Decided on April 19, 2016

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

Decided on April 18, 2016

Decided on April 18, 2016

Decided on April 18, 2016

Decided on April 13, 2016

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, April 11, 2016

APPEARANCES OF COUNSEL

The Rybak Firm, PLLC, Brooklyn (Damin J. Toell of counsel), for appellant.

Conway, Farrell, Curtin & Kelly P.C., New York City (Jonathan T. Uejio of counsel), for respondent.

Ordered that the order is reversed, without costs, the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground of lack of insurance coverage is denied, and the matter is remitted to the Civil Court for a determination of the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground of lack of medical necessity for the services rendered.

In this action by a New York City provider to recover assigned first-party no-fault benefits for services rendered to its assignor, who had allegedly sustained injuries in a New York City motor vehicle accident on July 29, 2009, defendant^[FN*] moved for summary judgment dismissing the complaint on the{**51 Misc 3d at 72} grounds that no coverage existed and that there was a lack of medical necessity for the services rendered. In support of its motion, defendant argued, among other things, that the Civil Court failed to obtain personal jurisdiction over defendant; that a conflict-of-law analysis required the application of Michigan law; and that there was a lack of coverage for the vehicle involved in the accident, as a Michigan court had issued an order, entered on default, in a declaratory judgment action, declaring the policy to be invalid at its inception due to the rescission of the insurance policy based on fraud and/or misrepresentation by the insured in procuring the Michigan policy. By order entered April 2, 2014, the Civil Court granted defendant’s motion, implicitly finding that personal jurisdiction over defendant had been acquired and holding that Michigan law controlled, pursuant to which an insurer may rescind an [*2]insurance policy and declare it void at its inception despite the fact that the claimant is an innocent third party. This appeal by plaintiff ensued. It is noted that plaintiff raises no issue regarding the Civil Court’s determination that Michigan law controls.

[1] Despite defendant’s assertions that it does not write insurance policies or conduct business in New York, it is uncontroverted that defendant’s New York certificate of authority states that defendant is licensed to engage in specified insurance business in New York. Consequently, defendant was authorized to do business in New York State, and, pursuant to Insurance Law § 1212 (a), an insurer authorized to do business in the state must appoint the Superintendent of Insurance as its agent for service of process “in any proceeding against it on a contract delivered or issued for delivery, or on a cause of action arising, in this state” (emphasis added). Inasmuch as the cause of action in the case at bar arose in New York, we find that the service of process upon the Superintendent of Insurance was sufficient to acquire jurisdiction over defendant (see Insurance Law § 1212 [b]).

[2] Michigan law allows for the rescission of a motor vehicle insurance policy based on fraud or a material misrepresentation in the application for insurance (see Titan Ins. Co. v Hyten, 491 Mich 547, 817 NW2d 562 [2012]; Gagnon v Citizens Ins. Co., 2013 WL 331548, *6, 2013 Mich App LEXIS 178, *15-16 [Ct App, July 30, 2013, docket No. 301188], appeal denied 494 Mich 883, 834 NW2d 503 [2013]; Lake States Ins. Co. v Wilson, 231 Mich App 327, 586 NW2d 113 [1998]). However, Michigan{**51 Misc 3d at 73} has generally denied an insurer’s right to rescind a policy of insurance in order to avoid payment of no-fault benefits to an innocent third party (see Gagnon v Citizens Ins. Co., 2013 WL 331548, *6, 2013 Mich App LEXIS 178, *15-16; Great Lakes Cas. Ins. Co. v Auto Owners Ins. Co., 2010 WL 2595102, *1, 2010 Mich App LEXIS 1213, *2-3 [Ct App, June 29, 2010, docket No. 290871]; Lake States Ins. Co. v Wilson, 231 Mich App at 331, 586 NW2d at 115).

Contrary to the determination of the Civil Court, the holding of the Supreme Court of Michigan in Titan did not abrogate the innocent third party rule. In Gagnon, the plaintiff sought to recover no-fault personal injury protection benefits and the Court of Appeals of Michigan held that the innocent third party rule prohibited the insurer from rescinding the policy. The court distinguished Titan by holding that although the Supreme Court in Titan stated that an insurer is not precluded from availing itself of a remedy to avoid liability under an insurance policy on the ground of fraud in the application for insurance even when the claimant is a third party, “the insurer in Titan sought to reform an insurance policy by reducing the excess liability coverage limits available to innocent accident victims to the statutory minimum; it did not seek to completely avoid liability under the policy” (Gagnon v Citizens Ins. Co., 2013 WL 331548, *6, 2013 Mich App LEXIS 178, *19).

