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 September 8, 2011. The order, insofar as appealed from, denied defendant’s motion for summary judgment dismissing the complaint.

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

In support of its motion, defendant proffered an affidavit by its claims examiner which was sufficient to establish that defendant’s denial of claim form 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 [App Term, 2d & 11th Jud Dists 2007]) and that plaintiff had submitted its claims to defendant more than 45 days after the date the services had been rendered to plaintiff’s assignor (see Insurance Department Regulations [11 NYCRR] § 65-1.1). Defendant’s denial of claim form adequately advised plaintiff of the basis for the denial, and it further advised plaintiff that the late submission of the claim would be excused if plaintiff provided a reasonable justification for the lateness (see Insurance Department Regulations [11 NYCRR] § 65-3.3 [e]). We find that the reason proffered by plaintiff was insufficient.

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

Aliotta, J.P., Pesce and Rios, JJ., concur.
Decision Date: April 30, 2013

District Court of Nassau County, First District

CV-006644-11

Friedman, Harfenist, Kraut & Perlstein, Attorneys for Plaintiff, 3000 Marcus Avenue, Suite 2E1, Lake Success, New York 11042, 516-355-9600; Bruno, Gerbino & Soriano, LLP, Attorneys for Defendant, 445 Broad Hollow Road, Suite 220, Melville, New York 11747, 631-390-0010.

Michael A. Ciaffa, J.

The following papers have been considered by the Court

on this motion: submitted April 22, 2013

_________________________________________________________ _______________

Papers Numbered

_____________________________________________________________ ___________

Notice of Motion, Affirmation & Exhibits Annexed………………………1 – 2

Affirmation in Opposition…………………………………………………………..3

Reply Affirmation……………………………………………………………………..4

Defendant moves for an order granting it summary judgment, dismissing claims for no-fault benefits that had been timely filed by the plaintiff, Jersey Rehab PA, P.C. Three bills are at issue. Each sought payment for health services rendered by plaintiff to its assignor, claimant Owen G. Webb, after an auto accident.

The second and third bills in dispute (plaintiff’s fourth, fifth, sixth and seventh causes of action) were timely denied by defendant based upon Mr. Webb’s failure to attend an IME. In the absence of a challenge by plaintiff to defendant’s proof, the Court assumes that defendant’s evidence is sufficient to establish timely mailing of the IME notices to Mr. Webb. Compare St.Vincent’s Hosp. v GEICO, 50 AD3d 1123 (2d Dept 2008), with ARCO Med. NY, PC v NY Cent. Mut. Fire Ins. Co., 2011 NY Slip Op 50184 (App Term 2d Dept). Likewise, defendant’s proof by affidavit sufficiently establishes that Mr. Webb failed to appear for an IME, as requested.

Under well settled legal principles, a claimant’s attendance at a properly noticed and scheduled IME is a condition precedent to an insurer’s obligation to cover no-fault [*2]claims. See Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 (2d Dept 2006). Nevertheless, under the peculiar facts presented in this case, the Court holds that the defendant cannot properly claim that Mr. Webb breached a “condition precedent” to coverage when defendant, itself, breached a regulatory “condition precedent” to its right to obtain an IME of Mr. Webb.

Critically, the no-fault regulations include mandatory notice requirements governing insurer requests for both EUOs and IMEs (11 NYCRR 65-3.5[e]). The regulations expressly provide that the insurer “shall inform the applicant at the time the examination is scheduled that the applicant will be reimbursed for any loss of earnings and reasonable transportation expenses incurred in complying with the request” (id.).

In interpreting the provision in issue, the Insurance Department’s General Counsel has opined that every EUO notice “must include requisite language advising the person required to appear … of that person’s right to reimbursement for lost earnings and transportation costs … in order for such notice to be deemed effective under the regulation.” General Counsel Opinion 12-22-2006 (No.1) (emphasis added). Since the regulation draws no distinction between EUOs and IMEs (see 11 NYCRR 65-3.5[e]), the conclusion is inescapable: IME notices are subject to the very same requirements.

As plaintiff’s counsel cogently argues in her opposing papers, defendant’s IME request letters fail to comply with this mandatory directive. Although the letters include a sentence stating that “[a]ll fees relating to this appointment will be paid by your insurance carrier,” that language merely implies that the IME doctor’s fees will be paid by the insurer. By no means does this language give notice to Mr. Webb that he would be reimbursed for lost earnings and transportation expenses as required by the literal terms of the regulation.

Accordingly, the Court concludes that defendant’s IME notices cannot be deemed to have substantially complied with the notice requirements of 11 NYCRR 65-3.5(e). Furthermore, under the logic of the General Counsel’s opinion, which is entitled to deference unless “irrational or unreasonable,” see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., supra, the IME letters were ineffective and insufficient to give proper notice to Mr. Webb of his right to reimbursement.

Consequently, defendant’s papers fail to establish, as a matter of law, that Mr. Webb breached a condition precedent to coverage by failing to appear for an IME. Simply stated, compliance with the above-quoted notice requirement of 11 NYCRR 65-3.5(e) is a “condition precedent” to the insurer’s right to demand an IME. If the insurer fails to give the applicant proper notice of his right to reimbursement for lost wages and transportation costs, the IME demand is defective, per se, and may not form the basis for defeating an otherwise timely and proper no fault claim by a provider.

For these reasons, plaintiff’s fourth, fifth, sixth and seventh causes of action are not subject to summary dismissal on grounds of IME default.

Finally, defendant requests summary judgment dismissing the causes of action [*3]relating to the first bill (plaintiff’s second and third causes of action) on the ground that it paid the first bill, in full. Plaintiff does not oppose this branch of the motion.

Accordingly, defendant’s motion for summary judgment is GRANTED only to the extent of dismissing plaintiff’s second and third causes of action. The motion is otherwise DENIED.

So Ordered:

District Court Judge

Dated: April 26, 2013

cc:Bruno, Gerbino & Soriano, LLP

Friedman, Harfenist, Kraut & Perlstein, LLP

Civil Court of the City of New York, Kings County

71119/2010

Attorneys for Plaintiff STRACAR MEDICAL SERVICES

Law Offices of Gary Tsirelman

65 Jay Street, 3rd Floor

Brooklyn, NY 11201

Attorneys for Defendant NATIONWIDE MUTUAL INS. CO.

Epstein, Harms, McDonald, Esqs.

One Whitehall Street, 13th Floor

New York, NY 10004

Harriet Thompson, J.

Motion Cal No.90Motion Seq. #

Papers Submitted to Special Term

on5/18/2012,

DECISION/ORDER

Recitation, as required by CPLR §2219 (a), of the papers

considered in the review of this Motion

PapersNumbered

Notice of Motion ………………………………. ..1-2

Order to Show Cause and Affidavits Annexed _____________ [*2]

Answering Affidavits .._____1_____

Replying Affidavits ._____________

Exhibits _____________

Other …………………………………………………._____________

PROCEDURAL HISTORY

Every now and then, a clever legal maneuver can change the course of litigation. In this Civil Court action, the Plaintiff had served, in or about July 29, 2010, a Summons and Verified Complaint to recover first-party No-Fault benefits as a result of alleged injuries arising out of an automobile accident which occurred on June 28, 2008. In or about October 22, 2010, the Defendant interposed a Verified Answer which contained various affirmative defenses and a demand for a Bill of Particulars.

The Defendant moves this Court by Notice of Motion returnable on November 7, 2011 for summary judgment pursuant to CPLR §3212 on the grounds that the Plaintiff failed to submit proper verification of the claim and failed to attend two properly scheduled Examinations Under Oath (hereinafter “EUO”), a condition precedent to insurance coverage and a violation of the Insurance regulations, precluding recovery of the medical claim. More significantly, the Defendant asserts that the medical services must be denied based on the fraudulent procurement of the insurance policy by the assignor.

On the return date, the attorneys, by written agreement, adjourned the motion to May 9, 2012 for the parties to engage in motion practice.

On the adjourned date, the Plaintiff served and filed opposition papers to the Defendant’s motion. The Plaintiff asserts several claims, to wit: the Defendant failed to properly establish its defense of fraudulent procurement of the insurance policy; procedural irregularities such as the insurance policy annexed to the motion is uncertified and the denials are unsigned; and attacks the credibility of the supporting fact affidavit based on a discrepancy in the number of bills received by the Defendant.

