[*1]

Civil Court of the City of New York, Kings County, July 20, 2017

APPEARANCES OF COUNSEL

Rivkin Radler LLP, Uniondale (Vincent P. Valente of counsel), for defendant.

Zara Javakov, Esq., P.C., Brooklyn (Adam Waknine of counsel), for plaintiff.

The issue as to which reargument is granted, as to which we find no controlling appellate authority, is whether a no-fault insurer which notices an examination under oath (EUO) of a medical professional provider, as to which the provider timely objects and requests explanation as to the reason for the EUO, is obligated to provide such a reason as a prerequisite to the EUO.

Defendant GEICO Insurance (GEICO) moves for reargument of this court’s decision and order dated March 20, 2017 (March 20 decision), which denied GEICO’s motions for summary judgment in eight cases consolidated for decision.^[FN1] The March 20 decision found that plaintiffs had established their prima facie cases as to timely mailing of bills, receipt thereof by GEICO, and nonpayment of the bills, and that GEICO had made its prima facie case as to timely mailing of requests for examinations under oath and plaintiff provider’s nonappearance for examination. The court held, in relevant part, that “in view of Plaintiff’s request in response to Defendant’s demand for EUO of a reason therefore, and Defendant’s response denying necessity to provide any reason, triable issues exist as to whether Defendant had any legally valid reason for seeking EUOs of Plaintiff provider.” (Mar. 20 decision para 2 thereof.) It is primarily this holding that is challenged by GEICO on reargument.

The Relevant Facts

The relevant facts in each of these cases are similar. In each case, upon receipt of bills from plaintiff, GEICO timely notified plaintiff American Chiropractic Care P.C. (American) to appear for an EUO, and plaintiff’s counsel, upon receipt of that notification, expeditiously wrote to GEICO’s counsel, prior to the date scheduled for the EUO, requesting that GEICO{**57 Misc 3d at 531} provide “good faith reasons, based upon the application of objective standards that serves as justification for demanding [plaintiff] to appear for an EUO.” (See e.g. Letter of Julie Lyumbimova, Esq., dated [*2]Aug. 14, 2014, annexed within exhibit 3 to GEICO’s motion.)

In response to the letters of plaintiff’s counsel requesting a good faith reason for the EUO of the provider, GEICO’s counsel declined to provide any reason, but instead asserted that “GEICO is not required to provide your Client with the objective basis and/or ‘good reasons’ for its request for an EUO,” citing 11 NYCRR 65-3.5 (c), and specifically so much thereof as provides, in relation to the requirement that EUOs to be supported by specific objective justification, that “insurer standards shall be available for review by [State Insurance] Department examiners.” (See Letter of Ryan Goldberg, dated Aug. 26, 2014, part of exhibit 3 to GEICO’s motion.) It is undisputed that following the exchange of such correspondence, plaintiff did not appear for examination.

The Legal Issue

After careful analysis of the case law cited by each party, and the applicable regulations, the court stands by its prior decision that upon receipt of a timely request (that is, sufficiently prior to the date for which the EUO is scheduled to allow for a response), the insurer is required to provide some good faith basis for the EUO, and the requirement that insurer standards for scheduling EUOs are available for review by the Insurance Department does not relieve the insurer from the need to respond, in the manner set forth below, to a timely request on behalf of the provider.

Analysis

The Comprehensive Motor Vehicle Insurance Reparations Act (Insurance Law § 5101 et seq.) and the no-fault regulations (11 NYCRR 65-1.1 et seq.) provide the no-fault insurer with the right to require an EUO of the assignor of the claim, as well as the provider of medical services or supplies. While the right to an EUO of an assignor, that is, an individual who suffered injury as the result of an automobile accident, is virtually automatic, the EUO of a provider stands on different grounds. The reason for this is that there is obvious potential to abuse the EUO of a provider, typically a medical doctor or chiropractor, although it may also be a provider of durable medical{**57 Misc 3d at 532} equipment. The claims at issue in no-fault cases are ordinarily no more than a few thousand dollars, and frequently less than even $1,000. To require a doctor to leave his or her practice for at least half a day, between the time to travel to and from an EUO, and the time actually spent under examination, will often result in a loss of income to the doctor disproportionate to, if not in excess of, the amount of the claim, although here GEICO specifically offered to reimburse American for lost earnings and transportation expenses, as required by the regulations. Equally important, an EUO takes the doctor away from time that would otherwise be spent providing health care to patients. (In this regard, there is no provision to reimburse the provider for the time spent in preparation for the examination, including that necessary to compile and review the numerous documents requested by GEICO in advance of the EUO.) The public interest requires that such disruption of medical professionals not be undertaken lightly or on the proverbial fishing expedition in the hope that some basis, perhaps the provider’s nonappearance, may be developed to deny an otherwise legitimate claim.

