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

Appeal from an order of the District Court of Nassau County, Third District (Andrea Phoenix, J.), dated November 22, 2010. The order, insofar as appealed from, denied the branch of plaintiffs’ motion seeking summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is affirmed, without costs.

In this action by providers to recover assigned first-party no-fault benefits, plaintiffs moved for summary judgment. Defendant opposed the motion and cross-moved for summary judgment dismissing the complaint on the ground that it had timely denied plaintiffs’ claims based upon the assignor’s eligibility for workers’ compensation benefits, and that there was an issue as to whether plaintiffs’ assignor had been injured during the course of employment, thereby requiring that the matter be submitted to the Workers’ Compensation Board (Board). The District Court denied the motion and cross motion without prejudice and held the action in abeyance pending a determination by the Board, finding that there were mixed questions of law and fact regarding the availability of workers’ compensation benefits, over which the Board had primary jurisdiction. Plaintiffs appealed from so much of the order as denied without prejudice their motion for summary judgment and held the action in abeyance. On appeal, by order dated June 18, 2009, this court modified the District Court’s order “by striking the provision denying without prejudice plaintiffs’ motion for summary judgment and by remitting plaintiffs’ motion to the District Court to be held in abeyance pending a prompt application to the Workers’ Compensation Board for a determination of the parties’ rights under the Workers’ Compensation Law. In the event plaintiffs fail to file proof with the District Court of such application within 90 days of the date of the order entered hereon, the District Court shall deny plaintiffs’ motion and grant reverse summary judgment in favor of defendant dismissing the complaint unless plaintiffs show good cause why the complaint should not be dismissed” (A.B. Med. Servs., PLLC v American Tr. Ins. Co., 24 Misc 3d 75, 76 [App Term, 9th & 10th Jud Dists 2009]; see LMK Psychological Servs., P.C. v American Tr. Ins. Co., 64 AD3d 752 [2009]).

Thereafter, plaintiffs moved for leave to renew their prior motion for summary judgment. [*2]Defendant opposed plaintiffs’ motion and cross-moved for summary judgment dismissing the complaint pursuant to this court’s June 18, 2009 order. By order dated November 22, 2010, the District Court, insofar as is relevant to this appeal, denied the branch of plaintiffs’ motion seeking summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint, finding that a proper application to the Board, pursuant to this court’s June 18, 2009 order, had not been made.

Since plaintiffs did not demonstrate that a proper application for workers’ compensation benefits had been made in accordance with the Workers’ Compensation Law (see e.g. Workers’ Compensation Law § 33) within the time provisions set forth in this court’s order dated June 18, 2009, they failed to establish that they had complied with this court’s order. Accordingly, the order, insofar as appealed from, is affirmed.

Iannacci, J.P., Nicolai and Molia, JJ., concur.
Decision Date: April 25, 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 Levine, J.), entered May 24, 2010, deemed from a judgment of the same court entered October 19, 2010 (see CPLR 5512 [a]; Neuman v Otto, 114 AD2d 791 [1985]). The judgment, entered pursuant to the May 24, 2010 order denying plaintiff’s motion for summary judgment and granting defendant’s cross motion for summary judgment, dismissed the complaint.

ORDERED that the judgment is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint. After judgment was entered, plaintiff appealed from the order. We deem plaintiff’s appeal to be from the judgment (see CPLR 5512 [a]; Neuman v Otto, 114 AD2d 791 [1985]).

Contrary to plaintiff’s contention, the affidavit of defendant’s claim representative was sufficient to establish that defendant had timely denied plaintiff’s claims (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). As this is the sole issue raised on appeal by plaintiff, the judgment is affirmed.

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: April 25, 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 (Alan L. Lebowitz, J.H.O.), dated July 19, 2010. The order granted plaintiff’s motion to restore the case to the trial calendar and denied defendant’s cross motion to dismiss the complaint.

ORDERED that the order is modified by providing that plaintiff’s motion to restore the case to the trial calendar is denied; as so modified, the order is affirmed, without costs.

Plaintiff commenced this breach of contract action in 1998 to recover no-fault benefits for medical treatments she had received from healthcare providers for injuries she had sustained as a result of a motor vehicle accident. In July 1999, plaintiff withdrew her notice of inquest, and the case was apparently marked off the calendar. The parties then proceeded with discovery through May 2001. In April 2010, defendant served plaintiff with a 90-day notice. Plaintiff then attempted, within the 90-day period, to file a notice of trial. A clerk in the Civil Court rejected the filing and instructed plaintiff to move to restore the case to the calendar, which plaintiff did by notice of motion returnable in June 2010. Defendant cross-moved to dismiss the complaint pursuant to CPLR 3404. Thereafter, by order dated July 19, 2010, the Civil Court granted plaintiff’s motion and denied defendant’s cross motion.

