, PLLC, Brooklyn (Damin J. Toell of counsel), for appellant.

Law Office of Printz & Goldstein, Woodbury (Bryan P. Fauci of counsel), for respondent.

Ordered that the order is modified by providing that defendant’s cross motion for summary judgment dismissing the complaint is denied; as so modified, the order is affirmed, without costs.

Plaintiff’s assignor was injured in a motor vehicle accident while riding in a vehicle which was insured by a New Jersey automobile insurance policy issued by defendant. Thereafter, plaintiff commenced this action to recover, among other things, assigned first-party no-fault benefits for the services it had rendered to its assignor, alleging that its claims were unpaid. Plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint on the ground that the dispute had to be resolved by arbitration. In opposition to plaintiff’s motion and in support of the cross motion, defendant addressed only the merits of plaintiff’s motion, made no arguments in support of its cross motion, and did not move to compel arbitration. The Civil Court denied plaintiff’s motion and granted defendant’s cross motion.

Since the insurance policy at issue contains a provision that “[t]he policy and any amendments and endorsements are to be interpreted pursuant to the laws of the state of New Jersey,” New Jersey law applies (see Bay Med. P.C. v GEICO Ins. Co., 41 Misc 3d 145[A], 2013 NY Slip Op 52084[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]).^[FN*] In Bay Med. P.C., this court held that dispute resolution is not mandatory pursuant to NJ Stat Ann § 39:6A-5.1 (a), as implemented by NJ Admin Code § 11:3-5.1 (a), which provides that a dispute regarding the recovery of no-fault benefits may be submitted to dispute{**50 Misc 3d at 109} resolution upon the initiative of either party to the [*2]dispute (see also New Jersey Mfrs. Ins. Co. v Bergen Ambulatory Surgery Ctr., 410 NJ Super 270, 272-273, 982 A2d 1, 2-3 [2009]). The insurance policy in question also states that a matter may be submitted to dispute resolution “on the initiative of any party to the dispute.” However, the existence of an option to arbitrate is not a ground for dismissal of a court action; such an option—if exercised by way of a motion to compel arbitration—is a ground to stay the court action (see CPLR 7503 [a]). As defendant has not moved to compel arbitration, defendant’s cross motion for summary judgment dismissing the complaint should have been denied (see Bay Med. P.C. v GEICO Ins. Co., 41 Misc 3d 145[A], 2013 NY Slip Op 52084[U]; Advanced Med. Diagnostics of Queens, P.C. v GEICO Ins. Co., 38 Misc 3d 140[A], 2013 NY Slip Op 50219[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]).

Inasmuch as plaintiff failed to establish, in the first instance, the medical necessity of the services rendered (see Elkins v New Jersey Mfrs. Ins. Co., 244 NJ Super 695, 583 A2d 409 [1990]) and failed to show that defendant did not properly pay any claim within 60 days after it had been furnished with written notice of the fact of a covered loss and the amount of same (see NJ Stat Ann § 39:6A-5 [g]), under New Jersey law, plaintiff’s motion for summary judgment was properly denied.

Accordingly, the order is modified by providing that defendant’s cross motion for summary judgment dismissing the complaint is denied.

Aliotta, J.P., Pesce and Solomon, JJ., concur.

Footnotes

Footnote *:Contrary to plaintiff’s contention, the underwriter’s affidavit that defendant submitted in support of its cross motion laid a sufficient foundation to allow consideration of the exhibits annexed to the cross motion.

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, December 2, 2015

APPEARANCES OF COUNSEL

Gary Tsirelman P.C., Brooklyn (David M. Gottlieb of counsel), for appellant.

Law Office of Printz & Goldstein, Woodbury (Lawrence J. Chanice of counsel), for respondent.

Ordered that the order is reversed, without costs, and plaintiff’s motion to restore the action to the trial calendar is granted.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff filed a notice of trial on May 19, 2008. A notation on the New York State Unified Court System eCourts public website indicates that the matter was “settled” on March 9, 2009. Approximately 31/2 years later, plaintiff, asserting that the case was mistakenly marked “settled,” moved to restore the action to the trial calendar and for an order exempting plaintiff from filing another notice of trial. Defendant opposed plaintiff’s motion and cross-moved to dismiss the complaint based upon plaintiff’s failure to proffer a reasonable excuse for not timely moving to restore the case. Plaintiff appeals from an order of the Civil Court which denied plaintiff’s motion as untimely, finding that restoration of the case would prejudice defendant.

