June 7, 2006
Lexington Acupuncture, P.C. v State Farm Ins. Co. (2006 NY Slip Op 26251)
https://www.beynensonlaw.com/case-law/lexington-acupuncture-p-c-v-state-farm-ins-co-2006-ny-slip-op-26251/
- Decided
- June 7, 2006
- Citation
- 2006 NY Slip Op 26251 · 12 Misc 3d 90
- Posture
- Summary judgment
- Outcome
- Insurer prevailed
- Later treatment
- Followed in 6 later decisions (see Cited by)
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 Lexington Acupuncture, P.C. v State Farm Ins. Co. (2006 NY Slip Op 26251)
| Lexington Acupuncture, P.C. v State Farm Ins. Co. |
| 2006 NY Slip Op 26251 [12 Misc 3d 90] |
| Accepted for Miscellaneous Reports Publication |
| AT2 |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, August 30, 2006 |
[*1]
| Lexington Acupuncture, P.C., as Assignee of Wilber Soto, Respondent, v State Farm Insurance Company, Appellant. |
Supreme Court, Appellate Term, Second Department, June 7, 2006
APPEARANCES OF COUNSEL
McDonnell & Adels, P.C., Garden City (Todd M. Hellman of counsel), for appellant. Gary Tsirelman, P.C., Brooklyn (Darya Klein of counsel), for respondent.
{**12 Misc 3d at 91} OPINION OF THE COURT
Memorandum.
Order reversed without costs, plaintiff’s motion for summary judgment denied and defendant’s cross motion to dismiss the complaint or, in the alternative, compel responses to its discovery demands granted to the extent of directing that plaintiff shall respond to those discovery demands which seek information regarding whether plaintiff was fraudulently incorporated, within 30 days of the date of the order entered hereon, or within such other reasonable period as the parties stipulate to in writing.
In this action to recover $1,400 in first-party no-fault benefits for health care services rendered to its assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists 2003]). Contrary to defendant’s contention, plaintiff’s affidavit was sufficient to establish that it mailed the claims to defendant, and its remaining contentions have no merit. The burden then shifted to defendant to show a [*2]triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).
In February 2003 defendant conducted a preclaim independent medical examination of plaintiff’s assignor after which defendant’s examiner determined that the assignor needed no more acupuncture as of that date. Defendant subsequently denied each claim, by denials dated March, April and May 2003, based on a February report finding the lack of medical necessity. Defendant annexed an unsworn copy of said report to its opposition papers which is in inadmissible form and is, therefore, insufficient to warrant denial of plaintiff’s motion for summary judgment (see A.B. Med. Servs. PLLC v Electric Ins. Co., 7 Misc{**12 Misc 3d at 92} 3d 130[A], 2005 NY Slip Op 50542[U] [App Term, 2d & 11th Jud Dists 2005]). Moreover, defendant’s June 2003 general denial of claim form is fatally defective since numerous portions thereof are blank/incomplete (see e.g. Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]). Accordingly, defendant is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Nevertheless, the defense that plaintiff, a provider of health care services, is not eligible for reimbursement of no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) is not subject to preclusion (see A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co., 11 Misc 3d 137[A], 2006 NY Slip Op 50504[U] [App Term, 2d & 11th Jud Dists 2006]). Moreover, summary judgment should be denied where the opposition papers set forth that facts essential to justify opposition may exist but cannot then be stated (see CPLR 3212 [f]).
In Mallela (4 NY3d 313 [2005], supra), the Court of Appeals found that insurers may withhold payment of first-party no-fault benefits provided by fraudulently licensed medical service corporations to which patients have assigned their claims. Consequently, we find that discovery requests seeking corporate information to determine whether the owners of a medical service corporation are improperly licensed are germane to the question of whether said corporation is eligible for reimbursement. Pursuant to 11 NYCRR 65-3.16 (a) (12),
“[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 necessary to perform such services in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.”
The Education Law provides that only persons licensed or certified can practice acupuncture in the State of New York (see Education Law § 8212). The Business Corporation Law provides that each shareholder, director or officer of the corporation must be licensed to practice the profession for which the corporation was organized (see Business Corporation Law § 1503 [b]; § 1507).
We find that defendant’s papers establish that so much of defendant’s discovery requests as seek information regarding{**12 Misc 3d at 93} whether plaintiff was fraudulently incorporated are material and necessary (see CPLR 3101) and, thus, said papers set forth that facts essential to justify opposition may exist but cannot now be stated. Consequently, plaintiff’s motion for summary judgment is premature pending the completion of discovery (see CPLR 3212 [f]). It is noted that plaintiff did not oppose the cross motion in the court below. Accordingly, plaintiff’s motion for summary judgment is denied and defendant’s cross motion is granted to the extent of compelling plaintiff to respond to defendant’s discovery demands which seek information regarding the ownership, control and licensing of plaintiff corporation, within 30 days of the date of the order entered hereon. [*3]
Golia, J.P. (concurring with the result only): While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I am constrained to agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.
Rios and Belen, JJ., concur; Golia, J.P., concurs in a separate memorandum.