On appeal, defendant contends that plaintiff’s motion to restore the case to the calendar should have been denied and its cross motion to dismiss the complaint granted. An action that has been marked off the calendar, and which is not restored to the calendar within one year, may be restored only if the plaintiff demonstrates, among other things, a meritorious cause of action and a reasonable excuse for the delay in moving to restore (see e.g. Vitality Chiropractic, P.C. v State Farm Mut. Ins. Co., 25 Misc 3d 130[A], 2009 NY Slip Op 52114[U] [App Term, 2d, 11th & 13th Jud Dists 2009]), which plaintiff failed to do. Consequently, plaintiff’s motion should have been denied.

Defendant’s cross motion to dismiss the complaint invoked CPLR 3404. However, as CPLR 3404 applies solely to cases in the Supreme or County Courts (see Chavez v 407 Seventh Ave. Corp., 39 AD3d 454 [2007]), the Civil Court properly denied defendant’s CPLR 3404 cross motion to dismiss. We note that were the cross motion to be deemed as having been brought pursuant to CPLR 3216 seeking to dismiss for want of prosecution, it would have been premature [*2]since it was made prior to the expiration of the 90-day period. Thus, defendant’s cross motion was properly denied.

Accordingly, the order is modified by providing that plaintiff’s motion to restore the case to the trial calendar is denied.

Pesce, P.J., Weston and Rios, JJ., concur.
Decision Date: April 25, 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, Queens County (Maureen A. Healy, J.), entered August 20, 2010, deemed from a judgment of the same court entered September 14, 2010 (see CPLR 5501 [c]). The judgment, entered pursuant to the August 20, 2010 order granting defendant’s motion for summary judgment and denying plaintiff’s cross motion for summary judgment, dismissed the complaint.

ORDERED that the judgment is affirmed, with $10 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which granted defendant’s motion for summary judgment dismissing the complaint and denied its cross motion for summary judgment. A judgment was subsequently entered, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

Contrary to plaintiff’s sole contention, defendant’s denial of claim forms and the accompanying explanation of benefit forms were sufficient to apprise plaintiff that defendant was partially paying and partially denying its bills on the ground that the unpaid portion exceeded the amount permitted by the workers’ compensation fee schedule. Accordingly, the order is affirmed (see generally Great Wall Acupuncture v GEICO Gen. Ins. Co., 16 Misc 3d 23 [App Term, 2d & 11th Jud Dists 2007]).

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: April 25, 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 (Dawn Jimenez Salta, J.), entered March 10, 2010, deemed from a judgment of the same court entered May 25, 2010 (see CPLR 5501 [c]). The judgment, entered pursuant to the March 10, 2010 order granting defendant’s motion for summary judgment dismissing the complaint and denying plaintiff’s cross motion for summary judgment, dismissed the complaint.

ORDERED that the judgment is affirmed, with $10 costs. [*2]

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court, by order entered March 10, 2010, granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s cross motion for summary judgment. A judgment was subsequently entered, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

In support of its motion, defendant submitted affidavits from the president of the company retained by defendant to schedule independent medical examinations (IMEs). The affidavits established that the IME scheduling letters had been timely mailed pursuant to the company’s standard office practices and procedures (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]). Defendant also submitted affirmations from the orthopedist who was to perform the IMEs, which established that plaintiff’s assignors had failed to appear for the duly scheduled IMEs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]). In addition, an affidavit executed by defendant’s claims examiner demonstrated that the denial of claim forms, which denied plaintiff’s claims based on plaintiff’s assignors’ nonappearance at the IMEs, had been timely mailed (see St. Vincent’s Hosp. of Richmond, 50 AD3d 1123; Delta Diagnostic Radiology, P.C., 17 Misc 3d 16). Since the appearance of an assignor at a duly scheduled IME is a condition precedent to the insurer’s liability on the policy (see Insurance Department Regulations [11 NYCRR] § 65-1.1; Stephen Fogel Psychological, P.C., 35 AD3d at 722), defendant’s motion for summary judgment dismissing the complaint was properly granted. Accordingly, the judgment is affirmed.

Pesce, P.J., Weston and Rios, JJ., concur.
Decision Date: April 25, 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, Queens County (Jodi Orlow, J.), entered May 17, 2010, deemed from a judgment of the same court entered June 14, 2010 (see CPLR 5501 [c]). The judgment, entered pursuant to the May 17, 2010 order denying plaintiff’s motion for summary judgment and granting defendant’s cross motion for summary judgment, dismissed the complaint.

