• 347-746-6001
  • contact@beynensonlaw.com
Beynenson Law
Beynenson Law
    • No-Fault Collections
    • Billing and Collections
    • Provider Defense
  • How We Work
  • About
    • All Research & Data
    • Search Case Law & Regulations
    • New Decisions
    • Decisions by Court
    • Legal Questions
    • No-Fault Regulations
    • Claim Process & Deadlines
    • Arbitrator Scorecard
    • Arbitration Results by Provider
    • Ask No-Fault AI
  • Contact
  • East Hampton, New York

  • 347-746-6001
  • contact@beynensonlaw.com
    • No-Fault Collections
    • Billing and Collections
    • Provider Defense
  • How We Work
  • About
    • All Research & Data
    • Search Case Law & Regulations
    • New Decisions
    • Decisions by Court
    • Legal Questions
    • No-Fault Regulations
    • Claim Process & Deadlines
    • Arbitrator Scorecard
    • Arbitration Results by Provider
    • Ask No-Fault AI
  • Contact
January 8, 2007

Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50052(U))

https://www.beynensonlaw.com/case-law/midwood-acupuncture-p-c-v-state-farm-mut-auto-ins-co-2007-ny-slip-op-50052u/

Court
Appellate Term, Second Department
Decided
January 8, 2007
Citation
2007 NY Slip Op 50052(U) · 14 Misc 3d 131(A)
Posture
Summary judgment
Outcome
Split result
Later treatment
Followed in 8 later decisions (see Cited by)
Issues
Fraudulent incorporation (Mallela) Discovery and procedure
Legal questions
Mallela defense: preclusion and discovery · Fraudulent incorporation (Mallela) (see the maps)
Cite as
Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 14 Misc 3d 131(A), 2007 NY Slip Op 50052(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.

Fraudulent licensing under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense outside the 30-day preclusion rule. The insurer raised questions about who operated and controlled the provider, making fraudulent-incorporation discovery material and necessary under CPLR 3101. Under Mallela, fraudulently incorporated providers are ineligible for reimbursement. Because essential opposition facts might exist but could not yet be stated, the provider's summary judgment cross motion was premature under CPLR 3212 (f). The Appellate Term, Second Department, modified the order to deny that cross motion without prejudice to renewal after discovery. It upheld denial of the insurer's severance motion under CPLR 603 because the five claims shared potential incorporation issues and the insurer showed no prejudice to a substantial right.

Reported in New York Official Reports at Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50052(U))

[*1]
Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co.
2007 NY Slip Op 50052(U) [14 Misc 3d 131(A)]
Decided on January 8, 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 January 8, 2007

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS


PRESENT: : PESCE, P.J., GOLIA and BELEN, JJ
2006-1 K C.
Midwood Acupuncture, P.C. a/a/o Williams Bernadette, Wesley Lewis, Ala Pinhasov, Martines Ivelka, Paulino Wendy, 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 (Eileen Nadelson, J.), entered October 4, 2005. The order denied defendant’s motion to sever the causes of action and granted plaintiff’s cross motion for summary judgment.

Order modified by denying plaintiff’s cross motion for summary judgment without prejudice to renewal upon the completion of discovery; as so modified, affirmed without costs.

Plaintiff commenced this action to recover first-party no-fault benefits as the assignee of five assignors. The claims arose out of four separate accidents, and defendant moved to sever the claims into separate actions pursuant to CPLR 603. Plaintiff cross-moved for summary judgment. By order entered October 3, 2005, the court below granted plaintiff’s cross motion and denied defendant’s motion as moot.

