Decided on August 11, 2017

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Decided on August 11, 2017

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Korsunskiy Legal Group, P.C. (Michael Hoenig, Esq.), for appellant. McDonnell & Adels, P.C. (Linda A. Mule, Esq.), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Wavny Toussaint, J.), entered September 5, 2013. The order, insofar as appealed from, granted defendant’s motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, to compel plaintiff to respond to defendant’s discovery demands, to the extent of compelling plaintiff to respond to defendant’s discovery demands and to produce plaintiff’s owner for an examination before trial, and denied plaintiff’s cross motion for summary judgment.

ORDERED that the order, insofar as appealed from, is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from so much of an order of the Civil Court as denied plaintiff’s cross motion for summary judgment and granted defendant’s motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, to compel plaintiff to respond to defendant’s notice for discovery and inspection, and its “demand for verified written interrogatories,” to the extent of compelling plaintiff to provide defendant with, among other things, verified responses to defendant’s discovery demands, including “W-2(s), 1099(s) & 941 tax forms; office records, bank records, management, billing & rental agreements; annual salary of owner and employee; [and] proof of payment regarding use of office space,” and to produce plaintiff’s owner for an examination before trial.

Plaintiff argues that defendant is not entitled to the discovery ordered by the Civil Court. However, inasmuch as plaintiff failed to timely challenge the propriety of defendant’s notice for discovery and inspection (see CPLR 3122 [a]) or timely object to defendant’s “demand for verified written interrogatories” (see CPLR 3133 [a]), plaintiff is obligated to produce the information sought except as to matters which are privileged or palpably improper (see Fausto v City of New York, 17 AD3d 520 [2005]; Marino v County of Nassau, 16 AD3d 628 [2005]; Midborough Acupuncture, P.C. v State Farm Ins. Co., 21 Misc 3d 10 [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d [*2]136[A], 2008 NY Slip Op 51529[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d Dept, 2d & 11th Jud Dists 2006]). While discovery demands which concern matters relating to defenses which a defendant is precluded from raising are considered palpably improper and may not be discoverable, notwithstanding the fact that plaintiff did not specifically object thereto (see Midborough Acupuncture, P.C., 21 Misc 3d 10; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]; A.B. Med. Servs. PLLC, 11 Misc 3d 71), upon a review of the record, we find that the discovery at issue is not palpably improper (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; All Boro Psychological Servs., P.C. v Allstate Ins. Co., 39 Misc 3d 9 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). In addition, defendant is entitled to an examination before trial of plaintiff’s owner (see CPLR 3101 [a]; Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]).

In view of the foregoing, plaintiff’s contention that it is entitled to summary judgment lacks merit because, as the Civil Court noted, plaintiff’s motion is premature (see CPLR 3212 [f]; All Boro Psychological Servs., 39 Misc 3d 9).

Accordingly, the order, insofar as appealed from, is affirmed.

PESCE, P.J., ALIOTTA and SOLOMON, JJ., concur.

Gabriel & Shapiro, LLC (Steven F. Palumbo, Esq.), for appellant. Gullo & Associates, LLP ( Cristina Carollo, Esq.), for respondent.

Appeal from an order of the District Court of Suffolk County, Third District (C. Stephen Hackeling, J.), dated January 27, 2016. The order granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s cross motion for summary judgment.

ORDERED that the order is modified by providing that defendant’s motion for summary judgment dismissing the complaint is denied; as so modified, the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the District Court which granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s cross motion for summary judgment.

“The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case” (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). The failure to make such a prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers (see id.). Here, the affirmed report of the doctor who had performed an independent medical examination (IME) of the assignor contained contradictory statements (see e.g. Black v County of Dutchess, 87 AD3d 1097 [2011]; Coscia v 938 Trading Corp., 283 AD2d 538 [2001]) as to whether the injury to plaintiff’s assignor’s right knee was “partially causally related to” the accident at issue or caused by “preexisting degenerative changes.” Furthermore, an MRI report that was reviewed by the IME doctor did not set forth an impression of degenerative changes. Nor did the IME doctor indicate that he had examined an operative report on the arthroscopy at issue. Thus, contrary to the determination of the District Court, defendant failed to make a prima facie showing of lack of causation. Consequently, defendant’s motion should have been denied.

Plaintiff’s contention that its cross motion for summary judgment should have been granted lacks merit. Plaintiff failed to establish its prima facie entitlement to judgment as a [*2]matter of law since it did not establish either that defendant had failed to deny the claim within the requisite 30-day period (see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 [2015]), or that defendant had issued a timely denial of the claim that was conclusory, vague or without merit as a matter of law (see Westchester Med. Ctr. v Nationwide Mut. Ins. Co., 78 AD3d 1168 [2010]; Ave T MPC Corp. v Auto One Ins. Co., 32 Misc 3d 128[A], 2011 NY Slip Op 51292[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]). In view of the foregoing, we do not reach plaintiff’s remaining contention.