ORDERED that the judgment is affirmed, with $10 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which denied its motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint. A judgment was subsequently entered, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

Contrary to plaintiff’s contention, the affirmed peer review reports annexed to defendant’s cross motion each set forth a factual basis and medical rationale for the doctors’ determination that there was a lack of medical necessity for the services rendered to plaintiff’s assignors. As plaintiff’s remaining contentions either lack merit or are academic, the judgment is affirmed (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]).

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: April 25, 2012

Supreme Court, Nassau County

1411/12

Economou & Economou, Attorney for Petitioner, 485 Underhill Boulevard, Syosset, NY 11791

Brian Rothenberg, Attorney for Respondent, 100 Duffy Avenue, Hicksville, NY 11801

Robert A. Bruno, J.

Upon the foregoing papers, it is ordered that this motion is decided as follows:

Petitioner requests an Order pursuant to Article 75 and CPLR §3102( c), compelling disclosure and discovery to aid in arbitration; and, pursuant to Article 75 and CPLR §2201(b) staying any and all proceedings present, and staying the filing of any new proceedings which seek reimbursement of no-fault benefits pursuant to Article 51 (Comprehensive Motor Vehicle Insurance Reparations Act) and 11 NYCRR 65 (Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act) pending the compliance with such order. Respondent opposes said application.

In a proceeding pursuant to CPLR Article 75, to, inter alia, stay arbitration of certain No-Fault proceedings, the petitioning insurance carriers move pursuant to CPLR 3102[c] for an order: (1) compelling disclosure and discovery in aid of arbitration from the defendant Kissena Medical Imaging, P.C.; and/or (2) staying certain pending arbitrations commenced by Kissena Medical Imaging, P.C., and temporarily enjoining and/or staying it from commencing any further No-Fault arbitration proceedings for reimbursement of benefits as against the petitioners.

The petitioner insurance companies — over 40 in total — have commenced the within proceeding to stay certain pending and/or anticipated no-fault arbitrations and/or “any and all proceedings” which have been, or will be, instituted by the respondent No-Fault provider/medical corporation, Kissena Medical Imaging, P.C. [“Kissena”](Pet., ¶¶ 4-5; 19-20; Exh., “A”). The petition also demands stated disclosure in aid of the foregoing arbitration proceedings, four of which — the petitioners claim — are currently pending (Pet., ¶¶ 19-20).

According to the petitioning carriers, Kissena has billed them for radiological services it has provided to injured no-fault claimants, from whom Kissena received benefit assignments (Caio Aff., ¶¶ 6-7). The carriers have declined, however, to pay the Kissena bills, arguing in sum that Kissena is an illegally constituted and/or fraudulently incorporated medical service corporation in violation of applicable no-fault rules and regulations (see generally, State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313, 320-321 [2005]; One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 54 AD3d 738, 740).

More specifically, the relief sought by the petitioners is based on allegations that: (1) Kissena [*2]has been fraudulently incorporated by “paper” owner, Lawrence N. Diamond, M.D; (2) it “appears” that Kissena is secretly owned and controlled by a non-physician in violation of New York law; and (3) that Kissena has billed the plaintiffs for services performed by independent contractors, not by Kissena employees, also in violation stated No-Fault rules and regulations (Pet., ¶¶ 4-7, 9-12, 15-16, 18). In response, Kissena has commenced certain arbitration proceedings under the No-Fault law to recover payment for the services it has rendered.

Significantly, apart from the four arbitrations identified in an attachment to the petition (Exh., “A”), the petition does not allege that the remaining carriers have actually received specifically identified claims or arbitration demands from Kissena; nor does it identify precisely what arbitrations — pending or otherwise — are imminent with respect to the extensive list of carriers whose names have been included in the caption.

The disclosure sought in connection with the application is extensive and requests, inter alia: the production of Kissena’s owner, Lawrence N. Diamond, M.D., for a deposition; the identity of all billing and management companies and/or agents for Kissena; all written agreements and contracts, including those between Kissena and any billing and/or management agents; all written agreements between Diamond personally and any of Kissena’s billing or management companies or agents; all contracts between Diamond and Kissena; all financial statements of Kissena, including all banks records for accounts maintained by Kissena; all federal and state tax documentation, including all filings and returns for both for Kissena and Diamond personally; all corporate documents/leases for premises where the clinic may be located; and as well as all equipment leases, documents of incorporation and all filings made with the Secretary of State (Pet., ¶ 32).

