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 (Robin Kelly Sheares, J.), dated June 3, 2011. The order denied plaintiff’s motion for summary judgment.

ORDERED that the order is reversed, with $30 costs, plaintiff’s motion for summary judgment is granted, and the matter is remitted to the Civil Court for a calculation of statutory interest and an assessment of attorney’s fees.

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

For the reasons stated in LOF Med. Supply, Inc. v Geico Gen. Ins. Co. (39 Misc 3d 136[A], 2013 NY Slip Op 50595[U] [App Term, 2d, 11th & 13th Jud Dists 2013]), the order is reversed, plaintiff’s motion for summary judgment is granted, and the matter is remitted to the Civil Court for a calculation of statutory interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 and the regulations promulgated thereunder.

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: June 25, 2013

[*1]

Civil Court of the City of New York, New York County, June 24, 2013

APPEARANCES OF COUNSEL

Dodge & Monroy, P.C., Melville, for defendant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, LLC, Garden City, for plaintiff.

{**40 Misc 3d at 788} OPINION OF THE COURT

James E. d’Auguste, J.

Defendant Utica Mutual Insurance Company seeks summary judgment dismissing plaintiff New Century Medical Diagnostics, P.C.’s no-fault benefits action.

The parties’ submissions demonstrate that New Century timely submitted its claims and Utica timely denied the claims{**40 Misc 3d at 789} based upon New Century’s failure to appear at two scheduled examinations under oath. Defaulting in appearing at properly scheduled examinations under oath [*2]represents a failure to comply with a condition precedent to coverage. (Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559 [1st Dept 2011]; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2d Dept 2006].) New Century has not denied its nonappearance, but asserts that the notices were defective because they sought the production of a specific individual. In advancing this argument, New Century relies upon a New York State Insurance Department^[FN*] opinion letter holding that a no-fault medical provider can produce any individual with personal knowledge at a scheduled examination under oath. (Ops Gen Counsel NY Ins Dept No. 09-06-10 [June 2009, Alexander Tisch, Esq.].) The Insurance Department, however, did not opine that an insurer’s attempt to secure the production of a particular person renders the entire verification request a nullity. Rather, the opinion letter merely holds that a no-fault provider is permitted to designate any individual with knowledge irrespective of an insurer’s demand that a specific individual appear. Thus, while New Century was not required to produce the specific person Utica requested, its failure to produce any person at the scheduled examinations under oath permitted Utica to deny New Century’s claims.

Accordingly, Utica’s motion for summary judgment dismissing the complaint is granted.

Footnotes

Footnote *: The Insurance Department is now a part of the Department of Financial Services.

[*1]

District Court of Nassau County, First District, June 18, 2013

APPEARANCES OF COUNSEL

Robert P. Macchia & Associates for defendant. Israel, Israel & Purdy for plaintiffs.

{**40 Misc 3d at 978} OPINION OF THE COURT

Fred J. Hirsh, J.

Defendant moves to strike the notice of trial and certificate of readiness for trial on the grounds discovery is not complete.{**40 Misc 3d at 979}

Background

Joseph Perez, M.D. is the owner of several medical facilities. While these facilities are located in different locations, the address for each of the medical facilities for which Dr. Perez is listed as the officer, shareholder or director with the Department of Education is 1890 New York Avenue, Huntington, New York 11746.

After receiving numerous no-fault claims from Dr. Perez facilities, Allstate Insurance Company began to investigate the operation of these facilities.

At an examination under oath conducted by Allstate in 2005, Dr. Perez testified he [*2]used management companies to pick the locations for his medical facilities, to hire and handle payroll for his support staff and to handle billing. The management companies used by Dr. Perez to provide these services are located at 1890 New York Avenue, Huntington, New York.

Allstate asserts it has repeatedly requested copies of the management agreements between Dr. Perez medical facilities and the management company. Allstate asserts it is entitled to discovery of these documents in connection with a Mallela defense. (See State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005].)

Allstate asserts the medical facilities owned by Dr. Perez also engage in a systematic pattern of overbilling. Testimony taken at examinations under oath of patients who receive treatment at Dr. Perez medical facilities indicate Dr. Perez and other doctors employed at those facilities submit bills for providing a complex examination that should take close to an hour when the examination took between 15 and 30 minutes.

Allstate further asserts Dr. Perez bills no-fault for services provided by independent contractors.

Allstate claims there is a pattern of providing similar if not identical treatment to patients who are examined by Dr. Perez or other doctors at Perez owned facilities. Allstate claims patients examined by Dr. Perez or at Perez owned facilities are regularly referred for chiropractic treatment at facilities owned by David Tubins, D.C. Allstate claims this raises issues regarding illegal fee-splitting with Dr. Tubins.