Accordingly, the order is modified by providing that defendant’s motion for summary judgment dismissing the complaint is denied.

MARANO, P.J., TOLBERT and GARGUILO, JJ., concur.

[*1]

The Law Office of Jason Tenenbaum, P.C., Garden City, NY, for appellant.

In an action for a judgment declaring that the plaintiff is not obligated to pay certain no-fault insurance benefits on the ground that the services rendered to the defendant’s assignor were not medically necessary, the plaintiff appeals from an order of the Supreme Court, Nassau County (Brown, J.), entered September 22, 2016, which denied its unopposed motion pursuant to CPLR 3215 for leave to enter a default judgment upon the defendant’s failure to appear or answer the complaint.

Ordered that the order is affirmed, without costs or disbursements.

In February 2016, the plaintiff commenced this action pursuant to Insurance Law § 5106 (c) seeking de novo adjudication of a dispute regarding the defendant’s entitlement to receive payment for medical services rendered to its assignor. After the defendant did not appear or answer the complaint, the plaintiff moved pursuant to CPLR 3215 for leave to enter a default judgment. The Supreme Court denied the plaintiff’s unopposed motion on the ground that the plaintiff had not submitted sufficient facts to support its claim. On this appeal, we affirm, but for a different reason.

A plaintiff seeking leave to enter a default judgment must file proof of proper service of the summons and the complaint, the defendant’s default, and the facts constituting the claim (see CPLR 3215 [f]; Fried v Jacob Holding, Inc., 110 AD3d 56, 59 [2013]).

The plaintiff averred that it served the defendant, a foreign limited liability company not authorized to conduct business in New York, pursuant to Limited Liability Company Law § 304. As relevant to the plaintiff’s contentions, that statute requires three things. First, service upon the unauthorized foreign limited liability company may be made by personal delivery of the summons and complaint, with the appropriate fee, to the Secretary of State (see Limited Liability Company Law § 304 [b]). Second, in order for the personal delivery to the Secretary of State to be “sufficient,” the plaintiff must also give the defendant direct notice of its delivery of the process to the Secretary of State, along with a copy of the process. The direct notice may be sent to the defendant by registered mail, return receipt requested, to the defendant’s last known address (see Limited Liability Company Law § 304 [c] [2]). Third, after process has been delivered to the Secretary of State and direct notice of that service has been sent to the defendant, the plaintiff must file proof of service with the clerk of the court. That proof of service must be in the form of an “affidavit of compliance.” The affidavit of compliance must be filed with the return receipt within 30 days after the plaintiff [*2]has received the return receipt from the post office. Service of process shall be complete 10 days after the affidavit of compliance has been filed with the clerk with a copy of the summons and complaint (Limited Liability Company Law § 304 [c] [2]). Strict compliance with Limited Liability Company Law § 304 is required, including as to the filing of an “affidavit of compliance” (see Interboro Ins. Co. v Tahir, 129 AD3d 1687, 1689 [2015]; cf. Flick v Stewart-Warner Corp., 76 NY2d 50, 57 [1990]). Where the plaintiff has failed to demonstrate strict compliance, the plaintiff will not be entitled to a default judgment (see Interboro Ins. Co. v Tahir, 129 AD3d at 1689). Here, the plaintiff failed to submit an affidavit of compliance with the return receipt within 30 days after it received the return receipt from the post office. Accordingly, the plaintiff’s unopposed motion for leave to enter a default judgment was properly denied (see id.).

In light of our determination, we need not address the plaintiff’s remaining contention. Balkin, J.P., Austin, Roman and LaSalle, JJ., concur.

The Law Office of Printz & Goldstein (Lawrence J. Chanice, Esq.), for appellant. Law Offices of Ilona Finkelshteyn (Emilia I. Rutigliano, Esq.), for respondent.

Appeal from a judgment of the Civil Court of the City of New York, Queens County (Larry Love, J.), entered October 1, 2015. The judgment, after a nonjury trial, awarded plaintiff the principal sum of $1,051.81.

ORDERED that the judgment is reversed, with $30 costs, and the matter is remitted to the Civil Court for the entry of a judgment in favor of plaintiff in the principal sum of $549.18 on the first cause of action, following a calculation of statutory interest and an assessment of attorney’s fees thereon, and for a new trial on the second cause of action.

