Aurora Chiropractic, P.C. v Farm & Cas. Ins. Co. of Ct. (2004 NY Slip Op 51066(U))

Civil Court of the City of New York, Kings County

80154/03

David M. Steiner, Esq. of Isreal, Isreal & Purdy of Great Neck, NY appeared for plaintiff; Jeanne M. Valentine, Esq. of Cluasen, Miller P.C. of New York, New York appeared for Defendant.

Ann Elizabeth O’Shea, J.

Upon the foregoing cited papers, the decision and order on defendant’s motion to vacate a default judgment and to dismiss the complaint, is as follows:

Plaintiffs Aurora Chiropractic PC, Dragon Acupuncture PLLC, Latortue Medical Services, PC and S & B Neurocare, PC, instituted this action to recover first-party, no-fault benefits for medical services rendered to their assignor, Kathleen Marsh, who was injured in an automobile accident on February 16, 2001. Plaintiffs provided medical services to Ms. Marsh between March 14, 2001, and February 8, 2002. Each of the plaintiffs made several claims for payment. Upon the purported failure of defendant to pay or deny the claims within thirty days, plaintiffs instituted this action.

The summons and complaint were served on defendant on June 25, 2003. An extension of time to file an answer was requested and granted, giving counsel until August 15, 2003, to answer the complaint. On defendant’s failure to answer, a clerk’s judgment was entered, without any judicial intervention, in the amount of $31,287.65.

Defendant now seeks an order opening the default and setting aside the judgment entered [*2]against it. Defendant also seeks an order dismissing the complaint on the grounds that after August 31, 2001, it had no further obligation to pay No Fault benefits. Plaintiff submitted papers in opposition. Oral argument was heard on May 19, 2004, subsequent to which the matter was submitted for decision.

As a general rule, a default judgment will be vacated and a late answer will be permitted when a defendant can show that there was some reasonable excuse for its delay in answering and there is some merit to its defense (see Spencer v. Sanko Holding USA, 247 AD2d 532 [2d Dept 1998]). A defendant is not required to establish its defense as a matter of law; it need only set forth sufficient facts to make out a prima facie showing of a meritorious defense (see Quis v. Bolden, 298 A.D.2d 375 (2d Dept 2002).

In support of its claim to have a reasonable excuse for its delay in answering, defendant states that it intended to file an answer to the complaint, but ultimately could not do so without an index number, which plaintiff failed to provide. Although defendant allegedly attempted independently to ascertain the index number, by sending its law clerk on September 25, 2003, directly to the Court, its law clerk allegedly was told that there was no index number assigned to the matter. When defendant’s law clerk subsequently sought the information directly from plaintiff’s counsel by telephone, he purportedly was informed that plaintiff’s counsel was “not aware of” the index number, a telephone conversation which plaintiff’s counsel denies ever occurred. No claim is made that any further attempts to serve or file its answer were made. Because it was plaintiffs’ duty to provide defendant with an index number, defendant asks the court to excuse defendant from having taken no further action between the date on which it made inquiry of the Civil Court, and the date on which the default judgment was entered.

Despite defendant’s failure to follow up on the case during the five months which passed between the date it first sought an index number incident to filing an answer, and the date the default judgment was entered, it seems evident that there was no intention on the part of defendant to default in answering. Viewed in light of the strong public policy of this State which favors the resolution of cases on the merits (see Scagnelli v. Pavone, 178 AD2d 590 [2d Dept 1991]), and considering the fact that defendant moved promptly to open the default (see A.B. Med. Servs. Pllc v. Americar & Truck Rental Inc.., 2003 NY Slip Op 51394U [App. Term. 2003]), defendant’s excuse is deemed adequate.