In support of plaintiff’s motion, its attorney stated that her review of the file shows that there had been no settlement, whereas defendant’s attorney asserts that the case was dismissed because the same causes of action had been settled with previous counsel. While the eCourts website, of which we may take judicial notice (see Matter of Cento Props. Co. v Assessor, 71 AD3d 1015 [2010]; Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13 [2009]), states that this matter was settled on March 9, 2009, such a notation on the website “does not constitute a sufficient memorialization of the terms of the alleged settlement so as to satisfy the open-court requirement of CPLR 2104” (Andre-Long v Verizon Corp., 31 AD3d 353, 354 [2006]; see Johnson v Four G’s Truck Rental, 244 AD2d 319 [1997]). Furthermore, as there is no indication that the{**50 Misc 3d at 106} purported settlement was reduced to a writing and signed by the parties, or made in open court, an enforceable settlement agreement cannot be determined from the record before us (see CPLR 2104; Stuart Realty Co. v Rye Country Store, 296 AD2d 455 [2002]). Since there is no proof that an enforceable settlement was ever reached, plaintiff’s motion should have been granted. We note that, contrary to the determination of the Civil Court, plaintiff was not obligated to demonstrate in its motion, among other things, lack of prejudice to defendant, since the case had been marked “settled” (see Long-Waithe v Kings Apparel Inc., 10 AD3d 413[*2][2004]), whether or not erroneously. In view of the foregoing, we reach no other issue.

Accordingly, the order is reversed and plaintiff’s motion to restore the action to the trial calendar is granted.

Elliot, J.P., Pesce and Solomon, JJ., concur.

[*1]

Supreme Court, New York County, November 20, 2015

APPEARANCES OF COUNSEL

Thomas Torto, New York City, for plaintiffs.

Russell Friedman & Associates, LLP, Lake Success (Dara C. Goodman of counsel), for defendant.

This is a declaratory judgment action regarding no-fault insurance coverage. Defendant counterclaims for attorney’s fees and compensation for bills for the medical services that defendant allegedly provided to occupants of insured automobiles.

Defendant had previously moved for an order dismissing plaintiffs’ complaint for failure to state a cause of action, pursuant to CPLR 3211 (a) (7); or alternatively for an order dismissing plaintiffs’ complaint on the ground that plaintiffs lacked the capacity to file this action, pursuant to CPLR 3211 (a) (3). Defendant’s motion was denied, by this court’s October 17, 2012 decision and order, and separate opinion. Plaintiffs now move for summary judgment, pursuant to CPLR 3212, declaring that defendant is not entitled to no-fault benefits from plaintiffs with respect to the no-fault claims at issue in this action, and to dismiss defendant’s counterclaims; or alternatively, pursuant to CPLR 2201, to stay all American Arbitration Association (AAA) no-fault arbitration proceedings filed by defendant against plaintiffs to recover no-fault benefits for the no-fault claims at issue in the action, including a stay of enforcement and payment of previously issued AAA arbitration awards, pending determination of this declaratory judgment action.{**50 Misc 3d at 714}

Plaintiffs allege that defendant, as an assignee of first-party no-fault benefits, submitted to plaintiffs claims for defendant’s supposed treatment of “approximately” 31 people who sought medical treatment following motor vehicle accidents. Plaintiffs point out that in support of defendant’s claims it submitted medical reports with identical findings in relation to eight of the 31 patients, who were injured in different motor vehicle accidents. Plaintiffs also contend that defendant was engaging in a systematic upcoding of claims by using the same CPT codes, which are for the highest level of care on an initial examination, in relation to the treatment of minor soft tissue injuries.

Due to the suspicious nature of defendant’s claims, plaintiffs conducted an investigation, which revealed that Alexandre Scheer, M.D., defendant’s owner, was the subject of professional discipline by the New York State Office of Professional Medical Conduct (OPMC) for allegedly engaging in the fraudulent practice of medicine. Dr. Scheer had agreed to a consent order that he did not contest the charge and consented to a 60-month probation period during which he was allowed to practice medicine only with supervision. The consent order stated as a term of Dr. Scheer’s probation: “Respondent shall practice medicine only when monitored by a licensed physician, board certified in an appropriate specialty, (‘practice monitor’) proposed by Respondent and subject to the written approval of the Director of OPMC. Any medical practice in violation of this term shall constitute the unauthorized practice of medicine.”

