[*1]

Supreme Court, Appellate Term, Second Department, 9th and 10th Judicial Districts, December 18, 2012

APPEARANCES OF COUNSEL

Joseph Henig, P.C., Bellmore (Mark A. Green of counsel), for appellant. Rossillo & Licata, P.C., Westbury (John J. Rossillo of counsel), for respondent.

{**38 Misc 3d at 42} OPINION OF THE COURT

Memorandum.

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, we find that the District Court properly denied plaintiff’s motion for summary judgment on the ground that plaintiff had not demonstrated its prima facie entitlement to judgment as a matter of law (see New York Hosp. Med. Ctr. of Queens v Statewide Ins. Co., 33 Misc 3d 130[A], 2011 NY Slip Op 51863[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2011]).

A plaintiff seeking to recover for no-fault benefits must submit proof of the fact and the amount of the loss sustained, i.e., that health care services or supplies were provided and the amount thereof (see Insurance Law § 5106 [a]; Ave T MPC Corp. v Auto One Ins. Co., 32 Misc 3d 128[A], 2011 NY Slip Op 51292[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]; King’s Med. Supply, Inc. v Hereford Ins. Co., 5 Misc 3d 55 [App Term, 2d Dept, 9th & 10th Jud Dists 2004]). In this case, plaintiff submitted an NF-5, UB-04 and DRG master output report in support of its motion for summary judgment. However, in order for such documents to constitute prima facie proof of the fact and the amount of the loss sustained, plaintiff would have had to demonstrate that such documents were admissible, pursuant to CPLR 4518 (a), as proof of the acts, transactions, occurrences and/or events recorded therein (see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 31 Misc 3d 21 [App{**38 Misc 3d at 43} Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]; see generally Matter of Carothers v GEICO Indem. Co., 79 AD3d 864 [2010]; Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2008]). Plaintiff failed to do so.

Plaintiff’s argument that hospitals should not be held to the same standards of proof as other healthcare providers, because hospitals are required to use a different claim form (an NF-4 or NF-5 rather than an NF-3), is without merit. The NF-3 (verification of treatment by [*2]attending physician or other provider of health service), NF-4 (verification of hospital treatment) and NF-5 (hospital facility form) are all prescribed by the no-fault regulations (Insurance Department Regulations [11 NYCRR] Appendix 13), and one is not inherently more reliable than the others. The fact that a certain form was used to submit a claim to an insurer is irrelevant to the question of whether the health care provider demonstrated to the court that it is entitled to recover no-fault benefits.

We recognize that CPLR 4518 (b) allows hospital records to be used as prima facie proof of the facts contained in those records. However, CPLR 4518 (b) does not apply to “any action instituted by or on behalf of a hospital to recover payment . . . for services rendered by or in such hospital.” Even assuming, without deciding, that a hospital’s records could be used by the plaintiff hospital in an assigned first-party no-fault case, pursuant to CPLR 4518 (b), under the theory that the hospital is suing as the assignee of a patient seeking to recover benefits from an insurance company, and not on its own behalf, such documents must, in any event, “bear[ ] a certification by the head of the hospital or by a responsible employee in the controller’s or accounting office that the bill is correct, that each of the items was necessarily supplied and that the amount charged is reasonable.” No such certification was provided here, nor did plaintiff submit an affidavit of a hospital employee attesting to the truth of any of the contents of the records submitted by plaintiff. Instead, the only sworn statements submitted by plaintiff were made by plaintiff’s attorney and by an employee of a third-party billing company, neither of whom claimed any knowledge as to the truth of the contents of the records.

Finally, we note that the cases cited by plaintiff (e.g. Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 34 AD3d 532 [2006]), for the proposition that hospitals are not required to submit proof of the fact and the amount of the loss sustained to the court in order to demonstrate their entitlement to no-fault{**38 Misc 3d at 44} benefits, do not impact our decision in this case. In those cases, there is no indication that the defendants had ever objected to the plaintiffs’ prima facie showing on the ground that those plaintiffs had failed to submit such proof. Thus, plaintiff has not demonstrated that any appellate court in New York has been presented with the question of whether a plaintiff hospital is required to offer proof of the fact and the amount of the loss sustained in order to recover no-fault benefits in court and, upon considering that question, held that the hospital is not required to offer such proof. The Appellate Division has specifically held, twice, that a health care provider has not demonstrated its entitlement to recover no-fault benefits after finding that the provider’s claim forms were inadmissible pursuant to CPLR 4518 (a) (see Matter of Carothers, 79 AD3d 864; Art of Healing Medicine, P.C., 55 AD3d 644), and plaintiff has not provided a compelling reason to distinguish the instant case from those cases.

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

We decline defendant’s request to search the record and award it summary judgment dismissing the complaint.

Molia, J.P., Iannacci and LaSalle, JJ., concur.

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 (Maureen A. Healy, J.), entered February 2, 2011. The order, insofar as appealed from as limited by the brief, denied defendant’s motion for summary judgment dismissing the complaint.

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, defendant moved for summary judgment dismissing the complaint and plaintiff cross-moved for summary judgment. The Civil Court found that plaintiff and defendant had established their prima facie cases and that the sole issue for trial was the medical necessity of the services rendered to plaintiff’s assignor. Defendant appeals, as limited by its brief, from so much of the order as denied its motion.

In support of its motion, defendant submitted, among other things, a sworn peer review report which set forth a factual basis and medical rationale for the doctor’s determination that there was a lack of medical necessity for the chiropractic services rendered. In opposition to the motion, plaintiff submitted an affidavit by its chiropractor which was sufficient to demonstrate that there was an issue of fact as to the medical necessity of the services at issue (see Quality Psychological Servs., P.C. v Mercury Ins. Group, 27 Misc 3d 129[A], 2010 NY Slip Op 50601[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; cf. Pan Chiropractic, P.C. v Mercury Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d, 11th & 13th Jud Dists 2009]).

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

Rios, J.P., Aliotta and Solomon, JJ., concur.
Decision Date: December 13, 2012

[*1]

District Court of Nassau County, First District, December 12, 2012

APPEARANCES OF COUNSEL

Israel, Israel & Purdy, LLP, Great Neck, for plaintiff. Richard T. Lau & Associates, Jericho, for defendant.

{**38 Misc 3d at 751} OPINION OF THE COURT

Michael A. Ciaffa, J.

Plaintiff moves for summary judgment upon its claim for no-fault benefits, and defendant cross-moves for summary judgment dismissing the claim. For the reasons stated below, plaintiff’s motion is denied, the cross motion is granted, and the action is dismissed as premature.