Allstate claims these circumstances lead it to believe Dr. Perez medical facilities are subject to a Mallela defense. Allstate seeks to obtain discovery in this regard and to take a deposition of Dr. Perez in regard to the possible Mallela defense.{**40 Misc 3d at 980}

Huntington Medical Plaza, P.C. is a facility owned by Dr. Perez. Huntington Regional Chiropractic, P.C. is a facility owned by Dr. Tubins.

In addition to being the named officer, shareholder and director of Huntington Medical Plaza, P.C., Dr. Perez is the named shareholder, officer and director of Brentwood Medical Plaza, P.C., Brentwood Medical Care, P.C., Patchogue Medical Plaza P.C., Patchogue Medical Services, P.C., Hempstead Medical Plaza, P.C., Hempstead Medical Care, P.C. and Stony Brook Medical Care, P.C.

Allstate has served a notice for discovery and inspection requesting Huntington Medical Plaza, P.C. produce copies of its banking records and banking resolutions, tax returns, office and equipment leases, management agreements and other corporate records it would need to establish a Mallela defense. Huntington Medical Plaza, P.C. has objected to producing this material asserting the demands are overbroad, unduly burdensome and irrelevant.

Plaintiffs assert this is nothing more than a “fishing expedition” and the discovery is unrelated to the real issues in this case that involve the denial of claims on the grounds the fees are not in accordance with the fee schedule and the medical services were not medically necessary. Plaintiffs claim a similar request for similar discovery has been rejected by the Civil Court, Queens County.

Discussion

Because Mallela involves issues that are not ordinarily in issue in actions to recover first-party no-fault benefits, a party seeking Mallela discovery must establish a reasonable basis for requesting the material. (Midborough Acupuncture, P.C. v State Farm Ins. Co., [*3]21 Misc 3d 10 [App Term, 2d Dept, 2d & 11th Jud Dists 2008].)

The use of a management company to manage the business of a medical provider is not in and of itself insufficient to establish a Mallela defense. The issue is what control does the management company have over the operation of the medical practice and to what extent is the management company realizing the financial benefits from the operation of the medical practice. The issues in determining whether a medical facility is subject to a Mallela defense are whether the fees being paid to the management for routine services excessive, is the management company renting office supplies, equipment and space to the{**40 Misc 3d at 981} medical provider for payments that are excessive, are the management company employees the sole signatories to the medical practice bank accounts, is the medical provider actually performing the medical services for which the professional corporation was formed, to what extent is the licensed professional involved in the decisions relating to the operation of the medical facility and is the licensed professional more like a salaried employee or the owner of the business. (See Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno Gerbino & Soriano, LLP, 26 Misc 3d 448 [Civ Ct, Richmond County 2009].) Stated more simply, is the licensed professional involved both medically and operationally in the operation of the business or has the medical professional simply provided a license that permits persons who lack a license to operate, control and benefit from the operation of a medical facility or practice.

While this court believes the proper procedure for an insurer who believes a provider is subject to a Mallela defense is to commence a declaratory judgment seeking a determination of the provider’s eligibility to receive no-fault benefits, Mallela may be asserted as an affirmative defense to an action for no-fault benefits. (New York First Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 25 Misc 3d 134[A], 2009 NY Slip Op 52217[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009].)

CPLR 3101 (a) provides for full disclosure by a party to an action of “all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” CPLR 3101 (b) provides that privileged material is not subject to discovery.

Information is “material and relevant” for the purposes of CPLR 3101 (a) if the demanded matter, “will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason.” (Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968].) The demanded material must be produced if it can be used as evidence in chief, for rebuttal or for cross-examination. (Id.; Wind v Eli Lilly & Co., 164 AD2d 885 [2d Dept 1990].)

Documents that are not admissible into evidence may be obtained through discovery if the production of those documents may lead to the discovery of admissible evidence. (Matter of Southampton Taxpayers Against Reassessment v Assessor of Vil. of Southampton, 176 AD2d 795 [2d Dept 1991]; Fell v Presbyterian Hosp. in City of N.Y. at Columbia-Presbyt. Med. Ctr., 98 AD2d 624 [1st Dept 1983].){**40 Misc 3d at 982}

The party seeking production of the material has the burden of establishing that the production of the demanded material will lead to the discovery of relevant evidence while the party resisting the production of the material has the burden of establishing the material is irrelevant, privileged or confidential. (Crazytown Furniture v Brooklyn Union Gas Co., 150 AD2d 420 [2d Dept 1989]; Carp v Marcus, 116 AD2d 854 [3d Dept 1986]; Herbst v Bruhn, 106 AD2d 546 [2d Dept 1984].) [*4]

Most if not all of the documents and material demanded in regard to a Mallela defense, such as banking resolutions and statements, equipment and office leases, tax returns, management agreements, are documents that are in the exclusive possession and control of the medical provider. Most if not all of this material would be irrelevant to the action and not subject to discovery in an action to obtain payment of first-party no-fault benefits if the defendant insurer was not asserting a Mallela defense.