In this action by a provider to recover assigned first-party no-fault benefits for various medical supplies it had provided to its assignor, a nonjury trial was held, limited to defendant’s defense of lack of medical necessity (see CPLR 3212 [g]). As to the medical necessity of the cervical traction unit for which recovery is sought in the second cause of action, which is the sole issue raised on appeal, defendant’s expert witness testified that he had reviewed the assignor’s medical records and that the cervical traction unit was not medically necessary. After awarding plaintiff a directed verdict on the first cause of action, the Civil Court stated, with regard to the second cause of action, that it had “no choice but to find in favor of the plaintiff,” as there was no proof as to the findings of the author of the peer review report upon which the denial of claim had been based, and therefore the court had no way of knowing whether defendant’s expert witness agreed or disagreed with the original peer reviewer. A judgment was subsequently entered awarding plaintiff $549.18 on the first cause of action and $502.63 on the second cause [*2]of action, as well as statutory interest and attorney’s fees.

The Civil Court erred in refusing to consider expert testimony from the witness who did not prepare the peer review report on the ground that the peer review report was not admitted into evidence, and in indicating that testimony from the author of the peer review report was required. Testimony of an expert witness who did not prepare the peer review report upon which an insurer’s denial of claim was based can be used to prove a lack of medical necessity (see e.g. Metropolitan Med. Supplies, LLC v GEICO Ins. Co., 36 Misc 3d 141[A], 2012 NY Slip Op 51490[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Moreover, at trial, an insurer cannot use a peer review report to prove its defense of lack of medical necessity (see e.g. A-Quality Med. Supply v GEICO Gen. Ins. Co., 39 Misc 3d 24 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). While the expert witness’s testimony should be limited to the basis for the denial as set forth in the peer review report (e.g. Park Slope Med. & Surgical Supply, Inc. v Progressive Ins. Co., 34 Misc 3d 154[A], 2012 NY Slip Op 50349[U] [App Term, 2d, 11th & 13th Jud Dists 2012]), it is plaintiff’s burden to make an appropriate objection in the event the testimony goes beyond the basis for the denial and, if necessary, produce the peer review report. As plaintiff here failed to make an appropriate objection, it was error for the Civil Court to have disregarded the testimony of defendant’s witness. Consequently, a new trial is required on the second cause of action.

Accordingly, the judgment is reversed and the matter is remitted to the Civil Court for the entry of a judgment in favor of plaintiff in the principal sum of $549.18 on the first cause of action, following a calculation of statutory interest and an assessment of attorney’s fees thereon, and for a new trial on the second cause of action.

WESTON, J.P., ALIOTTA and ELLIOT, JJ., concur.

[*1]

Cardillo Law PC, Brooklyn, NY (Harry A. Cardillo of counsel), for appellant.

Freiberg, Peck & Kang LLP, Armonk, NY (Yilo J. Kang of counsel), for respondent.

In an action for a judgment declaring that the plaintiff is not obligated to pay certain no-fault insurance benefits, the defendant appeals from an order of the Supreme Court, Queens County (Dufficy, J.), entered February 29, 2016, which denied its motion to extend its time to answer, or in the alternative, to compel the plaintiff to accept the untimely answer.

Ordered that the order is affirmed, with costs.

The plaintiff insurance company commenced this action against the defendant, seeking a judgment declaring that it was not obligated to pay certain no-fault insurance benefits because the defendant failed to appear for examinations under oath. The defendant filed an answer approximately 31/2 months after the statutory time to file an answer had expired. The plaintiff rejected the answer as untimely, and the defendant moved to extend its time to answer, or in the alternative, to compel the plaintiff to accept the untimely answer. The Supreme Court denied the motion, and the defendant appeals.

To compel the plaintiff to accept an untimely answer as timely or to extend the time for a defendant to answer, a defendant must provide a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action (see Ryan v Breezy Point Coop., Inc., 76 AD3d 523, 524 [2010]; Juseinoski v Board of Educ. of City of N.Y., 15 AD3d 353 [2005]). Here, the defendant submitted an answer which was verified only by its attorney and an affirmation from its attorney who did not have personal knowledge of the facts. These documents were insufficient to demonstrate that the defendant had a potentially meritorious defense to the action (see Salch v Paratore, 60 NY2d 851 [1983]; Ryan v Breezy Point Coop., Inc., 76 AD3d at 524; Juseinoski v Board of Educ. of City of N.Y., 15 AD3d 353 [2005]).

The parties’ remaining contentions either are without merit or have been rendered academic in light of our determination.

Accordingly, the Supreme Court providently exercised its discretion in denying the defendant’s motion. Dillon, J.P., Austin, Hinds-Radix and LaSalle, JJ., concur.

Decided on July 31, 2017

Civil Court of the City of New York, Kings County

CV-700505-13/BX

Plaintiff- Law Firm of Israel, Israel and Purdy, LLP by Scott H. Fisher, Esq.

