[*1]

Civil Court of the City of New York, Bronx County, November 17, 2014

APPEARANCES OF COUNSEL

Bruce Somerstein & Associates, P.C., New York City, for defendant.

Cohen & Jaffe, LLP, Lake Success, for plaintiff.

In this action seeking reimbursement for assigned no-fault benefits, this court must answer the question of whether an insurer complies with the requirement of 11 NYCRR 68.6 to pay the “prevailing fee in the geographic location of the provider” when it reimburses the provider for health services rendered in another state in accordance with that state’s no-fault fee schedule.

Factual and Procedural Background

On February 23, 2012, Vincent Molino was operating an automobile when he was involved in a four-car accident caused by an intoxicated driver. Following the accident, Molino received treatment from plaintiff Surgicare Surgical for knee, lower back, and neck injuries. [*2]Surgicare performed arthroscopic surgery on Molino at a location in New Jersey approximately one year after the accident.

Plaintiff, as the assignee of Molino, submitted a claim on May 6, 2013 to defendant National Interstate Insurance Company in the amount of $10,800 for the surgery. Two days later, defendant sent a verification form to plaintiff requesting additional information. Plaintiff replied to the verification form by way of a “medical necessity” letter dated May 31, 2013. Defendant then issued payment in the amount of $5,996.67, but denied the remaining portion of plaintiff’s claim. In a standard “Denial of Claim” form, dated June 13, 2013, defendant indicated that plaintiff’s fees were “not in accordance with fee schedules” and were “reduced in accordance with the New Jersey No-Fault Ambulatory Surgery Fee Schedule guidelines.” Plaintiff commenced this action to recover the remainder of its claim. Despite defendant’s payment of $5,996.67, plaintiff alleges in its complaint that “there [was] no payment of the subject bill” (complaint ¶ 15).

Defendant now moves to dismiss. Plaintiff opposes the motion and cross-moves for summary judgment on its complaint.

Arguments In support of its motion to dismiss, defendant argues that, under 11 NYCRR 68.6, it was required to pay the “prevailing fee in the geographic location of the provider.” Since health care services were rendered in New Jersey, a state which has promulgated a fee schedule under its no-fault laws, defendant{**46 Misc 3d at 739} contends that the reimbursement provided for in New Jersey’s fee schedule constitutes the “prevailing fee” under New York’s section 68.6. Defendant concludes, therefore, that it properly denied so much of plaintiff’s claim that exceeded the maximum charge under New Jersey’s fee schedule for the services in question. In support of its position, defendant annexes to its reply papers an affidavit from a professional medical coder, Lisa Acuna, who states that defendant properly calculated the payment amount for plaintiff’s claim under New Jersey’s fee schedule. Lastly, defendant argues that dismissal is warranted because plaintiff is estopped from seeking the remainder of its claim based on the doctrine of accord and satisfaction.

In opposition, plaintiff asks preliminarily that this court deem defendant’s motion to dismiss as one for summary judgment pursuant to CPLR 3212 (c). As to the merits, plaintiff does not dispute that New Jersey’s fee schedule, if applicable, would bar plaintiff’s claim. However, plaintiff contends that New Jersey’s fee schedule does not apply because the term “prevailing fee” in the regulation is not synonymous with “fee schedule.” Plaintiff argues that in contrast to New Jersey’s version of section 68.6, which expressly limits out-of-state reimbursements to those rates set forth in the host state’s fee schedule, New York’s rule for reimbursement of out-of-state services does not refer to a local “fee schedule.” By omitting specific reference to a fee schedule, plaintiff argues, New York’s Legislature refused to limit payments for out-of-state services to the amounts set forth in another state’s fee schedule. Plaintiff further contends that this court would exceed its authority by interpreting the plain language of section 68.6 to require that an insurer pay anything other than the “prevailing fee of the geographic location of the provider.”

Despite defendant’s submission of the Acuna affidavit in its reply papers, plaintiff argues that defendant’s failure to include an affidavit from a competent medical coder in its initial moving papers warrants denial of the instant motion. Additionally, plaintiff contends that defendant failed to timely issue its denial and neglected to preserve its fee schedule defense when issuing the standard denial form. Lastly, plaintiff argues that the “partial” payment of $5,996.67 on plaintiff’s $10,800 claim effectively estops defendant from denying any unpaid portion of the claim.

In support of its cross motion for summary judgment, plaintiff argues that it has established timely mailing of its claim and{**46 Misc 3d at 740} that payment on the claim is overdue. Defendant opposes the cross motion.

Discussion

On a motion to dismiss pursuant to CPLR 3211, the court affords the pleadings a liberal construction, giving the non-moving party the benefit of every favorable inference, and determines only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]). However, allegations consisting of bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not presumed to be true (see Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000]). In such a case, “[a] CPLR 3211 dismissal may be granted where documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law” (see Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 571 [2005] [internal quotation marks omitted]).

Two procedural issues arise in the context of defendant’s motion to dismiss. First, plaintiff’s complaint alleges that “there [was] no payment of the subject bill” (complaint ¶ 15), however, this statement is not only refuted by defendant’s evidence of a $5,996.67 payment to plaintiff, but also by plaintiff’s admission that it received this payment from defendant. Plaintiff’s allegation of no payment is flatly contradicted by the evidence and, thus, clearly erroneous. As such, plaintiff can only seek the unpaid portion on its $10,800 claim.