Upon submission of the petitioners’ order to show cause, this Court struck the temporary restraining order contained therein. The foregoing temporary restraining order would have broadly stayed “any and all” pending proceedings and enjoined Kissena from commencing any additional arbitration matters as against all of the named petitioners (Order to Show Cause, 2nd and 3rd decretal paragraphs).

The petitioners’ underlying application for injunctive relief and discovery in aid of arbitration is now before the Court. The application should be denied.

It is settled that petitioner seeking disclosure in aid of an arbitration pursuant to CPLR 3102[c] must affirmatively demonstrate that “extraordinary circumstances” exist, “such that this relief would be absolutely necessary for the protection of its rights” (see, Progressive Specialty Ins. Co. v. Alexis, 90 AD3d 933, 834; Travelers Indem. Co. v. United Diagnostic Imaging, P.C., 73 AD3d 791, 792 see also, De Sapio v. Kohlmeyer, 35 NY2d 402, 406 [1974]; Hendler & Murray v. Lambert, 147 AD2d 442, 443 cf., Government Employees Ins. Co. v. Morris, 83 AD3d 709; Kissena Medical Imaging, P.C., 25 Misc 3d 1214(A), 901 NYS2d 911, 2009 WL 3337597 [Supreme Court, Nassau County 2009]). Indeed, disclosure devices are to be “sparingly used in arbitration proceedings'” (De Sapio v. Kohlmeyer, supra, 35 NY2d 402, 406; Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra, 73 AD3d at 792; Matter of Flood, 157 AD2d 780, 781).

With these principles in mind, the Court agrees that the petitioners have not sustained their [*3]burden of demonstrating that extraordinary circumstances exist (Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra).

Significantly, in opposition to the motion, Kissena has persuasively argued, among other things, that: (1) it has been duly incorporated by a physician licensed to practice medicine in the State of New York; (2) the affidavits submitted by the carriers’ investigators (who are apparently employees of one particular carrier), are inconclusive and lacking in the requisite factual detail; and (3) only two arbitration proceedings (with amounts in issue of $2,670.40 and $878.67) are actually now pending before an arbitrator, which claims have been denied on medical necessity grounds (Caio Aff., ¶¶ 31, 41-45, 48, 50, 52). The record also supports Kissena’s assertions that many of the document demands are excessively broad and unlimited in their temporal scope (cf., Accent Collections, Inc. v. Cappelli Enterprises, Inc., 84 AD3d 1283). The petitioners have not submitted reply papers in which they have responded to, or otherwise materially disputed, the foregoing assertions.

Lastly, there is no dispute that the petitioners possess the right to request that the involved arbitrators direct Kissena to produce materials relating to, inter alia, Kissena’s corporate structure(Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra, 73 AD3d at 791-792). Nor does the evidence indicate “that if a disclosure directive is made during those proceedings, the requested disclosure will, at that point, be unavailable” (Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra). Surprisingly, during oral argument when this Court struck petitioner’s application for a temporary restraining order, petitioner’s admitted they did not bother seeking the discovery they are requesting herein, in the arbitrary proceeding they request this Court to stay.

Under these circumstances, and upon the exercise of its broad discretion, the Court agrees that the petitioners’ submissions do not establish the existence of extraordinary circumstances warranting the requested, discovery in aid of arbitration.

The Court has considered the petitioners’ remaining contentions and concludes that they are lacking in merit.

According, it is,

ORDERED petitioners’ order to show cause pursuant to CPLR 3102[c], for an order, inter alia, granting a stay and stated discovery in aid of arbitration, is denied.

All matters not decided herein are DENIED.

This constitutes the decision and order of this Court.

Dated: April 23, 2012

Mineola, New YorkE N T E R: [*4]

______________________________

Hon. Robert A. Bruno, J.S.C.

—[*1] Joseph Henig, P.C., Bellmore, N.Y., for appellant.

Bruno, Gerbino & Soriano, LLP, Melville, N.Y. (Mitchell L. Kaufman of counsel), for respondent.

In an action to recover no-fault medical payments under a policy of automobile insurance, the plaintiff appeals from so much of an order of the Supreme Court, Nassau County (Marber, J.), entered September 12, 2011, as denied its motion for summary judgment on the complaint.