With this information, plaintiffs requested that defendant submit to an examination under oath (EUO) to verify defendant’s claims. Dr. Scheer appeared at the EUO on behalf of defendant. Defendant’s counsel directed him at the EUO not to answer questions as to OPMC’s investigation of him and as to whether he complied with the probation condition of being supervised by an appropriate doctor while treating the no-fault claimants whose claims are at issue in this action. Defendant’s attorney asserted that issues relating to OPMC’s investigation, documents, proceedings, and the consent order were not proper subjects of the EUO because the investigation was about prior unrelated conduct by Dr. Scheer and was confidential. Furthermore, Dr. Scheer did not answer questions concerning the medical treatment rendered to a particular patient due to the claim having been denied by plaintiffs based on negative physical examinations.{**50 Misc 3d at 715}

Following the EUO, defendant’s claims were denied for the 31 patients on the grounds that defendant systematically upcoded its claims and that Dr. Scheer refused to answer pertinent questions at the EUO. Plaintiffs commenced this declaratory judgment action on August 26, 2011 for a declaration that defendant is not entitled to no-fault benefits for the approximately 31 claims.

On September 8, 2011, the National Insurance Crime Bureau (NICB) issued an alert advising that a priority one investigation was being conducted in relation to claims made by defendant. An indictment was filed on November 27, 2012 against Dr. Scheer and others for conspiracy to commit no-fault insurance fraud and mail fraud in a scheme to defraud insurers. Dr. Scheer entered into a deferred prosecution agreement with the United States Attorney for the Southern District of New York. Subsequently, a nolle prosequi was entered into by the U.S. Attorney and so ordered by the District Judge.

Commencing in 2012, defendant pursued some of its claims through arbitration before the AAA. Plaintiffs participated in the arbitrations before the AAA. In the arbitrations, the indictment was excluded or given no weight, as the indictment contained only allegations, and Dr. Scheer had not been convicted. Arbitration awards were issued in defendant’s favor. Plaintiffs brought “several” CPLR article 75 proceedings challenging the awards in the Civil Court of the City of New York, but the petitions were denied.^[FN*]

A party moving for summary judgment must demonstrate that there are no disputed issues of fact and that he, she, or it is entitled to judgment as a matter of law, pursuant to CPLR 3212 (b) (Smalls v AJI Indus., Inc., 10 NY3d 733, 735 [2008]; Pokoik v Pokoik, 115 AD3d 428 [1st Dept 2014]; see Gammons v City of New York, 24 NY3d 562, 569 [2014]). To defeat summary judgment, the party opposing the motion has to show{**50 Misc 3d at 716} that there is a material question(s) of fact that requires a trial (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; CitiFinancial Co. [DE] v McKinney, 27 AD3d 224, 226 [1st Dept 2006]; see Hoover v New Holland N. Am., Inc., 23 NY3d 41, 56 [2014]).

Plaintiffs contend that they are entitled to summary judgment on the grounds that defendant engaged in systemic upcoding and billed for unnecessary or nonexistent treatments, and that defendant refused to answer material questions at his EUO. Plaintiffs assert that the latter was a breach of the condition precedent in the insurance policies requiring cooperation at the EUO.

[1] Dr. Scheer’s failure to answer all relevant questions at the EUO, as required by the provisions of the applicable insurance policies, constitutes a material breach of contract, and precludes recovery by defendant. A condition precedent to coverage is cooperation in submitting to an EUO (see Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [1st Dept 2011]; Levy v Chubb Ins., 240 AD2d 336, 337 [1st Dept 1997]). The insurance policies and 11 NYCRR 65-3.5 (c) provide that plaintiffs, as insurers, may request that defendant, as a claimant, submit to an EUO, as a condition precedent to disbursement of benefits. Dr. Scheer stepped into the shoes of the insureds (cf. New York & Presbyt. Hosp. v Country-Wide Ins. Co., 17 NY3d 586, 592 [2011] [“as an assignee of all the rights, privileges and remedies to which (the patient) was entitled under the No-Fault Law, (the plaintiff) stood in the shoes of (the patient) and acquired no greater rights than he had”]). Dr. Scheer’s refusal to answer relevant questions in relation to the claims was not proper and led to an appropriate disclaimer of coverage by plaintiffs (see Latha Rest. Corp. v Tower Ins. Co., 38 AD3d 321, 322 [1st Dept 2007]).