The Defendant relies exclusively on Gramatan Home Investors Corp v. Lousi N. Lopez, 46 NY2d 481, 386 NYS2d 308 (1979) for the proposition that a sister state consent decree that terminated the insurance policy ab initio is not binding on the Plaintiff. The Plaintiff’s rationale is that a “judgment in a prior action against the assignor could not be used to estop the assignee from raising certain matters determined there in the subsequent action where the assignment was made prior to the initiation of the action against [the] assignor” (Affirmation of MARINA MORARU at ¶6). In addition, the Plaintiff argues that the facts in this case are akin to the facts in Gramatan, and concludes that “the assignment in this matter was executed prior to the commencement of the action against the assignor and the Defendant is estopped from relitigating the issue. (Affirmation of MARINA MORARU at ¶7).

The court record does not contain a reply to the opposition by the Plaintiff. [*3]

After oral argument, this court reserved decision and submitted this motion sub judice.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The following facts are uncontroverted. MACKLIN SANTERRIA executed an assignment of benefits before her treatment by the Plaintiff on July 14, 2008. MACKLIN SANTERRIA was treated by the above named Plaintiff for alleged injuries for dates of services from August 13, 2008-September 9, 2008 for the sum of $1,329.23 and for dates of service from September 8, 2008-October 20, 2008 for the sum of $544.68 for a grand total sum of $1,873.91. These bills for the above services were received by the Defendant on September 29, 2008 and October 27, 2008, respectively. The Defendant requested verification on October 6, 2008 and October 27, 2008, respectively. The purported verification stated that the Defendant was conducting an investigation to determine “whether the alleged injuries arose out of the use and operation of our insured vehicle and whether the injured party is an eligible injured party entitled to No-Fault benefits under the above mentioned policy. As a result, we have requested an EUO of the claimant. The EUO is currently scheduled from 10/7/2008.”

The second purported verification provided that the investigation was continuing; the EUO is currently scheduled for 11/7/2008 and requested the production of the following documents from the Plaintiff: office notes and physical therapy notes.

On December 23, 2008, the Defendant notified the assignor that their investigation revealed that the application for the policy of insurance revealed that material misrepresentations were made to the insurer in the procurement of the policy and based on those misrepresentations the company voided the policy back to the date of the insurance application on December 1, 2004.

On December 29, 2008, the medical claims were denied by the Defendant.

In or about February 17, 2009, the Defendant commenced an action in the state of Virginia to void the insurance policy based on fraud by the claimant in the application for the insurance policy.

On August 18, 2009, the assignor, represented by counsel and the Defendant Corporation, also represented by counsel, entered into a Dismissal Order in the state of Virginia which stated, in pertinent part, that “[w]ithout conceding any wrongdoing on her part, Defendant (claimant-assignor) agrees that the policy should be voided ab initio, so that it is ORDERED that the policy described in the Complaint filed herein is voided ab initio”.

The initial substantive issue before this court is whether the affidavits of mailing meet the requirements of the No-Fault law to establish proper proof of mailing of the denials. To that end, and as previously ruled by this court, the common law doctrine of presumption of regularity is still alive in New York State despite arguments to the contrary. (Quality Psychological Services, PC., v. Hartford Insurance Company, 2013 NY Slip Op 50045(U)). Generally speaking, a letter or notice that is properly stamped, addressed and mailed is presumed to be received by the addressee. News Syndicate Co. v. Gatti Paper Stock Corp., 256 NY 211, 176 NE 169 (NY, [*4]1931); New York New Jersey Products Dealers Coop v. Mocker, 59 AD2d 970, 399 NYS2d 280 (NY A.D., 3d Dept., 1977). A simple denial of receipt has been held insufficient to rebut this presumption. Countrywide Home Loans, Inc. v. Brown, 305 AD2d 626, 760 NYS2d 200 (NY AD2d Dept., 2003) .

As Judge Tapia recently stated in Hastava & Aleman Assoc. P.C. v. State Farm Mut. Auto Ins. Co., 24 Misc 3d 1239(A), 899 NYS2d 59 (Civ. Ct., Bx Ct., 2009) “the regulation uses “forward” to describe the manner in which notification is to be effectuated. The only kink is determining what constitutes sufficient “notice” because the regulation does not specify the mailing procedure by which to notify the injured party.” In that case, the court determined that the mailing of a letter by certified mail, return receipt requested is entitled to the same presumption of receipt as regular first-class mail in the absence of the signed returned receipt”. Furthermore, “satisfying No-Fault policy conditions does not have to be compromised at the expense of challenging mailing procedures because proof of mailing of verification letters via regular USPS is enough to create a presumption of receipt. In addition, the use of certified mail does not create a more demanding presumption of mailing and receipt beyond that of a letter that was properly mailed. The regulations make no distinction between sending a letter via regular mail or via certified mail.”

The presumption of receipt may be created by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed. Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679, 729 NYS2d 776 (2001); Nassau Ins Co. v. Murray, 46 NY2d 828, 414 NYS2d 117 (1978); Matter of Francis v. Wing, 263 AD2d 432, 694 NYS2d 29 (NY A.D. 1st Dept., 1999); Azriliant v. Eagle Chase Assoc., 213 AD2d 573, 575, 624 NYS2d 238 (NY AD2d Dept., 1995); Phoenix Ins. Co v. Tasch, 306 AD2d 288, 762 NYS2d 99 (NY AD2d Dept., 2003); Matter of Colyar, 129 AD2d 946, 947, 515 NYS2d 330 (NY AD3d Dept., 1987). Therefore, affidavits that merely state that the bills were mailed within the statutory time period have been held insufficient to establish proof of actual mailing. Comprehensive Medical v. Lumbermens Mutual Ins. Co., 4 Misc 3d 133(A) (App. Term 9 & 10th Jud. Dists, 2004).

The burden is on the insurer to present an affidavit of an employee who personally mailed the verification and/or denial, or on the other hand, an affidavit of an employee with personal knowledge of the office’s mailing practices and procedures. Such individual must describe those practices or procedures in detail, explicitly denoting the manner in which she/he acquired the knowledge of such procedures or practices, and how a personal review of the file indicates that those procedures or practices were adhered to with respect to the processing of that particular claim (emphasis added).

By demonstrating its routine and reasonable office procedures, the Defendant meets its burden of proof that the notices were mailed to the plaintiff and were received. The burden then shifts to the plaintiff to rebut the presumption of receipt. Abuhamra v. New York Mut. Underwriters, 170 AD2d 1003, 566 NYS2d 156 (NY A.D. 4th Dept., 1991); Residential Holding Corp. v. Scottsdale Ins. Co., supra. Indeed, “[i]n addition to a claim of no receipt, there must be a showing that the routine office practice was not followed or was so careless that it would be unreasonable to assume that the notice was mailed. Nassau Ins Co. v. Murray, 46 NY2d 828, 414 [*5]NYS2d 117 [1978]; See also Badio v. Liberty Mutual Fire Ins. Co., 12 AD23d 229, 785 NYS2d 52 (App. Div., 1st Dept., 2004).

Now, the next significant issue in this case involves the fraudulent procurement of the insurance policy by the assignor.