This court recognizes, and indeed endorses, the right of an insurer, acting in good faith, to require an EUO of a provider. Such EUOs are an important tool in rooting out fraud, which many believe to be all too prevalent in the medical treatment of no-fault patients. Thus, a balance must be struck between the policy of rooting out and preventing fraud, and not unnecessarily disrupting the practice of a medical professional without a good faith basis for so doing.

On reargument, both plaintiff and GEICO have provided case law supporting their respective [*3]positions. The court notes that virtually all of the cases cited emanate from trial courts or arbitrators, so that there is little, if any, appellate authority on this issue.

GEICO relies on the following cases: City Chiropractic v State Farm (Civ Ct, Kings County, Feb. 24, 2016, Thompson, J., index No. 37182/14 [relying on Department of Insurance opinion letters dated Oct. 15, 2002 and Dec. 22, 2006]); Gotham Massage Therapy v State Farm (Civ Ct, Bronx County, Dec. 20, 2010, Taylor, J., index No. 30502/09); and Karina K. Acupuncture v State Farm (Civ Ct, Kings County, Jan. 3, 2012, Garson, J., index No. 1702/11) as well as various arbitration awards and judgments entered thereon, all holding that the insurer has no obligation to state any reason for an EUO of the provider. (The{**57 Misc 3d at 533} court opinions and orders are annexed as exhibit 5 to GEICO’s moving papers, and the arbitration awards are annexed as exhibit 6.)

None of these cases emanate from an appellate court, so they are not binding on this court. Moreover, while City Chiropractic appears directly on point, as do some of the arbitration awards, both Gotham Massage and Karina K. are factually distinguishable. In Gotham Massage, there is no indication that the provider requested a justification for the EUO prior to its scheduled date. Karina K. refused to appear for its EUO unless the insurer agreed to a series of “non-negotiable” demands, a situation far different from the request of American for an explanation of its good faith basis for an EUO. Accordingly, the legal authority relied upon by GEICO may be distilled into one case directly on point, a second which may or may not be on point depending on facts not contained in the opinion, and arbitration awards, coupled with the opinion letters of the Insurance Department. In response, plaintiff relies on a number of cases which emanate from trial courts, and are as equally lacking in binding authority as those relied upon by GEICO, together with a number of arbitration awards. We note that the trial court cases relied upon by plaintiff, while not controlling, appear to be more closely on point than those cited by GEICO. For example, in Avalon Radiology, P.C. v Ameriprise Ins. Co. (52 Misc 3d 836 [Suffolk Dist Ct 2016]) the court held:

“Thus [provider’s] request for the objective reason in response to the first EUO request triggered an obligation on the part of the . . . insurer to respond by providing the specific objective justification for the EUO request. The insurer’s response in this case to the effect that it was not obligated to do so is plainly wrong.” (52 Misc 3d at 838.)

In Rutland Med., P.C. v State Farm Ins. Co. (45 Misc 3d 1033 [Civ Ct, Kings County 2014]), the court denied the insurer’s motion for summary judgment, finding triable issues where the provider timely objected to appearing for an EUO, as to whether if the insurer failed to respond, the provider’s failure to appear for the EUO was reasonable. In Dynamic Med. Imaging, P.C. v State Farm Fire & Cas. Co. (32 Misc 3d 600 [Nassau Dist Ct 2011]), the court noted, albeit in what is arguably dicta, that the insurer “would also have to establish it had an objective justification for requesting the EUO. Such proof requires affidavits.” (32 Misc 3d 600, 604.) In Victory{**57 Misc 3d at 534} Med. Diagnostics, P.C. v Nationwide Prop. & Cas. Ins. Co. (36 Misc 3d 568 [Nassau Dist Ct 2012]), the court held that “before a claimant provider should be required to produce Mallela^[FN2] material, the insurer must have and articulate a good faith and [*4]factual basis for seeking the information.” (36 Misc 3d 568, 574.) Plaintiff cites other trial court cases and arbitration awards with similar holdings.

