February 14, 2007

First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50354(U))

https://www.beynensonlaw.com/case-law/first-help-acupuncture-p-c-v-state-farm-mut-auto-ins-co-2007-ny-slip-op-50354u/

Court: Appellate Term, Second Department
Decided: February 14, 2007
Citation: 2007 NY Slip Op 50354(U) · 14 Misc 3d 141(A)
Posture: Other motion
Outcome: Insurer prevailed
Issues: Discovery and procedure Fraudulent incorporation (Mallela)
Legal questions: Mallela defense: preclusion and discovery (see the maps)

Cite as

First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 14 Misc 3d 141(A), 2007 NY Slip Op 50354(U) (App Term, 2d Dept, 2d & 11th Jud Dists 2007)

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.

The provider's failure to comply fully with ordered discovery concerning fraudulent incorporation warranted dismissal under CPLR 3126. The insurer had obtained an order directing the provider to answer interrogatories and produce an appropriate deposition representative regarding ownership, operation and control. The insurer then moved to dismiss for continued noncompliance or, alternatively, for summary judgment, asserting that the provider's principal had not answered questions on those subjects. The provider did not oppose the motion. Following Lexington Acupuncture, P.C. v State Farm Ins. Co., which permitted discovery into fraudulent incorporation, the Appellate Term, Second Department, reversed the denial and granted the insurer's motion to dismiss.

Reported in New York Official Reports at First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50354(U))

[*1]

First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co.

2007 NY Slip Op 50354(U) [14 Misc 3d 141(A)]

Decided on February 14, 2007

Appellate Term, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 14, 2007

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

PRESENT:: PESCE, P.J., WESTON PATTERSON and GOLIA, JJ
2006-323 K C.

First Help Acupuncture, P.C. a/a/o Robert Patterson, Antonio Saravia and Teresa Ramov, Respondent,
against
State Farm Mutual Automobile Ins. Co., Appellant.

Appeal from an order of the Civil Court of the City of New York, Kings County (Robin S. Garson, J.), entered on November 16, 2005. The order denied defendant’s motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, for summary judgment.

Order reversed without costs and defendant’s motion to dismiss the complaint granted.

In this action, plaintiff seeks to recover first-party no-fault benefits for health care services rendered to its assignors. In a prior cross motion, defendant sought to dismiss the complaint for plaintiff’s failure to comply with discovery or, in the alternative, to compel discovery. In support thereof, defendant’s attorney noted that plaintiff’s principal had failed to provide discovery with respect to her ownership, operation and control of plaintiff (see generally State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90 [App Term, 2d & 11th Jud Dists 2006]). By order dated December 28, 2004, plaintiff was directed to respond to written interrogatories and to produce an appropriate representative for a deposition.

In the instant motion, defendant seeks to dismiss the complaint pursuant to CPLR 3126 for plaintiff’s continued failure to provide certain discovery, or, in the alternative, for summary judgment. In defendant’s moving papers, it is asserted that plaintiff’s principal failed to respond to any questions regarding the ownership, operation or control of plaintiff. Said motion was unopposed. The court below denied the motion.

In Lexington Acupuncture, P.C. v State Farm Ins. Co. (12 Misc 3d 90, supra), this court held that the defendant insurance company could properly seek discovery of information regarding whether plaintiff was fraudulently incorporated. Plaintiff failed to fully comply with [*2]the December 28, 2004 order. Moreover, plaintiff failed to oppose the
instant motion. In view of the foregoing, defendant’s motion to dismiss the complaint pursuant to CPLR 3126 should have been granted.

Pesce, P.J., Weston Patterson and Golia, JJ., concur.
Decision Date: February 14, 2007

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.

Mallela defense: preclusion and discovery

Open the full map

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 (rules on the question, but another ground decided the case)

Held the insurer could properly seek discovery on whether the provider was fraudulently incorporated, and dismissed the complaint because the principal refused to answer questions about ownership, operation and control.

Defense may be pursuedDefense barredThis decisionCites it or cited by itCited or followed

Of the 136 decisions on this question in the Second Department courts and the Court of Appeals, 112 (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)Fraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
Lexington Acupuncture, P.C. v State Farm Ins. Co. (2006 NY Slip Op 26251) FollowedThe provider's summary judgment motion was premature because discovery could establish fraudulent incorporation and reimbursement ineligibility.

Similar decisions

Lexington Acupuncture, P.C. v State Farm Ins. Co. (2007 NY Slip Op 51758(U))The provider's inadequate discovery responses and failure to oppose the insurer's motion supported striking its complaint under CPLR 3126 (3).
Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 27135)The insurer raised issues concerning the provider's actual operation and control that required discovery before summary judgment.
AVA Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 51756(U))The provider's failure to answer discovery or oppose the insurer's motion supported striking its complaint under CPLR 3126 (3).
Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50052(U))Fraudulent licensing under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense outside the 30-day preclusion rule.
New York First Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2009 NY Slip Op 51593(U))The provider's right to appeal directly from the discovery and amendment order terminated when judgment was entered in the action.