Legal questions (4)
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.
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 ineligibility defense is not subject to preclusion and discovery into ownership, control and licensing was material and necessary, so the provider's motion was premature and discovery compelled.
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.
On summary judgment or another pretrial motion, what must a no-fault claimant show to establish its prima facie case?
This decision: Claimant's proof held to make out its prima facie case (rules on the question, but another ground decided the case)
Held the provider's affidavit sufficiently established mailing of the claims and that payment was overdue, rejecting the insurer's challenge to its prima facie showing.
Of the 1,065 decisions on this question in the Second Department courts and the Court of Appeals, 513 (this one included) are in the same category.
Did a party’s evidence establish that it mailed a no-fault claim, denial, verification request or examination notice?
This decision: The provider's or claimant's proof established mailing of its claim form, NF-2 or verification response (rules on the question, but another ground decided the case)
Rejected the insurer's challenge and held the provider's affidavit sufficient to establish that it mailed the claims, though the provider's motion was denied as premature pending discovery on fraudulent incorporation.
Of the 1,400 decisions on this question in the Second Department courts and the Court of Appeals, 106 (this one included) are in the same category.
Did the insurer’s proof establish lack of medical necessity, and did the provider’s evidence rebut it?
This decision: Insurer's medical-necessity proof failed (conclusory, no factual basis or rationale, inadmissible, not credited) (rules on the question, but another ground decided the case)
Held the insurer's unsworn IME report inadmissible and therefore insufficient to defeat the provider's motion on medical necessity.
Of the 617 decisions on this question in the Second Department courts and the Court of Appeals, 109 (this one included) are in the same category.
Cited in this decision
A label shows how this decision treated the case it cites.
- Mary Immaculate Hosp. v Allstate Ins. Co. (2004 NY Slip Op 02359)The hospitals established entitlement to summary judgment by proving that statutory billing forms were mailed and received and payment was overdue.
- Amaze Med. Supply v Eagle Ins. Co. (2003 NY Slip Op 51701(U))A provider's completed claim forms establish its prima facie case without additional medical proof when the insurer is precluded.
- A.B. Med. Servs. PLLC v Electric Ins. Co. (2005 NYSlipOp 50542(U)) FollowedThe assignor's selective IME attendance established receipt of all listed requests and raised a medical-necessity issue on the no-show denials.
- Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co. (2005 NY Slip Op 02235)The insurer failed to prove mailing of its denial, and the denial was incomplete even if timely.
- 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).
- A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co. (2006 NY Slip Op 50504(U)) FollowedThe providers obtained partial summary judgment because denials were untimely or defenses lacked evidentiary support.
Cited by (17)
A label shows how the later decision treated this one.
- 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.
- Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50052(U)) FollowedFraudulent licensing under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense outside the 30-day preclusion rule.
- Citywide Social Work & Psychological Servs., P.L.L.C. v State Farm Mut. Auto. Ins. Co. (2006 NY Slip Op 51831(U)) FollowedAn untimely denial does not preclude a defense that a provider is fraudulently licensed and ineligible for no-fault reimbursement.
- 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.
- First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50354(U)) FollowedThe provider's failure to comply fully with ordered discovery concerning fraudulent incorporation warranted dismissal under CPLR 3126.
- 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.
- Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno, Gerbino & Soriano LLP (2006 NY Slip Op 26372)An insurer need not show conduct tantamount to fraud before obtaining litigation discovery on a provider's alleged fraudulent incorporation.
- Complete Orthopedic Supplies, Inc. v State Farm Ins. Co. (2007 NY Slip Op 27192)A fee schedule dispute remained triable because the insurer established neither a proper scheduled fee nor a comparable fee for the goods.
- 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.
Show all 17 citing decisions
- Quality Med. Care, P.C. v New York Cent. Mut. Fire Ins. Co. (2010 NY Slip Op 50262(U))
- Bay Plaza Chiropractic, P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51925(U))
- Cambridge Med., P.C. v Nationwide Prop. & Cas. Ins. Co. (2008 NY Slip Op 50629(U))
- Clinton Med. Off. P.C. v Progressive Max Ins. Co. (2026 NY Slip Op 26094)
- VA Acutherapy Acupuncture, P.C. v State Farm Ins. Co. (2007 NY Slip Op 51217(U))
- Downtown Acupuncture PC v State Wide Ins. Co. (2015 NY Slip Op25371)
- Okslen Acupuncture, PC v State Farm Mut. Auto. Ins. Co. (2021 NY Slip Op 50652(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.
- Midborough Acupuncture, P.C. v State Farm Ins. Co. (2008 NY Slip Op 28291)The insurer established grounds for discovery concerning the provider's possible fraudulent incorporation, including corporate tax information.
- Montgomery Med., P.C. v State Farm Ins. Co. (2006 NY Slip Op 51116(U))The insurer's evidence raised a factual issue of fraudulent incorporation despite denials issued 53 days after the provider's EUO. Under 11 NYCRR 65-3.8 (a) (1), verification was received when the EUO occurred; the late denials precluded medical necessity and concurrent-care defenses.
- 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.
- 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.