Both New York common law and the Insurance Law establish that the insurance carrier may rescind and/or void any insurance policy if it can be shown that a material misrepresentation was made at the time of the procurement of the insurance policy. See BW Sportswear , Inc. v. Those Certain Underwriters at Lloyd’s of London, 32 Misc 3d 1245(A), 2011 435767, 2 (NY Sup. Ct., NY County, 2011)(Oing, J.) citing Kiss Construction NY Inc. v. Rutgers Casualty Ins. Co., 61 AD3d 412, 877 NYS2d 253 (1st Dept., 2009); NY Ins. Law §3105. As part of the Motor Vehicle Financial Security Act, the Vehicle and Traffic Law (hereinafter “VTL”) § 313 states in part that: “(1)(a) No contract of insurance for which a certificate of insurance has been filed with the commissioner shall be terminated by cancellation by the insurer until at least twenty days after mailing to the named insured at the address shown on the policy a notice of termination by regular mail, except where the cancellation is for non-payment of premium in which case fifteen days notice of cancellation by the insurer shall be sufficient.” See also Rules of New York Automobile Insurance Plan §18 [2] which provides that VTL §313 also applies to the cancellation of a policy issued under the assigned risk plan. (Aetna Cas. & Sur. Co. v. O’Connor, 8 NY2d 359, 207 NYS2d 679, 170 NE2d 681 (1960)). It has long been recognized that this provision “supplants the insurance carrier’s common law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively” (Teeter v. Allstate Ins. Co., 9 AD2d 176, 192 NYS2d 610, affd, 9 NY2d 655, 212 NYS2d 71, 173 NE2d 47; Aetna Cas. & Sur. Co., v. O’Connor, 8 NY2d 359, 207 NYS2d 679, 170 NE2d 681; Olivio v. GEICO of Washington D.C., 46 AD2d 437, 362 NYS2d 873; Reliance Ins. Co. v. Daly, 38 AD2d 715, 329 NYS2d 504 (AD2d Dept., 1972) ; See also Matter Liberty Mut. Ins. Co. v. McClellan, 127 AD2d 767; DiDonna v. State Farm Mut. Auto. Ins. Co., 259 AD2d 727; A-Drive Corp v. General Acc. Group, 114 AD2d 430; Pilato v. Nassau Ins. Co., 79 AD2d 971.

It has also been held that by allowing only prospective cancellation of an automobile liability insurance contract, the law places on the insurer the burden of discovery of any fraud before issuing a policy or at the earliest possible moment thereafter, and prevents interference with the rights of third parties who may have been injured as a result of the negligence of the insured during the term of the contract. Aetna Cas. & Sur. Co., v. O’Connor, supra; Matter Liberty Mut. Ins. Co. v. McClellan, supra; Olivio v. GEICO of Washington D.C., supra. See also Matter of Insurance Co of North America v. Kaplun, 274 AD2d 293, 713 NYS2d 214 [AD2d Dept., 2000].

The insurance carrier that is precluded from rescinding a policy retroactively due to fraud is not without a remedy. For example, if the insurer is required to pay benefits under the policy to a third party, it may bring an action against its insured to recover such losses (See Reliance Ins. Co. v. Daly, 38 AD2d 715, 329 NYS2d 504 (AD2d Dept., 1972)). In Reliance Ins. Co v. Daly, supra, the Appellate Division refused to allow the insurance carrier to rescind the policy because [*6]of the misrepresentations of its insured, but concluded that “nothing in the applicable law precludes a suit for damages after the insurer’s responsibilities to a third party have been satisfied” (38 AD2d at 716).

In addition, and most significant, when the insured brings an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured’s misrepresentation and/or fraud in obtaining the policy precludes any recovery by the insured (See DiDonna v. State Farm Mut. Auto. Ins. Co., supra; Mooney v. Nationwide Mut. Ins. Co., 172 AD2d 144). “Just as the public interest is not disserved by a suit brought by the insurer against its insured who fraudulently procured the policy, neither is it disadvantaged if the insurer is relieved of a claim asserted against it by such an insured. If it is established, as defendant here affirmatively alleges, that plaintiff acquired his policy by fraudulent means, denying plaintiff the right to recover would not impinge in any way upon the protection the policy accords innocent victims, would not subvert the statutory proscription against retroactive cancellation and would comport with elementary fairness” (Mooney v. Nationwide Mut Ins. Com., supra, at 149). Similarly, where the right to coverage is asserted in a declaratory judgment action by the insured, the insurance carrier may defend on the ground that the insured was a participant in the fraudulent issuance of the policy (Taradena v. Nationwide Mut. Ins. Co., 239 AD2d 876; Travelers Indem. Co. v. Avelino, 191 AD2d 229; cf., Eagle Ins. Co. v. Liberty Mut. Ins. Co., 267 AD2d 347).

The only limitation to the above rule was recently brought to the fore front by the Appellate Division in the case of Westchester Med. Centre v. GMAC, 2011 NY Slip Op 00217 [80 AD3d 603] in which the court held that “although the defendants contend that they submitted evidence showing that the plaintiff’s assignor misrepresented his state of residence in connection with the issuance of the subject insurance policy, the defendants are precluded from asserting that defense, as a result of their untimely denial of the claim (See Fair Price Med. Supply Corp. v. Travelers Indem. Co., 10 NY3d 556; 564 [2008]; Hospital for Joint Diseases v. Travelers Prop. Cas. Ins. Co., 98 JNY3d at 319; Westchester Med. Ctr v. Lincoln Gen. Ins. Co., 60 AD3d 1045, 1046-1047- [2009]).

In A.B. Medical Servs. PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8, 820 NYS2d 378 At 2d Dept., 2006) the Appellate Term found that the rule that an insurer cannot retroactively cancel a contract of insurance on the grounds of fraud or misrepresentation protects only innocent injured third parties and does not apply to a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured No-Fault benefits. Consequently, the defense of fraudulent procurement of an insurance policy, which is nonwaivable, and thus exempt from the 30 day preclusion rule, was available to the Defendant. “We hold that only innocent third parties who are injured are protected (id at 298) and not health care providers who deals with the assignor-insured at its peril in accepting an assignment of the insured’s no-fault benefits. (cf. Matter of Metro Med. Diagnostics v. Eagle Ins. Co., 293 AD2d 751, 75-752 [2002])”.

Based on the above, it appears that there is a conflict in authority between the Appellate Division and the Appellate Term. The former states that the procurement defense is waivable if not preserved in the denials and the latter states that it is a nonwaivable defense. Since this issue [*7]is not before the court, this court is not duty bound to address this issue.

One final issue that has been raised by the Plaintiff. The Plaintiff seeks to convince this court that based on the ruling in Gramatan Home Investors Corp. supra, the Dismissal Order from the Virginia court is not binding on this Plaintiff. The Plaintiff argues that the assignment in this case that was executed prior to the commencement of this action would not estop the Plaintiff from relitigating this case. The facts in Gramatan are worth a brief discussion. A vinyl siding company entered into a contact with a homeowner. The company assigns the rights to the contract to Home Investors Trust who then assigned to Gramatan. Subsequently, the Attorney General prosecuted the vinyl company for fraud and voided the contract between the homeowner and the company. After the conclusion of that case, Gramatan sued the homeowner on the contract. The homeowner moved for summary judgment stating the judgment in the earlier case collaterally estopped the plaintiffs from enforcing the terms of the contract. The court, reversing the Appellate Division, stated that “an assignee is deemed to be in privity with the assignor where the action against the assignor is commenced before there has been an assignment. In that situation the subject matter of the assignment was then embroiled in litigation and was subject to the claims of third parties and the assignee is charged with notice that his rights to the assignment are subject to competing claims. Conversely, an assignee is not privy to a judgment where the succession to the rights affected thereby has taken place prior to the institution of the suit against the assignor [S]ince there is no dispute that the assignment was made well before commencement of the consumer fraud action against the plaintiff’s assignor, plaintiff is not bound by the terms of that judgment”. The Plaintiff reasons that since the assignment in this case was granted before the Virginia Dismissal Order, the Plaintiff is not bound by the terms of that order. This Court disagrees and as provided below, Gramatan is clearly distinguishable from the instant case.

Notwithstanding arguments by Plaintiff and the rule in Gramatan, the primary issue is whether the judgment of dismissal in the Virginia court is entitled to enforcement in the Civil Court in this county. Absolutely.

As a general rule, there are two types of foreign judgments: the judgment of a court of another state-“sister-state judgment”, and the judgment of a court of another nation.

The Uniform Enforcement of Foreign Judgments Act that is embodied in Article 54 of the CPLR prescribes the procedural requirements for enforcement of foreign judgments in New York State. As Professor David A. Siegel observed the title of the statute is a bit misleading. Although it seems to apply to all foreign judgments, in fact, it applies only to the American judgments. See CPLR Practice Commentaries, §C5401:1.