If the management company is actually operating Huntington Medical Plaza, P.C. and Dr. Perez is providing his license to Huntington Medical Plaza, P.C., Huntington Medical Plaza, P.C. would be subject to a Mallela defense. It would not be eligible to receive payment of no-fault benefits for this claim. However, Huntington Medical Plaza, P.C. should not have to produce and make available to the defendant corporate and financial documents that would otherwise not be subject to discovery simply because it filed no-fault claims or simply because Allstate has alleged a Mallela defense and has a suspicion Huntington might be running afoul of licensing laws.

The issue of whether the subject material is subject to discovery and whether Huntington Medical Plaza, P.C. is subject to a Mallela defense will recur until such time as a court has determined whether there is a basis for asserting such a defense.

Where the court cannot determine from the record whether the disputed documents are subject to discovery, the court should direct that the documents be produced for an in camera inspection. (Ross v Northern Westchester Hosp. Assn., 43 AD3d 1135 [2d Dept 2007]; Matter of Chebere v Johnson, 3 AD3d 365 [1st Dept 2004]; Masterwear Corp. v Bernard, 298 AD2d 249 [1st Dept 2002]; Nationwide Ins. Co. v Crisano, 286 AD2d 670 [2d Dept 2001].) From a reading of the papers, the court cannot determine whether the material demanded is subject to discovery.

Therefore, defendant’s motion is granted to the extent that Huntington Medical Plaza, P.C. shall produce for in camera{**40 Misc 3d at 983} inspection copies of all banking resolutions, signature cards and account agreements for all bank accounts maintained by Huntington for the years 2011, 2012 and 2013, copies of all consulting/management agreements for the years 2011, 2012 and 2013, copies of all billing management agreements for the years 2011, 2012 and 2013, copies of all corporate tax returns for the years 2011 and 2012, and copies of all leases for premises occupied and equipment rented for the years 2011, 2012 and 2013.

Such documents shall be produced to the chambers of the Honorable Fred J. Hirsh, District Court, Nassau County, 99 Main Street, Hempstead, New York 11550 for in camera inspection within 90 days of the date of this order. All proceedings in this action are stayed pending the production of the documents and inspection by the court.

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 (Nancy M. Bannon, J.), entered May 13, 2011. The order, insofar as appealed from, denied defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is reversed, with $30 costs, and defendant’s cross motion for summary judgment dismissing the complaint is granted.

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

Defendant’s cross motion papers established that defendant had timely denied the claim at issue (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]) based on a lack of medical necessity. In addition, defendant submitted an affirmed peer review report which set forth a factual basis and a medical rationale for the peer reviewer’s determination that there was a lack of medical necessity for the services at issue. As defendant’s showing that the services were not medically necessary was not rebutted by plaintiff, defendant’s cross motion should have been granted (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & [*2]13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]). In light of the foregoing, we reach no other issue.

Accordingly, the order, insofar as appealed from, is reversed and defendant’s cross motion for summary judgment dismissing the complaint is granted.

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: June 17, 2013

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, Queens County (Leslie J. Purificacion, J.), entered June 9, 2011. The order granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment dismissing the complaint.

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

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

In support of its cross motion for summary judgment, defendant submitted an affidavit by an employee of the entity which had scheduled, on behalf of defendant, the independent medical examinations (IMEs) involved herein. The affidavit established that the IME scheduling letters had been timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [*2][App Term, 2d & 11th Jud Dists 2007]). In addition, the affidavits submitted by defendant demonstrated that its denial of claim forms, which denied the claims in question based upon the failure of plaintiff’s assignor to appear for the IMEs, had been timely mailed (see St. Vincent’s Hosp. of Richmond, 50 AD3d 1123; Delta Diagnostic Radiology, P.C., 17 Misc 3d 16). Defendant also submitted an affirmation by its examining physician and affidavits by its examining chiropractor, psychologist and acupuncturist, respectively, each of which stated that plaintiff’s assignor had failed to appear for the scheduled IMEs. As a result, defendant established its prima facie entitlement to judgment as a matter of law (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]). Inasmuch as, in opposition to the motion, plaintiff submitted only an affirmation of counsel, which affirmation failed to raise a triable issue of fact, the Civil Court should have granted defendant’s cross motion for summary judgment dismissing the complaint.