Defendant- Law Firm of McCormick & Mattie, PC by Stafford Harmit, Esq.

The plaintiff, Quality Medical Care, PC, commenced this action against the defendant, Progressive Casualty Insurance Company, to recover first-party no-fault benefits for medical services rendered to their assignor-insured, Tammy Murphy, the insured pertaining to an automobile policy issued to her on August 2, 2011.

The plaintiff was represented by Scott H. Fisher, Esq., of counsel to the law firm of Israel, Israel and Purdy, LLP, and defendant was represented by Stafford Harmit, Esq., of counsel to the law firm of McCormick & Mattie, PC.

The bench trial in the above-captioned matter was conducted on June 2, 2017. Prior to the taking of any testimony the attorneys for the respective parties introduced a written Stipulation which, in relevant part, acknowledged that plaintiff had timely submitted a complete proof of claim to the defendant on or about August 20, 2012; that the business records of the plaintiff would be admitted into evidence as Exhibit 1 without objection and was attached to the Stipulation; that the business records of the defendant would be admitted into evidence as Exhibit 2 without objection and was attached to the Stipulation; acknowledged that defendant timely mailed a Denial of Claim form to the plaintiff on the date indicated therein, to wit: September 7, 2012, which form was contained within Exhibit 2; and that if any payments have been made by the defendant, the total disputed amount for the underlying bills is $1,979.30; that should there be an award in favor of the plaintiff the award should include statutory interests, attorney fees, costs and disbursements; and that the only issues to be decided at trial are those issues preserved in defendant’s denial of claim forms, to wit: based upon an investigation conducted by the defendant, the patient and the insured, Tammy Murphy, is not an eligible injured party on the basis of having violated Part VII-The General Provisions of the automobile policy for having made misrepresentations in the insurance application that constitute a condition [*2]precedent for coverage to be in effect.

The attorney for the plaintiff, Scott H. Fisher, Esq., after having submitted the aforementioned written Stipulation in evidence furthermore stated that the policy was issued on August 2, 2011, and that the patient (and assignor-insured), Tammy Murphy, misrepresented her address in the insurance application.

Essentially, this court must determine whether or not the patient misrepresented her address. Under no-fault law, the burden is on the defendant insurance company to establish the misrepresentation.

Pursuant to the submission of the written Stipulation and the attached evidentiary materials, plaintiff’s attorney took the posture that he had made out his prima facie case to entitle payment of the medical fees sought and rested on the record.

The attorney for the defendant insurance company, Stafford Harmitt, Esq., argued that based on the alleged misrepresentation made by the assignor-insured at the time she applied for automobile insurance that the insurance company had the right to deny the claim.

The defendant proceeded with its defense by calling Jerianne Green as a witness. Ms. Green identified herself as a claims adjuster and litigation specialist employed by the defendant for the past 13-½ years. Ms. Green testified that her job responsibilities required her to review lawsuits filed for payment on medical bills and to make the determination whether to pay the bills or to deny them, and if payment was to be denied she would defend the decision denying payment by testifying in Court. Ms. Green testified that she was familiar with the facts and circumstances of the case based on having reviewed the file in preparation for trial.

Without objection by plaintiff, Ms. Green provided a copy of the insurance policy application which was marked as Defendant’s Exhibit A. The policy application (Exhibit A) indicated that on August 2, 2011 the patient and the assignor-insured, Tammy Murphy, listed her address as being 116 Bidwell Terrace, Rochester New York 14609. In addition, Ms. Green without objection by plaintiff provided certified copies of two (2) motor vehicle accident reports, NYS Department of Motor Vehicle forms MV-104 and MV-104AN, marked as Defendant’s Exhibits B-1 and B-2, respectively.

The significance of defendant’s Exhibits B-1 and B-2 is that on the date of the motor vehicle accident, to wit: July 4, 2012, Ms. Tammy Murphy, provided a residential address of 123-65 147 Street, Jamaica New York 11436, to the reporting police officer(s), not the Rochester, New York address she had provided nine (9) months earlier in her insurance application. In fact, according to the defendant’s Exhibits B-1 and B-2, Ms. Murphy’s residential address on the date of the accident, to wit: July 4, 2012, was based on and corroborated by the address contained in her New York State driver’s license and motor vehicle registration certificate.

Ms. Green furthermore testified that attributable to the discrepancy in the residential address provided by Ms. Murphy at the time she applied for insurance and the address indicated in the accident report that the defendant insurance company’s procedures were to request verification of the address to corroborate and establish that the insurance applicant actually resided at the address stated in the application when the policy was first taken out. Based on the failure of Ms. Murphy to receive correspondence mailed to her by the defendant as said correspondence was returned by the post office as undeliverable and the further failure to provide [*3]any proof of her Rochester, New York residence on the date the policy was taken out the defendant denied the claim for medical services on the basis of fraud and misrepresentation in the insurance application.