The principal issue presented by the motion and cross motion concerns defendant’s failure to give notice to plaintiff’s attorneys that it was requesting verification of the claim from the plaintiff medical provider. Defendant’s proof establishes that it mailed timely verification requests directly to plaintiff, but received neither the requested material nor any response. In opposing defendant’s argument that plaintiff’s lawsuit should be dismissed as premature, plaintiff’s papers contend that defendant’s verification letters should have been sent to plaintiff’s attorneys pursuant to the no-fault regulations and that firm’s explicit written request. Although plaintiff’s contention has merit, defendant’s failure to send its verification requests to plaintiff’s attorneys, by itself, is legally inconsequential. Most importantly, plaintiff does not dispute that it received defendant’s verification letters. In the absence of a prompt objection by plaintiff to the misdirected [*2]verification letters, plaintiff is in no position to complain about defendant’s mistake. Its action, therefore, was brought prematurely, and must be dismissed.

The facts relevant to the motion and cross motion are undisputed. By letter dated October 19, 2011, plaintiff submitted a timely claim for no-fault benefits to defendant through a letter from its attorneys, Israel, Israel & Purdy, LLP (IIP). The cover letter from IIP stated, in pertinent part: “in the event you require additional verification of the claim or proof of loss, then your request for the same, including medical records, should be forwarded to us, as Attorneys, and we will in turn arrange for the transmittal to you.”

Plaintiff’s claim was received at defendant’s Ballston Spa office no later than October 21, 2011. Following receipt of the claim, defendant timely mailed a verification request to plaintiff on November 3, 2011, seeking submission of a “[l]etter of medical necessity.” For reasons not explained, defendant failed to mail a copy of the letter to IIP. Instead, copies were sent only to plaintiff’s assignor (Maria Silva) and her attorneys.

When no response was received within the following 30 days, defendant sent a second verification request to plaintiff on{**38 Misc 3d at 752} December 16, 2011. Again, defendant failed to send a copy of the letter to IIP. Again, copies were sent only to plaintiff’s assignor and her attorneys.

The court begins its analysis by assuming that no-fault insurers must ordinarily respect a provider’s decision to pursue a claim through communications from and to its lawyers. Once an insurer is advised that it should communicate directly with a provider’s attorneys, any such communications should be directed to those attorneys. Lawyers for parties are ethically bound to observe such a rule. (See Rules of Professional Conduct [22 NYCRR 1200.0] rule 4.2 [a] [“a lawyer shall not communicate . . . with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the prior consent of the other lawyer or is authorized to do so by law”].) So, too, a debt collector who knows that a consumer is represented by an attorney is “generally obligated to communicate with the consumer only through the attorney.” (See Rosario v American Collective Counseling Servs., Inc., 2001 WL 1045585, *1, 2001 US Dist LEXIS 13455, *3-4 [MD Fla 2001], citing 15 USC § 1692c [a] [2].) “In such situations, a notice to counsel satisfies the requirement that notice be sent to the consumer.” (Id., 2001 WL 1045585, *1, 2001 US Dist LEXIS 13455, *4.)

Similarly, in matters involving insurance claims, where the insurer has been apprised that a claimant has counsel, appellate court decisions hold that statutory notices to the claimant may properly be sent to “the claimant’s attorney, rather than [to] the claimant personally.” (See Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124, 127 [1st Dept 1999]; see also St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338, 339-340 [2d Dept 2002]; New York Hosp. Med. Ctr. of Queens v State Farm Mut. Auto. Ins. Co., 293 AD2d 588, 590-591 [2d Dept 2002]; New York Mut. Underwriters v O’Connor, 105 AD2d 994, 995 [3d Dept 1984].) Indeed, as the court recognized in Lenox Hill Radiology & MIA P.C. v Global Liberty Ins. (20 Misc 3d 434, 438 [Civ Ct, NY County 2008]), “sending [a] verification request to the attorneys [of the medical provider] . . . [is] notice to the principal-provider as a matter of law.” [*3]

In view of the foregoing, in cases where a no-fault claimant chooses to have its claim presented thru counsel, and designates counsel as its agent for receipt of requests for verification, a no-fault insurer should scrupulously respect a claimant or provider’s wish that all such communications be sent to its attorneys for their response. Although the processing of a no-fault claim{**38 Misc 3d at 753} is not supposed to be adversarial (see 11 NYCRR 65-3.2 [b]), practical realities require acknowledgment that attorneys oversee or are involved in each and every step of the process. When such attorneys are designated as a provider’s agent at the claims stage, an insurer ought to honor that designation in the course of processing the provider’s claim for no-fault benefits. Absent circumstances where a statute or regulation requires otherwise, the court sees no reason why an insurer should not communicate directly with counsel for the provider.

Nothing in the no-fault regulations requires a different conclusion. Under the provisions which specifically govern verification requests, an insurer seeking verification must “follow up with the party from whom the verification was requested, either by telephone call, properly documented in the file, or by mail.” (11 NYCRR 65-3.6 [b].) However, the regulation further provides: “[a]t the same time the insurer shall inform the applicant and such person’s attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested.” (Emphasis added.)

Plaintiff’s counsel correctly maintains that her office should be deemed “the applicant’s attorney” for the purpose of receiving notice of any missing verification as required by this regulation. Pursuant to the currently prevailing case law interpretations of section 65-3.6 (b), a provider seeking payment through an assignment is deemed the “applicant.” (See Cambridge Med., P.C. v Progressive Cas. Ins. Co., 29 Misc 3d 186, 188-189 [Civ Ct, Richmond County 2010], discussing East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202 [2d Dept 2009], and Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 2d Dept 2007].) Moreover, defendant cannot dispute that it was aware, from IIP’s initial claim letter, that IIP was representing plaintiff in connection with the instant claim. Indeed, IIP clearly placed the insurer on notice that the provider’s law firm was acting as its agent for the receipt of all correspondence concerning the bills at issue. (See Cambridge Med., P.C. v Progressive Cas. Ins. Co., 29 Misc 3d at 189.) Therefore, at a very minimum, defendant should have sent written notice of defendant’s follow-up verification request to both plaintiff and IIP, in accordance with section 65-3.6 (b).

Instead of doing so, defendant merely sent copies of its letters to plaintiff’s assignor and her attorney. Under the circumstances at bar, the insurer’s failure to notify IIP of the request for{**38 Misc 3d at 754} verification is inexcusable. At least with respect to the follow-up notice, that failure violated the no-fault regulations governing claim verification.