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

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: June 17, 2013

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 (Carolyn E. Wade, J.), entered April 11, 2011. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross 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 moved for summary judgment, and defendant cross-moved for summary judgment dismissing the complaint on the ground that defendant had timely and properly denied plaintiff’s claims based upon plaintiff’s assignor’s failure to appear for duly scheduled examinations under oath (EUOs). The Civil Court denied plaintiff’s motion and granted defendant’s cross motion.

Contrary to plaintiff’s sole argument on appeal with respect to defendant’s cross motion, defendant properly demonstrated that it had mailed the EUO scheduling letters and denials at issue (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). As plaintiff raises no other argument with respect to the granting of [*2]defendant’s cross motion, the order denying plaintiff’s motion for summary judgment and granting defendant’s cross motion for summary judgment dismissing the complaint is affirmed.

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: June 17, 2013

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, Queens County (Rudolph E. Greco, Jr., J.), entered April 7, 2010. The order, insofar as appealed from, (1) upon, in effect, granting the branches of defendant’s motion seeking leave to reargue or, in the alternative, to renew its prior motion to vacate an order of the same court (William A. Viscovich, J.) entered December 19, 2008, which had granted plaintiff’s unopposed motion for leave to enter a default judgment, adhered to the prior determination denying such vacatur, and (2) upon, in effect, granting the branch of defendant’s motion seeking leave to reargue its prior motion to dismiss the complaint pursuant to CPLR 3211 (a) (8), adhered to the prior determination denying the motion.

ORDERED that 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 obtained leave to enter a default judgment against defendant pursuant to an order of the Civil Court (William A. Viscovich, J.) entered December 19, 2008. Defendant then moved pursuant to CPLR 5015 (a) (1) to vacate the order and permit it to defend the action. Two months later, defendant moved to dismiss the complaint pursuant to CPLR 3211 (a) (8). In support of the [*2]latter motion, defendant alleged, among other things, that plaintiff had failed to serve process upon defendant and, instead, had mistakenly served defendant’s third-party claims administrator. By order entered February 2, 2010, the Civil Court (Rudolph E. Greco, Jr., J.) denied both of defendant’s motions.

Thereafter, defendant moved for 1) leave to reargue or, in the alternative, to renew its prior motion to vacate the December 19, 2008 order and, upon reargument or, in the alternative, renewal, to vacate said order, and 2) leave to reargue its prior motion to dismiss the complaint and, upon reargument, to dismiss the complaint.

By order entered April 7, 2010, the Civil Court (Rudolph E. Greco, Jr., J.), upon, in effect, granting defendant leave to reargue and renew its prior motion to vacate the December 19, 2008 order, adhered to its prior determination denying such vacatur. Additionally, the court, upon, in effect, granting defendant leave to reargue its prior motion to dismiss the complaint, adhered to its prior determination denying the motion.

The Civil Court properly denied the branch of defendant’s motion seeking, upon reargument, to dismiss the complaint. A defendant’s voluntary participation in litigation in which the lack of jurisdiction could be, but was not, raised constitutes a submission to the jurisdiction of the courts (see generally Gager v White, 53 NY2d 475, 488 [1981]; Parasconda v Club Mateem, Inc., 33 Misc 3d 141[A], 2011 NY Slip Op 52201[U] [App Term, 2d, 11th & 13th Jud Dists 2011]). In the instant case, defendant submitted to the jurisdiction of the court when, in its initial motion, it sought to vacate the December 19, 2008 order, and permit it to “defend this action on the merits,” rather than seeking to dismiss the complaint for lack of jurisdiction (see Parasconda v Club Mateem, Inc., 33 Misc 3d 141[A], 2011 NY Slip Op 52201[U]).

The Civil Court also properly denied the branch of defendant’s motion seeking, upon reargument, to vacate the December 19, 2008 order pursuant to CPLR 5015 (a) (1). A movant seeking to vacate a default based on an excusable default is required to demonstrate both that there was a reasonable excuse for the default and a meritorious defense to the action (see CPLR 5015 [a] [1]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Codoner v Bobby’s Bus Co., Inc., 85 AD3d 843 [2011]; Lane v Smith, 84 AD3d 746 [2011]; Solomon v Ramlall, 18 AD3d 461 [2005]). Defendant failed to demonstrate a meritorious defense as it did not submit adequate proof to raise a question of fact regarding whether the assignor had been acting within the course of her employment when the accident had occurred. The affidavit of defendant’s third-party claims administrator merely alleged in a conclusory manner that the assignor “was injured during the course of her employment and therefore, workers’ compensation was primary for this loss,” without substantiating this assertion with any evidence (see A.B. Med. Servs. PLLC v American Tr. Ins. Co., 8 Misc 3d 127[A], 2005 NY Slip Op 50959[U] [App Term, 2d & 11th Jud Dists 2005]).