Ms. Green acknowledged that she herself never conducted any investigation of Ms. Murphy’s residence nor had any involvement with the case other than reviewing the file for purposes of testifying at trial, ie., Ms. Green had no personal knowledge of the matters that she testified about at the trial.

The best that this court can surmise, is that there must be a price differential in the policy premiums charged in Rochester, New York and Jamaica, New York, with the latter premiums being higher as this appears to be the motive attributed by defendant to the plaintiff’s assignor, Tammy Murphy, to perpetrate a fraudulent scheme by procuring the subject insurance policy at a reduced insurance premium. The defense asserted by the defendant is that as a consequence Ms. Murphy’s medical provider, the plaintiff, is not eligible to recover assigned no-fault benefits.

Assuming arguendo that Ms. Murphy had used a fraudulent scheme to procure insurance the defendant, pursuant to Vehicle and Traffic Law Section 313, would not have been able to terminate the policy by canceling it until after it mailed a notice of termination by regular mail to her as an insurance carrier’s common-law right to cancel a contract of insurance pursuant to its provisions may only be effected prospectively. (Matter of Liberty Mutual Insurance Company v. McClellan, 127 AD2d 767, [1987; see also Matter of Cruz v. New Millennium Construction Corp., 17 AD3d 19 [2005]; Matter of MetLife Auto & Home v. Agudelo, 8 AD3d 571 [2005]; Matter of Integon Insurance Company v. Goldson, 300 AD2d 396 [2002]; Matter of Insurance Company of New Amsterdam v. Kaplun, 274 AD2d 293 [2000]). The statute “places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured’s negligence” (Matter of Insurance Company of New Amsterdam v. Kaplun, 274 AD2d 293 [2000]). In this case there has been no allegation nor any proof that the defendant effectively canceled the subject insurance policy pursuant to VTL Section 313 prior to July 4, 2012, the date of occurrence of the accident.

However, in “an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured’s misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured” (Matter of Insurance Company of New Amsterdam v. Kaplun, 274 AD2d 293 [2000]). This is essentially the defense that the defendant insurance company, Progressive Casualty Insurance Company, has asserted.

It has been held that health care providers deal with the as assignor-insured at their peril in accepting an assignment of the insured’s no-fault benefits. (Matter of Insurance Company of New Amsterdam v. Kaplun, 274 AD2d 293 [2000]). Contrary to plaintiff’s contention, the defense of fraudulent procurement of an insurance policy, which is non-waivable and hence exempt from the 30-day preclusion rule, may be asserted as against plaintiff-providers in this action seeking to recover assigned no-fault benefits (Matter of Metro Medical Diagnostics v. Eagle Insurance Company, 293 AD2d 751 [2002]).

Included in Exhibit 1 of the written Stipulation is a photocopy of the New York State motorist license to the assignor-insured, Tammy M. Murphy, as well as a New York State insurance identification card issued to her on or about October 27, 2011, by Progressive, defendant in the above-captioned matter. Ms. Murphy’s driver’s license was issued to her on July [*4]22, 2010, and lists her residence at said time as 123-65 147 Street, Jamaica New York 11436. Therefore on August 2, 2011, the time that the insurance application was submitted Ms. Murphy’s residence address on file with the New York State Department of Motor Vehicles was in Jamaica, New York. Said driver’s license had been issued a little over a year at the time that Ms. Murphy submitted her application for insurance, which application was admitted into evidence without objection by the plaintiff and was marked Defendant’s A in evidence. It is furthermore noted by this court that the motor vehicle sought to be insured by Ms. Murphy on August 2, 2011, was a 2005 Mitsubishi Gallant which according to the insurance application was garaged in ZIP Code 14609, i.e., Rochester, New York.

Also included in Exhibit 1 of the written Stipulation is a New York State insurance identification card issued by Progressive on October 27, 2011, to Ms. Murphy for a 2008 Dodge, as a “REPLACEMENT VEHICLE”. By issuing a New York State insurance identification card to Ms. Murphy on October 27, 2011, reflecting the Jamaica, New York residential address Progressive Casualty Insurance Company had actual notice that she was no longer residing in Rochester, New York, as of said date. As such the plaintiff, had eight (8) months prior knowledge that Ms. Murphy was residing in New York City prior to the July 4, 2012, motor vehicle accident.