[1] Secondly, to the extent that plaintiff claims defendant neglected to annex a qualifying affidavit from a medical coder to its initial moving papers, defendant later cured this defect in its reply papers by way of the affidavit from Lisa Acuna. Acuna, who is a certified medical coder, avers that defendant paid the exact amount permitted under New Jersey’s fee schedule for the health services provided by plaintiff. Although plaintiff could have responded to the affidavit in its cross motion, it failed to do so. Thus, plaintiff had—but waived—an opportunity to dispute those assertions (see Held v Kaufman, 91 NY2d 425, 430 [1998] [defenses raised for the first time in reply papers on a motion to dismiss were properly considered without danger of prejudice where plaintiff was afforded opportunity to respond]). In sum, while the parties disagree about whether New Jersey’s fee schedule applies under these circumstances, neither party{**46 Misc 3d at 741} disputes that, if New Jersey’s fee schedule does apply, defendant complied with section 68.6.

[2] With respect to plaintiff’s request to convert this motion to one for summary judgment, this court declines to deem defendant’s instant motion as one for summary judgment pursuant to CPLR 3211 (c). Although resolution of a purely legal question is appropriate on a motion for summary judgment (see Mihlovan v Grozavu, 72 NY2d 506, 508 [1988]), the court may also decide a motion to dismiss pursuant to rule 3211 when it is premised entirely on an issue of statutory interpretation (see McKechnie v Ortiz, 132 AD2d 472 [1st Dept 1987]) or when the sufficiency of the pleadings poses a question of law (see e.g. Rosner v Paley, 65 NY2d 736, 738 [1985]). Since no issues of fact need to be determined in order to resolve the instant motion, this court is left to answer a question of law, that is, whether defendant complied with section 68.6 when it limited payment for the health services performed by plaintiff to the amount allowable under New Jersey’s fee schedule. Thus, some interpretation of the regulation at issue is called for.

In a claim brought under New York’s Comprehensive Motor Vehicle Insurance Reparations Act, otherwise referred to as the “No-Fault Law” (see Insurance Law § 5101 et seq.), a provider’s reimbursement for eligible health services performed in New York “shall not exceed the charges permissible under [the fee schedule established by the New York State Workers’ Compensation Board]” (see Insurance Law § 5108 [a]). Under subdivision (c), “[n]o provider of health services . . . may demand or request any payment in addition to the charges authorized [under the fee schedule]” (Insurance Law § 5108 [c]).

Responsibility for administering the Insurance Law rests with the Superintendent of Insurance who has “broad power to interpret, clarify, and implement the legislative policy” (A.M. Med. Servs., P.C. v Progressive Cas. Ins. Co., 101 AD3d 53, 64 [2d Dept 2012] [internal quotation marks omitted]; see Insurance Law § 301). In the no-fault context, section 5108 (b) of the Insurance Law empowers the superintendent to “promulgate rules and regulations implementing and coordinating the provisions of [the No-Fault Law].” These rules, found in part 68 of the New York Insurance Department Regulations, “govern[ ] the charges for professional health services” (see Great Wall Acupuncture v GEICO Gen. Ins. Co., 16 Misc 3d 23, 25-26 [App Term, 2d Dept 2007]).

Within this regulatory framework, the Insurance Department has promulgated section 68.6 which provides that “[i]f a professional{**46 Misc 3d at 742} health service . . . is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider” (11 NYCRR 68.6).

The question of exactly what constitutes the “prevailing fee” in this context appears to be one of first impression since neither of the parties nor this court have located authority interpreting section 68.6 in relation to a state which utilizes a no-fault fee schedule. However, the Superintendent of Insurance has issued a formal opinion interpreting section 68.6 in the context of a foreign jurisdiction that apparently did not have a fee schedule. The opinion, which involved a question of licensure for physical therapists providing health services in Guatemala, specifically cites the section at issue and states:

“[*5]As to the amount of the reimbursement, where the health services are provided outside of New York State . . . [t]he dollar amount of the reimbursement for physical therapy services (or other professional health services) performed on an eligible injured person under a New York No-Fault insurance policy in Guatemala is determined by the permissible cost for such services in Guatemala” (Ops Gen Counsel NY Ins Dept No. 03-04-03 [Apr. 2003], 2003 WL 24312368 [US], *2 [emphasis added]).

The Superintendent’s use of the word “permissible” is significant as it strongly suggests that reimbursement for health services performed in a foreign jurisdiction may be regulated by that jurisdiction’s laws, including a governing no-fault regime. Indeed, the principle of limiting reimbursements to “permissible” amounts is mirrored in the section of the Insurance Law that codifies the No-Fault Law’s salient feature of explicitly restricting reimbursement for health services performed in New York to the amounts allowable by this State’s fee schedule (see Insurance Law § 5108 [a]); therefore, it is only logical that the same principle should apply to foreign jurisdictions. Consistent with the use of “permissible” in the core provision of the No-Fault Law, the Superintendent has reasonably interpreted the language of section 68.6 to require that an insurer pay for any health service performed in a locale outside of New York at the permissible cost for that location. As such, the Superintendent’s interpretation of its own regulations is entitled to deference (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009] [“the (Insurance) Superintendent’s ‘interpretation (of its own regulations) if not irrational or unreasonable,{**46 Misc 3d at 743} will be upheld in deference to his special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision’ ”]).

In addition, the language of the preceding subsection within section 68.6 also utilizes the term “prevailing fee.” That subsection, section 68.5 (b), states that

“If a professional health service is performed which is [eligible for no-fault benefits], but is not set forth in fee schedules adopted or established by the superintendent, and: . . .

“(b) if the superintendent has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent” (11 NYCRR 68.5 [b] [emphasis added]).