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

Pesce, P.J., Aliotta and Solomon, JJ., concur.
Decision Date: June 17, 2013

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, June 17, 2013

APPEARANCES OF COUNSEL

Joseph Sparacio, P.C., Staten Island (Joseph Sparacio of counsel), for appellant. Law Offices of Karen C. Dodson, New York City (Tricia D. Prettypaul of counsel), for respondent.

{**40 Misc 3d at 78} OPINION OF THE COURT

Memorandum.

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

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff mailed to defendant insurer, pursuant to CPLR 312-a, a copy of the summons and verified complaint, dated February 13, 2004. The record contains no signed acknowledgment of receipt, as is required by CPLR 312-a. On March 24, 2004, defendant served a verified answer, in which it asserted the affirmative defense of lack of personal jurisdiction as service of process had not been “perfected.”

There was no further activity in the case until February 13, 2009, when plaintiff purchased an index number and, for the first time, filed with the Civil Court the 2004 summons and complaint, along with defendant’s 2004 answer. There is no proof of service upon defendant of the summons and complaint following the 2009 Civil Court filing (see CCA 411). On [*2]November 30, 2009, plaintiff mailed a notice of trial and certificate of readiness to defense counsel, and filed it with the Civil Court on December 1, 2009.

By notice of motion dated April 23, 2010, defendant moved for, among other things, leave to amend its answer to interpose the affirmative defense that the action had not been commenced within the time prescribed by law and that it was therefore barred by the statute of limitations, and, upon such amendment, for summary judgment dismissing the complaint. Plaintiff appeals from so much of an order of the Civil Court entered July 29, 2010 as implicitly granted the branch of defendant’s motion seeking leave to amend the answer and, upon such amendment, dismissed the complaint. The court held that plaintiff’s action had not been properly commenced within the period of the statute of limitations because defendant had not executed an acknowledgment of receipt, and, therefore, service had not been properly effectuated in accordance with the provisions of CPLR 312-a.

On appeal, plaintiff contends that the action was properly commenced “upon service of the summons and complaint.” Although {**40 Misc 3d at 79}plaintiff admits that defendant did not return the acknowledgment of receipt required by CPLR 312-a, plaintiff claims that by serving its answer on March 24, 2004, defendant made an appearance in the action, which is “equivalent to personal service of the summons” (CPLR 320 [b]), and then waived its defense of improper service by failing to move to dismiss the complaint on this ground within 60 days of service of its answer, as required by CPLR 3211 (e). Plaintiff further argues that any “mistake, omission, defect or irregularity . . . in the filing process” may be disregarded (CPLR 2001).

CPLR 312-a, as an alternative to the other methods of personal service authorized by CPLR 307, 308, 310, 311 or 312, permits personal service to be made by first class mail, by mailing a copy of the summons and complaint, together with two copies of a statement of service by mail and acknowledgment of receipt, with a return envelope, postage prepaid, addressed to the plaintiff (CPLR 312-a [a]). The defendant must complete the acknowledgment of receipt and mail or deliver it within 30 days from the date of receipt. Under CPLR 312-a, service is complete on the date the signed acknowledgment of receipt is mailed or delivered to the plaintiff (but cf. CCA former 410 [b]). The signed acknowledgment of receipt constitutes proof of service (CPLR 312-a [b] [1]; 306 [d]).

In 2004, when plaintiff sought to serve defendant pursuant to CPLR 312-a, the “commencement-by-service” system was still in effect in the Civil Court, i.e., an action in the Civil Court was commenced by service of the summons (CCA former 400). Service of the summons was complete upon filing proof of service (CCA former 410 [b]), or, in the case of service pursuant to CPLR 312-a, by filing the acknowledgment of receipt, which constitutes proof of service (CPLR 312-a [b] [1]; 306 [d]). The filing of the acknowledgment of receipt has the effect of establishing the completion of service for purposes of initiating the time in which a defendant must respond (see Deepdale Gen. Hosp. v American Colonial Ins. Co., 144 Misc 2d 917 [App Term, 2d Dept, 9th & 10th Jud Dists 1989]), but here there was no acknowledgment of receipt, thus, none was filed and, technically, no action had been commenced by virtue of plaintiff’s actions (see Nagy v Heuss House Drop In Shelter for the Homeless, 198 AD2d 115 [1993]). Consequently, defendant’s time to answer did not commence to run. As has been noted, plaintiff, until early 2009, attempted no other means of service (CPLR 312-a [e]) nor otherwise took any further measures. [*3]