In view of the foregoing, we find that defendant cannot rely on a lack of coverage defense to withhold payment of no-fault benefits to plaintiff for the medical services it rendered to its assignor, who was an innocent third party. We note that since the Civil Court did not determine the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground that there was a lack of medical necessity for the services rendered, the matter is remitted to the Civil Court for a determination of that branch of defendant’s motion.

Accordingly, the order is reversed, the branch of defendant’s motion seeking summary judgment dismissing the complaint on the ground of lack of insurance coverage is denied, and the matter is remitted to the Civil Court for a determination of the remaining branch of defendant’s motion.

Pesce, P.J., Weston and Solomon, JJ., concur.

Footnotes

Footnote *:In his affidavit in support of defendant’s motion, the general counsel for Auto Club Insurance Association states that “ACIA is also known as AAA Michigan.” However, defendant was not so described in the summons and complaint.

[*1]

Civil Court of the City of New York, Kings County, April 11, 2016

APPEARANCES OF COUNSEL

The Rybak Firm, PLLC, Brooklyn, for plaintiff.

Peter C. Merani, P.C., New York City, for defendant.

{**52 Misc 3d at 492} OPINION OF THE COURT

Plaintiff’s and defendant’s respective motions for summary judgment are decided as follows:

I. Factual Background[*2]

In this action to recover assigned first-party no-fault benefits, plaintiff submitted a claim form and invoice to defendant for services rendered to Cosby Reavis on October 8, 2013. According to plaintiff’s claim, these services related to three different codes promulgated under the Official New York Workers’ Compensation Medical Fee Schedule. These codes are 99215, 20553 and 20999. Through the affidavit of its owner, Ksenia Pavlova, plaintiff contends it has made a prima facie case because it timely mailed a claim (NYS Form NF-3) for services rendered to Cosby Reavis, in accordance with its office procedure for generating and mailing bills, and that defendant has not paid the bill.

Defendant received plaintiff’s claim on October 21, 2013, and issued a denial (NYS Form NF-10) of the claim on December 3, 2013, based on a defense of lack of medical necessity of the services rendered, and based upon its contention that plaintiff did not bill its services in accordance with the applicable fee schedule. Defendant submits a copy of the denial with the affidavit of its claims representative, Nancy Kowalchuk, who describes defendant’s procedure for receiving and reviewing claims, and for sending denials to its Southwest Output Processing Center. Defendant also submits the affidavit of Janine{**52 Misc 3d at 493} Wicks of its Southwest Output Processing Center, who describes defendant’s procedure for mailing responses to claims for benefits, such as plaintiff’s claim. Lastly, defendant submits the sworn statement of Dr. Dorothy Scarpinato, who describes her determination that plaintiff’s services were not medically necessary, based on her independent medical examination of Cosby Reavis.

II. Discussion

A. Fee Codes 99215 and 20553

[1] To prevail on a motion for summary judgment, a medical provider must establish its prima facie case by proving it mailed its “completed claim form to the insurer,” and the insurer failed to pay or deny the claim within 30 days of receipt of the claim (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 507 [2015]). With regard to the claims bearing codes 99215 and 20553, this court holds that plaintiff has met its prima facie burden. However, for the reasons stated below, the court finds that plaintiff has not met its prima facie burden as to the claim bearing code 20999.

Following submission of the bill, defendant had 30 days to pay or deny the claim for any defense, except for any non-precludable defense (Viviane Etienne, 25 NY3d at 506). As defendant denied plaintiff’s claim more than 30 days from the date of receipt, defendant did not preserve its defense of medical necessity (Bonetti v Integon Natl. Ins. Co., 269 AD2d 413, 414 [2d Dept 2000] [lack of medical necessity is a precludable defense]). In addition, defendant’s motion omits any argument concerning the proper billing of services associated with codes 20553 and 99215. Accordingly, this court grants plaintiff’s motion for summary judgment with regard to services related to codes 20553 and 99215.

B. “By Report” Code 20999

[2] With regard to the remaining code 20999, defendant argues that plaintiff has not satisfied its prima facie burden because plaintiff’s claim is incomplete. Specifically, defendant contends plaintiff did not provide sufficient information in support of the amount it charged for the services it designated with code 20999 of the Fee Schedule. Instead of having a relative value associated with the service, code 20999 is designated “By Report,” abbreviated “BR.” The Fee Schedule states that, in order to determine the appropriate monetary value of services designated [*3]“BR,” plaintiff must provide certain information.