However, it does not necessarily follow that such a mistake requires a decision granting plaintiff’s motion and denying defendant’s cross motion. As a general rule, when notice is given to a person’s designated agent, that notice is typically imputed to the [*4]agent’s principal. The premise for the general rule is that the agent owes a duty to his principal to forward the notice. While this no-fault matter presents the opposite situation, where notice was given to the principal not the agent, the same general rules should apply. Just as an agent is duty bound to forward notices to his principal, the principal has an implied duty to forward notices to its agent in cases where the principal intends to have an agent act on its behalf. “Every contract of agency carries with it an implied obligation on the part of the principal to do nothing that would thwart the effectiveness of the agency.” (Sidella Export-Import Corp. v Rosen, 273 App Div 490, 492 [1st Dept 1948].) “A party cannot insist upon a condition precedent . . . when its nonperformance has been caused by himself.” (Id.)

In the instant case, the insurer established that its verification requests were timely mailed to the provider, and the provider does not dispute receiving them. Appellate court decisions make plain that “further communication, not inaction” is necessary to preserve objections to arguably improper insurer verification requests. (Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553, 555 [2d Dept 1999]; see also St. Vincent’s Hosp. v American Tr. Ins. Co., 299 AD2d at 340; New York Hosp. v State Farm Mut. Auto Ins. Co., 293 AD2d at 590-591; accord Five Boro Psychological & Licensed Master Social Work Servs., PLLC v GEICO Gen. Ins. Co., 38 Misc 3d 354 [Civ Ct, Kings County 2012]; Canarsie Chiropractic, P.C. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 1228[A], 2010 NY Slip Op 50950[U] [Civ Ct, Kings County 2010].) The same should hold true here.

Plaintiff, as an applicant for no-fault benefits seeking payment for its services, knew or should have known that it needed to provide routine verification, in the form of a letter of medical necessity, before its claim would be processed by defendant. Although it apparently received two written requests for such verification, plaintiff never reminded defendant that the notices should have gone to IIP. If plaintiff forwarded the verification{**38 Misc 3d at 755} notices to IIP, that firm did nothing, either. Both had the opportunity to act. Neither raised a timely objection to the requests. The verification was never provided. The claim remained premature. (See e.g. Alev Med. Supply, Inc. v Eveready Ins. Co., 37 Misc 3d 137[A], 2012 NY Slip Op 52184[U] [App Term, 2d Dept,2d, 11th &13th Jud Dists 2012].) Notwithstanding defendant’s failure to also send copies of the verification requests to IIP, plaintiff, not defendant, bears the primary blame for its own predicament.

In closing, under current case law precedent, medical providers have a duty to promptly respond to verification requests which are arguably improper. As appellate courts have noted in other contexts,

“[I]t would be incongruous to conclude that the insurance regulation regarding follow-up verification, or any other statute or rule, warrants a result which would, in effect, penalize an insurer who diligently attempts to obtain the information necessary to make a determination of a claim, and concomitantly, rewards a plaintiff who makes no attempt to even comply with the insurer’s requests.” (Triangle R Inc. v Praetorian Ins. Co., 30 Misc 3d 129[A], 2010 NY Slip Op 52294[U], *2 [App Term, 1st Dept 2010], quoting Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862, 865 [2d Dept 2009].)

[*5]Consequently, the insurer’s failure to send copies of its requests to the provider’s attorneys is immaterial. The action is premature, and accordingly must be dismissed.

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court of the City of New York, Bronx County (Fernando Tapia, J.), entered March 17, 2011, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Fernando Tapia, J.), entered March 17, 2011, reversed, with $10 costs, motion granted and complaint dismissed. The Clerk is directed to enter judgment accordingly.

In opposition to defendant’s prima facie showing of entitlement to judgment as a matter of law on the ground that plaintiff did not submit timely proof of its claim for first-party no-fault benefits (see 11 NYCRR 65—1.1; 65—3.3[d],[e]; New York & Presbyt. Hosp. v Country-Wide Ins. Co., 17 NY3d 586, 592 [2011]), plaintiff failed to raise a triable issue of fact. The conclusory affidavit of plaintiff’s employee, who had no personal knowledge of the date the claim was mailed, and described in only the most general terms her offices mailing practices and procedures, was insufficient to raise an issue of fact (see Westchester Med. Ctr. v Countrywide Ins. Co., 45 AD3d 676, 677 [2007]). Nor did the certified mail receipt relied upon by plaintiff raise a triable issue as to actual mailing (see Mid City Construction Co., Inc. v Sirius America Insurance Company, 70 AD3d 789, 790 [2010]; New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2006]), especially given that the receipt contained two different postmarks and a file number that did not correspond to plaintiff’s claim. We also note that plaintiff submitted no proof of “reasonable justification” for the failure to provide timely notice of the claim (see 11 NYCRR 65-3.3[e]; New York & Presbyt. Hosp. v Country-Wide Ins. Co., 17 NY3d at 592).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT. [*2]
Decision Date: December 11, 2012

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, First District (Michael A. Ciaffa, J.), entered August 2, 2011. The order denied defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed, without 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 an order of the District Court which denied defendant’s motion for summary judgment dismissing the complaint.

In support of its motion, defendant submitted an affidavit by its litigation examiner which established that defendant had timely mailed a request and follow-up request for verification (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]), and that the requested verification had not been provided. Since plaintiff has not rebutted defendant’s prima facie [*2]showing that defendant’s initial request and follow-up request for verification were timely mailed and that plaintiff failed to respond to the requests, defendant established that its time to pay or deny the claim had been tolled. Consequently, defendant’s motion for summary judgment dismissing the complaint, on the ground that the action was premature, should have been granted (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [a]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Mary Immaculate Hosp. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 130[A], 2008 NY Slip Op 52046[U] [App Term, 9th & 10th Jud Dists 2008]).

Contrary to plaintiff’s argument, plaintiff did not prove that defendant had issued a denial in response to the bill at issue. The denial attached to plaintiff’s opposition was a general denial, not a specific denial, as it did not set forth an amount of the bill, or the date of the bill, or who had rendered services, or what those services were. Moreover, the denial lists Candice Vernon as the applicant for benefits, not plaintiff, and explicitly states that the applicant is not an assignee.

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

LaSalle, J.P., Molia and Iannacci, JJ., concur.
Decision Date: December 07, 2012

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Michael A. Ciaffa, J.), dated August 1, 2011. The order granted defendant’s motion for, in effect, summary judgment dismissing the complaint.

ORDERED that the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the District Court, by order dated December 10, 2010, stayed the action and required plaintiff to file proof, within 90 days of the date of the order, that its assignor had filed an application with the Workers’ Compensation Board for a determination of the parties’ rights under the Workers’ Compensation Law. The order further provided that, in the event plaintiff failed to do so, defendant’s motion for summary judgment dismissing the complaint would be granted unless plaintiff showed good cause why the complaint should not be dismissed.