Section 68.5 (b) requires that the insurer pay the “prevailing fee in the geographic location of the provider” only if this State’s fee schedule has not established a permissible charge for the health service or has not adopted the type of provider who seeks reimbursement for no-fault benefits. In other words, for any claimed health service, the insurer must look first to the fee schedule in determining the proper reimbursement amount. It is only after the insurer concludes that the fee schedule does not apply that it may look to the “prevailing fee” in the provider’s location. The provider’s likelihood of receiving the “prevailing fee” is further conditioned upon the insurer’s prerogative to re-categorize the particular health service to fit under existing fee schedules. By looking first to the application of a fee schedule, section 68.5 employs a logical approach in which [*6]the insurer pays a “prevailing fee,” as plaintiff defines that term, only after all possible fee schedule applications have been exhausted.

Both the Insurance Department’s opinion and section 68.5 (b)’s formula for applying the “prevailing fee” comport with the policy goals underlying the legislature’s adoption of a fee schedule. The purpose of a fee schedule is “to significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium” (Goldberg v Corcoran, 153 AD2d {**46 Misc 3d at 744}113, 118 [2d Dept 1989] [internal quotation marks omitted], citing Governor’s Program Bill, 1977 McKinney’s Session Laws of NY at 2449; Governor’s Mem in Support of Assembly Bill 7781-A). Moreover, per Insurance Department regulation, the express purpose of the fee schedule was to “contain . . . the cost of no-fault insurance” (see 11 NYCRR 68.0). Like New York, New Jersey passed similar no-fault legislation as a “cost-containment initiative” (see Casinelli v Manglapus, 181 NJ 354, 360, 858 A2d 1113, 1116 [2004]). In furtherance of policy goals akin to New York’s, New Jersey’s Department of Insurance has promulgated a medical fee schedule (see 11 NJ Admin Code 11:3-2.9). Thus, the “permissible” charge for health services rendered in New Jersey are limited by the maximum amounts permitted under New Jersey’s fee schedule.

[3] Based on the foregoing, this court holds that, when services are rendered outside of New York but in a jurisdiction which utilizes a fee schedule, the insurer complies with section 68.6 by paying the “permissible” charge for that particular medical service, that is, the amount permitted by that jurisdiction’s fee schedule. There being no dispute that defendant issued payment on plaintiff’s claim in accordance with New Jersey’s fee schedule, plaintiff is not entitled to more. Since plaintiff’s action is based entirely on its claim of entitlement to reimbursement in excess of New Jersey’s “permissible” charge, the relief sought in the complaint must be denied and the action dismissed.

Contrary to plaintiff’s position, this court neither exceeds its “jurisdiction” nor subverts the plain language of section 68.6 by holding that an insurer complies with section 68.6 when the reimbursement amount is consistent with another state’s fee schedule. Rather, this court merely adopts a reading of section 68.6 that comports with both the Insurance Department’s interpretation of its own regulation, as well as the policy goals underlying New York’s (not to mention, New Jersey’s) No-Fault Law.

Aside from the core objective of “provid[ing] a tightly timed process of claim, disputation and payment” (see LMK Psychological Servs., P.C., 12 NY3d at 222), another important goal of the no-fault laws was also to “reduce the burden on the courts” (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007] [internal quotation marks omitted]). If this court were to accept plaintiff’s interpretation of section 68.6, rather than “reduce the burden on the courts,” similar {**46 Misc 3d at 745}no-fault disputes would routinely call upon trial courts to conduct evidentiary hearings on local billing practices to determine the “prevailing fee” in a neighboring location notwithstanding the fact that such a jurisdiction has already established its own legally permissible fee. Such a situation would undoubtedly subvert the No-Fault Law’s core objective of creating a speedy process of claim, dispute resolution, and, ultimately, payment.

Equally important, the goals of consistency and fairness are undermined when injured parties, or their provider-assignees, can be reimbursed for the same health services at different rates [*7]from those permitted under either New York’s or even another state’s fee schedule simply because the services were rendered outside of New York but are to be paid in this State. Plaintiff’s proposed reimbursement scheme would only frustrate the purposes of both jurisdictions’ no-fault laws because providers would be incentivized to treat New York patients in other jurisdictions hoping to receive more for performing the same health service outside of New York’s borders.

[4] Turning to plaintiff’s remaining contentions, this court finds no merit in plaintiff’s argument that defendant’s denial of claim was untimely. An explicit schedule for claim submission, response, and decision is provided in Insurance Department regulations (see 11 NYCRR 65-1.1, 65-2.4 [c]; 65-3.5 [a], [b]; 65-3.8 [c]). Although it is well-established that “[an insurer] that fails to deny a claim within the 30-day period is generally precluded from asserting a defense against payment of the claim” (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 318 [2007]), if the insurer seeks additional verification, the 30-day window is tolled until the insurer receives the requested information (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008]). Here, plaintiff made its claim on May 6, 2013, but defendant sent back a verification form two days later. The 30-day window was therefore tolled until defendant received the verification information it requested. Plaintiff admittedly submitted this information by way of a medical necessity letter on May 31, 2013. Given that defendant issued the denial of claim form on June 13, 2013, which was well within 30 days of plaintiff’s medical necessity letter, defendant’s denial was timely.