The record is devoid of what actions, if any, the defendant took in regards to Ms. Murphy’s automobile insurance policy after having actual knowledge that she was residing in Jamaica, New York. Apparently, the defendant subsequent to the automobile accident decided to disclaim payment of Ms. Murphy’s medical bills on the purported basis that at the time the application for insurance was submitted by her that she provided a false residential address.

While it is difficult to determine Ms. Murphy’s actual residence at the time she applied for automobile insurance as the only evidence adduced at trial was based on documentary evidence there is no evidence attesting to her intent. What is known is that at the time of issuance of a driver’s license Ms. Murphy represented to the New York State Department of Motor Vehicles that she was residing in Jamaica, New York. That in filing out an on-line application for insurance Ms. Murphy provided the Rochester, New York address and not the address contained on her driver’s license. Is this a manifestation that Ms. Murphy had relocated to Rochester, New York, and failed to notify the New York State Department of Motor Vehicles of her change in residence? In any event, Ms. Murphy registered a 2005 Mitsubishi in late July or early August 2011 utilizing her address in Rochester, New York. Then within three (3) months time Ms. Murphy registered a replacement vehicle, the 2008 Dodge, for which on October 27, 2011, she was issued another insurance identification card by Progressive which contained the same Jamaica, New York address as reflected in her driver’s license. On July 4, 2012, the date of the accident Ms. Murphy provided the Jamaica, New York address to the police officers who filled out the accident reports and as contained not only on her driver’s license but most importantly on the insurance identification card issued by Progressive three (3) months after procuring an automobile insurance policy. Ms. Murphy did not have Progressive issue an insurance identification certificate for the replacement motor vehicle on October 27, 2011, with the Rochester, New York address. As such, this court does not conclude that Ms. Murphy had any intent to provide a false and fraudulent residential address when filled out the insurance application to obtain automobile insurance.

Any financial benefit to Ms. Murphy for the three (3) month period that the 2008 Dodge was registered in Rochester, New York would have been minimal. The defendant having actual notice that Ms. Murphy was residing in Jamaica, New York should have at a minimum upwardly adjusted the insurance policy premium. If Ms. Murphy had any motive to pay lower premiums then query why the replacement vehicle was not registered by Ms. Murphy in Rochester, New York.

This court holds that the defendant, Progressive Casualty Insurance Company has failed to meet its burden of proof that the assignor-insured, Ms. Murphy, provided a false and fraudulent residential address on August 2, 2011, on her insurance application. Therefore the plaintiff, Quality Medical Care, PC, is entitled to a money judgment in the amount of $1,979.30, plus costs and disbursements and statutory interest.

Dated: July 26, 2017
Bronx, New York
Armando Montano
Judge, Civil Court

SMCV 322-16
James F. Matthews, J.

Upon the following papers numbered 1 to 24 read on this motion by defendant for an order of dismissal pursuant to CPLR 3126 for non-compliance with interrogatories and combined discovery demands or an order striking plaintiff’s Notice of Trial and an order compelling plaintiff’s response to discovery demands pursuant to CPLR 3124, and an order compelling an EBT of plaintiff’s owner by a date certain ; by Notice of Motion/Order to Show Cause and supporting papers 1-4, 19 ; Notice of Cross Motion and supporting papers 20-22 ; Answering Affidavits and supporting papers 20-22 ; Replying Affidavits and supporting papers 23,24 ; Filed papers ; Other exhibits: 5-18 ; (and after hearing counsel in support of and opposed to the motion),

it is,

ORDERED that the motion by defendant, seeking an order vacating plaintiff’s Notice of Trial and striking the action from the Trial Calendar, pursuant to 22 NYCRR §208.17^[FN1] and dismissing plaintiff’s complaint pursuant to CPLR 3126 on the ground that plaintiff has failed to comply with defendant’s interrogatories and combined discovery demands, is denied, conditioned upon plaintiff providing specific and meaningful responses (see Kihl v Pfeffer, 94 NY2d 118, 123 [1999]; CPLR 3124) to all of the prior discovery and inspection demands of defendant served on 06/24/16, to the extent plaintiff has not complied, including the Combined Demands pursuant to CPLR 3120, Notice of Examination Before Trial pursuant to CPLR 3101 and 3107, Notice for Discovery and Inspection, Request for Expert Discovery, and Demand for Verified [*2]Written Interrogatories, within 30 days of the date of service of this Order by the Court; and it is further conditioned upon plaintiff providing, in particular, a clear copy of the following documents requested in defendant’s motion: management agreements, lease agreements, tax returns^[FN2] and bank records, as per defendant’s written demands. The Court finds there are special circumstances which warrant disclosure of plaintiff’s corporate income tax returns (see CPLR 3101; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A][App Term, 2nd & 11th Jud Dists, 2008]). Defendant’s request in its motion for “corporate records” and “other tax records” is denied, as being vague, broad and ambiguous, making compliance impossible; and it is further conditioned upon plaintiff, by an officer, director, member, agent or employee having the information (see CPLR 3133[b]), serving on defendant a meaningful written answer under oath, or a meaningful objection under oath stating the reasons for the objection, with reasonable particularity (see CPLR 3133[a]), to the extent plaintiff has not complied, to each interrogatory previously served upon it, with each question answered separately and fully and with each answer preceded by the question to which it responds, within 30 days of the date of service of this Order by the Court (see CPLR 3133[b]). In the view of the Court, plaintiff has failed to timely object to defendant’s interrogatories “with reasonable particularity the reasons for each objection” (see CPLR 3122[a]).