In State Farm Mut. Auto Ins. Co. v Mallela (4 NY3d 313 [2005]), the Court of Appeals held that fraudulently incorporated medical corporations were not entitled to reimbursement of no-fault benefits. The Court noted that 11 NYCRR 65-3.16 (a) (12), which states that “[a] provider of health care services is not eligible for reimbursement under section 5102 (a) (1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement,” specifically “excluded from the meaning of basic economic loss’ payments made to unlicensed or fraudulently licensed providers, thus rendering them ineligible for reimbursement” (Mallela, 4 NY3d at 320). The defense that a provider is fraudulently licensed and hence ineligible for reimbursement of no-fault benefits under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense and is therefore not subject to the 30-day preclusion rule (see First Help Acupuncture P.C. v State Farm Ins. Co., 12 Misc 3d 130[A], 2006 NY Slip Op 51043[U] [App [*2]Term, 2d & 11th Jud Dists]; see also Allstate Ins. Co. v Belt Parkway Imaging,
P.C., ___ AD3d ___, 2006 NY Slip Op 07279 [1st Dept]; Metroscan Imaging P.C. v GEICO Ins. Co., 13 Misc 3d 35 [App Term, 2d & 11th Jud Dists 2006]). Defendant’s opposition papers suffice to raise issues as to who really operated and controlled plaintiff (see Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90 [App Term, 2d & 11th Jud Dists 2006]). Consequently, so much of defendant’s discovery requests as seek information regarding whether plaintiff was fraudulently incorporated are material and necessary (see CPLR 3101). Accordingly, plaintiff’s cross motion for summary judgment was premature pending the completion of discovery (see CPLR 3212 [f]; Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90, supra) since the opposition papers set forth that facts essential to justify opposition may exist but cannot be stated (see CPLR 3212 [f]). In view of the foregoing, the court below should have denied said cross motion without prejudice to renewal upon the completion of discovery.

Defendant’s answer asserts, inter alia, that plaintiff was fraudulently incorporated, thereby indicating that the five claims are likely to raise common issues of law or fact (cf. Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co., 12 AD3d 185 [2004]). Since defendant did not otherwise show prejudice to a substantial right, it was not an improvident exercise of discretion for the court below to deny defendant’s motion to sever (see e.g. McCrimmon v County of Nassau, 302 AD2d 372 [2003]).

Pesce, P.J., Golia and Belen, JJ., concur.
Decision Date: January 8, 2007

Legal questions (2)

Questions 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

Held the fraudulent-licensing defense nonwaivable and not subject to preclusion, found the insurer's papers raised issues about who controlled the provider, and denied the provider's summary judgment as premature pending discovery on incorporation.

  • Court of AppealsCt App 1
  • Appellate DivisionApp Div 7
  • Appellate TermApp Term 72
  • Trial courtsTrial 56
2005, Court of Appeals: 1 decision (1 Defense may be pursued)2021, Appellate Division: 1 decision (1 Defense may be pursued)2019, Appellate Division: 2 decisions (1 Defense may be pursued, 1 Defense barred)2017, Appellate Division: 1 decision (1 Defense may be pursued)2016, Appellate Division: 1 decision (1 Defense may be pursued)2011, Appellate Division: 1 decision (1 Defense may be pursued)2008, Appellate Division: 1 decision (1 Defense may be pursued)2019, Appellate Term: 1 decision (1 Defense may be pursued)2018, Appellate Term: 2 decisions (2 Defense may be pursued)2017, Appellate Term: 2 decisions (2 Defense may be pursued)2014, Appellate Term: 2 decisions (2 Defense may be pursued)2013, Appellate Term: 5 decisions (5 Defense may be pursued)2012, Appellate Term: 8 decisions (8 Defense may be pursued)2011, Appellate Term: 8 decisions (7 Defense may be pursued, 1 Defense barred)2010, Appellate Term: 9 decisions (7 Defense may be pursued, 2 Defense barred)2009, Appellate Term: 7 decisions (7 Defense may be pursued)2008, Appellate Term: 8 decisions (7 Defense may be pursued, 1 Defense barred)2007, Appellate Term: 7 decisions (7 Defense may be pursued)2006, Appellate Term: 6 decisions (6 Defense may be pursued)2025, Appellate Term: 7 decisions (7 Defense may be pursued)2023, Trial courts: 2 decisions (2 Defense may be pursued)2021, Trial courts: 4 decisions (3 Defense may be pursued, 1 Defense barred)2019, Trial courts: 1 decision (1 Defense may be pursued)2017, Trial courts: 4 decisions (2 Defense may be pursued, 2 Defense barred)2015, Trial courts: 3 decisions (3 Defense may be pursued)2013, Trial courts: 2 decisions (1 Defense may be pursued, 1 Defense barred)2012, Trial courts: 6 decisions (1 Defense may be pursued, 5 Defense barred)2011, Trial courts: 1 decision (1 Defense barred)2010, Trial courts: 3 decisions (3 Defense barred)2009, Trial courts: 4 decisions (3 Defense may be pursued, 1 Defense barred)2008, Trial courts: 6 decisions (5 Defense may be pursued, 1 Defense barred)2007, Trial courts: 2 decisions (2 Defense may be pursued)2006, Trial courts: 5 decisions (5 Defense may be pursued)2005, Trial courts: 9 decisions (5 Defense may be pursued, 4 Defense barred)2025, Trial courts: 2 decisions (2 Defense may be pursued)2026, Trial courts: 2 decisions (2 Defense may be pursued)This decision
20052010201520202025
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. One decision in other departments that cites or is cited by this one is on the full map.