[2] Plaintiffs’ inquiry at the EUO regarding Dr. Scheer’s medical license was permissible. As a professional service corporation, defendant was required to be owned and controlled by a licensed professional, who rendered the services provided by defendant (see One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738, 740 [2d Dept 2008]). Although Dr. Scheer was entitled to confidentiality regarding the OPMC administrative proceeding itself (Public Health Law § 230; Anonymous v Bureau of Professional Med. Conduct/State Bd. for Professional Med. Conduct, 2 NY3d 663, 669-670 [2004]; Doe v Office of Professional Med. Conduct of N.Y. State Dept. of {**50 Misc 3d at 717} Health, 81 NY2d 1050, 1052 [1993]), the effect of the consent order on the manner in which Dr. Scheer was entitled to practice medicine was not confidential. With respect to questions about treatment, Dr. Scheer’s refusal to answer them resulted in obstructing plaintiffs from obtaining relevant information to evaluate the treatments rendered and the sums claimed.

In its first counterclaim, defendant seeks attorney’s fees. However, under the American rule as to attorney’s fees in litigation, even a prevailing party in an action generally may not recover his, her, or its attorney’s fees (see Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21-22 [1979]). Although attorney’s fees can be recovered by an insured who defends against an insurer’s declaratory judgment action and prevails on the merits, defendant is not such a party here (see U.S. Underwriters Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 597-598 [2004]). With respect to defendant’s second counterclaim for recovery of bills, as defendant has not shown that it fully complied with plaintiffs’ material EUO inquiries, defendant is not entitled to payment of the claims.

Therefore, by separate decision and order, plaintiffs’ motion was granted to the extent of awarding plaintiffs summary judgment declaring that defendant is not entitled to no-fault benefits from plaintiffs with respect to the no-fault claims at issue in this action and dismissing defendant’s counterclaims. Thus, given that plaintiffs’ main request for relief has been granted, the request for alternative relief need not be decided.

Footnotes

Footnote *:The arbitration awards and court decisions may give res judicata and collateral estoppel effect (see Rembrandt Indus. v Hodges Intl., 38 NY2d 502, 504 [1976]; Feinberg v Boros, 99 AD3d 219, 226 [1st Dept 2012]; Kern v Excelsior 57th Corp., LLC, 77 AD3d 500, 501 [1st Dept 2010]; Acevedo v Holton, 239 AD2d 194, 195 [1st Dept 1997]). However, such defenses must be raised as affirmative defenses or by a motion under CPLR 3211 (a) (5), or the defenses are waived (see CPLR 3211 [e]; Mayers v D’Agostino, 58 NY2d 696, 698 [1982]). Defendant failed to do so (or even articulate “res judicata” or “collateral estoppel” in the papers in opposition to the motion). Furthermore, there are no arbitration awards or civil court decisions submitted as to the eight specifically named of the 31 patients. Thus, those affirmative defenses were waived.

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, October 19, 2015

APPEARANCES OF COUNSEL

The Law Office of Robyn M. Brilliant, P.C., New York City (Robyn M. Brilliant of counsel), for appellant.

Ordered that the order is modified by providing that the branch of defendant’s motion seeking attorney’s fees is granted; as so modified, the order is affirmed, without costs, and the matter is remitted to the Civil Court for a determination of the reasonable amount of attorney’s fees incurred by defendant up to the date of discontinuance.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff’s oral application for a discontinuance without prejudice was granted by the Civil Court on February 6, 2013. Thereafter, defendant moved to vacate the February 6, 2013 order, or, in the alternative, to modify the prior order by providing that the discontinuance was with prejudice, and for attorney’s fees and sanctions. By order dated January 7, 2014, the Civil Court denied the branch of defendant’s motion seeking to vacate or modify the February 6, 2013 order and implicitly denied the branches of defendant’s motion seeking attorney’s fees and sanctions.