{**52 Misc 3d at 494}“Information concerning the nature, extent, and need for the procedure or service, time, skill and equipment necessary, etc., is to be furnished using all of the following:

“A) Diagnosis (postoperative), pertinent history and physical findings.

“B) Size, location, and number of lesions or procedures where appropriate.

“C) A complete description of the major medical procedure and the supplementary procedures.

“D) When possible, list the closest similar procedure by code and relative value unit. The ‘BR’ relative value unit shall be consistent in relativity with the other relative value units in the schedule.

“E) Estimated follow up period, if not listed.

“F) Operative time.” (See Fee Schedule § 4, Surgery at 4, Surgical Ground Rule No. 10 [June 1, 2012 ed].)

In its papers, plaintiff makes no showing that it provided this information.

Neither plaintiff nor defendant provides any case law to support or refute defendant’s argument that this information is part of plaintiff’s prima facie burden, and this court has found no governing precedent. Thus, this issue appears to be a matter of first impression in this jurisdiction.

This court views “By Report” information as, by definition, part of the proof of plaintiff’s “completed claim form” (see Viviane Etienne, 25 NY3d at 507), and thus part of plaintiff’s prima facie burden. The Fee Schedule, which has been adopted into New York’s no-fault regulations (see 11 NYCRR 68.1 [a]), places an affirmative duty on the medical provider to submit this information to justify its billing. By omitting this information, plaintiff deprived defendant of sufficient notice of the claim. Without sufficient notice, defendant should not be expected to evaluate and pay the claim. Consequently, plaintiff did not establish its prima facie case for services related to code 20999.

Separate from the language of the Fee Schedule, defendant also argues that, pursuant to the recently amended 11 NYCRR 65-3.8 (g) (1), plaintiff must prove it billed in accordance with the Fee Schedule as part of its prima facie burden. As this court held in East Coast Acupuncture, P.C. v Hereford Ins. Co. (51 Misc 3d 441, 442-443 [Civ Ct, Kings County 2016]), the amended 11 NYCRR 65-3.8 (g) (1) does not per se require a{**52 Misc 3d at 495} medical provider to prove it billed in accordance with the Fee Schedule as part of its prima facie burden. Instead, the regulation states that, to the extent plaintiff bills amounts in excess of the Fee Schedule, the claim is not established.^[FN*] Therefore, this court held that the fee schedule defense is, under the amended [*4]regulation, non-precludable. Consistent with that opinion is the implication that, to even be considered, the basis of a bill must be established. Fee Schedule encoding generally acts as an agreed shorthand for the value of services. By exception, claims submitted through “By Report” codes have no predetermined relative value, and therefore, must be properly documented and detailed (as described in Surgical Ground Rule No. 10) before they can be considered established and complete. Accordingly, this court holds that, by failing to provide the information specified in the Fee Schedule in support of its services, plaintiff has not made its prima facie case as to code 20999.

III. Conclusion

For the foregoing reasons, plaintiff’s motion is granted with respect to the services billed under codes 20553 and 99215, in the amount of $267.79, and plaintiff may enter judgment for $267.79 plus statutory costs, attorney’s fees, disbursements and interest. Defendant’s motion is granted with respect to services billed under code 20999, and plaintiff’s claim with respect to those services is dismissed.

Footnotes

Footnote *:In any event, defendant does not argue that plaintiff billed in excess of the Fee Schedule. Rather, defendant argues that its fee schedule denial arose because plaintiff failed to provide the information necessary to determine the appropriate fee for its services related to code 20999.

Decided on April 8, 2016

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

Appeal from an order of the Civil Court of the City of New York, Kings County (Katherine A. Levine, J.), entered June 10, 2013. The order denied plaintiff’s motion to vacate a prior order of the same court, made at a jury trial, granting defendant’s oral motion pursuant to CPLR 4401 for judgment dismissing the complaint.

ORDERED that the order entered June 10, 2013 is reversed, with $30 costs, plaintiff’s motion to vacate the prior order granting defendant’s oral motion pursuant to CPLR 4401 for judgment dismissing the complaint is granted, defendant’s oral motion is denied, and the matter is remitted to the Civil Court for a new trial.