Fraudulent incorporation (Mallela)

Open the full map

On the merits, when may a no-fault insurer withhold payment because unlicensed persons own or control the provider (Mallela)?

This decision: Evidence of unlicensed ownership/control enough to proceed, but not resolved (rules on the question, but another ground decided the case)

Held the fraudulent-licensing defense nonwaivable and not subject to the 30-day preclusion rule, and that the insurer's papers raised issues as to who really controlled the provider, so summary judgment awaited discovery.

  • Court of AppealsCt App 3
  • Appellate DivisionApp Div 8
  • Appellate TermApp Term 26
  • Trial courtsTrial 24
2019, Court of Appeals: 1 decision (1 Defense established)2005, Court of Appeals: 1 decision (1 Defense established)2025, Court of Appeals: 1 decision (1 Not a Mallela ground)2019, Appellate Division: 4 decisions (2 Defense established, 2 Defense not established)2017, Appellate Division: 2 decisions (1 Defense established, 1 Defense not established)2016, Appellate Division: 1 decision (1 Triable issue)2008, Appellate Division: 1 decision (1 Triable issue)2020, Appellate Term: 1 decision (1 Not a Mallela ground)2019, Appellate Term: 1 decision (1 Defense established)2013, Appellate Term: 1 decision (1 Defense established)2012, Appellate Term: 1 decision (1 Not a Mallela ground)2010, Appellate Term: 6 decisions (2 Defense established, 1 Triable issue, 2 Defense not established, 1 Not a Mallela ground)2009, Appellate Term: 4 decisions (2 Defense established, 1 Triable issue, 1 Not a Mallela ground)2008, Appellate Term: 4 decisions (1 Defense established, 1 Triable issue, 2 Defense not established)2007, Appellate Term: 5 decisions (1 Defense established, 4 Triable issue)2006, Appellate Term: 2 decisions (1 Triable issue, 1 Defense not established)2015, Appellate Term: 1 decision (1 Defense not established)2019, Trial courts: 1 decision (1 Triable issue)2017, Trial courts: 2 decisions (1 Defense not established, 1 Not a Mallela ground)2015, Trial courts: 2 decisions (1 Defense established, 1 Not a Mallela ground)2013, Trial courts: 1 decision (1 Defense not established)2010, Trial courts: 1 decision (1 Not a Mallela ground)2009, Trial courts: 3 decisions (1 Defense established, 2 Triable issue)2008, Trial courts: 4 decisions (1 Defense established, 2 Triable issue, 1 Defense not established)2007, Trial courts: 2 decisions (1 Defense established, 1 Triable issue)2006, Trial courts: 3 decisions (3 Triable issue)2005, Trial courts: 4 decisions (3 Defense established, 1 Defense not established)2004, Trial courts: 1 decision (1 Not a Mallela ground)This decision
20052010201520202025
Defense establishedTriable issueDefense not establishedNot a Mallela groundThis decisionCites it or cited by itCited or followed