While plaintiff cites several Appellate Term cases, they are not controlling, as they dealt with the situation where the respective plaintiff providers, unlike American, did not timely object to the EUO request, but sought to raise objections only in response to the insurer’s subsequent summary judgment motion, following the provider’s nonappearance. While American asserts that those cases provide authority that the Appellate Term would have upheld a timely objection lacking an explanatory response by the insurer, we decline to so read those cases. (See Natural Therapy Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 42 Misc 3d 137[A], 2014 NY Slip Op 50134[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]; Natural Therapy Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 44 Misc 3d 141[A], 2014 NY Slip Op 51310[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]; Metro Health Prods., Inc. v State Farm Mut. Auto. Ins. Co., 47 Misc 3d 127[A], 2015 NY Slip Op 50402[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015].)

GEICO asserts that the requirement that its standards for scheduling EUOs of providers be made available to the Insurance Department precludes any request by the provider for a preexamination explanation for an EUO. The court disagrees. First, that requirement neither explicitly nor implicitly provides that Insurance Department oversight is in lieu of or preempts the provider’s right to timely seek an explanation for the EUO. We note that even were the Insurance Department to find an insurer to have abused the EUO process, that would be of little solace to a provider who duly appeared for examination. Moreover, the Insurance Department’s oversight of the standards employed by an insurer is necessarily a different analysis than whether those standards were properly applied with regard to a particular provider.

In balancing the need for insurers to conduct EUOs of providers to root out and prevent fraud against the burden on the{**57 Misc 3d at 535} insurer to respond to a timely request for explanation from the provider as to the reason for an EUO, and the burden on a medical professional to appear for examination, we find the burden on the insurer to respond to be slight. In support of GEICO’s underlying motion, GEICO submitted the affidavit of its special investigator, Victor Hernandez, who set forth in great detail the matters supporting GEICO’s need for an EUO of American. From a review of the Hernandez affidavit, it appears that all of these matters were known to GEICO at the time it noticed the EUO of American. This court sees no reason why GEICO could not have easily responded to American’s request for explanation by setting forth some of the matters now contained in the Hernandez affidavit, rather than by stonewalling and asserting that it did not have to provide any explanation to American.

We do not mean to suggest that GEICO should have responded by setting forth all of the information at its disposal with regard to American, or that it needed to set forth anything under oath. But, in this court’s view, GEICO needed to set forth some explanation, even in the form of a letter from counsel, which might have contained a highly-edited version of the matters set forth in Mr. Hernandez’s subsequent affidavit, to demonstrate a good faith basis for the EUO. The burden on the insurer to make some prima facie showing of good faith is far less than the burden that would be imposed on a provider to appear for examination when there is no good faith basis to request an EUO.

There is another benefit to a rule requiring the insurer to provide a substantive response to a timely objection by a provider to an EUO. A substantive response will allow the provider, with the advice of counsel, to make an intelligent decision whether to appear for the EUO and to be adequately prepared so that the examination may be expeditiously concluded. The good faith, or lack thereof, would be established by the insurer’s substantive response. A provider who fails to appear [*5]for its properly noticed EUO, as to which a substantive response was made to any timely objection, would be subject to summary dismissal of its case. And, as the statute and regulations only require a good faith application of objective standards, it would be extremely difficult, at the least, for the provider to challenge a substantive explanation by the insurer for the EUO, so long as that explanation was made in good faith.{**57 Misc 3d at 536}

Conclusion

Accordingly, while the court has granted reargument, upon reargument, we hold that no controlling facts or applicable law was overlooked in the March 20 decision and order. The court stands by the March 20 decision, and particularly paragraph “2” thereof, holding it to be a triable issue as to whether GEICO had a good faith basis, under objective standards, to seek the EUO of American,^[FN3] given American’s timely objection to the EUO, and GEICO’s refusal to set forth any basis for the examination.

Footnotes

Footnote 1:We similarly consolidated for decision GEICO’s eight motions for reargument.

Footnote 2:State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 (2005).

Footnote 3:American and GEICO dispute whether American attached to its papers in the underlying motion sufficient documents to show that it raised timely objection to EUOs with regard to assignments from certain assignors, namely Jesus and Bella Gutierrez. In reviewing American’s papers, it appears that its counsel’s letter included these claims in a list annexed to that letter referencing these assignors. Nevertheless, as to these assignors, the issues for trial shall include whether American’s counsel timely objects to the EUOs prior to the scheduled date.

Decided on July 14, 2017

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

The Rybak Firm, PLLC (Damin J. Toell, Esq.), for appellant. Nicolini, Paradise, Ferretti & Sabella, PLLC (Francis J. Ammendolea, Esq.), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Ingrid Joseph, J.), entered April 25, 2014. The order granted defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with $25 costs.