Generally, courts are reluctant to compel a party to litigate (see DuBray v Warner Bros. Records, 236 AD2d 312, 314 [1997]), and it is well settled that courts have the discretion to grant a motion for discontinuance, without prejudice, if no{**50 Misc 3d at 53} special circumstances exist, such as prejudice to a substantial right of the defendant or other improper consequences (see Tucker v Tucker, 55 NY2d 378, 383 [1982]; GMAC Mtge., LLC v Bisceglie, 109 AD3d 874, 876 [2013]; Wells Fargo Bank, N.A. v Fisch, 103 AD3d 622, 622 [2013]; Mathias v Daily News, 301 AD2d 503, 504 [2003]; Valladares v Valladares, 80 AD2d 244, 257-258 [1981], mod on other grounds sub nom. Tucker v Tucker, 55 NY2d 378 [1982]). “Unlike a motion for change of venue which involves the affirmative selection of another forum, a court in granting discontinuance merely makes it possible for the action to be brought elsewhere” (Urbonowicz v Yarinsky, 290 AD2d 922, 923 [2002] [citations omitted]). However, motions for discontinuance should not be used to enable plaintiffs to “do indirectly what they are not permitted to do directly” (Katz v Austin, 271 App Div 217, 218 [1946]; see also DuBray v Warner Bros. Records, 236 AD2d at 314).

[1] In support of the branch of its motion seeking to vacate or modify the February 6, 2013 order, defendant did not provide any information regarding the arguments that had been made before the Civil Court in support of, and in opposition to, plaintiff’s oral application. Despite the fact that plaintiff subsequently commenced an action against defendant in the Civil Court, Bronx County, to recover the same no-fault benefits as sought herein, defendant’s argument—that plaintiff sought the discontinuance because it did not have a witness to provide testimony establishing its billing and wanted to commence an action in the Civil Court, Bronx County, where a witness allegedly is not required to establish billing—is not supported by the record, which indicates that a trial had yet to commence in the case at bar. The record does not establish that plaintiff expressed its intention to discontinue the Queens County action in order to commence an action in Bronx County (cf. DuBray v Warner Bros. Records, 236 AD2d at 314). Consequently, defendant did not establish that plaintiff indirectly sought to do what it was not permitted to do directly, i.e., change venue, when it moved for discontinuance.

[2] Notwithstanding the foregoing, inasmuch as it is uncontroverted that defendant had defended the instant action for three years during which time it had made numerous motions, engaged in discovery practice, and repeatedly appeared in court, defendant is entitled to recover the reasonable attorney’s fees it incurred in its defense of the instant action up to the date of discontinuance, in order to eliminate any possible{**50 Misc 3d at 54} prejudice attributable to the discontinuance (see Carter v Howland Hook Hous. Co., Inc., 19 AD3d 146, 146-147 [2005]). We pass on no other issue.

Accordingly, the order is modified by providing that the branch of defendant’s motion seeking attorney’s fees is granted; as so modified, the order is affirmed, and the matter is remitted to the Civil Court for a determination of the reasonable amount of attorney’s fees incurred by defendant up to the date of discontinuance.

Pesce, P.J., Aliotta and Solomon, JJ., concur.

[*1]

Supreme Court, Appellate Term, First Department, October 8, 2015

Surgicare Surgical v National Interstate Ins. Co., 46 Misc 3d 736, affirmed.

APPEARANCES OF COUNSEL

The Law Office of Cohen & Jaffe, LLP, Lake Success (Aaron J. Perretta of counsel), for appellant.

Bruce Somerstein & Associates, P.C., New York City (Donald J. Kavanagh, Jr. of counsel), for respondent.

Order, entered November 17, 2014, affirmed, with $10 costs.

This first-party no-fault action arises from health services rendered by plaintiff provider at its New Jersey location. Plaintiff billed $10,800 for the services (associated with arthroscopic knee surgery), but defendant insurer paid only $5,996.67 on the claim, an amount in accordance with the New Jersey fee schedule. In this action, plaintiff, in effect, seeks the ($4,803.33) difference between the amount charged and payment made by defendant pursuant to the aforementioned fee schedule.

Insurance Department Regulations (11 NYCRR) § 68.6 provides that where a health service reimbursable under Insurance Law § 5102 (a) (1) “is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider” (emphasis added). We agree, essentially for reasons stated by Civil Court (46 Misc 3d 736 [2014]), that where a reimbursable health care service is performed outside the State of New York in a jurisdiction that has enacted a medical fee schedule prescribing the permissible charge for the service rendered, an insurer may properly rely on such fee schedule to establish the “prevailing fee” within the meaning of 11 NYCRR 68.6, and demonstrate compliance therewith by payment in accordance with that fee schedule.