It has been long established by federal and state law that the Full Faith and Credit Clause of the United States Constitution dictate compulsory recognition of sister-state judgments including judgments of federal courts, territorial courts, the District of Columbia as well as judgments of courts of other states. Justice Cooper, in Peng v. Hsieh, 31 Misc 3d 528, 528 NYS2d 285, 2011 NY Slip Op 21061, recently discussed that long standing federal right. He stated that “it is the firm principal of our federalist system of government that full faith and credit must be given to each state to those “public Acts, Records, and judicial proceedings of every other state.” US Cons., Art. IV, §1. This doctrine is premised on the notion that “[t]he judgment [*8]of a state court should have the same credit, validity and effect, in every other court of the United States which it had in the state where it was pronounced Hampton v. McConnel, 16 U.S. (3Wheat) 234, 235, 4 L.Ed. 378 (1818); See also Williams v. North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279 (1942)”. See also Matter of Bennett, 84 AD3d 1365, 1367, 923 NYS2d 715; Madjar v. Rosa, 83 AD3d 1011, 923 NYD2d 561.

The constitutional requirement of full faith and credit precludes any inquiry into the merits of the judgment, the logic or inconsistency of the decision underlying it or the validity of the legal principles on which it is based (Cradle Co. v. Tri-Angle Assoc., 18 AD3d 100, 798 NYS2d 360 (1st Dept., 2005). Based on these underlying principles, out of state judgments inherently possess res judicata effect as to those issues conclusively decided, thereby avoiding relitigation of those previously decided issues in any other state. Said another way, the application of full faith and credit to the judgment of sister-state is the functional equivalent of “interstate res judicata” (DiCaprio v. DeCaprio, 219 AD2d 819, 631 NYS2d 975 appeal dismissed 87 NY2d 967, 642 NYS2d 195, 644 NE2d 1258, lv denied 88 NY2d 802, 645 NYS2d 445, 668 NE2d 416 rearg, denied 89 NY2d 861, 653 NYS2d 283, 675 NE2d 1236).

While the merits of the judgment of a sister-state may not be collaterally attacked, a judgment debtor may challenge the judgment on the basis of a lack of personal jurisdiction (J D Fin. Co v. Patton, 284 AD2d 164, 166, 727 NYS2d 71 (2001). The court’s review of a foreign judgment, is thus, limited to whether the rendering court had jurisdiction, an inquiry which the courts steadily mandate to include due process considerations (Fiore v. Oakwood Plaza Shopping Ctr., 78 NY2d 572, 577, 578 NYS2d 115, 585 NE2d 364 Cert. denied 506 US 823, 113 S.Ct. 75, 121 L.Ed.2d 40; HO v. McCarthy, 90 AD3d 710, 935 NYS2d 310 (AD2d Dept., [2011]); Fleet v. Costelloe, Inc., 19 Misc 3d 29, 856 NYS2d 436 (AT 2d Dept., [2008]; Mortgage Money Unlimited, v. Schaffer, 1 AD2d 773, 774 [2003]). See also States Resources Corp. v. Whittingham, 32 Misc 3d 1210(A), 932 NYS2d 763, 2011 WL 2640864 (NY. Sup.), 2011 NY Slip Op 51241(U).

In addition, see a recent decision by Chief Justice Lippman in the matter of John Galliano S.A. v. Stallion, Inc., 15 NY3d 75, 930 N.E.2d 756, 904 NYS2d 683 (2010) which involved a foreign money judgment and his analysis of CPLR Article 53, namely, CPLR 5304 which sets forth grounds for nonrecognition of a foreign judgment including the lack of personal jurisdiction (CPLR§5304[a][2]) or the failure of the aggrieved party to receive “notice of the proceedings in sufficient time to enable him to defend” (CPLR §5304[b][2]). See also Khallad v. Blanc, 96 AD3d 1574, 947 NYS2d 859 (NY AD 4d Dept., 2012) finding that the Florida Court had personal jurisdiction over a husband and thus, the judgment was entitled to full faith and credit.

A default judgment of a sister-state can also be accorded full faith and credit in New York (HO v. McCarthy, 90 AD3d 710, 935 NYS2d 310 (AD2d Dept., [2011]); Rockland Industries, Inc. v. Horowitz, 50 AD3d 661, 854 NYS2d 232 (2d Dept., 2008); Progressive Intern. Co. v. Varun Continental, Ltd., 16 AD3d 476, 791 NYS2d 181 (2d Dept., 2005); JDC Finance Comp. I LP v. Patton, 284 AD2d 164, 727 NYS2d 71 (AD 1st Dept., 2001); Staton Wholesale v. Barker, 257 AD2d 902, 684 NYS2d 44 (3d Dept., 1999).The public policy of this state in favoring resolution of disputes on the merits does not preclude enforcement of a foreign default judgment. John Galliano S.A. v. Stallion, Inc., supra. [*9]

This court has purposely limited its discussion to sister-state judgments and not foreign states or nations. Those decrees of other nations are accorded recognition only through comity; only recognized in the court’s discretion, guided and controlled, among other things, by the circumstances of that particular case and provided that the foreign court had proper jurisdiction, the judgment was not fraudulently obtained and does not go against our state’s public policy. (Galliano S.A. v. Stallion, Inc., supra; Society of Lloyd’s v. Grace, 278 AD2d 169, 718 NYS2d 327 (1st Dept. 2000).

Having discussed the frame work of the insurance law and regulations to lay the proper foundation for our analysis in the case at bar, the court makes the following findings of facts and conclusions of law.

It is undisputed that the Plaintiff submitted a proper proof of claim in the form of a health care services application (NF-3) for reimbursement for health care services rendered to the assignor, MACKLIN SANTERRIA.

The Plaintiff claims that there is a question of fact as to whether the denials and letters are copies of documents sent to the assignor have no merit. The affidavits of STEVEN KLIMEK, a Claims Specialist at the Defendant Corporation since October 9, 2000, sufficiently informs the court of his handling of No Fault claims including investigations of all claims; making coverage determinations; evaluating the bills; making a determination of verification requests and if an IME or peer review are needed, to determine insurance coverage. He also stated with sufficient detail the Defendant’s mailing procedures used in connection with written requests for EUO’s and/or the production of other documents as well as the mailing of any denial of claim forms based upon his employment duties at Nationwide. He explicitly describes the mailing procedures of the Defendant in paragraphs 9 (a)-(f). Based upon his knowledge of Defendant’s mailing practices and procedures and his review of the file in the instant matter, he informs the court that the Defendant received the medical bills on September 29, 2008 and October 20, 2008 and describes the verification process which is part of his daily responsibilities. He affirms that he personally handled this claim and brings to this court’s attention that the denials annexed as Exhibit E were issued by him and mailed pursuant to standard office practice and procedures. This evidence is not disputed by the Plaintiff, except by inadequate generalities, which can not defeat a motion for summary judgment.

The Defendant also proffers the affidavit of EDWARD MCGUIRE, a No Fault Claims Manager, who completes the practices and procedures of the Defendant insurer’s mailing procedures. He affirms that the denials and EOBs are completed by the Claims Reps, printed by them, and are printed and mailed in duplicate and placed in the mail baskets for pick for delivery to the mail room in the North Syracuse and New York claims office. All of the mail that is picked up on a particular day is delivered to the US Post Office on the same day. The court also finds this affidavit reliable and is ample proof of the completion of the mailing practices and procedure of the Defendant.

By demonstrating its routine and reasonable office procedures, the Defendant meets its burden of proof that the notices were mailed to the Plaintiff and were received. The burden now shifts to the Plaintiff to rebut the presumption of receipt and to raise a triable issue of fact. Abuhamra v. New York Mut. Underwriters, supra; Residential Holding Corp. v. Scottsdale Ins. [*10]Co., supra.

The bills for the above services were received by the Defendant on September 29, 2008 and October 27, 2008, respectively. The Defendant requested verification on October 6, 2008 and October 27, 2008, respectively. The prescribed thirty (30) day time line to pay or deny a claim was tolled until the insurer received proper verification of all relevant information requested of the injured party or provider. 11 NYCRR 65.15 (g), (7); St. Vincent Hospital of Richmond v American Tr. Ins. Co., 299 AD2d 338, 370 750 NYS2d 98 (NY A.D., 2002). The burden does not shift to the insurer to pay or deny the claim until the required party has complied with the verification request.