Thereafter, defendant moved for, in effect, summary judgment dismissing the complaint, asserting that plaintiff had failed to comply with the prior order. As plaintiff failed to demonstrate in opposition to defendant’s instant motion that its assignor had made such an application, and did not show good cause why the complaint should not be dismissed, the District [*2]Court properly granted defendant’s motion for, in effect, summary judgment dismissing the complaint (see A.B. Med. Servs., PLLC v American Tr. Ins. Co., 35 Misc 3d 134[A], 2012 NY Slip Op 50764[U] [App Term, 9th & 10th Jud Dists 2012]). Accordingly, the order is affirmed.

LaSalle, J.P., Molia and Iannacci, JJ., concur.
Decision Date: December 07, 2012

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.), dated February 18, 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, without 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 moved for summary judgment dismissing the complaint. Although the Civil Court denied defendant’s unopposed motion, it held that the only issue to be resolved at trial was whether defendant had issued the denial of claim form in duplicate.

Contrary to the finding of the Civil Court, the affidavit submitted by defendant in support of its motion established that the denial of claim had been issued in duplicate (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]). Since the Civil Court found that defendant is otherwise entitled to judgment, and as plaintiff cannot be heard to challenge that finding in light of plaintiff’s failure to oppose defendant’s motion for summary judgment dismissing the complaint, defendant’s motion is granted (see Delta [*2]Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 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]).

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

Rios, J.P., Aliotta and Solomon, JJ., concur.
Decision Date: December 07, 2012

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

Appeal from an order of the Civil Court of the City of New York, Kings County (Katherine A. Levine, J.), dated October 15, 2010. 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 moved for summary judgment dismissing the complaint. The Civil Court denied defendant’s motion, finding, among other things, that defendant had established its prima facie case and that the “matter shall proceed to trial on the issue of medical necessity.”

In support of its motion, defendant submitted, among other things, affirmed peer review reports and an independent medical examination report, which set forth factual bases and medical rationales for the reviewers’ determinations that there was a lack of medical necessity for the services rendered. In opposition to the motion, plaintiff failed to rebut the conclusions set forth in defendant’s reports. In view of the foregoing, and as plaintiff has not challenged the Civil Court’s finding, in effect, that defendant is otherwise entitled to judgment, the order, insofar as appealed from, is reversed and defendant’s motion for summary judgment dismissing the [*2]complaint is 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 & 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]).

Rios, J.P., Aliotta and Solomon, JJ., concur.
Decision Date: December 07, 2012

Supreme Court, Kings County

21836/11

Plaintiff Attorney: Lester Herzog, 1729 E. 15th Street, Brooklyn, NY 11229

Defendant Attorney: Smith Mezure Director Wilkins Young & Yagerman, PC, 111 John Street, New York, NY 10038

David Schmidt, J.

The following papers numbered 1 to 11 read on these motions:

Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-2, 3-4, 5-6

Opposing Affidavits (Affirmations)7-9

Reply Affidavits (Affirmations)10-11

Affidavit (Affirmation)

Other Papers

Upon the foregoing papers in this action seeking supplementary uninsured/underinsured motorist (SUM) coverage under a policy of insurance issued by defendant Geico General Insurance Company (Geico or defendant), plaintiffs Sarah H. Orman and Gidon Orman (plaintiffs) move, pursuant to CPLR 3211 (b), to dismiss four of Geico’s affirmative defenses. By order to show cause, Geico moves to vacate plaintiffs’ note of issue and [*2]certificate of readiness, and to strike this matter from the trial calendar. Geico separately cross-moves, pursuant to CPLR 3211 (a) (7),

to dismiss plaintiffs’ second cause of action alleging that it breached its implied covenant of good faith and fair dealing.

Background

Plaintiff Sarah Orman (plaintiff) was involved in a car accident which took place on October 23, 2007 in Woodmere, New York. While plaintiff was making a left turn, plaintiffs’ vehicle was struck in the rear by the vehicle owned and operated by Maximino Luna. According to the police report and the deposition testimony of plaintiff in the underlying action (Orman v Luna, Index No. 12108/09), Mr. Luna attempted to stop before the collision but was unable to do so. At the time of the accident, Mr. Luna had an Allstate automobile insurance policy with limits of $25,000 per person and $50,000 per accident. Plaintiffs held a policy with Geico which included SUM coverage with $50,000/$100,000 policy limits. It is not disputed that plaintiff is a “covered person” under the terms of the policy.

In August, 2008, Geico was awarded 100% in arbitration and plaintiffs’ deductible of $500 was refunded to them.

In October, 2009, plaintiffs sent Geico a formal notice of their intention to make a claim, with accompanying correspondence. Geico acknowledged receipt of the claim by letter dated November 5, 2009, and advised plaintiffs to notify it if they received a policy limit settlement offer from Allstate that was less than their “UIM” limit. Plaintiffs’ counsel advised Geico, by letter dated November 13, 2009, that Allstate had not yet tendered its policy and that the underlying action was being litigated, although it had not been placed on the trial calender.

On October 6, 2010, plaintiff was deposed in the underlying action.

In March, 2011, Allstate advised plaintiffs’ counsel that it was offering the $25,000 policy limits for settlement of the bodily injury claim for plaintiff as a result of the accident.

By letter dated June 20, 2011, plaintiffs’ counsel advised Geico that Allstate had tendered its policy of $25,000. In addition, counsel attached a copy of Allstate’s tender, a copy of the declaration pages of the policy and an affidavit of “no excess” coverage, signed by Mr. Luna. Counsel also requested Geico’s permission, in writing, to accept Allstate’s tender.

By letter dated June 21, 2011, plaintiffs’ counsel provided Geico with a package of medicals, photos and other documents, and again requested Geico’s permission to accept Allstate’s tender.

By letter dated June 23, 2011, Geico advised plaintiffs’ counsel that “you have GEICO’s permission to settle your client’s Bodily Injury claim with the adverse tort carrier, Allstate, insurer of Maximino Luna.” Geico also advised plaintiffs’ counsel that in order to evaluate an underinsured motorist bodily injury claim, it required “medical specials” documenting plaintiff’s injuries and a written authorization to obtain a copy of plaintiff’s no-fault file.

By letter dated June 25, 2011, Allstate advised plaintiff and her attorney that a settlement check was issued to plaintiff in the amount of $25,000.

On August 30, 2011, referring to his August 15, 2011 conversation with Geico’s claims examiner, plaintiffs’ counsel advised Geico that plaintiffs would not accept anything less than [*3]the full $25,000 SUM coverage limits; that as of that date, Geico had not contacted him; and that he was in the process of drafting pleadings to commence a direct action against Geico. Counsel also stated that plaintiffs would be including a cause of action for bad faith, “in view of the fact that Geico refused to pay $25,000, where the economic damages alone, exceed one million dollars – without even considering the personal injuries and pain and suffering.”