The Clerk of the Court is directed to adjourn the Notice of Trial to a date at least 90 days beyond the date this order is mailed to the parties.

The Court notes that plaintiff provided responsive papers dated 07/05/16 to defendant’s discovery demands of 06/24/16, belatedly on 11/01/16^[FN3] , which responses were rejected by defendant on 11/02/16 as being insufficient and unresponsive in a material way. The discovery demands are grounded in plaintiff’s complaint which seeks recovery of first-party no-fault benefits for medical services rendered to plaintiff’s assignor on 08/20/15 in the total amount of $5,200.00, as the result of an automobile accident of 07/02/15; and it is further

ORDERED that defendant’s alternative motion pursuant to CPLR 3124, seeking to compel plaintiff’s owner to appear for an examination before trial (“EBT”) at a date certain, is granted, to the extent that plaintiff corporation shall appear at an examination before trial (“EBT”) through a person chosen by plaintiff, who is knowledgeable of the facts and circumstances of all aspects of this matter as alleged in the verified complaint (see Sladowski-Casolaro v World Championship Wrestling, Inc., 47 AD3d 803 [2nd Dept 2008]), and is prepared to testify under oath, at a date, time and place certain set by defendant, convenient to plaintiff, within 30 days of the date of receipt of this order, with any adjournments only upon consent of the attorneys for the parties, but in no event beyond 45 days of the date of receipt of [*3]this order; and it is further

ORDERED that in the event of plaintiff’s failure to comply with this Order, plaintiff shall be precluded from offering into evidence at the trial of this action, any documents or testimony that were called for in defendant’s discovery demands, to which meaningful responses have not been timely served, pursuant to CPLR 3126(2) and (3), in addition to any other reasonable remedies requested by defendant which the Court deems appropriate; and it is further

ORDERED that plaintiff’s cross-motion for a protective order pursuant to CPLR 3103, is denied. Plaintiff failed to object by filing a motion for a protective order within 20 days of receipt of defendant’s demands and the untimely request must be denied (see CPLR 3122[a]; Hunt v Odd Job Training, 44 AD3d 714 [2nd Dept 2007]). Where a plaintiff has failed to timely object to the propriety of discovery, “plaintiff is obligated to produce the information sought, except as to matters which are palpably improper or privileged” (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 134[A][App Term, 9th & 10th Jud Dists 2009]; see also Fausto v City of New York, 17 AD3d 520 [2nd Dept 2005]). Where discovery demands concern matters which defendant is precluded from raising, “they are palpably improper notwithstanding the fact that plaintiff did not timely object thereto” (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., supra; A.B. Medical Services v Utica Mutual Ins. Co., 11 Misc 3d 71 [App Term, 2nd Dept 2006]).

However, where, as here, a defendant seeks discovery to support its defense that plaintiff is ineligible to recover no-fault benefits because it is a fraudulently incorporated professional service corporation (see State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313 [2005]), the defense is not precluded (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., supra).

Moreover, contrary to plaintiff’s contentions, the Court finds that defendant set forth detailed and specific reasons supporting the possible fraudulent incorporation of a professional service corporation by plaintiff, which if true, would preclude plaintiff from recovering no-fault benefits under the law, thereby demonstrating defendant’s requests for discovery were both material and necessary to the defense of the within actions (see A.B. Medical Services v Utica Mutual Ins. Co., supra; see also Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., supra). This was provided by the affidavit of David Brooks, Case Manager of the Special Investigative Unit of defendant insurance company (“SIU Investigator”), which was charged with investigating, detecting and combating fraud, including medical care provider fraud, pursuant to Insurance Law §409. His affidavit stems from his investigation, which established a good faith basis for defendant’s allegation that plaintiff may be involved in no-fault based fraudulent activities and provided a sufficient foundation for defendant’s discovery requests concerning the manner of plaintiff’s ownership, operation and control of its professional corporation (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., supra).