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

Contrary to plaintiff’s contention, the record demonstrates that defendant had not received requested verification and, thus, that the action is premature (see Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]). In opposition to defendant’s motion, plaintiff submitted an affidavit from plaintiff’s owner, in which he identified the documents that had been sent by plaintiff to defendant in response to defendant’s verification requests, which established that plaintiff had failed to send the requested verification. For example, plaintiff did not provide defendant with wholesale invoices for the equipment furnished by plaintiff even though these invoices were requested by defendant.

Accordingly, the order is affirmed.

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

Bruno, Gerbino & Soriano, LLP (Mitchell L. Kaufman, Esq.), for appellant. Zara Javakov, P.C. (Zara Javakov, Esq.), for respondent (no brief filed).

Appeal from an order of the Civil Court of the City of New York, Kings County (Katherine A. Levine, J.), entered January 15, 2014, deemed from a judgment of the same court entered February 11, 2014 (see CPLR 5501 [c]). The judgment, entered pursuant to the January 15, 2014 order granting plaintiff’s motion for summary judgment and denying defendant’s cross motion for summary judgment dismissing the complaint, awarded plaintiff the principal sum of $4,188.66.

ORDERED that the judgment is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment, and defendant cross-moved for summary judgment dismissing the complaint on the ground that the claims at issue had been timely and properly denied based on plaintiff’s failure to appear for scheduled examinations under oath (EUOs). The Civil Court granted plaintiff’s motion, and denied defendant’s cross motion on the ground, among others, that the facts submitted by defendant in support of its cross motion showed that, while defendant declared that plaintiff had failed to appear for scheduled EUOs, defendant had rescheduled each EUO before the date set for each EUO and that, prior to each EUO, defendant was aware that plaintiff was unable to appear. A judgment was subsequently entered, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

Defendant denied the claims at issue based upon the alleged failure of plaintiff to appear at duly scheduled EUOs. With respect to the claims which defendant admits it received between January 18, 2012 and February 14, 2012, defendant’s moving papers demonstrate that the first EUO scheduling letter sent to plaintiff was mailed more than 30 days after defendant had received these claims. As a result, contrary to defendant’s contention, defendant failed to demonstrate that it had properly denied these claims based upon plaintiff’s failure to appear for [*2]duly scheduled EUOs (see Great Health Care Chiropractic, P.C. v Travelers Ins. Co., 49 Misc 3d 145[A], 2015 Misc 3d 51665[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; O & M Med., P.C. v Travelers Indem. Co., 47 Misc 3d 134[A], 2015 NY Slip Op 50476[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]). Since the EUO scheduling letters sent to plaintiff were a nullity with respect to these claims, defendant failed to establish the existence of a triable issue of fact with respect thereto (see O & M Med., P.C., 47 Misc 3d 134[A], 2015 NY Slip Op 50476[U]).

While defendant’s time to pay or deny the remaining claims may have been tolled by EUO scheduling letters sent to plaintiff by defendant, as the Civil Court noted, defendant’s papers demonstrate that, prior to each scheduled EUO of plaintiff, defendant sent plaintiff a letter rescheduling the EUO of plaintiff for a different date. As a result, the fact that plaintiff did not appear on the date originally set forth in a scheduling letter does not constitute a failure to appear, as defendant had already changed the date for which that EUO had been scheduled. In view of the foregoing, defendant failed to show a triable issue of fact as to whether it had properly denied these claims based upon plaintiff’s failure to appear for two duly scheduled EUOs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]), let alone establish it as a matter of law.

Accordingly, the judgment is affirmed.

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

The Rybak Firm, PLLC (Damin J. Toell, Esq.), for appellant. Jaffe & Koumourdas, LLP (Jean H. Kang, Esq.), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Pamela L. Fisher, J.), entered March 7, 2014. The order, upon a motion by plaintiff for summary judgment and a cross motion by defendant for summary judgment dismissing the complaint or, in the alternative, to strike the complaint and dismiss the action pursuant to CPLR 3126, denied plaintiff’s motion and granted the branch of defendant’s cross motion seeking summary judgment dismissing the complaint.