By letter dated September 15, 2011, Geico advised plaintiffs’ counsel that plaintiffs’ SUM policy limit was $50,000/$100,000; that it was “always willing to negotiate any claim in good faith;” and that, based upon alleged economic damages, it requested all medical authorizations, MRI films, the no-fault file and employment records so that it could properly evaluate plaintiffs’ claim. Geico further stated that it would contact counsel upon completion of its review.

By letter dated September 26, 2011, plaintiffs’ counsel again advised Geico that plaintiffs would not accept anything less than the full $25,000 SUM coverage limits, and that in response, “[the claims examiner] … stated that Geico, at present, is unwilling to tender same.” Plaintiffs’ counsel further stated that in view of the above, he enclosed six authorizations and informed Geico that an action against Geico had been commenced.^[FN1]

On that same date, (September 26, 2011) plaintiff commenced this action, alleging a cause of action for breach of contract, a cause of action alleging bad faith, and a cause of action for loss of consortioum. As relevant here, the second cause of action states:

“That defendant’s refusal and/or neglect to pay its policy limits when requested to do so, was not made in good faith in view of all relevant circumstances.

That in refusing and/or neglecting to pay its policy limits, defendants considered only its own interests, without also taking into consideration the interests of its insured.

That the defendant’s refusal and/or neglect to pay plaintiff amounted to gross disregard for its insured’s interests; by failing to place the interests of its insured on equal footing with its own interests.”

Plaintiffs’ seek $100,000 in damages each for the first and second causes of action, and unspecified damages for the third cause of action.

On October 25, 2011, Geico answered the complaint and asserted various affirmative defenses including, as relevant here, that plaintiff did not sustain serious injury or non-economic loss under Insurance Law §§ 5102 and 5014.

Subsequently, plaintiffs move to dismiss four of Geico’s affirmative defenses, plaintiff cross-moved to dismiss Geico’s serious injury affirmative defense, and Geico moved to vacate the note of issue and certificate of readiness. [*4]

Discussion

Plaintiffs move, pursuant to CPLR 3211 (b), to dismiss four of defendant’s affirmative defenses. “A party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit” (Mazzei v Kyriacou, 98 AD3d 1088, 1088-1089 [2012], quoting CPLR 3211 [b]). “When moving to dismiss or strike an affirmative defense, the plaintiff bears the burden of demonstrating that the affirmative defense is without merit as a matter of law” (id., [internal quotation marks and citations omitted]). “In reviewing a motion to dismiss an affirmative defense, the court must liberally construe the pleadings in favor of the party asserting the defense and give that party the benefit of every reasonable inference” (id., [internal quotation marks and citations omitted]). “However, where affirmative defenses merely plead conclusions of law without any supporting facts,’ the affirmative defenses should be dismissed pursuant to CPLR 3211 (b)” (Bank of Am., N.A. v 414 Midland Ave. Assoc., LLC, 78 AD3d 746, 750 [2010], quoting Fireman’s Fund Ins. Co. v Farrell, 57 AD3d 721, 723 [2008]).

Here, with respect to defendant’s second affirmative defense, plaintiffs have established that they obtained personal jurisdiction over defendant through documentary evidence. In this regard, plaintiffs have annexed the proof of service, a fee receipt and an acknowledgment from the New York State Insurance Department, confirming that defendant was served with the plaintiffs’ summons and verified complaint on September 27, 2011 pursuant to Insurance Law § 1212. Further, defendant does not oppose this branch of plaintiffs’ motion.

With respect to defendant’s seventh affirmative defense – that plaintiffs’ failed to properly notify defendant of their intent to make an “UM/UIM claim” – as indicated above, plaintiffs sent a Notice of Intention to Make Claim and accompanying correspondence to defendant by letter dated November 30, 2009. Thus, plaintiffs have sustained their burden of demonstrating that this defense is without merit as a matter law because it does not apply under the factual circumstances of this case (Tenore v Kantrowitz, Goldhamer & Graifman, P.C., 76 AD3d 556, 557-558 [2010]). Moreover, defendant does not oppose this branch of plaintiffs’ motion.

Based upon the foregoing, these branches of plaintiffs’ motion to dismiss defendant’s second and seventh affirmative defenses are granted.

As to that branch of plaintiffs’ motion to dismiss defendant’s sixth affirmative defense – asserting that plaintiffs failed to meet conditions precedent to warrant “UM/UIM” benefits – plaintiffs argue that defendant fails to elaborate which conditions precedent they failed to meet. In particular, plaintiffs contend that they fulfilled the three condition precedents necessary to receive UIM/SUM benefits, namely: (1) they sent defendant a Notice of Intention to Make a Claim, (2) defendant admitted exhaustion of Mr. Luna’s policy limits, and (3) that in its June 23, 2011 letter, defendant granted plaintiffs permission to settle with Allstate for its policy limits, set forth two requirements to pursue the underinsured claim, and never stated that plaintiffs failed to meet any conditions precedent.

In opposition to this branch of plaintiffs’ motion, defendant argues that it did not admit [*5]that Mr. Luna’s policy limits were exhausted, but only conceded that Allstate tendered an insurance policy with limits of $25,000 to the plaintiffs.^[FN2] Specifically, defendant argues that there “may have been other applicable insurance policies that plaintiff did not attempt to reach,” and essentially argues that the “affidavit of excess” signed by Mr. Luna is incompetent because it does not reference the accident date and makes “sweeping statements with nothing to support the claims.” Further, defendant asserts that it should be given the opportunity “to explore whether Mr. Luna had other applicable insurance at the time of the accident [and that] [] [i]f so, plaintiff would have failed to meet a pre-condition of bringing this supplementary underinsured motorist claim.”

As plaintiffs’ state in their reply, defendant’s contention that Mr. Luna may have additional coverage is speculative. Moreover, defendant does not dispute that it had the opportunity to determine whether Mr. Luna had any applicable insurance at the time of the accident. Further, defendant has failed to demonstrate that Mr. Luna’s sworn affidavit of excess is incompetent. As noted above, Mr. Luna affirmed that he was not covered under another applicable insurance policy. Although his affidavit does not contain the date of the accident, it contains his policy number, which corresponds to the policy number on the copy of his policy/declaration pages showing the coverages that were on the policy at the time of loss of “10[-]23[-]2007,” as affirmed by an Allstate Claim Support representative in a notarized statement (Plaintiff’s Notice of Motion, Exh. G).