Significantly, the Superintendent of Insurance issued an opinion letter stating that the reimbursement amount under section 68.6 “is determined by the permissible cost” in the out-of-state location (Guatemala) (see Ops Gen Counsel NY Ins{**50 Misc 3d at 87} Dept No. 03-04-03 [Apr. 2003]). The Superintendent’s interpretation is entitled to deference, since it is neither irrational nor unreasonable, nor counter to the clear wording of a statutory provision (see LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009]). Indeed, the Superintendent’s reliance upon the “permissible cost” in the foreign jurisdiction is consistent with [*2]the legislative purpose underlying Insurance Law § 5108 and implementing regulations—to “significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium” (Goldberg v Corcoran, 153 AD2d 113, 118 [1989], appeal dismissed 75 NY2d 945 [1990]).

Applying section 68.6 as interpreted by the Superintendent, the “prevailing fee in the geographic location of a provider” is the “permissible” reimbursement rate authorized in the foreign jurisdiction. Here, the permissible rate authorized in New Jersey for the services rendered by plaintiff is set forth in New Jersey’s no-fault statute and applicable fee schedule. Allowing plaintiff to bill at a rate significantly higher than the permissible charges in the New Jersey fee schedule would undermine the purpose of Insurance Law § 5108, and thwart the core objectives of the No-Fault Law—”to provide a tightly timed process of claim, disputation and payment” (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 319 [2007] [citation omitted]), to “reduce the burden on the courts and to provide substantial premium savings to New York motorists” (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 860 [2003]).

Contrary to plaintiff’s claim, the omission of the term “fee schedule” from the regulation does not indicate that its exclusion was intended. Construed within the context of the regulation, whose scope and application broadly extends to all geographic locations outside the State of New York, the legislature’s use of the comprehensive term “prevailing fee,” rather than the less inclusive term “fee schedule,” comports with common sense and the reality that the different jurisdictions have not unanimously adopted a no-fault regime, and/or uniformly based the permissible reimbursement charge upon a medical fee schedule.

We note that since the services here were rendered after April 1, 2013, the defense of excessive fees is not subject to preclusion (see 11 NYCRR 65-3.8 [g] [eff Apr. 1, 2013]).{**50 Misc 3d at 88}

Plaintiff’s remaining contentions are unpreserved or without merit.

Shulman, J.P., Hunter, Jr., and Ling-Cohan, JJ., concur.

15621/12

Attorney For Petitioner: Acuhealth Acupuncture, P.C.
Gary Tsirelman, P.C.
129 Livingston Street
Brooklyn, New York 11201

Attorney For Respondent: Country-Wide Insurance Company
Jaffe & Koumourdas
40 Wall Street – 12th Floor
New York, New York 10005

PapersNumbered

Notice of Cross Motion and Affidavit ……………………………..____2_____

Answering Affidavits ……………………………………………………………..____3_____

Replying Affidavits ………………………………………………………………..____4_____

Exhibits …………………………………………………………………………………____5_____

Other .__________

Upon the foregoing papers, petitioner ACUHEALTH ACUPUNCTURE, PC moves for an order to vacate the Master Arbitrator’s award, pursuant to CPLR § 7511. Respondent COUNTRY-WIDE INSURANCE COMPANY opposes the motion and moves for an order to confirm the Master Arbitrator’s award, pursuant to CPLR § 7510.

This case arises out of an automobile accident with petitioner’s assignor on August 8, 2010. At the time of the accident, there was an existing No-Fault policy issued by the Respondent. Petitioner rendered health services to the assignor for the personal injuries sustained in the car accident. When petitioner did not receive full reimbursement for the services provided, the matter proceeded to arbitration. Respondent denied payment for acupuncture services on the contention that petitioner was owned and controlled by a person who is contrary to the New York State No-Fault law requirements, which states that “A provider of health care services is not eligible for reimbursement . . . if the provider fails to meet any applicable New York State . . . licensing requirement necessary to perform such service in New York.” 11 NYCRR § 65-3.16(a)(12). Respondent provided evidence that ACUHEALTH ACUPUNCTURE, PC was owned, controlled, and operated by Andrey Anikeyev, who is not a licensed medical practitioner. Petitioner submitted an affidavit from Natalya Kornilova stating that she is the sole owner of petitioner. As Ms. Kornilova was ill at the time of the arbitration, Arbitrator Weiner dismissed the petitioner’s claim without prejudice to afford respondent the opportunity to subpoena Ms. Kornilova and examine her under oath during the proceedings. Petitioner appealed and Master Arbitrator D’Ammora affirmed.