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

The plaintiff demonstrated its prima facie entitlement to judgment as a matter of law on its complaint to recover no-fault payments, by submitting evidence that the prescribed statutory billing form had been mailed and received by the defendant insurer, which failed to either pay or deny the claim within the requisite 30-day period (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.5; NYU-Hosp. for Joint Diseases v American Intl. Group, Inc., 89 AD3d 702 [2011]; Mount Sinai Hosp. v Country Wide Ins. Co., 85 AD3d 1136 [2011]; Mount Sinai Hosp. v Government Empls. Ins. Co., 85 AD3d 1135 [2011]; New York & Presbyt. Hosp. v Selective Ins. Co. of Am., 43 AD3d 1019 [2007]). In opposition to the motion, however, the defendant established that it had made a timely request for additional verification and that it timely denied the claim within 30 days of receipt of the requested information (see 11 NYCRR 65-3.8 [a] [1]; 65-3.5 [b]; 65-3.6 [b]; Westchester Med. Ctr. v American Tr. Ins. Co., 60 AD3d 848, 849 [2009]; New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co., 39 AD3d 832 [2007]; New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512, 513 [2006]; see generally Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007]).

The parties’ remaining contentions are without merit.

Accordingly, the Supreme Court properly denied the plaintiff’s motion for summary judgment on the complaint. Skelos, J.P., Dillon, Eng and Austin, JJ., concur.

District Court of Nassau County, First District

CV-019332-11

Marcotte & Associates, P.C.

McDonnell & Adels, PLLC

Fred J. Hirsh, J.

The following named papers numbered 1 – 6

submitted on this motion on February 14, 2012 Papers NumberedNotice of Motion and Affidavits Annexed1-2

Notice of Motion and Affidavits Annexed3-4

Affirmation in Opposition to Defendant’s Motion5

Replying Affidavits6

Defendant moves for summary judgment. Plaintiff moves to compel discovery.^[FN1]

BACKGROUND

Concourse Chiropractic, PLLC (“Concourse”) sues as assignee of Odalis Guzman (“Guzman”) seeking to recover first party no-fault benefits for chiropractic treatment it provided to Guzman.

Concourse submitted bills for treatment it provided to Guzman for the period 8/5/09 to 8/13/09 in the sum of $150, 9/2/09 in the sum of $33.70, 9/23/09 in the sum fo $33.70 and 11/18/09 in the sum of $33.70. Defendant State Farm Mutual Insurance Company (“State Farm”) acknowledges timely receipt of these bills.

Concourse also submitted bills for the treatment rendered to Guzman for the period 11/13/08 to 12/18/08 in the sum of $425.44. State Farm asserts it paid these bills in full with applicable interest and attorney’s fees on August 22, 2011.

State Farm’s special investigation unit (“SIU”) has been investigating the operation of Concourse since 2006. Concourse is owned by Mitchell Zeren, D.C. (“Zeren”). Concourse operates out of 2676 Grand Concourse, Bronx, New York.

State Farm has commenced a civil RICO action against CPT Medical Services, P.C. (“CPTMS”) and its owner Dr. Huseyin Tuncel and other medical providers who State Farm [*2]claims are regularly prescribing and performing unnecessary Current Perception Threshold testing (“CPT testing”). During discovery in the civil RICO action, State Farm learned that Zeren was a practitioner who was referring patients to CPTMS for CPT testing. The record before this Court does not reflect how often or how many times Zeren referred patients to CPTMS for CPT testing. The record also does not reflect whether State Farm denied payment for those tests and if it did, whether actions were brought to recover payment of no-fault benefits for these tests and the outcome of those actions.

The record also does not reflect whether Concourse referred Guzman for CPT testing.

Zeren is also listed as the owner of MZJR Chiropractic Care, P.C. which he co-owns with Jeffrey Rauch, D.C., Mitchell Zeren, P.C., Zeren Chiropractic, P.C. and Zeren Family Chiropractic, all of which are located at 2676 Grand Concourse in The Bronx.

Zeren has also submitted bills to State Farm for treatment provided at Kingsbridge Chiropractic.

Vista Medical and Rehab, P.C. (“Vista”), Blue Sky Acupuncture. P.C. (“Blue Sky”) and Complete Medical Care Services of NY also submit bills with a billing and treatment address of 2676 Grand Concourse in The Bronx.

State Farm claims it receives bills from Concourse that reflect Concourse is providing treatment to patients three to four times a week. These same patients are also receiving physical therapy treatment from Vista and acupuncture from Blue Sky at the same time. The progress notes submitted by Concourse, Vista and Blue Sky do not reflect the concurrent care regimens.

Bills submitted by Concourse, Vista and Blue Sky use not only the same address but also use the same telephone number. This telephone number is also listed as the telephone number for Zeren Chiropractic, Kingsbridge Chiropractic and Complete Medical Care.

Vista is owned by Abiola Olawale Familusi, M.D. (“Dr. Familusi”). Dr. Familusi is associated with Multiviz Health Management Corp. (“Multiviz”). The New York State Department of State records indicate Belle Solomon (“Solomon”) is the CEO of Multiviz. Solomon does not hold any professional licenses.