In addition, Mr. Luna’s affidavit was provided to defendant by plaintiffs’ counsel on June 20, 2011 – before defendant gave plaintiffs permission to settle plaintiff’s bodily injury claim with Allstate – which contains the name of the underlying action as well as the claim number for the accident. Finally, as noted immediately above, defendant gave plaintiffs permission to settle with Allstate, and the record does not indicate that defendant advised plaintiffs at any time that it failed to comply with any conditions precedent. Where, as here, an affirmative defense merely pleads conclusions of law without any supporting facts, it should be dismissed.Based on the foregoing, this branch of plaintiffs’ motion to dismiss defendant’s sixth affirmative defense is granted.

Plaintiffs also move to dismiss defendant’s third affirmative defense that plaintiffs did not sustain a serious injury under Insurance Law § 5102 or sustain economic loss under Insurance Law § 5104. Plaintiffs argue that the serious injury threshold does not apply in this action for two reasons. First, plaintiffs contend that is not an action “against another covered person,” since Geico, the defendant, does not qualify as a “covered person” under Insurance Law § 5012 (j). In this regard, section j of Insurance Law § 5102, entitled “Definitions,” provides that:

” Covered person’ means any pedestrian injured through the use or operation of, or any owner, operator or occupant of, a motor vehicle which has in effect the financial security required by article six or eight of the vehicle and traffic law or which is referred to in subdivision two of section three hundred twenty-one of such law; or any other person entitled to first party benefits.” [*6]

Second, plaintiffs assert that this is not an action for “personal injuries” to which the “serious injury” threshold requirement applies under Insurance Law § 5104 (a); rather it is a breach of contract action in which the serious injury threshold is not applicable. Stated otherwise, plaintiff argues that she is not alleging that defendant was negligent in the use or operation of a motor vehicle; rather she contends that this action relates strictly to defendant’s contractual liability based on its “SUM/UIM endorsements.” In this regard, Insurance Law § 5104 (a), entitled “Causes of action for personal injury,” provides, in pertinent part, that:

“(a) Notwithstanding any other law, in any action by or on behalf of a covered person against another covered person for personal injuries arising out of negligence in the use or operation of a motor vehicle in this state, there shall be no right of recovery for non-economic loss, except in the case of a serious injury, or for basic economic loss…” (emphasis added).

Despite the foregoing arguments, plaintiffs concede that “[f]or the sake of full disclosure . . . in Raffellini (v State Farm Mutual Automobile Insurance, 9 NY3d 196 [2007]), the Court of Appeals sided with the Fourth Department (against the Second Department) and found that the serious injury’ [no] [f]ault threshold does apply in the SUM/UIM context.” Nevertheless, plaintiffs go on to state that Raffellini “was strictly predicated on the proper interpretation of two implicitly contradictory provisions of Insurance Law § 3420, that the court “did not consider [their] legal arguments predicated on §§ 5102 and 5104,” and “[t]herefore, notwithstanding the holding in Raffellini, the courts are not foreclosed from considering the same issue on alternate grounds.”

Plaintiffs also contend that even assuming that they are required to demonstrate that they sustained serious injury in order to obtain their SUM coverage, they have already done so do by demonstrating that they sustained over a million dollars in economic damages,^[FN3] and that plaintiff has a “medically determined injury or impairment” which prevented her from “performing substantially all of the material acts that constituted her usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the accident.”

This branch of the plaintiffs’ motion must be denied. In Raffellini (9 NY3d at 205), the Court of Appeals held that in an action by an insured against its insurer for supplementary uninsured/underinsured motorist coverage, the plaintiff must prove that he or she sustained a serious injury. The court held that Insurance Law § 3420 (f) (2), which “addresses additional optional personal injury coverage that can be purchased by a policyholder [i.e. SUM coverage],” is an extension of Insurance Law § 3420 (f) (1), the statute which “mandates that insurers provide uninsured motorist coverage in every New York motor vehicle liability policy,” and which conditions payment of mandatory uninsured motorist benefits on a finding that the insured suffered a serious injury as defined in Insurance Law § 5102 (d) (emphasis added) (id. at 200). Thus, the court ruled that the serious injury exclusion of Insurance Law § 3420 (f) (1) applies to supplementary benefits (Insurance Law [*7]§ 3420 [f] [2]), and that therefore an insured must prove serious injury in order to receive supplementary benefits (id. at 204).

Plaintiffs nevertheless argue that the Court of Appeals in Raffellini did not consider their arguments under Insurance Law § 5104 and 5012 (j), and thus may consider them now. This argument must be rejected. As an initial matter, these arguments were raised before the Supreme Court and the Appellate Division, Second Department. Although these courts granted plaintiffs’ motion to strike the insurance company’s serious injury defense, in part, on these grounds, the Court of Appeals came to the opposite conclusion based upon the same facts.

Moreover, the claim that the Court of Appeals did not consider plaintiffs’ arguments under Insurance Law §§ 5104 (a) and 5102 (d) must be rejected since the court relied upon Insurance Law § 5104 in coming to its conclusion. Specifically, the court was unpersuaded that the placement of the serious injury exclusion in Insurance Law § 3420 (f) (1) but not in 3420 (f) (2) reflected a “legislative determination to restrict the serious injury exclusion to mandatory benefits.” In this regard, the court held that:

“such a distinction would not be consistent with the policy underlying supplementary benefits, which are designed to give insureds the same level of protection that would have been available to others under the policy if the insureds were the tortfeasors who caused personal injuries. When an insured injures someone in a motor vehicle accident, the injured party is subject to the serious injury requirement in the No-Fault Law and cannot sue for noneconomic loss unless the serious injury threshold is met (see Insurance Law § 5104 [a]). Since the purpose of supplementary coverage is to extend to the insured the same level of coverage provided to an injured third party under the policy, the insured must also meet the serious injury requirement before entitlement to supplementary benefits. If this were not the case, the insured would receive coverage more comprehensive than that available to a third party injured by the insured (emphasis added).

It is evident from the facts of this case that the application of the serious injury exclusion is consistent with the policy supporting supplementary benefits. Here, plaintiff received payment for his basic economic loss through no-fault benefits. When he sued the negligent party who caused the collision, he was seeking recovery for noneconomic loss. Having obtained the $ 25,000 limit of coverage from the negligent driver’s insurer, he then sought additional noneconomic loss damages under the SUM endorsement to his State Farm insurance policy. Since a third party injured as a result of plaintiff’s negligence would have had to demonstrate serious injury to obtain noneconomic loss damages under plaintiff’s policy, it follows that plaintiff himself must prove serious injury to recover under his SUM endorsement—as Regulation 35-D requires. State Farm is therefore entitled to pursue its serious injury defense” (Raffellini, 9 NY3d at 205).

In any event, based upon the precedent of Raffellini, this court may not entertain plaintiffs’ arguments since, as indicated above, the Court of Appeals has conclusively held that an insurer is entitled to pursue a serious injury defense when sued by its insured for supplementary underinsured motorist benefits. Accordingly, this branch of plaintiffs’ motion [*8]to dismiss defendant’s third affirmative defense is denied.