[5] Plaintiff further contends that, even assuming timeliness of its denial, defendant nevertheless failed to preserve its billing practices defense. However, an insurer preserves such a defense{**46 Misc 3d at 746} merely by checking the “fees . . . not in accordance with the fee schedule” box on the standard denial form (Megacure Acupuncture, P.C. v Lancer Ins. Co., 41 Misc 3d 139[A], 2013 NY Slip Op 51994[U], *3 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]; Arco Med. NY, P.C. v Lancer Ins. Co., 37 Misc 3d 136[A], 2012 NY Slip Op 52178[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Not only did defendant check the appropriate box in its denial of plaintiff’s claim, but it also specified the basis for the denial, namely, that plaintiff’s reimbursement was “reduced in accordance with the New Jersey No-Fault Ambulatory Surgery Fee Schedule guidelines.”

Lastly, plaintiff’s argument that defendant’s partial payment on the claim somehow indicates that defendant was satisfied with the entirety of the claim is unavailing (see 11 NYCRR 65-3.8 [d] [“Where an insurer denies part of a claim, it shall pay benefits for the undisputed elements of the claim. Such payments shall be made without prejudice to either party” (emphasis added)]).

This court has considered the remainder of plaintiff’s contentions and finds them to be without merit.

Accordingly, it is ordered that defendant’s motion is granted and the complaint is dismissed; and it is ordered that plaintiff’s cross motion is denied in its entirety.

CV-020834-13

Russell Friedman & Associates, LLP, Attorneys for Plaintiff, 3000 Marcus Avenue, Suite 2E1, Lake Success, New York 11042-1005, 516-355-9694;

Abrams, Cohen & Associates, Attorneys for Defendant, 5 Hanover Square, Suite 1601, New York, New York 10004, 646-449-7490.

This is a case of first impression. Should this court follow the holding of the Second Department that claimants are excused from filing claims for no-fault benefits when an insurance company disclaims coverage for no-fault benefits based upon a medical review? In the alternative, should this court follow the opinion of the Office of the General Counsel of the State of New York Insurance Department, which came after the holding of the Second Department, [*2]that claimants submitting for no-fault benefits must timely submit claims in order to be eligible for the payments of benefits even after receiving a denial of all future benefits by the insurance carrier?

Motion by State Farm

Defendant State Farm moves for summary judgment on the grounds that since plaintiff Greater Forest Hills did not submit proof of claim for $3,576.83 pursuant to NYCRR 65-1.1, plaintiff cannot recover for physical therapy rendered to its assignor Jacinto Sanchez.

Facts

Plaintiff seeks to recover the sum of $3,576.83 for physical therapy rendered to its assignor Jacinto Sanchez for the period of August 1, 2011 through February 1, 2012. Mr. Sanchez allegedly sustained personal injuries in an automobile accident on November 22, 2010. Plaintiff claims that it properly billed defendant for said service.

Defendant submits the affidavit of Carol Anne Slack, dated March 6, 2014, who is presently a claim representative and has been employed by defendant for over 21 years. Ms. Slack states that defendant never received the bill for $3,576.83 for services rendered August 1, 2011 through February 1, 2012.

Plaintiff submits no proof that it ever sent the bill to State Farm.

Defendant issued the Denial of Claim form dated June 9, 2011, which denied all New York No-Fault benefits effective June 10, 2011, because:

In accordance with the independent medical examination performed by Jacquelin Emmanuel MD on 5/23/11, the injured party is no longer in need of additional Orthopedic treatment; in addition, the cervical and lumbar injuries are resolved and the right shoulder impingement injuries are unrelated to the accident. Therefore, all New York No-Fault benefits pertaining to treatment to the above injuries are denied effective 6/10/11. A copy of this examination is enclosed for your review and a copy of the report is being sent to each party that is carbon copied on the NF10.

Decision

Defendant contends that since plaintiff never submitted the necessary claim form for the services rendered pursuant to NYCRR 65-1.1, plaintiff is barred from pursuing this action.

Plaintiff contends that once defendant repudiated any further responsibility to pay no-fault claims, plaintiff was no longer obligated to submit proof of claim forms to the defendant. Plaintiff cites Matter of State Farm Ins. Co. v. Domotor, 266 AD2d 219, 697 NYS2d 348 (2nd [*3]Dept 1999) to support its position. In Matter of State Farm Ins. Co. v. Domotor, State Farm terminated all further no-fault benefits after its medical experts determined that treatment was no longer necessary. The Second Department held that an insurance carrier can no longer insist that no-fault claims for services rendered be timely submitted once its disclaimed coverage:

An insured’s failure to provide timely written proof of loss is generally an absolute defense to an action to recover on the policy (see, Igbara Realty Corp. v. New York Prop. Ins. Underwriting Assn., 63 NY2d 201). However, this absolute defense may be waived (see, Igbara Realty Corp. v. New York Prop. Ins. Underwriting Assn., supra; Treptow v. Exchange Mut. Ins. Co., 106 AD2d 767). An insurance carrier may not insist upon adherence to the terms of its policy after it has repudiated liability on the claim by sending a letter disclaiming coverage (see, Rajchandra Corp. v. Title Guar. Co., 163 AD2d 765, 769) for “[o]nce an insurer repudiates liability . . . the [in]sured is excused from any of its obligations under the policy” (Ocean-Clear, Inc. v. Continental Cas. Co., 94 AD2d 717, 718).

Matter of State Farm v. Domotor, supra, was recently cited with approval by the court in State Farm Mut. Auto. Ins. Co. v. Urban, 78 AD3d 1064, 912 NYS2d 586 (2nd Dept 2010).