Of the 61 decisions on this question in the Second Department courts and the Court of Appeals, 19 (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).
  • First Help Acupuncture P.C. v State Farm Ins. Co. (2006 NY Slip Op 51043(U))Fraudulent licensing under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense outside the 30-day preclusion rule.
  • Allstate Ins. Co. v Belt Parkway Imaging, P.C. (2006 NY Slip Op 07279)Insurers may withhold payment of pre-April 4, 2002 claims from fraudulently incorporated providers under 11 NYCRR 65-3.16 (a) (12).
  • Metroscan Imaging, P.C. v GEICO Ins. Co. (2006 NY Slip Op 26319)A fraudulently incorporated medical provider cannot recover unpaid no-fault benefits even for services predating the licensing regulation.
  • 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.
  • Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co. (2004 NY Slip Op 07960) Contrasted (cf., but see)The provider's 68 assigned claims were properly severed because individual issues predominated and a joint trial risked confusion.

Cited by (12)

A label shows how the later decision treated this one.

  • 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.
  • Lexington Acupuncture, P.C. v General Assur. Co. (2012 NY Slip Op 22047) FollowedAn insurer may obtain Mallela discovery on sufficient allegations of fraudulent incorporation despite not pleading that defense.
  • Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 27135) FollowedThe insurer raised issues concerning the provider's actual operation and control that required discovery before summary judgment.
  • Medical Polis, P.C. v Progressive Specialty Ins. Co. (2012 NY Slip Op 50342(U)) FollowedAn insurer may obtain discovery on an unpleaded Mallela defense when sufficient allegations of fraudulent incorporation support the request.
  • Eastern Med., P.C. v Allstate Ins. Co. (2008 NY Slip Op 28109) FollowedAn insurer's fraudulent incorporation defense is not precluded by an untimely denial because provider eligibility is a statutory prerequisite.
  • New York Cent. Mut. Ins. v McGee (2009 NY Slip Op 52385(U)) FollowedThe insurer's common-ownership allegations did not justify joining all provider defendants, and its requested injunction lacked evidentiary support.
  • 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.
  • Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51551(U)) FollowedThe insurer established a meritorious defense through an investigator's affidavit raising issues about who operated and controlled the provider.
  • Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51529(U))The insurer established entitlement to corporate eligibility discovery, but failed to justify disclosure of the owner's personal tax returns.
  • 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).
Show all 12 citing decisions
  • VA Acutherapy Acupuncture, P.C. v State Farm Ins. Co. (2007 NY Slip Op 51217(U))
  • Lexington Acupuncture, P.C. v State Farm Ins. Co. (2007 NY Slip Op 51758(U))

Similar decisions

  • Midborough Acupuncture P.C. v State Farm Ins. Co. (2006 NY Slip Op 26360)An insurer's fraudulent-incorporation defense survives an untimely denial, and discovery into provider ownership and licensing is material.
  • First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50354(U))The provider's failure to comply fully with ordered discovery concerning fraudulent incorporation warranted dismissal under CPLR 3126.
  • North Acupuncture, P.C. v State Farm Ins. Co. (2006 NY Slip Op 52523(U))The provider failed to establish summary judgment entitlement through competent evidence and could not cure its moving papers in reply.
  • Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co. (2006 NY Slip Op 51879(U))The provider's attorney affirmation failed to establish the admissibility of its claim forms or a prima facie entitlement to judgment.
  • New York First Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2009 NY Slip Op 52217(U))A fraudulent-incorporation defense need not be asserted in a timely denial of claim.
Beynenson Law

No-fault collections for healthcare providers across New York State, with billing available together with collections.

Request a free claims review
About the firm

Contact

  • East Hampton, New York

  • 347-746-6001
  • contact@beynensonlaw.com
  • Contact form

Services

  • No-Fault Collections
  • Billing and Collections
  • Provider Defense

Research & Data

  • All Research & Data
  • Search Case Law & Regulations
  • New Decisions
  • Decisions by Court
  • Legal Questions
  • No-Fault Regulations
  • Claim Process & Deadlines
  • Arbitrator Scorecard
  • Arbitration Results by Provider
  • Ask No-Fault AI

©2026 The Beynenson Law Group, PC. Terms of Use Privacy Policy

Site by khrystev.dev

Attorney Advertising. Prior results do not guarantee a similar outcome. This website provides general information, not legal advice, and using it does not create an attorney-client relationship. Do not send confidential information through this site.