Instead of making any further verification request, on December 23, 2008, the Defendant voided the policy back to the date of the application of December 1, 2004, and subsequently, the medical bills were denied by the Defendant on December 29, 2008 by written notice in the form of a denial.

The court has reviewed the answer in this case and notes that the Defendant did not specifically allege fraud in the procurement of this insurance policy. However, the denial explicitly preserves the fraud in the procurement of the policy defense and as provided above, the denial was timely.

However, based on the well settled case precedent discussed above, New York law prohibits the termination of the insurance policy retroactively and this court finds that the termination action ab initio by the Defendant is void as a matter of law. Notwithstanding the impropriety of the termination of the insurance policy by the Defendant, the assignor, with the assistance of counsel, agreed in a two attorney stipulation in the Dismissal Order in Virginia, to void the insurance policy ab initio. It is well-settled law in New York that stipulations of settlement are favored by the courts and are not likely cast aside. (Hallock v. State of New York, 64 NY2d 224, 485 N.Y.S.2d 510, 474 N.E.2d 1178 (Ct of Appeals, 1984), citing Matter of Galasso, 35 NY2d 319, 321, 361 N.Y.S.2d 871 [1974]) particularly when made in open court (Hallock, 64 NY2d at 230, 485 N.Y.S. 510, 474 N.E.2d 1178, citing Matter of Dolgin Eldert Corp., 31 NY2d 1, 10, 334 N.Y.S.2d 833 [1974]).

Therefore, a Stipulation “will not be destroyed without a showing of good cause sufficient to invalidate a contract such as fraud, collusion, mistake, accident, or some other ground of the same nature.” (Campbell v. Bussing, 274 A.D. 893, 893, 82 N.Y.S.2d 616 [2nd Dept. 1947]; see also Hallock, 64 NY2d at 230, 485 N.Y.S. 510, 474 N.E.2d 1178; Matter of Frutiger, 29 NY2d 143, 149-150, 324 N.Y.S.2d 36 [1971]; Canino v. Electric Tech Corp., et al., 49 AD3d 1050, 1051, 856 N.Y.S.2d 683 [3d Dept. 2008] [applying the standard for vacating a stipulation in the context of amending a stipulation]. Thus, absent a showing of fraud, collusion or mutual mistake, a party to a stipulation may not avoid the consequences of the agreement. (Romero v. Martinez, 280 AD2d 58, 721 N.Y.S.2d 17 [1st Dept. 2001]).

The facts in this case does not support any finding that the Dismissal Order of Virginia was based on fraud, collusion, mistake, accident, or some other ground of like import. A party may waive their rights, even constitutional rights, in a stipulation and the court will not impose on the rights of the parties to chart their own litigation course. The court can only presume that [*11]the assignor had little alternative than to resolve the case in the state of Virginia since the evidence, if true, was overwhelmingly favorable to the Defendant Corporation. The assignor was probably also highly motivated to resolve the Virginia case to avoid possible prosecution and to enable her to obtain automobile insurance from another carrier.

As important, this sister-state Dismissal Order is entitled to recognition by this court and is the procedural equivalent of “interstate res judicata”. To determine otherwise, would be contrary to the spirit and letter of federal and state law. As provided above, the constitutional requirement of full faith and credit precludes any inquiry into the merits of the judgment, the logic or inconsistency of the decision underlying it or the validity of the legal principles on which it is based (Cradle Co. v. Tri-Angle Assoc., 18 AD3d 100, 798 NYS2d 360 (1st Dept., 2005). There is apparently no issue of the lack of personal jurisdiction since the assignor appeared with counsel and consented to the terms of the Dismissal Order. Therefore, this court will enforce the Virginia Dismissal order according to its terms. The claimant acknowledged and agreed in a sister state’s order that the policy was void from its inception and based on her agreement, there were no rights that she could have assigned to the Plaintiff. Hence, the court finds that there was no policy of insurance in effect for the claimant on the date of the accident and any claims by the Plaintiff against the Defendant are void. However, in the event that any innocent third parties seek claims under this insurance policy, notwithstanding, the Dismissal Order, the Defendant is required to protect and provide coverage to those third parties who may have been injured as a result of the negligence of the insured during the term of the contract. Aetna Cas. & Sur. Co., v. O’Connor, supra; Matter Liberty Mut. Ins. Co. v. McClellan, supra; Olivio v. GEICO of Washington D.C., supra. See also Matter of Insurance Co of North America v. Kaplun, 274 AD2d 293, 713 NYS2d 214 [AD2d Dept., 2000]. To determine otherwise, would be contrary to our state laws and case precedent.

After reviewing the other contentions raised by the Plaintiff, this court finds that they lack merit in fact and law.

For all of the reasons stated above, the Defendant’s motion for summary judgment is granted and the complaint is dismissed with prejudice.

This order and decision is without prejudice to any claims that the Plaintiff may have against the assignor for the payment of medical services provided herein. See Reliance Ins. Co. v. Daly, 38 AD2d 715, 329 NYS2d 504 (A.D., 2nd Dept., 1972).

A courtesy copy of this decision and order shall be mailed by the court to both parties.

The Defendant shall submit a judgment of dismissal to the Clerk of the Court and upon issuance thereof, shall serve a copy of the judgment and this order and decision with notice of entry on the Plaintiff within 30 days thereafter.

This constitutes the decision and order of this court.

_____________________________________________________________ ________ [*12]

DateApril 22, 2013HON. HARRIET THOMPSON

Judge of the Civil Court

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Defendant, as limited by its brief, appeals from so much of an order of the Civil Court of the City of New York, Bronx County (Raul Cruz, J.), entered August 15, 2012, as denied, in part, its motion for summary judgment dismissing the complaint or, alternatively, to compel discovery.

Per Curiam.

Order (Raul Cruz, J.), entered August 13, 2012, insofar as appealed from, reversed, with $10 costs, and defendant’s motion for summary judgment dismissing the complaint is granted in toto.

In opposition to the defendant-insurer’s prima facie showing of entitlement to judgment dismissing plaintiff’s no-fault claims in connection with services rendered from May 11, 2009 through July 9, 2009, plaintiff failed to raise a triable issue of fact. The affidavit of plaintiff’s principal, while explaining in general terms the office procedure followed by plaintiff in “log[ging]” verification requests into its “billing program,” failed to disclose the results of any search the affiant may have made of the billing program to ascertain whether the verification letters shown to have been sent by defendant had been logged in by plaintiff as received (see Comprehensive Neurological Servs., PA v Tri-State Consumer Ins., 35 Misc 3d 144[A], 2012 NY Slip Op 50950[U] [App Term, 1st Dept 2012]). Plaintiff’s bald denial of receipt of defendant’s verification requests was insufficient on this record to raise a triable issue.

Defendant also made a prima facie showing of entitlement to summary judgment dismissing plaintiff’s claims for services rendered from July 20, 2009 through September 10, 2009. In this regard, defendant submitted, inter alia, an independent medical examination report of its examining acupuncturist, which set forth a factual basis and medical rationale for the acupuncturist’s stated conclusion that the assignor’s injuries were resolved and that there was no need for further acupuncture treatment.

In opposition, plaintiff failed to raise a triable issue, relying largely on an affidavit of its principal, who, while broadly describing his approach to the practice of traditional Chinese medicine, failed to set forth any allegations as to the assignor’s claimed injuries or the medical [*2]necessity of the acupuncture treatments here at issue (see generally CPT Medical Services, P.C. v New York Cent. Mut, Fire Ins. Co., 18 Misc 3d 87 [2007]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 18, 2013

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Defendant, as limited by its brief, appeals from so much of an order of the Civil Court of the City of New York, New York County (Andrea Masley, J.), entered October 15, 2012, as denied its motion for summary judgment dismissing the complaint or, alternatively, to compel discovery.

Per Curiam.

Order (Andrea Masley, J.), entered October 15, 2012, reversed, without costs, and defendant’s motion for summary judgment dismissing the complaint is granted. The Clerk is directed to enter judgment accordingly.

