April 26, 2011
Radiology Today, P.C. v GEICO Gen. Ins. Co. (2011 NY Slip Op 21161)
https://www.beynensonlaw.com/case-law/radiology-today-p-c-v-geico-gen-ins-co-2011-ny-slip-op-21161/
- Decided
- April 26, 2011
- Citation
- 2011 NY Slip Op 21161 · 32 Misc 3d 4
- Posture
- Other motion
- Outcome
- Insurer prevailed
- Later treatment
- Followed in 2 later decisions (see Cited by)
- Legal questions
- Mallela defense: preclusion and discovery (see the maps)
Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.
Summary
Editorial summary by Beynenson Law, not part of the court’s decision.
Reported in New York Official Reports at Radiology Today, P.C. v GEICO Gen. Ins. Co. (2011 NY Slip Op 21161)
| Radiology Today, P.C. v GEICO Gen. Ins. Co. |
| 2011 NY Slip Op 21161 [32 Misc 3d 4] |
| Accepted for Miscellaneous Reports Publication |
| AT2 |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, July 20, 2011 |
[*1]
| Radiology Today, P.C., as Assignee of Roydon Pile, Appellant, v GEICO General Insurance Company, Respondent. |
Supreme Court, Appellate Term, Second Department, April 26, 2011
APPEARANCES OF COUNSEL
G.H. Chen & Associates, P.C., New York City (Graeme H. Chen and David B. O’Connor of counsel), for appellant. John E. McCormack, P.C., Garden City (Erin M. Crowley of counsel), for respondent.
{**32 Misc 3d at 5} OPINION OF THE COURT
Memorandum.
Ordered that the judgment, insofar as appealed from, is affirmed, without costs.
In this action by a health care provider to recover assigned first-party no-fault benefits, defendant sought discovery of documents and information, and to depose Dr. Solomon, a principal of plaintiff, in relation to the propriety of plaintiff’s incorporation and operation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). After serving plaintiff with further discovery demands, defendant moved for an order, among other matters, consolidating this action with 201 other actions pending between the parties, compelling Dr. Solomon to appear for a deposition in relation to the consolidated actions, compelling discovery of the documents and information previously sought and authorizing additional discovery with respect to plaintiff’s contractual relationships with other corporate providers and with certain named individuals. Plaintiff opposed defendant’s motion, arguing that defendant had failed to plead a defense based on fraud, and, in any event, that the discovery demands were overbroad, and cross-moved, pursuant to CPLR 3103, for a protective order “denying defendant’s request for further discovery and/or depositions,” and, alternatively, compelling its own discovery. Plaintiff argued that defendant had produced no proof that plaintiff’s incorporation or operation violated state licensing laws, and that defendant’s failure timely to pay or{**32 Misc 3d at 6} deny the claim forfeited all defenses including those based on plaintiff’s alleged fraudulent incorporation or operation. Defendant opposed the cross motion and argued that plaintiff’s January 5, 2009 stipulation, in an unrelated no-fault benefits recovery action, to produce much of the discovery sought by the defendant therein, should be construed to evidence the absence of merit to plaintiff’s opposition to discovery. In an order entered June 11, 2009, the Civil Court denied plaintiff’s cross motion for a [*2]protective order, in part, because “[plaintiff had] stipulated to the exact relief it now wishes to dispute.” The order further granted defendant’s motion to the extent of consolidating the 202 actions “for the limited purpose of determining . . . issues of plaintiff’s fraudulent incorporation within the meaning of Mallela,” and directing that, within 90 days of the order, plaintiff must produce Dr. Solomon for a deposition “to answer questions concerning plaintiff’s fraudulent incorporation within the meaning of Mallela” and that, within 60 days, plaintiff must
“[p]rovide complete responses to defendant’s discovery demands including but not limited to all factoring agreements or assignment of the disputed bills in question, all federal, state and local income tax returns for Radiology Today, P.C. from 2006 to present, the names and addresses of all persons and entities with financial interest in the plaintiff as defined by Public Health Law § 238 . . . , all employee information as demanded . . . [and] all management agreements and personal tax return[s] of Dr. Robert Solomon from the year 2006 to [the] present.”
The order also stated that plaintiff’s failure to provide the discovery granted would “support motions to dismiss.” Plaintiff declined to comply with the order insofar as it granted defendant’s motion to compel discovery, and, by order dated October 9, 2009, the Civil Court dismissed the 202 consolidated actions. A judgment was entered on November 16, 2009. Plaintiff appeals from so much of the judgment as dismissed the complaint in the case at bar.
The defense that plaintiff is ineligible to receive no-fault benefits because it failed to comply with state or local licensing requirements “is not waived by the failure to assert it in a denial of claim form nor is it precluded as a result of an untimely denial” (Multiquest, P.L.L.C. v Allstate Ins. Co., 17 Misc 3d 37, 39 [App Term, 2d & 11th Jud Dists 2007] [citations omitted]).{**32 Misc 3d at 7} No-fault benefits may not be paid to medical service corporations which submit “materially false filings with state regulators” (Mallela, 4 NY3d at 321) or, if properly formed under the “facially valid cover of . . . nominal physician-owners” (id. at 319), are operated by nonphysicians (id. at 321). In the latter case, “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law” (id.), in particular, “New York State or local licensing requirement[s]” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]).