Cross Motion of Defendant

Defendant cross-moves to dismiss plaintiffs’ second cause of action alleging a breach of the implied covenant of good faith and fair dealing. Defendant argues that plaintiffs cannot recover damages premised upon this cause of action because they have not pled and cannot prove the necessary allegations for bad faith. Defendant also contends that this cause of action seeks punitive damages, which are not available because breach of the implied covenant of good faith and fair dealing is not an independent tort, and because plaintiffs have not alleged that its conduct was egregious and that it was directed toward the public generally (New York Univ. v Cont’l Ins. Co., 87 NY2d 308, 316 [1995]).

In opposition, plaintiffs argue that although this state has not explicitly recognized a bad faith cause of action against a SUM insurer by its insured, the law with respect to SUM coverage is evolving in this state; that defendant has incorrectly characterized this cause of action as one solely for punitive damages so that it could argue that such a claim is not actionable; and that their complaint explicitly alleges “bad faith” as a separate cause of action.

In reply, defendant argues that plaintiffs rely upon the very case law that it had already distinguished in its cross motion; that, contrary to plaintiffs’ claim, it has cited a case which has rejected the application of general principles relating to a bad faith claim in a SUM context (Grinshpun v Travelers Cas. Co. of Conn., 23 Misc 3d 1111A, 2009 NY Slip Op 50706[U] [2009]); and that plaintiffs have conceded that they are seeking punitive damages because their counsel asserts that it is necessary to warn insurance carriers of the potential for “severe consequences” if they do not immediately tender their full SUM coverage upon request.

“In determining a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (7) . . . the pleading is afforded a liberal construction, the facts alleged are accepted as true, and the proponent of the pleading is accorded the benefit of every favorable inference” (J & D Evans Constr. Corp. v Iannucci, 84 AD3d 1171, 1171 [2011]). However, “bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration” (Lutz v Caracappa, 35 AD3d 673, 674 [2006]). Moreover, “[i]f the facts as alleged do not fit within any cognizable legal theory, the cause of action must be dismissed” (Meltzer v Meltzer, 41 AD3d 558, 558 [2007]).

“Implicit in every contract is a covenant of good faith and fair dealing” (Elmhurst Dairy, Inc. v Bartlett Dairy, Inc., 97 AD3d 781, 784 [2012]). “This covenant embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract” (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153 [2002] [internal quotation marks and citations omitted]). Further, “[w]hile the duties of good faith and fair dealing do not imply obligations inconsistent with other terms of the contractual relationship, they do encompass any promises which a reasonable person in the position of the promisee would be justified in understanding were included” (id.).

“[C]onsequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were [*9] “within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting'”‘(Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 [2008], quoting Bi-Econony Mkt., Inc. v Harleysville Ins. Co. of N.Y, 10 NY3d 187, 192 [2008], quoting Kenford Co. v County of Erie, 73 NY2d 312, 319 [1989]; see also Stein, LLC v Lawyers Tit. Ins. Corp.,AD3d, 2012 NY Slip Op 7291, *2 [2d Dept 2012]; Hoffman v Unionmutual Stock Life Ins. Co. of NY, 51 AD3d 633, 634 [2d Dept 2008]; Meegan v Progressive Ins. Co., 43 AD3d 182, 186-187 [4th Dept 2007]; Acquista v NY Life Ins. Co., 285 AD2d 73, 80 [1st Dept 2001]; TADCO Constr. Corp. v Allstate Ins. Co., 2011 NY Slip Op 33621[U], *5 [2011]). “Courts also look at what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made…'” (TADCO Constr. Corp., 2011 NY Slip Op 33621 [U], *5, quoting Kenford Co., Inc., 73 NY2d at 319). In addition, “[t]he nature, purpose and particular circumstances of the contract are some of the factors to be considered in determining what was in the reasonable contemplation of the parties at the time of the execution of the contract” (id., citing Rose Lee Mfg., Inc. v Chemical Bank, 186 AD2d 548, 551 [1992]). Finally, “[p]roof of consequential damages cannot be speculative or conjectural” (id., citing Ashland Mgt. Inc. v Janien, 82 NY2d 395, 403 [1993]).

Here, plaintiffs’ second cause of action seeks damages for defendant’s alleged bad faith in refusing to pay its policy limits when requested to do so, which “amounted to gross disregard for [their] . . . interests.” However, the cause of action fails to state a viable claim for breach of the covenant of good faith and fair dealing. As an initial matter, as indicated above, defendant’s assertion of a serious injury defense does not constitute bad fath. In any event, plaintiffs fail to allege that the damages they allegedly sustained were contemplated by the parties “as the probable result of a breach at the time of or prior to contracting” (Panasia Estates, Inc., 10 NY3d at 203 [internal quotation marks omitted]), nor does the record reflect that such consequential damages were reasonably contemplated by the parties (see Third Equities Corp. v Commonwealth Land Tit. Ins. Co., 2010 NY Slip Op 33462 [U], *15 [2010]). In addition, plaintiffs do not make this claim in their verified bill of particulars nor do they make this argument in opposition to defendant’s cross motion.

Further, extra-contractual damages have been awarded in cases involving insurance contracts different than the type of insurance contract involved here. For example, Bi-Economy involved a policy that included business interruption insurance which was designed to ensure that the insured had the financial support necessary to sustain its business operation in the event disaster occurred. The court held that plaintiff was entitled to extra contractual damages as a result of the defendant’s bad faith handling of plaintiff’s claim (failing to promptly adjust and pay the loss, resulting in the collapse of the business), because “the very purpose of business interruption coverage would have made [the insurer] aware that if it breached its obligations under the contract to investigate in good faith and pay covered claims it would have to respond in damages to [the insured] for the loss of its business as a result of the breach” (Bi-Economy, 10 NY3d at 195). Similarly, PanasiaEstates, Inc. involved a commercial property insurance policy covering damage to property while undergoing renovation. Rain had entered into the insured’s building resulting in extensive damage, the insurer did not investigate until several weeks later, and then denied the claim [*10]three months afterward. The court held that the insured’s claim for consequential damages based upon the insurer’s alleged failure to promptly investigate the claim was viable because such a claim could be asserted in an insurance context so long as the damages were contemplated by the parties as a probable result of the breach when they entered into the contract (see also Rodriguez v Allstate Ins. Co., 33 Misc 3d 827, 831 [Sup Ct, Kings County, 2011] [plaintiff-insured’s claim for consequential damages, namely car payments she made on a car that she was unable to use but for the defendant insurer’s alleged breach of contract, was a foreseeable consequenceof defendant’s alleged breach of contract];Carden v Allstate Ins. Co., 30 Misc 3d 479, 482 [2010] [under “Deluxe Homeowner’s Policy,” plaintiffs submitted evidence in admissible form that they suffered damages due to the delay in reconstruction of house because of defendant’s bad faith delay in settling their claim – after fire to house and damage to roof, mold developed, and plaintiffs were forced to remain out of dwelling and incur living expenses]; Handy & Harman v American International Group, Inc., 2008 NY Slip Op 32366 [U], *11 [2008] [plaintiff insured sufficiently alleged a claim for consequential damages for breach of the covenant of good faith based on insurer’s alleged failure to fully investigate its claims where purpose of environmental pollution liability policy was to “protect [the insured] from the calamity of unforseen and monumental environmental clean-up costs, and avert risk with regard to such costs and liabilities”]). Thus, in light of the nature of the contract involved here – an automobile liability insurance policy -it cannot reasonably be argued that plaintiffs contemplated receiving consequential damages as a result of defendant’s breach of its implied covenant of good faith and fair dealing