As such, discovery seeking a copy of the contract with a management company and a copy of the lease, is not palpably improper, as plaintiff has not demonstrated the information is privileged. Therefore, defendant is entitled to production of the documents and related information (Id.).

Furthermore, the Court finds that so much of defendant’s discovery requests which seek information regarding whether plaintiff was fraudulently incorporated, are material and necessary (see Midwood Acupuncture, P.C. v State Farm Mut. Auto Ins. Co., 14 Misc 3d 131[A][App Term, 2nd & 11th Jud Dists 2007]), and must be provided pursuant to defendant’s pertinent [*4]discovery demands.

In addition, plaintiff contends defendant’s verified answer fails to plead affirmative defenses relating to fraudulent incorporation with any type of specificity or particularity, or that facts may exist concerning whether plaintiff is properly incorporated, thereby waiving the defenses and making discovery unnecessary.

The Court finds that a review of defendant’s affirmative defenses 1, 19, 20, 23, 25 and 27, provides sufficient support for the potential merit of defendant’s defense of fraudulent incorporation, making plaintiff ineligible to recover no-fault benefits and making discovery material and necessary (see CPLR 3101[d]; Radiology Today, P.C. v GEICO, 32 Misc 3d 4 [App Term, 2nd Dept 2011]). It is well settled that “fraudulently incorporated medical corporations are not entitled to reimbursement of no-fault benefits and such defense is non-waivable and may be asserted any time (emphasis added)” (see Park Avenue Medical Care, P.C. v GEICO, 35 Misc 3d 1237[A][D Ct, Suffolk Cty 2012]; see also State Farm Mut. Auto Ins. Co. v Mallela, supra at 320; Midwood Acupuncture, P.C. v State Farm Mut. Auto Ins. Co., supra).

Moreover, “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 Radiology Today, P.C. v GEICO, supra at 7).

The failure to state a Mallela type defense “with particularity in the answer does not preclude the defendant from seeking pre-trial disclosure related thereto” (see Park Avenue Medical Care, P.C. v GEICO, supra at *1). A Mallela defense is not subject to preclusion (see Lexington Acupuncture, P.C. v State Farm Mut. Auto Ins. Co., 12 Misc 3d 90.92[App Term, 2nd & 11th Jud Dists 2006]).

Furthermore, where a plaintiff health care provider fails to abide by relevant licensing laws, the corporation lacks standing to bring actions for recovery of assigned first-party no-fault benefits (see Quality Medical Care, P.C. v New York Cent. Mut. Fire Ins. Co., 26 Misc 3d 139[A][App Term, 2nd, 11th & 13th Jud Dists 2010]). Here, since defendant has asserted affirmative defenses in its answer challenging the standing of plaintiff, defendant is entitled to Mallela discovery (see Lexington Acupuncture, P.C. v General Assur. Co., 35 Misc 3d 42 [App Term, 2nd, 11th & 13th Jud Dists 2012]); and it is further

ORDERED that plaintiff’s cross-motion seeking, in the alternative, to compel defendant to produce its SIU Investigator and any claims representative who was responsible for denying the instant claim and/or referring the matter to SIU for deposition, is denied. Defendant has timely objected to this relief within 20 days of receipt of plaintiff’s demand (see CPLR 3122[a]).

The attorneys for plaintiff filed a Notice of Trial and a Certificate of Readiness for Trial dated 12/22/16, which was received by the Court on 01/02/17. Plaintiff’s attorneys stated to the Court in the Certificate of Readiness for Trial, that “discovery proceedings now known to be necessary completed” and “there are no outstanding requests for discovery,” which statements were certified pursuant to 22 NYCRR §130-1, and further stated that the Notice of Trial was “not frivolous.” The Court is holding plaintiff to its filed statements, and the EBT request is denied, accordingly.

The foregoing constitutes the decision and order of this Court.

Dated: July 24, 2017

Footnotes

Footnote 1: The proper section for seeking an order striking plaintiff’s Notice of Trial in District Court is 22 NYCRR §212.17.

Footnote 2: Discovery of Corporate tax returns are permissible where special circumstances are shown (see CPLR 3101[a]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A][2nd & 11th Jud Dists 2008]). However, personal Federal and State Income tax returns of owner are not discoverable, “in the absence of a strong showing that the information is indispensable to the claim and cannot be obtained from other sources” (see Altidor v State-Farm ins. Co., 22 AD3d 435 [2nd Dept 2005]).

Footnote 3: Plaintiff’s papers were approximately four and a half months late and were therefore untimely (see CPLR 3122[a]; Fair Price Med. Supply Corp. v ELRAC Inc., 12 Misc 3d 119, 122 [App Term, 2nd & 11th Jud Dists 2006]).