At a jury trial of this action by a provider to recover assigned first-party no-fault benefits, plaintiff sought repeatedly to have its purported assignment of benefits admitted into evidence. The Civil Court denied each application, and ultimately granted defendant’s oral CPLR 4401 application to dismiss the complaint, finding that plaintiff could not establish a prima facie case because it had been unsuccessful in having its assignment of benefits admitted into evidence. Plaintiff appeals from an order of the Civil Court entered June 10, 2013 which denied its subsequent motion to vacate the trial order dismissing the complaint.

Plaintiff’s motion should have been granted. Defendant’s CPLR 4401 motion for judgment as a matter of law was made before the close of plaintiff’s case, and was therefore premature (see Kamanou v Bert, 94 AD3d 704 [2012]). Furthermore, the court’s reason for granting the application was erroneous, as a no-fault plaintiff is not required to submit an executed assignment of benefits in order to demonstrate its prima facie entitlement to recover on a no-fault claim (see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 [2015]; Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 [2005], affd 9 NY3d 312 [2007]; Urban Radiology, P.C. v GEICO Gen. Ins. Co., 39 Misc 3d 146[A], 2013 NY Slip Op 50850[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). Rather, for the assignment of benefits to become a subject of inquiry, a defendant must first demonstrate that it timely and properly raised an issue with respect to the assignment (see Hospital for Joint Diseases, 21 AD3d 348; Urban Radiology, P.C., 39 Misc 3d 146[A], 2013 NY Slip Op 50850[U]).

Accordingly, the order entered June 10, 2013 is reversed, plaintiff’s motion to vacate the prior order granting defendant’s oral motion pursuant to CPLR 4401 for judgment dismissing the complaint is granted, defendant’s oral motion is denied, and the matter is remitted to the Civil [*2]Court for a new trial.

Pesce, P.J., Weston and Aliotta, JJ., concur.

Appeal from an order of the Civil Court of the City of New York, Kings County (Carolyn E. Wade, J.), entered December 6, 2013. The order, insofar as appealed from, upon reargument, adhered to a prior determination in an order of the same court dated June 13, 2013 granting defendant’s motion to, in effect, vacate its default in opposing a prior motion by plaintiff, and granted defendant’s cross motion to dismiss the complaint pursuant to CPLR 3216 (e).

ORDERED that the order entered December 6, 2013, insofar as appealed from, is affirmed, without costs.

In this action to recover first-party no-fault benefits, by order dated June 13, 2013, the Civil Court granted a motion by defendant to, in effect, vacate its default in opposing a prior motion by plaintiff which had sought to place the action on the trial calendar. Plaintiff thereafter moved for leave to reargue her opposition to defendant’s motion, and defendant cross-moved to dismiss the complaint pursuant to CPLR 3216 (e). By order entered December 6, 2013, the Civil Court, upon granting reargument, adhered to its prior decision, and granted defendant’s cross motion.

This action, which was brought in 1998, was the subject of a prior appeal (Small v Metropolitan Prop. & Cas. Ins. Co., 35 Misc 3d 134[A], 2012 NY Slip Op 50760[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), in which this court found that the action had been marked off in 1999 and that when plaintiff moved to restore the case in 2010, in response to a 90-day notice served by defendant (see CPLR 3216), she was required to demonstrate a meritorious cause of action and a reasonable excuse for the delay in moving to restore. Contrary to plaintiff’s arguments on this appeal, that decision is law of the case (see 10A Carmody-Wait 2d § 70:537), and, as defendant and the Civil Court noted, plaintiff cannot evade the requirements set forth by this court by simply bringing the same motion under another name. As plaintiff has yet to demonstrate a meritorious cause of action or reasonable excuse for her multi-year delay, and as plaintiff has failed to demonstrate that the Civil Court overlooked or misapprehended any matter of fact or law (see CPLR 2221 [d] [2]), the Civil Court properly adhered to its prior determination.

We also find that the Civil Court properly granted defendant’s cross motion to dismiss the complaint pursuant to CPLR 3216 (e) (see Picot v City of New York, 50 AD3d 757 [2008]; Ovchinnikov v Joyce Owners Corp., 43 AD3d 1124 [2007]; Missos v General Motors Corp., 30 [*2]AD3d 303 [2006]).

Accordingly, the order entered December 6, 2013, insofar as appealed from, is affirmed.

Pesce, P.J., Weston and Aliotta, JJ., concur.