Defendant advances as its “meritorious defense” a claim that the treatment rendered by plaintiffs was not medically necessary. Lack of medical necessity is a defense to an action to recover no-fault benefits, which an insurer may assert pursuant to a timely denial, based on a medical examination or a sufficiently detailed peer review report (see Amaze Med. Supply, Inc. v. Eagle Ins. Co., 2004 NY Slip Op 50279U, 1 [App. Term 2d Dept 2004]). In this case, defendant’s claim of a lack of medical necessity is supported by the results of five independent medical examinations conducted by Dr. Weiss, an orthopedist, Dr. Weksler a clinical psychologist and certified pain specialist, Dr. Zlatnick, a neurologist, Dr. Orenstein, a chiropractor, and Dr. Iozzio, an acupuncturist. In their reports, the last dated August 21, 2001, each concludes that Ms. Marsh is fully recovered, and has no further need for medical treatment, establishing its defense.

Defendant contends that the timeliness of its denial is not in issue as it issued a blanket denial of all “future benefits” directly to Ms. Marsh, in advance of the submission of any of plaintiffs’ [*3]claims, bringing it outside of the preclusion rules set forth in Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997]. In support of this contention, defendant appends as an exhibit to its motion papers, five undated denial of claim [NF-10] forms. Each references a particular independent medical examination report and states that “future benefits are being denied” based on the specified report. Although no proof of mailing was adduced, defendant contends that the NF-10 forms, and the medical reports, were mailed to Ms. Marsh on August 31, 2001.

No-fault regulations provide that “if the insurer has information which clearly demonstrates that the applicant is no longer disabled, the insurer may discontinue the payment of benefits by forwarding to the applicant a prescribed denial of claim form” (11 NYCRR 65.15[g][2][ii]). However, that section does not absolve defendant of its responsibilities under the No-Fault law and regulations to individually consider and timely pay or deny each subsequent claim made for benefits under the No-Fault law. As was observed by the court in Atlantis Medical, P.C. v. Liberty Mutual Insurance Co., 2002 NY Slip Op 40043U, 2002 NY Misc LEXIS 202 [Dist. Ct. Nassau Co.], when the provider of medical services submits a claim as assignee of an insured, neither the statute nor the regulations contemplate the insurer simply “sitting mute and failing to act upon the claim, silently and secretly relying upon an earlier denial issued directly to the insured.” To the contrary, both the statute and the regulations contemplate the insurer responding directly to the claim within the statutorily prescribed time frame, failing which it will be precluded, pursuant to Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], from interposing such defenses as a lack of medical necessity.

Nor will a belated denial of plaintiffs’ No Fault claims be “deemed” timely on the basis of its earlier blanket disclaimer of responsibility which predated plaintiffs’ provision of services (see A&S Medical, P.C. v. Allstate Insurance Co., 196 Misc2d 322, 323 [App. Term. 1st Dept 2003], app. granted, NY App Div 2004 LEXIS 9836 [1st Dept July 5, 2004]). Thus, the additional NF- 10 forms included in defendant’s motion papers, dated January 16, 2002, responding to two claims made by plaintiff Aurora Chiropractic for $48.90 and $439.27, one claim made by plaintiff Latortue Medical Services for $812.89, and two claims made by plaintiff Dragon Acupuncture, for $1,275 and $1105, are not rendered “timely” by the mere addition of “benefits terminated on 8/31/01” as a part of the reason given for denial of the claims.

Nor do any of the January 10, 2003, NF-10 forms, standing on their own, evidence a timely denial of these five claims. For one thing, none of the NF-10 forms was sent to plaintiffs, as required by 11 NYCRR § 65.15(g)(3)(i)(“the applicant or the authorized representative”). They were all sent to plaintiffs’ assignor. Further, the forms are incomplete, lacking among other things the date on which the specified claims were received, absent which the timeliness of the response cannot be determined. Finally, defendant does not list a lack of medical necessity as the reason for its denial of plaintiffs’ claims. Having failed to do so, defendant is precluded pursuant to Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], from advancing lack of medical necessity as a defense to any part of this action.

As defendant is precluded, in the absence of a timely denial, from advancing lack of medical necessity as a defense, defendant’s motion to vacate the default and set aside the judgment is denied.

This constitutes the decision and order of this Court. [*4]

Date:September 23, 2004_____________________________

Ann Elizabeth O’Shea, J.C.C.