Finally, plaintiffs do not allege that they suffered any damages as a consequence of defendant’s alleged bad faith refusal to pay their claims (Grinshpun, 2009 NY Slip Op 50706[U],*4). In this regard, plaintiffs do not claim that defendant’s refusal to pay them their SUM benefits required them to incur any extra-contractual damages or prevented them from paying for needed medical and/or other living expenses. Thus, this cause of action merely alleges a denial of benefits promised under a policy of insurance (cf. Acquista, 285 AD2d at 80). As such, it is duplicative of plaintiffs’ first cause of action for breach of contract (see Jackson v AXA Equitable Life Ins. Co., 2011 NY Slip Op 32461[U], *3 [2011] [plaintiff’s third cause of action for breach of the covenant of good faith and fair dealing under a disability insurance policy duplicates plaintiff’s breach of contract claim; both claims arise from a dispute over the policy’s obligations and defendants’ satisfaction of them];Authelet v Nationwide Mutual Insurance Company, 2008 NY Slip Op 32929 [U], *3-4 [2008] [the plaintiff-insured’s cause of action alleging breach of the implied covenant of good faith and fair dealing under a homeowner’s policy pled the same conduct which was the predicate of breach of contract cause of action, i.e. the insurer’s failure to pay the full amount of the insured’s claim, and thus was duplicative of insured’s breach of contract claim]). Based upon the foregoing, plaintiffs’ second cause of action fails to state a claim for breach of the implied covenant of good faith and fair dealing. Accordingly, defendant’s motion to dismiss this cause of action is granted.

Defendant moves by order to show cause to vacate the note of issue and certificate of [*11]readiness and to strike this matter from the trial calendar. In support of its motion, defendant argues, among other things, that this action is in its inception, that only preliminary documentary discovery has been exchanged, that there have been no depositions, court conferences, or an independent medical examination of the plaintiff; and that further discovery with respect to plaintiffs’ claim for lost wages is required.

In opposition, plaintiffs assert, among other things, that discovery has already been conducted in the underlying action by Allstate and that additional discovery would be redundant.

In view of the court’s determination denying plaintiffs’ motion to dismiss defendant’s serious injury affirmative defense – requiring further discovery of plaintiffs’ injuries (alleged to be both continuing and permanent) – and in light of the fact that further discovery is required to address the issues set forth by defendant above, the court grants defendant’s motion only to the extent of directing that discovery will continue and that defendant will be permitted to move for summary judgment within 60 days after discovery is complete.

In sum, plaintiffs’ motion to dismiss defendant’s second, sixth, and seventh affirmative defenses is granted, and the motion is otherwise denied. Defendant’s cross motion to dismiss plaintiffs’ second cause of action is granted. Defendant’s application to vacate the note of issue and certificate of readiness is granted only to the extent of directing discovery to continue and to permit defendant to move for summary judgment within 60 days after discovery is complete.

This constitutes the decision and order of the court.

E N T E R

J. S. C.

Footnotes

Footnote 1:Plaintiffs’ counsel represents that “[a]ccording to the GEICO adjustor, there was a determination’ made by the carrier that the claim did not meet the No Fault threshold, and that the claim was probably not even worth $ 25G, and that ALLSTATE had overpaid” (Aff. in Opposition to Defendant’s Cross Motion to Dismiss Plaintiffs’ Second Cause of Action, ¶ 7).

Footnote 2:As indicated above, defendant advised plaintiffs’ counsel that plaintiffs “have GEICO’s permission to settle your client’s Bodily Injury claim with the adverse tort carrier.”

Footnote 3:Plaintiffs have annexed an “Analysis of Economic Loss” prepared by Leonard R. Freifelder, Ph.D., dated January 11, 2010, indicating that plaintiff’s total loss of earnings for the rest of her work life expectancy is $1,095,454 (Plaintiffs’ Notice of Motion, Exh. F).

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court of the City of New York, New York County (Manuel J. Mendez, J.), entered February 25, 2011, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Manuel J. Mendez, J.), entered February 25, 2011, reversed, with $10 costs, motion granted and complaint dismissed. The Clerk is directed to enter judgment accordingly.

In this action to recover first-party no-fault benefits, the evidentiary proof submitted by defendant-insurer was sufficient to establish, prima facie, that its initial and follow-up verification letters were timely and properly mailed to the plaintiff medical provider’s attorney (see Nassau Ins. Co. v Murray, 46 NY2d 828, 829 [1978]; LMK Psychological Servs., P.C. v Liberty Mut. Ins. Co., 30 AD3d 727, 728 [2006]; Badio v Liberty Mut. Fire Ins. Co., 12 AD3d 229 [2004]), as authorized by plaintiff’s counsel’s prior correspondence to defendant (see St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338, 339-340 [2002]; New York Hosp. Med. Ctr. of Queens v State Farm Mut. Auto. Ins. Co., 293 AD2d 588, 590-591 [2002]). It being undisputed that plaintiff failed to respond to these verification requests, defendant established entitlement to summary judgment dismissing the claim as premature (see St. Vincent Med. Care, P.C. v Country Wide Ins. Co., 80 AD3d 599, 600 [2011]).

In opposition, plaintiff’s attorney’s conclusory denial of receipt of the verification letters was insufficient to raise a triable issue (see Nassau Ins. Co. v Murray, 46 NY2d 828, 829-830 [1978]; Pardo v Central Coop. Ins. Co., 223 AD2d 832, 833 [1996]). We also reject plaintiff’s claim that 11 NYCRR 65-3.6(b) required defendant to issue a delay letter to both plaintiff and its attorney, since that requirement applies only in circumstances, not here present, where information is sought from a party other than the applicant (see Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [2007]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: November 30, 2012