Concourse, Vista and Blue Sky have previously used Multiviz address as its billing address. The claims in question in this action do not use Multiviz address as a billing address. The claims use Concourse’s Grand Concourse address as the billing address.

State Farm asserts Concourse use of Multiviz address as a billing address, the existence of a protocol scheme involving Concourse, Vista and Blue Sky and other information obtained in the civil RICO action raise concerns about the operation of these entities and suggest that someone other than the licensed professional listed as the owners are actually controlling the operation of these entities.

Despite these concerns, Concourse and the other Zeren related practices do not appear to be defendants in the civil RICO action.

Based upon this factual backdrop, State Farm sent a letter to Concourse dated October 1, 2009 acknowledging receipt of its claim for treatment provided to Guzman during the period August 5 through August 13, 2009 and requesting the Concourse appear for an Examination Under Oath (“EUO”) at the offices of McDonnell & Adels on October 27, 2009 at 10 a.m. In addition to appearing at the EUO, the letter requested Concourse [*3]produce at least seven days prior to the EUO the documents relating to the ownership of the PLLC, the general ledger and tax returns of Concourse for the past 12 months, a list of individuals who provided and/or supervised the health care treatment for which payment was requested identifying the professional license held by that individual and the relationship of that individual to Concourse (e.g., whether the person was an employee or independent contractor), documents relating to entities that rent space and/or equipment to or from Concourse and a completed and signed NF-3 and an assignment of benefits forms that included the 2004 updated fraud language.

Concourse did not respond this EUO letter, did not provide the documentary material requested in the EUO letter and did not appear for the EUO.

Upon receipt of the claim for the services rendered on September 2, 2009, State Farm send a letter dated October 13, 2009 advising Concourse it would not pay this claim until Concourse produced the material requested in the October 1, 2009 letter and appeared for the EUO requested by the October 1, 2009 letter.

By letter dated November 2, 2009, State Farm notified Concourse that Concourse had failed to appear for an EUO. The letter further acknowledges the receipt of the claim for the services provided on September 23, 2009 and advised Concourse it would not pay these claims until Concourse appeared for an EUO and produced the requested documents.

The letter advised Concourse the EUO to appear for an EUO on November 16, 2009 at 10 a.m. at the Garden City offices of McDonnell & Adels.

Both the October 1, 2009 letter and November 2, letter advise Concourse that if the date, time and location is inconvenient, Concourse is to contact State Farm to reschedule the EUO at for a date, time and location that was convenient for Concourse. Both letters also advise Concourse that the person appearing for the EUO will be reimbursed for lost earnings and reasonable transportation expenses.

Concourse did not respond to this letter in any way and did not appear for the EUO scheduled for November 16, 2009. As a result, on November 18, 2009, State Farm issued a denial of the aforementioned claims. State Farm also denied a claim submitted by Concourse for treatment provided to Guzman on November 18, 2009 on the grounds Concourse had failed to appear for an EUO.

Concourse motion is a standard motion to compel discovery. Concourse served a demand for interrogatories and a demand for expert information upon State Farm. State Farm has not responded to these demands. Concourse seeks an order striking State Farm’s answer because it has not responded to the discovery demands or alternatively for an order directing State Farm to respond. Concourse does not assert any of the information it demanded by way of discovery is necessary to oppose State Farm’s motion for summary judgment. See, CPLR 3212(f).

DISCUSSION

Plaintiff’s argument that defendant has failed to prove mailing is without merit. All of the cases cited by plaintiff on the issue of mailing were decided prior to St. Vincent’s Hosp. of Richmond v. Government Employees Ins. Co., 50 AD3d 1123 (2nd Dept. 2008). St. Vincent’s established a carrier could prove mailing by either by providing actual proof of mailing or the existence of an office practice and procedure designed to ensure timely and proper mailing of notices. [*4]

In order to overcome the presumption of mailing, plaintiff must establish the person making the affidavit attesting to the mailing or the carrier’s practices and procedures regarding mailing was not employed by the carrier when the notice was mailed and cannot establish the procedures described in the affidavit were in place when the notice was mailed, the carrier did not provide proof in admissible form establish actual mailing of the notice or any other evidence of its standard office practices and procedures for mailing denials and/or notices at the pertinent time. South Nassau Orthopedic Surgery and Sports Medicine, P.C. v. Auto One Ins. Co., 32 Misc 3d 129(A) (App.Term 2nd, 11th & 13th Jud. Dists.); Friendly Physicians, P.C. v. Geico Ins. Co., 29 Misc 3d 128(A) (App.Term 2nd, 11th 7 13th Jud. Dists. 2010);and Points of Health Acupuncture, P.C. v. Geico Ins. Co., 25 Misc 3d 140(A) (App.Term 2md, 11th & 13th Jud. Dists. 2009). In all other cases where mailing has been contested, the Appellate Courts have found proof of mailing to be satisfactory. The Appellate Term has found proof of mailing sufficient even when confronted with an affidavit from plaintiff’s medical biller specifically denying receipt of a verification request. Pomona Medical Diagnostic, P.C. v. Travelers Ins. Co., 31 Misc 3d 127(A) (App.Term, 2nd, 11th & 13th Jud. Dists. 2011).