In NY Medical Health, P.C. v. New York City Transit Authority, 24 Misc 3d 1219(A), 897 NYS2d 671, 2009 WL 2058664 (NY City Civ Ct, 2009) the Court followed the rationale of Matter of State Farm v. Domotor, supra, to a situation involving the New York City Transit Authority (self-insurer) which denied liability for no-fault benefits. The Transit Authority denied liability because the accident was caused by the injured party driving a bike into a disabled bus that was standing still, i.e.; in other words, the accident did not arise out of the use or operation of the Transit Authority motor vehicle. The Court upheld the arbitration award to the plaintiff because plaintiff no longer had a duty to submit timely claims to defendant once defendant denied coverage and all liability for no-fault benefits.

Defendant cites the opinion dated September 2, 2004, from the Office of the General Counsel of the State of New York Insurance Department. The opinion disagrees with the holding of Matter of State Farm v. Domotor, supra. The opinion states that the plaintiff must timely submit claims for no-fault benefits even when the insurance carrier has denied all future benefits based upon a medical exam. The opinion states:

Question Presented

After a No-Fault insurer has denied all future benefits for continued treatment by a health provider of an eligible injured person based upon the negative findings of an insurer’s medical examination of that person, must the insurer continue to issue denials for claims for continued treatment which are submitted subsequent to the issuance of the denial for all future benefits?

Conclusion

Yes. Pursuant to Section 5106(a) of the Insurance Law and Sections 65-3.8(a)(1) and 65-3.8(c) of Department No-Fault Regulation 68, whenever a No-Fault provider submits a claim for reimbursement to an insurer, the insurer must pay or deny the claim within 30 calendar days after receipt of proof of claim. There is no provision in either the No-Fault statue or regulation which relieves an insurer of the obligation to pay or issue a denial on all claims for benefits submitted. Neither does the statute or regulation relieve an applicant for benefits of their responsibility to submit claims in order to be eligible for the payment of benefits, even after receiving a denial of all future benefits.

Defendant urges this court to follow the said opinion from the State Insurance Department because the Court of Appeals generally gives deference to the opinions of the State Insurance Department; see paragraph 8 of the defendant’s reply affirmation, dated October 9, 2014, which states:

The Court of Appeals has generally given deference to the opinions of the regulatory agencies. See State Farm Mutual Automobile Insurance Co. v. Robert Mallela, 4 NY3d 313 (2005) (giving deference to the Insurance Department which had recently promulgated revised No-Fault regulations); New York State Assn. of Life Underwriters, 83 NY2d 353 (1994); Gaines v. New York State Division of Housing and Community Renewal, 90 NY2d 545 (1997); Rodriguez v. Perales, 86 NY2d 361 (1995); Elcor Health Services v. Novello, 100 NY2d 273 (2003); Morris v. County Bd. of Assessors, 35 NY2d 624 (1974). This has been true of the Insurance Department specifically. See John Paterno, Inv. v. Curiale, 88 NY2d 328 (1996). Such interpretations are generally accorded great weight by the Courts. See Udall v. Tallman, 380 U.S. 1 (1965); Lyng v. Secretary of Agriculture, 476 U.S. 926 (1976); Immigration and Naturalization Service v. Stanisic, 395 U.S. 62 (1969); State Farm Mutual Automobile Ins. Co v. Levin, 263 AD2d 233 (3rd Dept. 2000), appeal denied, 95 NY2d 754; Allstate Ins. Co. v. Libow, 106 AD2d 110 (2nd Dept., 1984).

Although this court is somewhat sympathetic to the position of defendant presented herein, this court is constrained to follow the Second Department that plaintiffs are not obligated to timely submit claims for no-fault benefits once an insurance carrier denies coverage.

Conclusion

This court urges defendant to appeal this decision to have the Second Department review this matter in light of the position of the State Insurance Department.

Thus, the motion for summary judgment is denied. Plaintiff can proceed to press its no-fault claim for services rendered even though it did not timely submit the necessary claim form because this requirement became unnecessary when defendant denied all further coverage for no-[*4]fault benefits based upon the independent medical examination of Dr. Jacquelin Emmanuel.

So Ordered:

/s/ Hon. Scott Fairgrieve

DISTRICT COURT JUDGE

Dated:November 10, 2014

Decided on November 3, 2014

Decided on October 29, 2014

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

Decided on October 22, 2014

Decided on October 22, 2014

[*1]

Law Office of Jason Tenenbaum, P.C., Garden City, N.Y., for appellant.

Joseph Henig, P.C., Bellmore, N.Y., for respondent.

In an action to recover no-fault benefits under a policy of automobile insurance, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Cozzens, Jr., J.), entered January 29, 2014, as denied, as premature, its cross motion for summary judgment dismissing the complaint.

Ordered that the order is affirmed insofar as appealed from, with costs.

On September 25, 2012, the plaintiff’s assignor, Chun Chen, was allegedly involved in an accident that occurred while he was a passenger in an automobile. More than three months later, on January 15, 2013, Chen was admitted to a facility operated by Mount Sinai Hospital (hereinafter the hospital), where he allegedly remained until the next day. On January 31, 2013, Hospital Receivables Systems, Inc. (hereinafter Hospital Receivables), on behalf of the hospital, sent the prescribed “no-fault NF-5 form” request for payment to the defendant Auto One Insurance Company (hereinafter Auto One) with respect to medical treatment which Chen had received at the hospital. Auto One received this form by February 4, 2013.

On February 14, 2013, Auto One sent the hospital a request for additional verification seeking, inter alia, “colored photos of surgery, [c]ervical spine MRI films for 11/15/12 and 12/13/12, [and] [c]omplete prior medical records from Dr. Leonid Reyfman for prior injury in 2011 to include any surgery records and prior MRI films.” Auto One also allegedly sent copies of this request for verification to Chen himself.