In opposition to the defendant-insurer’s prima facie showing that the assignor’s treated medical condition was not causally related to the underlying motor vehicle accident (see Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 19-20 [1999]), plaintiff failed to raise a material issue requiring a trial of its claim for assigned no-fault first-party benefits. The bare bones affidavit filed by plaintiff’s principal, an orthopedist who performed the surgical procedure giving rise to this no-fault action, was insufficient to defeat summary judgment. The affiant failed to set forth a factual basis for his single-sentence conclusion on the critical causation issue, and did not address, let alone rebut, the contrary findings made by defendant’s medical experts. We note plaintiff’s failure to file a respondent’s brief on appeal.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 16, 2013

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Defendant, as limited by its brief, appeals from that portion of an order of the Civil Court of the City of New York, Bronx County (Mitchell J. Danziger, J.), entered October 19, 2012, which denied, in part, its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Mitchell J. Danziger, J.), entered October 19, 2012, insofar as appealed from, affirmed, with $10 costs.

The action, seeking recovery of assigned first-party no-fault benefits, is not ripe for summary dismissal. The peer review report and accompanying affidavit submitted by defendant’s chiropractor failed to set forth a factual basis or medical rationale for his stated conclusion that the medical supplies here at issue were not medically necessary. The peer reviewer’s bald assertion that plaintiff’s assignor’s (voluminous) medical file lacked “useful/supportive information” — without essaying to explain what medical records, if any, were missing from the file — was insufficient to meet defendant’s prima facie burden of eliminating all triable issues as to medical necessity. In any event, plaintiff’s submission of an affidavit prepared by the assignor’s treating chiropractor, specifying the assignor’s medical conditions and describing the intended benefits of each of the medical supplies prescribed, was sufficient to raise a triable issue as to medical necessity (see generally Lee v McQueens, 60 AD3d 914 [2009]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 16, 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 (Pamela L. Fisher, J.), entered June 17, 2011. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment.

ORDERED that the order, insofar as appealed from, 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 so much of an order of the Civil Court as denied plaintiff’s motion for summary judgment.

A no-fault provider establishes its prima facie case “by proof of the submission to the defendant of a claim form, proof of the fact and the amount of the loss sustained, and proof either that the defendant had failed to pay or deny the claim within the requisite 30-day period, or that the defendant had issued a timely denial of claim that was conclusory, vague or without merit as [*2]a matter of law” (Ave T MPC Corp. v Auto One Ins. Co., 32 Misc 3d 128[A], 2011 NY Slip Op 51292[U], *1 [App Term, 2d, 11th & 13th Jud Dists 2011]; see Westchester Med. Ctr. v Nationwide Mut. Ins. Co., 78 AD3d 1168 [2010]).

In its motion, plaintiff established the submission of the two claim forms at issue, by annexing the denials which admitted the receipt of those claim forms (see East Acupuncture, P.C. v Electric Ins. Co., 16 Misc 3d 128[A], 2007 NY Slip Op 51281[U] [App Term, 2d & 11th Jud Dists 2007]; Oleg Barshay, D.C., P.C. v State Farm Ins. Co., 14 Misc 3d 74 [App Term, 2d & 11th Jud Dists 2006]). Contrary to defendant’s argument on appeal, plaintiff also established that the claim forms at issue were admissible for the truth of the transactions recorded therein, pursuant to CPLR 4518 (a), thereby making a prima facie showing of the fact and the amount of the loss sustained. Moreover, plaintiff demonstrated that defendant’s proffered defense of lack of medical necessity was without merit as a matter of law, in that the Civil Court had issued a prior order precluding defendant from offering any evidence in support of its claimed defense. In opposition to the motion, defendant failed to raise a triable issue of fact.

Accordingly, the order, insofar as appealed from, 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.

Rios, J.P., Weston and Aliotta, JJ., concur.
Decision Date: April 15, 2013

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Plaintiff appeals from three orders of the Civil Court of the City of New York, Bronx County (Sharon A.M. Aarons, J.), dated July 17, 2008 (two orders) and July 18, 2008, which granted defendant’s motions for summary judgment dismissing the complaints.

Per Curiam. [*2]

Orders (Sharon A.M. Aarons, J.), dated July 17, 2008 (two orders) and July 18, 2008, consolidated for the purpose of this decision, affirmed, with $10 costs on each action.

In these three actions by the provider, plaintiff Physical Performance Testing of NY (Physical), to recover assigned first-party no-fault benefits, defendant New York Central Mutual Insurance Company (Mutual) moved for summary judgment. Civil Court granted Mutual’s motions for summary judgment dismissing Physical’s complaints, finding that Physical was unlicensed and, therefore, ineligible for reimbursement of first-party no-fault benefits. Physical appeals, as limited by its brief, and we affirm.

It is well-settled that a provider of healthcare services is not eligible for reimbursement of assigned first-party no-fault benefits “under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York” (Insurance Department Regulations [11 NYCRR] § 65-3.16[a][12]; see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 321 [2005]). State law mandates that professional service corporations be owned and controlled only by licensed professionals (see Business Corporation Law §§ 1503[a], 1507, 1508), and that licensed professionals render the services provided by such corporations (see Business Corporation Law § 1504[a]; 11 NYCRR 65-3.16[a][6]). A professional corporation, which is actually controlled by a management company owned by unlicensed individuals in violation of the Business Corporation Law, is not entitled to be reimbursed for no-fault benefits (see One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738, 740 [2008]).

The Court of Appeals has held that the Superintendent of Insurance promulgated 11 NYCRR 65-3.16(a)(12) so as to “exclud[e] from the meaning of basic economic loss’ payments made tounlicensed or fraudulently licensed providers, thus rendering them ineligible for reimbursement” (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d at 320; see Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, 408 [2006]).

Applying these principles to the matter at bar, Mutual has made a prima facie showing of entitlement to summary judgment dismissing the complaints by demonstrating that the services rendered by Physical are not reimbursable expenses under the No-Fault Law. In opposition, Physical failed to raise a triable issue of fact with respect to its claims because they were not performed by a medical professional corporation, or a licensed health provider.

We have examined Physical’s remaining contentions, and to the extent they are preserved for appellate review, find them to be without merit.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 11, 2013

[*1]

Second Department, April 10, 2013

Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 30 Misc 3d 131(A), 2011 NY Slip Op 50033(U), reversed.

APPEARANCES OF COUNSEL

Joseph Henig, P.C., Bellmore, for appellant.

Michael S. Nightingale, Glen Cove (Bryan G. Melnick of counsel), for respondent.

{**106 AD3d at 158} OPINION OF THE COURT

Austin, J.

On this appeal, we are asked to determine whether a no-fault UB-04 form is the functional equivalent of a no-fault New York State Form N-F 5 (hereinafter N-F 5 form), the receipt of which triggers the 30-day period in which a no-fault insurer is required to pay or deny a claim for no-fault benefits or request further verification. For the following reasons, we answer in the negative and reverse the order of the Appellate Term of the Supreme Court for the Ninth and Tenth Judicial Districts (hereinafter the Appellate Term).

Barbara Kocourek was involved in a motor vehicle accident on October 30, 2008. At the time of the accident, the defendant, New York Central Mutual Fire Insurance Company (hereinafter New York Central), was Kocourek’s motor vehicle insurance carrier. Kocourek’s New York Central policy included the New York State mandated personal injury protection endorsement.