Therefore, the proof submitted is sufficient to establish the EUO requests were mailed to Concourse.

The case raises again the issue of whether an insurer can demand as part of its EUO request material that would constitute discovery that could be obtained in a properly raised Mallela defense [See, State Farm Mutual Ins. Co. v. Mallela,4 NY3d 313 (2005)] and whether an insurer can request documents be produced seven days prior to a scheduled EUO.

State Farm has established it has a factual basis and a founded belief that Concourse may be subject to a Mallela defense. However, the no-fault regulations do not contain any provisions that permit an insurer to demand production of documents in connection with the an EUO. The regulations do not contain any provisions that require a party to produce such material at least 7 days in advance of the EUO.

Verification is permitted to “verify the claim”. 11 NYCRR 65-3.5(c).

A Mallela defense has nothing to do with the claim. A Mallela defense relates to the status of the claimant and the claimant’s eligibility to obtain payment of no-fault benefits.

While the Court of Appeals uses the language of fraud to describe a Mallela defense, Mallelahas nothing to do with common law fraud. Common law fraud involves “misrepresentation of a material existing fact, falsity, scienter, deception and injury.” Channel Master Corp. v. Aluminum Limited Sales, Inc., 4 NY2d 403, 407 (1958). In reality, Mallela is akin to a piercing the corporate veil. TNS Holdings, Inc. v. MKI Securities, Inc., 92 NY2d 335 (1998) and Matter of Morris v. New York State Dept. of Taxation & Finance, 82 NY2d 339 (1993). Mallela is based upon Business Corporation Law §§1507 and 1508 and Education Law §6507(c)(i) that prohibit anyone who is not licensed to practice the profession for which the professional corporation was formed from having an ownership or controlling interest in a professional corporation.

The factual foundation of a Mallela defenseinvolves proof that persons not licensed to practice the profession for with the professional corporation, limited liability company or limited liability partnership was formed are the actual owner or are actually controlling the [*5]operation of the business. The licensed individual has done little more than permit his or her license to be used as a basis to form the business. The licensed professional turned the operation of the corporation over to the non-professionals by signing management agreements that provided for excessive fees for routine office or practice management services, office and equipment leases that provided for excessive lease payments and in all other respects turn the operation of the professional corporation to the non-professionals. Andrew Carothers, M.D., P.C. v. Insurance Companies Represented by Bruno, Gerbino & Soriano, LLP, 26 Misc 3d 448 (Civil Ct. Richmond Co. 2009).^[FN2]

The court notes that although this has been dubbed a “Mallela defense” the Court of Appeals decision was a result of a action brought by State Farm seeking a declaratory judgment that it was not obligated to pay no-fault claims submitted by Dr. Mallela because his professional corporation was actually controlled by persons not licensed to practice medicine.

The court notes that in dicta in Mallela the Court of Appeals anticipated carriers would delay payment of claims only to pursue investigations for good cause, that the Insurance Department would investigate possible abuses by the carriers and carriers would be able to demonstrate “good cause” only upon a demonstration of conduct tantamount to fraud. The court further notes that Court of Appeals apparently believed that if insurers had good cause to believe a medical provider was “fraudulently incorporated” the insurer would commence a declaratory judgment action seeking to a judgment that the medical provider is not eligible to receive no-fault payments. The court believes that the Court of Appeals did not anticipate an insurer would demand for an EUO and extensive corporate records in connection with a matter in which the carrier has already paid the provider $450 in no fault benefits and the existing dispute involves an unpaid claim for no-fault benefits of $251.

The court notes State Farm paid the no-fault benefits to Concourse after Concourse defaulted in appearing for an EUO. Thus, State Farm paid Concourse no-fault benefits for treatment provided to Guzman even though it had an absolute defense to that claim. See, Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, P.C., 82 AD3d 559 (1st Dept. 2011) – a carrier can deny all no-fault claims retroactive to the date of the accident if a claimant fails to appear for an EUO.