In a letter dated March 6, 2013, a representative of Hospital Receivables advised Auto One that “the hospital is not in possession of prior medical records from Dr. Leonid Reyfman including any surgery records and prior MRI Films”; that the hospital was not “in possession of any color photos of the surgery”; and that the hospital “was not authorized to release the actual cervical spine films that are in their [sic] possession.” This letter also indicated that the complete medical records maintained by the hospital referable to its treatment of Chen had been mailed to Auto One on March 5, 2013. Thereafter, Auto One sent a second request for verification dated March 19, 2013. In response thereto, Hospital Receivables, in effect, stated that it had already complied with the verification request.

[*2] In April 2013, the hospital, as assignee of Chen, commenced this action seeking payment of no-fault benefits. As relevant to this appeal, the Supreme Court denied Auto One’s cross motion for summary judgment dismissing the complaint, which was premised on the theory that the existence of outstanding requests for verification rendered the action premature. Auto One appeals.

When a health care provider, as assignee of a no-fault claimant, fails to respond to a verification request, including any follow-up request, “ ’the 30-day period in which to pay or deny the claim does not begin to run, and any claim for payment by the hospital is premature’ ” (Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d 889, 890 [2007], quoting New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004]; see Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 19 AD3d 569 [2005]). Here, Auto One failed to demonstrate its prima facie entitlement to judgment as a matter of law, since the record reveals that the hospital replied to the verification request with respect to those records in the hospital’s possession that it alleged it was authorized to release. In addition, there remain triable issues of fact regarding the “propriety” of some of Auto One’s requests for verification, including whether the items requested existed or were in the possession of the hospital or Chen (Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [1999]; cf. Westchester Med. Ctr. v Progressive Cas. Ins. Co., 43 AD3d 1039, 1040 [2007]). Thus, the Supreme Court properly denied, as premature, Auto One’s cross motion for summary judgment dismissing the complaint.

Given the existence of the triable issues of fact outlined above, there is no merit to the hospital’s contention that we should search the record and award it summary judgment. Mastro, J.P., Chambers, Sgroi and LaSalle, JJ., concur.

[*1]

Mischel & Horn, P.C., New York (Naomi M. Taub of counsel), for appellant.

Jones Jones LLC, New York (Jacqueline R. Mancino of counsel), for respondent.

Judgment, Supreme Court, New York County (Cynthia S. Kern, J.), entered June 10, 2013, for petitioner in the total amount of $39,935.19, and bringing up for review an order, same court and Justice, entered on or about December 12, 2012, which granted the petition to confirm two arbitration awards against respondent, unanimously affirmed, with costs. Appeal from order, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Petitioner’s insured, while driving a van during the course of his employment, was involved in a motor vehicle accident with another vehicle, driven by a nonparty who was insured under a policy issued by respondent. Petitioner paid workers’ compensation benefits to its insured in lieu of no-fault benefits, and then sought “loss transfer” reimbursement from respondent pursuant to Insurance Law § 5105, under the mandatory arbitration procedure. Respondent asserted, as an affirmative defense to petitioner’s claim, that it had disclaimed coverage to its insured on the ground of noncooperation.

As this matter involves compulsory arbitration, the awards will be upheld so long as there is evidentiary support, and they are not arbitrary and capricious (see Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). Here, the arbitrators rationally construed Insurance Law § 5105 (a) as providing petitioner insurer a direct right to recover loss transfer reimbursement from respondent, an adverse insurer of a tortfeasor who had a policy in effect at the time of the accident, regardless of respondent’s disclaimer of coverage on noncooperation grounds (see Matter of State Farm Mut. Auto. Ins. Co. v City of Yonkers, 21 AD3d 1110, 1110-1112 [2d Dept 2005]; see also Insurance Law § 5102 [j] [defining “(c)overed person” as having an insurance policy “in effect”]). The loss transfer recovery right of petitioner under Insurance Law § 5105 (a) is separate from the personal right of the insured tortfeasor (and his heirs, assignees, or subrogees) to receive a defense and indemnification from respondent (see Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 175 [1986]; Matter of Liberty Mut. Ins. Co. [Hanover Ins. Co.], 307 AD2d 40, 42 [4th Dept 2003]; State Farm Mut. Auto. Ins. Co., 21 AD3d at 1110-1112).

[*2] Respondent waived any argument that the arbitrators lacked jurisdiction, since it participated fully in the arbitration proceedings, never sought a stay of the arbitration, and did not raise the argument before the arbitrators or before the Supreme Court (see Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578, 583 [1977]; Matter of Philadelphia Ins. Co. [Utica Natl. Ins. Group], 97 AD3d 1153, 1153 [4th Dept 2012], appeal dismissed 20 NY3d 984 [2012]). Nor did respondent assert any argument before the arbitrators that the combined awards exceeded the policy limits. In any event, the argument is unavailing.

We have considered respondent’s remaining arguments and find them unavailing. Concur—Friedman, J.P., Moskowitz, Feinman, Gische and Kapnick, JJ.

[*1]

Civil Court of the City of New York, Kings County, October 5, 2014

APPEARANCES OF COUNSEL

Law Offices of Aloy O. Ibuzor, New York City, for defendant.

Korsunskiy Legal Group, P.C., Brooklyn, for plaintiff.