After the accident, Kocourek sought treatment for her injuries from the plaintiff Sound Shore Medical Center (hereinafter Sound Shore) between November 7, 2008, and November 12, 2008. Kocourek assigned her no-fault benefits to Sound Shore.{**106 AD3d at 159}

On November 24, 2008, New York Central received a UB-04 form from Sound Shore. Kocourek was identified as the patient and Sound Shore as the medical provider.^[FN1] According to the UB-04 form, which was generated on November 19, 2008, Sound Shore had provided $13,053.02 in services to Kocourek for treatment rendered from November 7, 2008, through [*2]November 12, 2008. The remarks section of the form stated “NO FAULT INSURANCE,” with New York Central’s name and address. The UB-04 form was not accompanied by an N-F 5 form, or any other documentation.^[FN2]

In response to Sound Shore’s submission of the UB-04 form, New York Central issued what it considered the first of two successive “requests for verification” on November 26, 2008. In its November 26, 2008, request, New York Central noted that “consideration” of this no-fault claim had been “delayed” because it was, inter alia, “[a]waiting application for NF benefits from patient” and “need[ed] a valid DRG code.”^[FN3]

On December 22, 2008, New York Central received an N-F 5 form, dated December 17, 2008, which had been prepared by an “authorized representative” of Sound Shore. The N-F 5 form was accompanied by a second UB-04 form which contained a notation that the UB-04 form was not a “no-fault bill” and referred to the N-F 5 form as “the authorized no-fault bill.” According to the N-F 5 form, Sound Shore was owed a total of $4,834.95 for services rendered to Kocourek. Along with the N-F 5 and UB-04 forms, Sound Shore also sent New York Central a “DRG Master Output Report” detailing how the total bill of $4,834.95 was calculated using the no-fault regular DRG rate, and an assignment of benefits form indicating that Kocourek executed the assignment on November 12, 2008. The assignment of benefits form was not signed by Kocourek, and indicated that Kocourek’s signature was “on file.”

New York Central’s receipt of the N-F 5 form prompted it to issue what it considered to be its second request for verification, dated December 31, 2008. In its December 31, 2008, request for{**106 AD3d at 160} verification, New York Central sought the admitting narratives, pertinent lab tests and/or X-ray results, discharge summary, and an assignment of benefits executed by Kocourek. All of these items had been previously requested by New York Central in its November 26, 2008, correspondence to Sound Shore. In its December 31, 2008 request, New York Central also asked for the EKG report and an explanation of the relationship between the motor vehicle accident and the treatment rendered. Further, it advised Sound Shore that the unsigned assignment form provided was not acceptable pursuant to the New York State insurance regulations.

Although Sound Shore did not respond to the December 31, 2008, request for verification, New York Central took no further action. It did not deny Sound Shore’s claim nor did it send any additional request for verification.

Sound Shore subsequently commenced this action against New York Central in the District Court, Nassau County, to recover no-fault medical payments. As its first cause of action, it sought no-fault medical payments totalling $4,834.95 for services it rendered to Kocourek.^[FN4] As an affirmative defense, New York Central asserted, inter alia, that this action was premature due to its “outstanding requests for verification” to which Sound Shore never responded.

New York Central moved for summary judgment dismissing the first cause of action. It argued that Sound Shore’s action was premature since Sound Shore failed to respond to its initial November 26, 2008, request for verification and its December 31, 2008, follow-up request for verification by not providing the admitting narratives, lab tests/X-ray results, discharge summary, and EKG report. Consequently, New York Central argued that the time for it to either pay the claim or issue a denial was tolled indefinitely.

Sound Shore cross-moved for summary judgment in its favor on the first cause of action, contending that it never actually billed New York Central until the N-F 5 form was sent on December 17, 2008. It argued, inter alia, that as a result, New York Central’s November 26, 2008, request for verification was a nullity since it predated the N-F 5 form, which was received by New York Central on December 22, 2008. Thus, Sound Shore maintained that there was no toll in effect, [*3]and that New York{**106 AD3d at 161} Central was now precluded from interposing a defense to the first cause of action.

The District Court denied New York Central’s motion for summary judgment dismissing the first cause of action and granted Sound Shore’s cross motion for summary judgment in its favor on that same cause of action. The District Court found that Sound Shore had established its prima facie entitlement to summary judgment in its favor by demonstrating that it submitted a claim for no-fault benefits to New York Central setting forth the amount it was owed and proof that New York Central failed to timely pay. The District Court also found that New York Central failed to raise a triable issue of fact in response to Sound Shore’s establishment of its entitlement to judgment as a matter of law, or to meet its burden in proving that it mailed timely requests for verification, to which responses remained outstanding.

New York Central appealed the order of the District Court to the Appellate Term. The Appellate Term reversed the order of the District Court, granted New York Central’s motion for summary judgment dismissing the first cause of action and denied Sound Shore’s cross motion (30 Misc 3d 131[A], 2011 NY Slip Op 50033[U] [2011]). The Appellate Term found that New York Central had made a timely request for verification and a timely follow-up request to which Sound Shore failed to respond. As a result, the Appellate Term determined that New York Central’s time to respond to Sound Shore’s claim had been tolled. The Appellate Term’s conclusion relied on its determination that the initial UB-04 form served by Sound Shore upon New York Central was the “functional equivalent” of an N-F 5 form. This Court granted Sound Shore’s motion for leave to appeal.

On appeal, Sound Shore argues that the UB-04 form is not a prescribed claim form under the no-fault regulations, but is, instead, used in determining treatment and diagnosis. It maintains that an N-F 5 form, as prescribed by the no-fault regulations, is the authorized claim form for hospitals and medical providers filing first party claims as the assignees of insured patients (see 11 NYCRR 65-3.4 [c] [6]). Sound Shore contends that a UB-04 form does not contain substantially the same information as an N-F 5 form, and that the information which is not included in the UB-04 form is essential to a no-fault claim. Sound Shore maintains that, as a result, the UB-04 form was not the “functional equivalent” of an N-F 5 form and, thus, New York Central’s December 31, 2008, request for verification{**106 AD3d at 162} was a first request and not a follow-up request. Therefore, it asserts that New York Central’s time to pay or deny its claim was not tolled.

New York Central argues that since it sent a request for verification in response to the November 24, 2008, UB-04 form sent by Sound Shore, its December 31, 2008, request was the second of two successive requests for verification, so it had no duty to make any further follow-up requests for verification. Since Sound Shore did not respond to either request, New York Central contends that its time to act was tolled. We hold that the UB-04 form sent by Sound Shore is not the “functional equivalent” of an N-F 5 form. Accordingly, we reverse.

Pursuant to the regulations promulgated by the Superintendent of Insurance to implement the No-Fault Law (Insurance Law art 51), an injured party, or that person’s assignee, must submit a written notice of claim to an insurer no later than 45 days after services are rendered (11 NYCRR 65-2.4). The written notice required to obtain first party benefits “shall be deemed to be satisfied by the insurer’s receipt of a completed prescribed application for motor vehicle no-fault benefits (NYS Form N-F 2) . . . or by the insurer’s receipt of a completed hospital facility form (NYS Form N-F 5)” (11 NYCRR 65-3.3 [d]). “[P]roof of claim . . . shall include verification of all of the relevant information requested” (11 NYCRR 65-3.8 [a] [1]). “An insurer must accept proof of claim submitted on a form other than a prescribed form if it contains substantially the same information as the prescribed form” (11 NYCRR 65-3.5 [f]). However, 11 NYCRR 65-3.5 (g) provides that

“[I]n lieu of a prescribed application for motor vehicle no-fault benefits submitted by an applicant [NYS Form N-F 2] and a verification of hospital treatment (NYS form NF-4), an insurer shall accept a completed hospital facility form (NYS form NF-5) (or an NF-5 and uniform billing form [UBF-1] which together supply all the information requested by the NF-5) submitted by a provider of health services with respect to the claim of such provider.”

Within 30 calendar days after receipt of the proof of claim for no-fault benefits, an insurer can either pay the claim, in whole or in part, deny it, or seek verification of it (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). A no-fault insurance carrier waives its defenses, other than those based on the complete absence of coverage (e.g., a defense to the effect that it never{**106 AD3d at 163} wrote a [*4]policy for the claimant), if it fails to deny a no-fault claim, or seek verification, within 30 calendar days after having received proof of claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; [c]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 279 [1997]).