{**40 Misc 3d at 80}Although no action had been commenced and, thus, defendant’s time to answer had not yet commenced, on March 24, 2004, defendant nevertheless served plaintiff with an answer, in which it asserted, as an affirmative defense, lack of personal jurisdiction. Thus, having preserved its jurisdictional defense, the answer could not be deemed the “equivalent to personal service of the summons upon” defendant (CPLR 320 [b]). The question remains, however, whether, under the circumstances presented, defendant was required, pursuant to CPLR 3211 (e), to move to dismiss the “action” on that ground within 60 days of serving its answer, or risk waiver of that defense. Defendant failed to make such a motion. However, as there was no viable pending action, defendant cannot be deemed to have waived its defense of lack of personal jurisdiction by failing to make a motion to dismiss this “action.” Therefore, since plaintiff had never served the summons and complaint, the action was never commenced in 2004.

In February 2009 (after the commencement-by-filing system had gone into effect in 2005 in the New York City Civil Court), plaintiff purchased an index number and filed the 2004 summons and complaint, as well as defendant’s 2004 answer, in the Civil Court. In December 2009, plaintiff served and filed its notice of trial and certificate of readiness. Since, under the current version of CCA 400 (1), “[a]n action is commenced . . . by filing a summons and complaint,” plaintiff clearly commenced its action in 2009. Plaintiff did not, however, serve upon defendant a copy of the summons and complaint, and, therefore, plaintiff did not acquire personal jurisdiction over defendant under the new system (see CCA 400 [2]). Since there was no service, there could be no filing of proof of service (CCA 410 [b]), which filing would mark the date when service was complete and from which defendant’s time to answer would commence to run. The fact that plaintiff filed defendant’s 2004 answer with the summons and complaint did not mean that it had acquired jurisdiction over defendant, and did not represent proof of service.

Thereafter, defendant successfully moved to amend its 2004 answer to add the affirmative defense that the action was barred by the statute of limitations and, upon such amendment, to dismiss on that ground. Even if we assume that defendant thereby waived its defense based on lack of personal jurisdiction (see e.g. CPLR 3211 [e]), there was merit to defendant’s statute of limitations defense.{**40 Misc 3d at 81}

The time within which an action must be commenced is computed “from the time the cause of action accrued to the time the claim is interposed” (CPLR 203 [a]). A defendant asserting a statute of limitations defense must establish that the plaintiff commenced the action after the expiration of the statute of limitations. A no-fault cause of action accrues when payment of no-fault benefits becomes “overdue” (see Insurance Law § 5106 [a]; see also Matter of Travelers Indem. Co. of Conn. v Glenwood Med., P.C., 48 AD3d 319, 320 [2008]; Mandarino v Travelers Prop. Cas. Ins. Co., 37 AD3d 775 [2007]; Acupuncture Works, P.C. v MVAIC, 27 Misc 3d 131[A], 2010 NY Slip Op 50646[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]). For statute of limitations purposes, plaintiff’s claim accrued on January 14, 2003, the date that defendant issued and mailed its denial of claim form. Since the six-year statute of limitations applies to the claim involved herein (CPLR 213 [2]; see Mandarino v Travelers Prop. Cas. Ins. Co., 37 AD3d 775 [2007]), in order for plaintiff’s action to be timely, it had to have been commenced by January 14, 2009. As we view the action as having first been commenced on February 13, 2009, when plaintiff purchased the index number and filed with the Civil Court the [*4]2004 summons and complaint along with defendant’s answer, the action is, necessarily, time-barred.

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

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

—[*1] The Golden Law Firm, Utica (B. Brooks Benson of counsel), for petitioners-appellants.

Barth Sullivan Behr, Buffalo (Laurence D. Behr of counsel), for respondent-respondent.

Appeal from an order of the Supreme Court, Oneida County (Norman I. Siegel, A.J.), entered May 2, 2012 in a proceeding pursuant to CPLR article 75. The order granted the motion of respondent to dismiss the petition to vacate the arbitration awards.

It is hereby ordered that the order so appealed from is unanimously modified on the law by confirming the awards and as modified the order is affirmed without costs.

