MZ Med. Care, PC v Selective Ins. Co. of Am. (2009 NY Slip Op 51093(U))

Civil Court of the City of New York, Kings County

039163/07

Genine D. Edwards, J.

In this action, plaintiff seeks to recover first-party no-fault benefits from defendant in the amount of $6,040.24, for medical services allegedly provided to its assignor, Flor A. Barrietos-Mercado. Defendant now moves for summary judgment, arguing that the underlying insurance policy was retroactively cancelled and deemed void ab initio. Plaintiff has no written opposition to the motion.

BACKGROUND

Plaintiff allegedly rendered medical services to Barrietos-Mercado for injuries resulting from an automobile accident on May 2, 2001. Barrietos-Mercado assigned her no-fault benefits concerning such services to plaintiff. In turn, plaintiff submitted a bill in the amount of $6040.24 to defendant but the bill was not paid. Consequently, plaintiff commenced this action.

On or about February 25, 1999, defendant issued an insurance policy to Barrietos-Mercado. The insurance application listed Barrietos-Mercado’s residential and registration addresses as

“1402 79th Street, North Bergen, New Jersey 07047.” See Exhibit C-2. It also included the following statement:

Applicant’s Certification: I declare and certify:

1) Certify that the zip code on this application is the zip code of my residence . . . .

4) I have personally read and received a copy of this application. To the best of my knowledge and belief all statements contained in this application are true.

5) I understand that if I obtained this insurance through fraud or misrepresentation, my policy will be voided. I understand that the Assigned Company will not pay claims if the policy is voided.

Id.

After the accident, defendant conducted an investigation which revealed that “32-38 83rd Street, 1st Floor, East Elmhurst, New York 11370” was Barrietos-Mercado’s actual address. Due to the misrepresentation in the insurance application, defendant, on June 7, 2007, returned Barrietos-Mercado’s premium check and retroactively cancelled the insurance policy.

[*2]THE LAW

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact. St. Claire v. Empire Gen. Contr. & Painting Corp., 33 AD3d 611, 821 NYS2d 471 (2d Dept. 2006). See also Alvarez v. Prospect Hosp., 68 NY2d 320, 508 NYS2d 923 (1986). The motion shall be supported by an affidavit from a person with knowledge of the facts. See CPLR 3212(b). Once the moving party satisfies these standards, the burden shifts to the adverse party to demonstrate the existence of evidence, in admissible form, sufficient to require a trial. See Katona v. Low, 226 AD2d 433, 641 NYS2d 62 (2d Dept. 1996); De Santis v. Romeo, 177 AD2d 616, 576 NYS2d 323 (2d Dept. 1991).

Retroactive cancellation of an automobile insurance policy is permitted under New Jersey law but prohibited under New York law. Compare Palisades Safety & Ins. Ass’n v. Bastien, 175 N.J. 144, 814 A.2d 619 (N.J. 2003) (policy void ab initio because insured misrepresented his marital status), and Rutgers Cas. Ins. Co. v. LaCroix, 194 N.J. 515, 946 A.2d 1027 (N.J. 2008) (“When a named insured has engaged in conduct that has resulted in the voiding of an automobile insurance policy, courts have employed the rescission remedy to deny that insured the right to claim PIP benefits under the void policy.”) with Eagle Ins. Co. v. Singletary, 279 AD2d 56, 717N.Y.S.2d 351 (2nd Dept. 2000) (“New York law does not allow retroactive cancellation.”), and A.B. Med. Servs. PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8, 820 NYS2d 378 (App. Term, 2d Dept. 2006) (automobile insurance policy may not be retroactively cancelled on ground that insured obtained policy through fraud or misrepresentation). This conflict of law, although arising in the context of a motor vehicle accident, must be resolved by the conflict of law rules relevant to contracts, not torts. Eagle Ins. Co., 279 AD2d at 58 (citing Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 NY2d 309, 618 NYS2d 609 (1994)). The “center of gravity” or “grouping of contacts” inquiry determines which state has the most significant contacts with the dispute. See Careplus Med. Supply, Inc. v. Selective Ins. Co. of America, 2009 NY Slip. Op. 29109 (App. Term, 9th & 10th Jud. Dists. 2009). Generally, Courts look at the place of contracting, the place of negotiation and performance of the contract, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties to determine which state has the most significant contacts with the dispute. See id; Eagle Ins. Co., 279 AD2d at 59; Li-Ellie Service, Inc. v. AIU Ins. Co., 23 Misc 3d 1112(A), 2009 NY Slip. Op. 50719(U) (Civ. Ct. New York County 2009).

THE FINDINGS

New Jersey law applies to this action. The insurance policy involves a company doing business in New Jersey, and an individual representing at the time the contract was entered into that she is a resident of New Jersey and that the car would be garaged in that state.Thus, the validity of the making and cancellation of the contract must be determined under New Jersey law.

Under New Jersey law, no-fault benefits are unavailable when it is sought as part of an insured’s first-party claim for benefits under his or her own policy of insurance declared void because of material misrepresentations made to the insurer. Palisades Safety & Ins. Ass’n, 175 N.J. at 148. See also Remsden v. Dependable Ins. Co., 71 N.J. 587, 367 A.2d 421 (N.J. 1976); Lovett v. Alan Lazaroff & Co., 244 N.J. Super. 510, 582 A.2d 1274 (N.J. Sup. Ct. App. Div. 1990).

A misrepresentation, made in connection with an insurance policy, is material if, when made, “a reasonable insurer would have considered the misrepresented fact relevant to its [*3]concerns and important in determining its course of action. In effect, materiality [is] judged according to a test of prospective reasonable relevancy.” Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 542, 582 A.2d 1257 (1990). As we have stated, “[t]he right rule of law . . . is one that provides insureds with an incentive to tell the truth. It would dilute that incentive to allow an insured to gamble that a lie will turn out to be unimportant.” Id. at 541-42, 582 A.2d 1257. Accordingly, our test for materiality “encourages applicants to be honest.” Mass. Mut. v. Manzo, 122 N.J. 104, 115, 584 A.2d 190 (1991) (explaining that misrepresentation is material if it “naturally and reasonably influence[s] the judgment of the under-writer in making the contract at all, or in estimating the degree or character of the risk, or in fixing the rate of premiums”) (citation omitted). Palisades Safety & Ins. Ass’n, 175 N.J. at 148-49.

There is no doubt that Barrietos-Mercado’s statements influenced how defendant analyzed the risk and ultimately assigned the premium associated to the insurance policy. Consequently, her statements were material misrepresentations that warranted the retroactive cancellation of Barrietos-Mercado’s insurance policy.

Plaintiff, a health-care provider, stands in the shoes of its assignor. It acquires no greater rights than that of its assignor. Lech v. State Farm Ins. Co., 335 N.J. Super. 254, 762 A.2d 269 (N.J. Super. Ct. App. Div. 2000) (“While an assignee’s rights can be no greater than those of the assignor, neither can they be any less.”); accord A.B. Med. Servs. PLLC, 12 Misc 3d at 11 (“We hold that only innocent third-parties who are injured are protected . . . and not a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured’s no fault benefits.”). As a result, plaintiff may not recover first-party no-fault benefits from defendant.

Accordingly, defendant’s motion for summary judgment is granted. Plaintiff failed to demonstrate the existence of evidence, in admissible form, sufficient to require a trial. The action is dismissed.

This constitutes the decision and order of this Court.

Date: June 3, 2009________________________

Genine D. Edwards

Judge of Civil Court