Plaintiff contends that the discovery order was improper because, in the answer and in support of its motion to compel discovery, defendant failed to “state[ ] in detail” the “circumstances constituting the wrong,” citing CPLR 3016 (b). There is no requirement that a defense predicated upon the failure to comply with “New York State or local licensing requirement[s]” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]) be pleaded with particularity pursuant to CPLR 3016 (b) (see generally V.S. Med. Servs., P.C. v Allstate Ins. Co., 25 Misc 3d 39 [App Term, 2d, 11th & 13th Dists 2009]). In addition, while mere conclusory allegations are never sufficient to obtain discovery with respect to a Mallela-based defense, defendant’s motion papers were sufficient to demonstrate that a Mallela-based defense [*3]was potentially meritorious.
Plaintiff’s motion for a protective order, filed nearly four months after defendant had served its supplemental discovery, was untimely (see CPLR 3122 [a]; Fair Price Med. Supply Corp. v ELRAC Inc., 12 Misc 3d 119, 122 [App Term, 2d & 11th Jud Dists 2006]). The failure of a party to timely challenge the propriety of discovery demands normally “obligate[s] [it] to produce the information sought” (New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 134[A], 2009 NY Slip Op 51396[U], *2 [App Term, 9th & 10th Jud Dists 2009]; see Fausto v City of New York, 17 AD3d 520, 522 [2005]), with the exception of items which are palpably improper or privileged (see Fausto, 17 AD3d at 522; Marino v County of Nassau, 16 AD3d 628 [2005]). As most of the discovery demands were not palpably improper or privileged, and in light of plaintiff’s failure to provide any discovery, the judgment, insofar as appealed from, dismissing the complaint in the case at bar is affirmed.
In view of the foregoing, we pass on no other issue.
Golia, J.P., Pesce and Steinhardt, JJ., concur.
Legal questions
A question of no-fault law this decision rules on, from our Legal Questions pages. Bars count the decisions on the question by year and court, coloured by category; circles are this decision and the decisions on the question it cites or that cite it. Point at a bar or circle for details. The categories and summaries are Beynenson Law’s classification, made by a language model and checked by a second reading.
May the insurer raise and investigate a Mallela (fraudulent incorporation) defense, or is it precluded, waived or denied discovery?
This decision: Insurer may raise or investigate the Mallela defense here
Held the Mallela defense was not waived or precluded by an untimely denial, need not be pleaded with particularity, and was shown potentially meritorious, so discovery was proper and dismissal for noncompliance was affirmed.
Of the 134 decisions on this question in the Second Department courts and the Court of Appeals, 111 (this one included) are in the same category.
Cited in this decision
A label shows how this decision treated the case it cites.
- State Farm Mut. Auto. Ins. Co. v Mallela (2005 NY Slip Op 02416) FollowedFraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
- Multiquest, P.L.L.C. v Allstate Ins. Co. (2007 NY Slip Op 27366) FollowedA professional service limited liability company is ineligible for no-fault reimbursement if it violates licensing requirements.
- V.S. Med. Servs., P.C. v Allstate Ins. Co. (2009 NY Slip Op 29310)An insurer may prove that a collision was intentional and outside no-fault coverage by a preponderance of the evidence.
- Fair Price Med. Supply Corp. v ELRAC Inc. (2006 NY Slip Op 26269)An improper self-referral defense survives a late denial when a health care provider seeks benefits through an entity in which it has an interest.
- New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2009 NY Slip Op 51396(U)) FollowedAn insurer pursuing a Mallela defense may depose a provider's owner without first showing that interrogatory responses are inadequate.
Cited by
A label shows how the later decision treated this one.
- Total Chiropractic, P.C. v USAA Cas. Ins. Co. (2017 NY Slip Op 50977(U)) FollowedAn insurer's good-faith showing of possible fraudulent incorporation supported discovery into the provider's ownership, operation and control.
- Park Ave. Med. Care, P.C. v Government Empls. Ins. Co. (2012 NY Slip Op 51032(U)) FollowedThe insurer's factual allegations, including the provider owner's federal indictment, warranted fraudulent-incorporation discovery.
- Apazidis, M.D., P.C. v State Farm Mut. Auto. Ins. Co. (2021 NY Slip Op 50498(U))The insurer's summary judgment motion failed on hearsay proof of good cause and verification notices naming a different provider.
- Jiang Acupuncture PC v State Farm Ins. Co. (2023 NY Slip Op 50961(U))The insurer failed to prove good cause for licensing verification with admissible evidence supporting summary judgment.
- Renelique v Foremost Signature Ins. Co. (2023 NY Slip Op 51226(U))The insurer's renewed summary judgment motion based on a declaratory judgment was denied as untimely without good cause.
Similar decisions
- Medical Polis, P.C. v Progressive Specialty Ins. Co. (2012 NY Slip Op 50342(U))An insurer may obtain discovery on an unpleaded Mallela defense when sufficient allegations of fraudulent incorporation support the request.
- All Boro Psychological Servs., P.C. v Allstate Ins. Co. (2013 NY Slip Op 23043)The insurer established a basis for Mallela discovery, defeating the provider's summary judgment motion.
- Corona Hgts. Med., P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 52185(U))Discovery supporting a precluded medical-necessity defense is palpably improper even without a timely objection.
- Urban Radiology, P.C. v GEICO Ins. Co. (2010 NY Slip Op 51554(U))The insurer's speculative fraudulent-incorporation allegations did not justify consolidation or a stay of the provider's no-fault actions.
- Q-B Jewish Med. Rehabilitation, P.C. v Allstate Ins. Co. (2011 NY Slip Op 21390)The insurer justified bank and tax discovery, but the provider's remaining responses were sufficient.