Memorandum: Petitioners sustained injuries in an automobile accident in June 1996, and thereafter submitted their no-fault claims for loss of earnings and medical expenses to respondent. Following respondent’s denial of most of those claims in April 1997, petitioners timely commenced a civil action in June 2002, i.e., within the six-year statute of limitations, rather than pursuing arbitration under the Insurance Law. In December 2005, shortly before the scheduled trial date, the parties agreed to submit the matter to arbitration. Petitioners’ counsel notified Supreme Court (Daley, J.), in January 2006 that the case would proceed to arbitration and requested removal of the case from the trial calendar. In December 2009, petitioners filed their request for arbitration and thereafter, in the context of the arbitration, respondent moved to dismiss petitioners’ claims on the ground that they were barred by the statute of limitations because more than 12 years had passed from accrual of the claims. The arbitrator agreed and dismissed the claims as time-barred, and a master arbitrator subsequently affirmed those awards. Petitioners thereafter commenced this proceeding in Supreme Court (Siegel, A.J.) pursuant to CPLR article 75 seeking to vacate the awards, and they now appeal from an order that, inter alia, granted respondent’s motion to dismiss the petition. Although we agree with respondent that petitioners were not entitled to vacatur of the awards, we note that the court erred in failing to confirm the awards pursuant to CPLR 7511 (e). We therefore modify the order accordingly.

Inasmuch as petitioners voluntarily pursued arbitration after they commenced a civil action, we conclude that our review is limited by the terms of CPLR 7511 (b) (1) and, “in the absence of proof of fraud, corruption, or other misconduct, the arbitrator’s determination on [the] [*2]issue[ ] of . . . the application of the [s]tatute of [l]imitations . . . is conclusive” (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). Here, petitioners offered no such proof. Contrary to petitioners’ contention, “the arbitrator had the discretion to consider whether to apply . . . the bar [of the statute of limitations]” (Siegel v Landy, 95 AD3d 989, 992 [2012]). Furthermore, we reject petitioners’ contention that the master arbitrator exceeded his power by making a de novo finding that the agreement to arbitrate lacked a waiver of the statute of limitations by respondent (see generally CPLR 7511 [b] [1] [iii]). “To exclude a substantive issue from arbitration” (Matter of Silverman [Benmor Coats], 61 NY2d 299, 308 [1984]), the limitation upon the arbitrator’s power “must be set forth as part of the arbitration clause” (id. at 307). Because no express limitation regarding the master arbitrator’s power was specified in the parties’ agreement to arbitrate, we conclude that the master arbitrator’s finding was not in excess of his power (see id. at 307-308). Present—Centra, J.P., Fahey, Lindley, Sconiers and Valentino, JJ.

Civil Court of the City of New York, Kings County

072854/09

Attorney for Plaintiff:

Gary Tsirelman P.C.

65 Jay Street, 3rd Floor

Brooklyn, NY 11201

Attorney for Defendant:

Law Office of Solowan & Welden

Dominick Dale, Esq.

170 Froehlich Farm Blvd.

Brooklyn, NY 11797

Katherine A. Levine, J.

The novel issue presented at trial is whether the bill submitted by plaintiff Jamaica Medical Supply Inc. (“plaintiff” or “Jamaica”), for the rental of medical supply equipment on its face constituted a reasonable justification for plaintiff’s untimely submission of written proof of claim or whether plaintiff had an independent obligation to submit a written reasonable justification for its late bill upon receiving the denial from defendant Geico Insurance Company (“Geico”).^[FN1]

Plaintiff Jamaica Medical Supply Inc. (“plaintiff” or “Jamaica”), a medical equipment company, commenced this action to recover the sum of $3475.00 for medical supplies it rented to its assignor Hilma Thornhill (“Thornhill”). At the commencement of the trial, both sides stipulated to each other s prima facie cases. In its NF-10 form, Geico denied the claim on the grounds that plaintiff violated the revised Mandatory Personal Injury Protection Endorsement (“Endorsement”or “PIP”) contained in the revised No-Fault Regulations—11 NYCRR ｧ65-1.1— [*2]by failing to submit its proof of claim for services to Geico within 45 days from the date services were rendered. The denial contained an explanation under reason 45 and set forth that “late notice will be excused where the applicant can provide reasonable justification of the failure to give timely notice.” The burden therefore shifted to plaintiff at trial to establish a clear and reasonable excuse for its untimely submission of the bill.

During the trial, defendant made a motion in limine to preclude the testimony of plaintiff’s owner on the ground that plaintiff failed to respond, during the claims phase, to defendant’s request in its denial to provide a reasonable excuse for its late claim. The Court took the motion under advisement but allowed the plaintiff to testify. Admitted into evidence were two no fault bills dated May 1, 2009, for a water circulating pump/cold pad and for a “passive motion exercise machine (“CPM”) along with the setting up and fitting of the machine and a pad. While both medical supplies were dispensed on March 6, 2009, the return receipt for the water circulating pad was dated March 20, 2009 where as the return receipt for the CPM unit was dated April 6, 2009. Also admitted into evidence were delivery receipts for the CPM unit and water circulating pump wherein Thornhill acknowledged receiving the items and promised to return the units in the same condition as received within two- six weeks of delivery.