This case raises anew the seemingly irreconcilable tensions that arise from treating an examination before trial (EUO) as{**56 Misc 3d at 285} both a condition precedent to coverage and as part of the verification procedures. It appears that no court has ruled upon whether an insurance company can issue a denial beyond the 30 day period for failure to appear for an EUO when the insurance company itself has failed to comply with the time lines specified in the verification procedures. This matter was submitted on the issue of whether an insurance company must schedule an EUO of the provider, pursuant to 11 NYCRR 65-3.5 (b), within 15 business days after it completes the assignor’s EUO, and what are the ramifications that flow from a late request for an additional EUO.

Plaintiff Prestige Medical P.C. (plaintiff, provider, or Prestige), a medical provider, brought this action for $2,423.58 for medical services it provided to its assignor Khalil Abdullah (assignor or Abdullah). After the EUO of the assignor was held on February 14, 2012, defendant Travelers Home and Marine Insurance Company (defendant, insurer, or Travelers), by letter dated March 13, 2012, requested an EUO of the provider, and thereafter scheduled the EUO for April 3, 2012. After the provider failed to appear, Travelers issued a follow-up letter, dated April 3, 2012, which rescheduled the EUO for April 23, 2012. After the provider again failed to appear, Travelers issued a denial dated May 9, 2012, based upon the provider’s EUO no-show.

Defendant moves for summary judgment based upon the plaintiff’s EUO no-show and outstanding verification. Plaintiff cross-moves for summary judgment on the grounds that the defendant failed to send out a scheduling letter to the provider for an EUO within 15 business days after holding the EUO of the assignor, as mandated by 11 NYCRR 65-3.5 (b).

In Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011]), the First Department held that a failure to attend an EUO (or independent medical exam [IME]) is a violation of a condition precedent to coverage which vitiates the policy. The First Department reasoned that since failure to appear for an EUO (or IME) cancels the contract as if there was no coverage in the first instance, an insurer could deny all claims retroactively to the date of loss and outside of the 30 day deadline in which to issue a denial. This court has followed Neomy Med., P.C. v American Tr. Ins. Co. (31 Misc 3d 1208[A], 2011 NY Slip Op 50536[U] [Civ Ct, Kings County 2011]; see also Tarnoff Chiropractic, P.C. v{**56 Misc 3d at 286} GEICO Ins. Co., 35 Misc 3d 1213[A], 2012 NY Slip Op 50670[U] [Nassau Dist Ct 2012] [court within Second Department follows Unitrin holding that denial need not be timely]).

The Second Department has also recognized that failure to comply with the insurance policy’s requirement to submit to an EUO or IME “is a material breach of the policy, precluding recovery of the policy proceeds.” (Interboro Ins. Co. v Clennon, 113 AD3d 596, 597 [2d Dept 2014], citing to Unitrin.) However, the Appellate Term, Second Department, while noting the Unitrin decision, still appears to hold that failure to appear for an EUO or IME is a precludable defense. (Clinton Place Med., P.C. v New York Cent. Mut. Fire Ins. Co., 43 Misc 3d 127[A], 2014 NY Slip Op 50472[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]; Clinton Place Med., P.C. v New York Cent. Mut. Fire Ins. Co., 43 Misc 3d 126[A], 2014 NY Slip Op 50468[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014].)

As cogently noted by the Honorable Fred J. Hirsh in Tarnoff, “[a]n EUO is a hybrid between a condition precedent to coverage and verification” (2012 NY Slip Op 50670[U], *5). Most of the provisions relating to EUOs are contained in regulations relating to verification. (Id.; see 11 NYCRR 65-3.5.) Nor does the insurer have an “unfettered right to request an EUO,” as it must have both an objective basis and justification for requesting it. (Id.)

To that end, this court holds that before an insurance company can take advantage of denying the claim beyond the 30 day period pursuant to Unitrin, it must first comply with the notification time lines contained in the verification procedures. 11 NYCRR 65-3.5 (b) authorizes an insurer to request “any additional verification required . . . to establish proof of claim . . . within 15 business days of receipt of the prescribed verification forms” (i.e., the completed application for no-fault benefits [N-F 2 form]) (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 299 [2007]). By properly requesting this additional verification within 15 business days from receipt of the proof of claim form, an insurer may toll the 30 day period in which it must deny the claim. (Prime Psychological Servs., P.C. v Nationwide Prop. & Cas. Ins. Co., 24 Misc 3d 230, 233 [Civ Ct, Richmond County 2009]; see Psych. & Massage Therapy Assoc., PLLC v Progressive Cas. Ins. Co., 5 Misc 3d 723, 724 [Civ Ct, Queens County 2004], citing 11 NYCRR former 65.15 [d] [1].) If the requested verification has not been supplied to the insurer within 30 days after the original{**56 Misc 3d at 287} request, the insurer shall, within 10 days, follow up upon its request for verification either by a telephone call or by mail. (11 NYCRR 65-3.6 [b].)

The insurance regulations provide for EUOs and IMEs as part of an insurer’s “entitlement to ‘additional verification’ following the insurer’s receipt of a provider’s statutory claim forms.” (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 19 [App Term, 2d Dept, 2d & 11th Jud Dists 2004], affd in part 35 AD3d 720 [2006].) Section 65-3.5 (d) provides that if the additional verification required by the insurer is a medical examination, it must be scheduled within 30 days from date of receipt of the prescribed verification forms. (See Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 19 [App Term, 2d Dept, 2d & 11th Jud Dists 2004]; see also Prime Psychological, 24 Misc 3d at 233; All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co., 20 Misc 3d 554 [Civ Ct, Kings County 2008]; Lumbermens Mut. Cas. Co. v Inwood Hill Med., P.C., 8 Misc 3d 1014[A], 2005 NY Slip Op 51101[U] [Sup Ct, NY County 2005].) Where an EUO is requested as additional verification, an insurer must schedule it within a reasonable time frame and as “expeditiously as possible.” (Eagle Surgical Supply, Inc. v Progressive Cas. Ins. Co., 21 Misc 3d 49, 51 [App Term, 2d Dept, 2d & 11th Jud Dists 2008].) An insurer that conducts an EUO has 30 days from the date the EUO is conducted to pay or deny the claim. (Tarnoff, 2012 NY Slip Op 50670, *11, *12; see 11 NYCRR 65-[*3]3.8 [a] [1].)