When a no-fault claim has been assigned to a hospital or medical provider and the hospital or medical provider sends an N-F 5 form to the no-fault insurer, the no-fault insurer’s receipt of an N-F 5 form triggers the running of the 30-day period within which the insurer has a duty to pay or to deny the claim, or to seek verification of it (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007]). Subsequent to the receipt of the N-F 5 form, if the insurer requires any additional information to evaluate the proof of claim, such request for verification must be made within 15 business days of the receipt of the N-F 5 form in order to toll the 30-day period (see 11 NYCRR 65-3.5 [b]; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d at 317). Where there is a timely original request for verification, but no response to the request for verification is received within 30 calendar days thereafter, or the response to the original request for verification is incomplete, then the insurer, within 10 calendar days after the expiration of that 30-day period, must follow up with a second request for verification (see 11 NYCRR 65-3.6 [b]). If there is no response to the second, or follow-up, request for verification, the time in which the insurer must decide whether to pay or deny the claim is indefinitely tolled (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d at 317; see also Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862, 864-865 [2009]). Thus, when a no-fault medical service provider fails to respond to the requests for verification, the 30 days in which to pay or deny the claim is tolled and does not begin to run (see Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d 889, 890 [2007]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004]; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 700 [2001]). Accordingly, any claim for payment by the medical service provider after two timely requests for verification have been sent by the insurer subsequent to its receipt of an N-F 5 form from the medical service provider is premature, if the provider has not responded to the requests (see Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d at 890; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d at 570). Nothing in the rules requires a second follow-up, that is, a third request for verification.{**106 AD3d at 164}

However, a request for verification that precedes a no-fault insurer’s receipt of the prescribed N-F 5 claim form does not trigger the tolling of the 30-day period within which an insurer must determine whether to pay or deny such a claim (see Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603, 604 [2011]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [1999]). The “UBF-1” form referred to in 11 NYCRR 65-3.5 (g) is the predecessor of the current “UB-04” form. Under 11 NYCRR 65-3.5 (g), a UBF-1/UB-04 form together with an N-F 5 form must be accepted by a no-fault insurer. The regulation does not state that a UBF-1/UB-04 form alone must be treated as the “functional equivalent” of an N-F 5 form. Further, the UB-04 form sent by Sound Shore to New York Central differed from the N-F 5 form Sound Shore eventually submitted to New York Central in that the UB-04 form did not include the policy number, a description of the accident, or the admitting and discharge diagnosis, and the amount charged was $13,053.02 rather than $4,834.95. Accordingly, we do not agree with the Appellate Term’s conclusion that a UB-04 form is the “functional equivalent” of an N-F 5 form (see 11 NYCRR 65-3.5 [f]). The only effective request for verification was therefore the one issued by New York Central on December 31, 2008, some six business days after its receipt of Sound Shore’s N-F 5 form on December 22, 2008 (see 11 NYCRR 65-3.5 [b]).

We note that the issuance of the request for verification on December 31, 2008, by New York Central resulted in an initial toll of the 30-day period within which to pay or deny the claim (see New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 700-701 [2001]). When Sound Shore failed to respond to New York Central’s December 31, 2008, request for verification by January 30, 2009, New York Central had until February 9, 2009, to issue a follow-up request for verification in order to invoke the protection of the indefinite tolling of its time to pay or deny the claim (see 11 NYCRR 65-3.6 [b]; Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co., 233 AD2d 431 [1996]). Thereafter, no further request for verification was issued by New York Central.

Since the initial toll of the 30-day period following Sound Shore’s submission of the N-F 5 form to New York Central had expired by the time this action was commenced, the first cause of action was not premature. Thus, Sound Shore established its prima facie entitlement to judgment as a matter of law with respect to the first cause of action by demonstrating that the necessary{**106 AD3d at 165} billing documents were mailed to, and received by, New York Central and that payment of no-fault benefits [*5]was overdue (see New York Hosp. Med. Ctr. of Queens v Country Wide Ins. Co., 82 AD3d 723, 723 [2011]; Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603, 604 [2011]).

In opposition, New York Central failed to raise a triable issue of fact as to whether it timely denied Sound Shore’s claim. New York Central failed to submit any evidence that it mailed a second or follow-up request for verification at the end of the 30-day period subsequent to mailing the initial request for verification on December 31, 2008, which would have tolled its time to pay no-fault benefits to Sound Shore (see Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d at 604). For this same reason, New York Central failed to meet its prima facie burden on its own motion for summary judgment (see id.).

Accordingly, the order dated January 10, 2011, is reversed, on the law, and the order of the District Court, Nassau County, dated August 31, 2009, is reinstated.

Angiolillo, J.P., Dickerson and Cohen, JJ., concur.

Ordered that the order dated January 10, 2011, is reversed, on the law, with costs, and the order of the District Court, Nassau County, dated August 31, 2009, is reinstated.

Footnotes

Footnote 1: The UB-04 form is a universal billing form developed by, among others, the National Uniform Billing Committee, which was formed in 1975 by the American Hospital Association.

Footnote 2: The N-F 5 form is published by the New York State Department of Financial Services in 11 NYCRR Appendix 13.

Footnote 3: DRG is an abbreviation for diagnosis related group. DRG is a system used to classify patients into groups based on criteria such as principal diagnosis, treatment given, age, gender, etc. Each patient in a DRG is expected to utilize similar medical resources.

Footnote 4: The second cause of action, which sought to recover unrelated no-fault medical payments, was settled pursuant to stipulation dated March 20, 2009.

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 May 2, 2011. The order denied defendant’s motion for summary judgment dismissing the complaint and granted plaintiff’s cross motion for summary judgment.

ORDERED that the order is reversed, with $30 costs, and defendant’s motion for summary judgment dismissing the complaint and plaintiff’s cross motion for summary judgment are remitted to the Civil Court for a new determination after final resolution of a prompt application to the Workers’ Compensation Board to determine the parties’ rights under the Workers’ Compensation Law. In the event plaintiff fails to file proof with the Civil Court of such application within 90 days of the date of this decision and order, the Civil Court shall grant defendant’s motion for summary judgment dismissing the complaint and deny plaintiff’s cross motion for summary judgment unless plaintiff shows good cause why the complaint should not be dismissed. [*2]

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint based upon plaintiff’s assignors’ alleged eligibility for workers’ compensation benefits, and plaintiff cross-moved for summary judgment. The Civil Court denied defendant’s motion, on the ground that defendant had failed to proffer evidence in admissible form in support of its defense, and granted plaintiff’s cross motion.

Defendant proffered sufficient evidence in admissible form of the alleged facts which gave rise to its contention that there was an issue as to whether plaintiff’s assignors had been acting as employees at the time of the accident, and that therefore workers’ compensation benefits might be available (see e.g. Jamaica Med. Supply, Inc. v American Tr. Ins. Co., 34 Misc 3d 133[A], 2011 NY Slip Op 52371[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; D.A.V. Chiropractic, P.C. v American Tr. Ins. Co., 29 Misc 3d 128[A], 2010 NY Slip Op 51738[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; AR Med. Rehabilitation, P.C. v American Tr. Ins. Co., 27 Misc 3d 133[A], 2010 NY Slip Op 50708[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Response Equip., Inc. v American Tr. Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op 51176[U] [App Term, 2d & 11th Jud Dists 2007]; cf. Westchester Med. Ctr. v American Tr. Ins. Co., 60 AD3d 848 [2009]). This issue must be resolved in the first instance by the Workers’ Compensation Board (Board) (see O’Rourke v Long, 41 NY2d 219, 225 [1976]; see also Dunn v American Tr. Ins. Co., 71 AD3d 629 [2010]; Jamaica Med. Supply, Inc. v American Tr. Ins. Co., 34 Misc 3d 133[A], 2011 NY Slip Op 52371[U]; D.A.V. Chiropractic, P.C. v American Tr. Ins. Co., 29 Misc 3d 128[A], 2010 NY Slip Op 51738[U]; AR Med. Rehabilitation, P.C. v American Tr. Ins. Co., 27 Misc 3d 133[A], 2010 NY Slip Op 50708[U]; Response Equip., Inc. v American Tr. Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op 51176[U]).

Accordingly, defendant’s motion and plaintiff’s cross motion should not have been determined. Instead, the Civil Court should decide the motions after final Board resolution. A prompt application to the Board, as set forth above, is required in order to determine the parties’ rights under the Workers’ Compensation Law (see Dunn v American Tr. Ins. Co., 71 AD3d 629; LMK Psychological Serv., P.C. v American Tr. Ins. Co., 64 AD3d 752 [2009]).

Rios, J.P., Pesce and Aliotta, JJ., concur.
Decision Date: April 08, 2013