Based upon the above, it is clear that plaintiff submitted a claim for the water circulating pump/cold pad 56 days after it was delivered and 42 days after it was returned by the assignor. Plaintiff submitted the claim for the CPM Unit/soft pad kit 56 days after it was delivered and 25 days after it was returned to plaintiff. While both claims were therefore submitted to Geico beyond the 45 days from date of delivery of the equipment, they were sent within 45 days after the rental equipment was returned.

Plaintiff’s president and owner, Mike Kmaimov (“Kmaimov”), testified that due to the exorbitant price of the equipment, Jamaica Medical only rents the CPM unit and water circulating pump. Since the equipment is rented, it was not possible for plaintiff to send the no -fault bill to the insurer within 45 days of disbursement since plaintiff could not ascertain the number of the days that the machines would be rented, and hence the cost of the rental, until the machines were returned. Kmaimov also testified that in some instances a doctor will be re prescribe the machines and it is “impracticable” for the plaintiff to pick up a new prescription and redeliver the machines.

Plaintiff submits that its provision of all the rental documents and no fault bills to defendant on May 1st constituted a reasonable excuse for the alleged late submission of the claim. Plaintiff argues that defendant bears the burden of reviewing the claim documents which clearly showed that the since the durable medical equipment (“DME”) were rentals, they “could not have been billed 45 days” from their initial disbursement. Plaintiff therefore asserts it could not send the no fault bill to defendant until the rental was complete. Yet, in the same breadth, plaintiff admits that case law and state DME guidelines mandate that the date of service must be [*3]the date the supplies were dispersed.

Pursuant to 11 NYCRR §65-1.1 (b) all claims must be submitted within “45 days after the date (the) services (were) rendered”. Where one proof of claim is submitted for several medical treatments, the 45 day period commences “the day after the first treatment is rendered.” SZ Med. P.C. v. Country-Wide Ins. Co., 12 Misc 3d 52, 55 (App. Term, 2d Dept. 2006) citing NY Ins Dept Informal Op No. 03-06-30 (June 30, 2003). See, Health Care Associates (Varallo) v. Geico, 2010 NY Slip Op 50094(U), 26 Misc 3d 1214(A) (Civil Ct., Richmond Co. 2010). These time limitations shall apply “unless the eligible injured person [or that person’s representative] submits written proof providing clear and reasonable justification for the failure to comply with such time limitation.” 11 NYCRR ｧ65-1.1. This duty follows from an insurer’s obligation to include within a denial, based upon the failure to timely submit a proof of claim advise to the applicant that late notice will be excused where the applicant can provide reasonable justification of the failure to give timely notice. 11 NYCRR ｧ65-3.3 (e). See, Radiology Today, P.C. v. Citiwide Auto Leasing, Inc., 15 Misc 3d 92 (App. Term, 2d Dept. 2007).

As plaintiff concedes that the case law and state DME guidelines mandate that the date of service be the date the supplies were dispersed, it cannot argue that its 45 days to submit a claim runs from the date that the rental equipment is returned. Furthermore, both of the rented DMEs were returned within the 45 day period, thus making it possible for plaintiff to still timely submit its claim forms to defendant. Given this fact, plaintiff’s attempt to distinguish rental equipment from equipment it sells to the assignor is of no significance. Similarly, plaintiff’s attempt to explain away the 45 day rule at trial by claiming that both the disbursement and return rental forms that it sent to defendant were self explanatory has no merit. Had the items been returned after the 45 days had already expired, the Court might consider whether these forms on their face constituted a reasonable justification for failure to give timely notice.

Since plaintiff could have timely submitted its claims upon the return of the rental equipment, defendant was not under an obligation to some how glean why plaintiff waited until May 1, 2010 to submit its claim forms. Defendant followed the regulations by including within its denial advice to plaintiff that its late notice excused it plaintiff could provide a reasonable justification. Having failed to respond to defendant’s request at the claims phase, plaintiff cannot interpose its justification at trial. Prestige Medical & Surgical Supply, Inc. v. Chubb Indemnity, 2010 NY Slip Op 50449(U), 26 Misc 3d 145(A) (App. Term, 2d Dept. 2010); Delta Diagnostic Radiology, P.C. v. MVAIC, 2007 NY Slip Op. 52143(U), 17 Misc 3d 1125(A) (Civil Ct., Kings Co. 2007).

As such, the complaint is dismissed with prejudice.

The foregoing constitutes the Decision and Order of the Court.

Dated: June 10, 2013______________________________

Hon. Katherine A. Levine

Judge, Civil Court

ASN by _______on___________

Footnotes

Footnote 1:A number of cases were consolidated at trial for the purposes of this issue.