“An arbitration award can be vacated by a court pursuant CPLR § 7511(b) on only three narrow grounds: if it is clearly violative of a strong public policy, if it is totally or completely irrational, or if it manifestly exceeds a specific, enumerated limitation on the arbitrator’s power.” Matter of Erin Constr. & Dev. Co., Inc. v. Meltzer, 58 AD3d 729 (2009). Even if the arbitrator commits errors of fact or law, the [*2]court should not vacate the arbitrator’s award.” Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 NY3d 471 (2006). In this case, Arbitrator Weiner’s ruling and Master Arbitrator D’Ammora’s affirmation do not meet the three narrow grounds for the Court to vacate the award pursuant to CPLR § 7511. The award is not against public policy of any kind, it is not irrational, and it does not exceed the powers of the arbitrator in any capacity. As such, the Court has no recourse but to affirm the arbitrator’s award.

Petitioner argues that the respondent should be estopped from litigating this case since a similar case was litigated in prior proceedings in this Court. “The two elements that must be satisfied to invoke the doctrine of collateral estoppel are that (1) the identical issue was decided in the prior action and is decisive in the present action, and (2) the party to be precluded from relitigating the issue had a full and fair opportunity to contest the prior issue.” Luscher v. Arrua, 21 AD3d 1005, 1007 (2005). However, petitioner does not provide the Court with any evidence or details of the prior rulings of Judge King or Judge Bayne. Their decisions only state that the case be remanded. In order for collateral estoppel to apply, this Court would need details of the reasoning behind the prior decisions of Judge King and Judge Bayne to determine whether the issues in this case were previously decided. As such details were not provided by the petitioner, respondent is not estopped from litigating this issue.

Petitioner argues that Arbitrator Weiner acted impermissibly and incorrectly as a matter of law by raising the issue of subpoenaing Natalya Kornilova sua sponte. However, an “arbitrator . . . may subpoena witnesses . . . upon the arbitrator’s own initiative or upon the request of any party, when the issues to be resolved require such witnesses.” 11 NYCRR § 65-4.5(o)(2), (see also NY CPLR § 7505, 11 NYCRR § 65-4.4 [e]). Petitioner cites a case, Matter of Health & Endurance Med., P.C. v. Deerbrook Ins. Co., 44 AD3d 857 (2007), which has no relevance to this matter. In that case, the arbitrator raised an issue not relevant for determination of the issues. In this case, the contents of Ms. Kornilova’s deposition were integral to the determination of the issues in question, namely the ownership of the petitioner. As such, the Arbitrator was well within his power to issue a subpoena to Ms. Kornilova.

Petitioner argues that Arbitrator Weiner impermissibly dismissed the case without prejudice. Petitioner contends that a dismissal without prejudice is only warranted when the filing is premature. However, petitioner does not provide any case law to support this proposition. To the contrary, an arbitrator can dismiss a case without prejudice when a party “has failed to establish a prima facie case, but it appears that proof which would support a prima facie case is available.” Kilduff v. Donna Oil Corp., 74 AD2d 562, 563 (1980). A dismissal without prejudice indicates that there was no final determination on the merits and a subsequent action should not be barred. Id. In this case, petitioner is still entitled to bring their claim to an arbitrator at a time Ms. Kornilova is healthy enough to be examined under oath by respondent. As such, the dismissal without prejudice was permissible.

Petitioner further contends that Arbitrator Weiner’s findings were arbitrary and capricious or incorrect as a matter of law regarding the question of whether Petitioner is fraudulently incorporated. As indicated earlier, “even if the arbitrator commits errors of fact or law, the court should not vacate the arbitrator’s award.” Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 NY3d 471 (2006). Arbitrator Weiner’s findings were not so egregious or against public policy as to vacate the award. As explained in Arbitrator D’Ammora’s affirmation, “Arbitrator Weiner could have reached several different results in his decision.” See Affirmation in Opposition, Exhibit B. Arbitrator Weiner’s decision was logical and reasonable and does not warrant the Court vacating the award.

This constitutes the decision and order of the Court.

ENTER,

____________________

JSC