ORDERED that the order is modified by providing that the branch of defendant’s cross motion seeking summary judgment dismissing the complaint is denied and the branch of defendant’s cross motion seeking, in the alternative, to strike the complaint and dismiss the action pursuant to CPLR 3126 is granted to the extent of compelling plaintiff to provide responses to defendant’s demand for interrogatories, demand for discovery and inspection, and demand for expert disclosure within 60 days of the date of the order entered hereon, and by further compelling plaintiff to appear for an examination before trial within 30 days thereafter, or on such other date as the parties shall agree, but in no event later than 60 days thereafter; as so modified, the order, insofar as appealed from, is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant cross-moved for summary judgment dismissing the complaint or, in the alternative, to strike the complaint and dismiss the action pursuant to CPLR 3126. By order entered March 7, 2014, the Civil Court denied plaintiff’s motion and granted the branch of defendant’s cross motion seeking summary judgment.

The affidavit submitted by defendant’s claims representative stated that each claim had been received on July 31, 2012, but also stated that defendant had first received notice of the claims with the submission of the claims on July 10, 2012. In light of this discrepancy, the record does not establish, as a matter of law, that defendant timely denied plaintiff’s claims based upon a late notice of the accident (see generally Complete Radiology, P.C. v Progressive Ins. [*2]Co., 37 Misc 3d 133[A], 2012 NY Slip Op 52079[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]; Fiutek v Clarendon Natl. Ins. Co., 33 Misc 3d 127[A], 2011 NY Slip Op 51840[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]), a precludable defense. Consequently, the branch of defendant’s cross motion seeking summary judgment dismissing the complaint should have been denied.

However, the record establishes that plaintiff did not serve responses to defendant’s demand for interrogatories, demand for discovery and inspection, and demand for expert disclosure, or appear for an examination before trial. Indeed, plaintiff failed to oppose this branch of defendant’s cross motion. CPLR 3101 (a) provides for “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” Parties to an action are entitled to reasonable discovery “of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” (Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968]; see Traditional Acupuncture, P.C. v State Farm Ins. Co., 24 Misc 3d 129[A], 2009 NY Slip Op 51335[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]). As defendant’s denial of claim form denied the claim on the ground that the amount billed exceeded the amount permitted by the workers’ compensation fee schedule and as defendant is defending this action on that same ground, among others, the discovery demands at issue were material and necessary to defendant’s defense (see e.g. Reilly v Oakwood Hgts. Community Church, 269 AD2d 582 [2000]; Great Health Care Chiropractic, P.C. v Interboro Ins. Co., 41 Misc 3d 130[A], 2013 NY Slip Op 51737[U] [App Term, 2nd Dept, 2d, 11th & 13th Jud Dists 2013]).

Accordingly, the order is modified by providing that the branch of defendant’s cross motion seeking summary judgment dismissing the complaint is denied and the branch of defendant’s cross motion seeking, in the alternative, to strike the complaint and dismiss the action pursuant to CPLR 3126 is granted to the extent of compelling plaintiff to provide responses to defendant’s demand for interrogatories, demand for discovery and inspection, and demand for expert disclosure within 60 days of the date of the order entered hereon, and by further compelling plaintiff to appear for an examination before trial within 30 days thereafter, or on such other date to which the parties shall agree, but in no event later than 60 days thereafter.

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

Kopelevich & Feldsherova, P.C. (Galina Feldsherova, Esq.), for appellant. Bruno, Gerbino & Soriano, LLP (Mitchell L. Kaufman, Esq.), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Harriet L. Thompson, J.), entered January 24, 2014. The order granted defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed, with $30 costs, and defendant’s motion for summary judgment dismissing the complaint is denied.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint, alleging that plaintiff and plaintiff’s assignor had failed to appear at duly scheduled examinations under oath (EUOs). Plaintiff opposed the motion. By order entered January 24, 2014, the Civil Court granted defendant’s motion.

As plaintiff argues, defendant’s moving papers failed to establish that the first EUO scheduling letter defendant sent to plaintiff had been timely, since defendant stated that the letter was sent more than 30 days after defendant had received the claims (see Neptune Med. Care, P.C. v Ameriprise Auto & Home Ins., 48 Misc 3d 139[A], 2015 NY Slip Op 51220[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; O & M Med., P.C. v Travelers Indem. Co., 47 Misc 3d 134[A], 2015 NY Slip Op 50476[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]). Moreover, defendant’s moving papers did not demonstrate that the claims had been timely denied (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2009]). In view of the foregoing, defendant failed to demonstrate its entitlement to summary judgment based upon plaintiff’s failure to comply with a condition precedent to coverage (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]).

Accordingly, the order is reversed and defendant’s motion for summary judgment dismissing the complaint is denied.

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

Decision Date: July 14, 2017