After the EUO of the assignor was conducted on February 14, 2012, the insurer did not issue a letter requesting an EUO of the provider until March 13, 2012, some 28 calendar days, or 19 business days after the EUO had been conducted. When the provider failed to appear for the scheduled April 3, 2012 EUO, the insurer, on that same day, issued a follow-up letter rescheduling the EUO for April 23, 2012. After the provider again failed to appear, Travelers issued a denial dated May 9, 2012 based upon the provider’s EUO no-show.

This court rules that since defendant failed to abide by the 15 day time frame in which to request additional verification in the form of an additional EUO, as required by 11 NYCRR 65-3.5 (b), it forfeited its right to issue an untimely denial as permitted by the Unitrin decision. The other ramification of Travelers’ untimely request for an additional EUO is the reduction of its time in which to issue its denial after the provider failed to appear for the rescheduled EUO on April 23, 2012.{**56 Misc 3d at 288}

In Nyack Hosp. v General Motors Acceptance Corp. (8 NY3d at 300), the Court of Appeals found that per 11 NYCRR 65-3.8 (j), any deviation from the rules governing verification shall reduce the 30 calendar day period in which an insurer can deny the claim. 11 NYCRR 65-3.8 (l) provides that “[f]or the purposes of counting the 30 calendar days . . . , with the exception of section 65-3.6 [follow-up requirements] . . . , any deviation from the rules set out in this section shall reduce the 30 calendar days allowed.” Since Travelers requested the EUO of the provider 19 days, rather than within 15 days after the EUO of the assignor had been held, its time in which to issue a denial is reduced by four days. Travelers therefore had 26 days from April 23, 2012, or until May 19th, in which to issue a denial. Travelers issued a timely denial on May 9, 2012. Accordingly, Traveler’s motion for summary judgment is granted and the plaintiff’s cross motion for summary judgment is denied.

[*1]

Civil Court of the City of New York, Kings County, October 1, 2014

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville, for defendant.

Law Office of Stephen Goldblatt, P.C., Brooklyn, for plaintiff.

Defendant’s motion for summary judgment is decided as follows:

Defendant’s motion is granted to the extent that it established the timely and proper generation and mailing of examination under oath (EUO) scheduling letters and plaintiff’s failure to appear on the scheduled EUO dates of January 18, 2013 and February 13, 2013. Defendant also established that the claims were timely denied.

Plaintiff, in opposition, does not challenge the timely mailing of defendant’s EUO [*2]requests or denials or that plaintiff failed to appear on the scheduled dates. Rather, plaintiff objects to the reasonableness of the EUO requests and attaches copies of letters addressed to defendant’s law firm responding to defendant’s EUO requests. In a letter dated January 17, 2013 plaintiff indicates that “there appears to be a disparity between [the position of the law firm] and that of State Farm.” Specifically, plaintiff requests clarification as to whether defendant was requesting both the production of documents and an EUO or whether defendant would consider the production of the documents to be sufficient. It is unclear whether and to what extent defendant responded to this letter as no responsive letter is included in the papers. Plaintiff’s subsequent letter, dated February 7, 2013, objects to appearing for an EUO and indicates that plaintiff believes it has fully met its obligation under the no-fault policy to comply with all reasonable requests for verification. Again, it is unclear whether defendant responded to plaintiff’s correspondence.

This court previously held in Five Boro Psychological & Licensed Master Social Work Servs., PLLC v GEICO Gen. Ins. Co. (38 Misc 3d 354 [Civ Ct, Kings County 2012, Cohen, J.]) that an objection must be timely to be meaningful. Thus, the court found that an objection to EUO requests raised for the first time after the action was commenced was too late to constitute a legitimate response and was insufficient to preserve an objection to reasonableness of those requests (see Five Boro, 38 Misc 3d 354, 357; see also Viviane Etienne Med. Care, P.C. v{**45 Misc 3d at 1035} State Farm Mut. Auto. Ins. Co., 35 Misc 3d 127[A], 2012 NY Slip Op 50579[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Here, in contrast, plaintiff offers evidence of a timely and specific objection to the reasonableness of defendant’s EUO requests and, as such, is not precluded from raising that objection in opposition to defendant’s motion (cf. Five Boro, 38 Misc 3d 354; see Viviane Etienne Med. Care, P.C., 35 Misc 3d 127[A], 2012 NY Slip Op 50579[U]).

Under the circumstances, plaintiff raises a question of fact with respect to the reasonableness of the EUO requests and whether, if defendant failed to respond, plaintiff’s failure to appear for the EUOs was excusable (cf. Five Boro, 38 Misc 3d 354; see Canarsie Chiropractic, P.C. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 1228[A], 2010 NY Slip Op 50950[U] [Civ Ct, Kings County 2010, Ash, J.]). The matter shall proceed to trial on the issues of plaintiff’s prima facie case and the reasonableness of defendant’s EUO requests.