The demand for information in this case is virtually identical to the demand this Court found impermissible and improper in Dynamic Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., 29 Misc 3d 278 (Dist. Ct. Nassau Co. 2010). See, also, Brownsville Advance Medical, P.C. v. Country Wide Ins. Co., 33 Misc 3d 1236(A) (Dist. Ct. [*6]Nassau Co. 2011) – Mallela type material cannot be obtained as verification of the claim.^[FN3]

Requesting an provider to produce voluminous corporate records in order to obtain payment of a no-fault claim is an abuse of the EUO and the entire verification process.

A Mallela defense is non-precludable and can be raised at any time. Lexington Acupuncture, P.C. v. General Assurance Co., -Misc.3d-, 2012 WL 661685 (App.Term 2nd, 11th & 13th Jud. Dists. 2012). The appropriate way to obtain Mallela material is to properly plead it as a defense to an action to obtain payment of no-fault benefits and establish a reasonable basis for requesting the material [Midborough Acupuncture, P.C. v. State Farm Ins. Co., 21 Misc 3d 10 (App.Term 2nd & 11th Jud. Dists. 2008)] or to bring a declaratory judgment action seeking a judgment declaring the provider is not eligible to obtain no-fault benefits because the licensed professional is a front for a professional corporation that is actually owned and controlled by non-professionals. Such a procedure would also have the advantage by having the parties obtain a full and final disposition of the insurer’s assertion the provider is ineligible to obtain payment of no-fault benefits.

The only explanation this court can find for this repeated and repetitive use of a request for an EUO and Mallela verification is the insurer’s hope that the provider will not response thus providing the insurer with an absolute defense to an action that is otherwise indefensible.

For the foregoing reasons, the court finds defendant’s EUO notice palpably improper. Defendant’s motion for summary judgment is denied.

Defendant’s motion for summary judgment stayed discovery. CPLR 3214. Defendant did not oppose plaintiff’s motion to compel discovery. Defendant should now be given the opportunity to oppose plaintiff’s discovery motion.

Therefore, plaintiff’s motion to strike defendant’s answer for failing to respond to plaintiff’s discovery demands is restored to the motion calendar of Civil Part 3, for May 14, 2012 at 9:30 a.m.

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge

Dated: April 16, 2012

cc:Marcotte & Associates, P.C.

McDonnell & Adels, PLLC

Footnotes

Footnote 1:Defendant has also moved to compel discovery. Defendant has withdrawn its motion to compel discovery and requested the court consider the papers submitted in support of its motion to compel discovery as its opposition to plaintiff’s cross-motion to compel discovery.

Footnote 2:The proof at trial in Carothers established the professional corporation was paying monthly lease fees to lease equipment in excess of the cost to purchase equipment. The licensed professional was not a signatory to the corporation bank account. The non-licensed individuals regularly withdrew significant sums of money from the corporate bank account to pay personal expenses. Dr. Carothers was receiving a fixed salary not dependent upon the income of the corporation and had almost no input on the operation of the business. The proof further established Dr. Carothers had limited participation in the medical activity of the professional corporation.

Footnote 3:The practical experience this court having heard and decided cases involving first party no-fault claims for over 3 ½ years is contrary to the expectation of the Court of Appeals when it decided Mallela. State Farm sent the same EUO request to Dynamic Medical in what appeared to be every claim Dynamic filed with State Farm. Over 50 motions identical to the one this Court decided in Dynamic Medical v. State Farm, supra were stayed by this Court pending the Appellate Term hearing and determinating the appeal State Farm took from this Court’s order. This does not include similar motions that were made, heard and decided in the three other civil parts of this Court. The actions were resolved prior to the Appellate Term hearing and deciding the appeal.

In Brownsville, supra, Country Wide repeatedly requested the same information by way of verification from Brownsville even though Brownsville had previously provided the information and even though much of the information Country Wide was requesting could have been obtained or confirmed in a matter of minutes through free, publically accessible web-site data bases maintained by the New York State Department of State and the New York State Department of Education.

[*1]

Supreme Court, Appellate Term, First Department, April 13, 2012

APPEARANCES OF COUNSEL

Jaffe & Koumourdas, LLP, New York City (Ariel S. Lichterman of counsel), for appellant. Gina Gleicher and Leon Kucherovsky, New York City, for respondent.

{**35 Misc 3d at 67} OPINION OF THE COURT

Per Curiam.

Order entered April 9, 2010, modified by granting defendant’s motion to the extent of reducing the amount of the judgment entered against it to the aggregate sum of $1,251; as modified, order affirmed, without costs.

The parties agree that the underlying no-fault first-party action was validly settled, but join issue as to the intended amount of the settlement. The facts leading up to the settlement are undisputed and may be briefly stated as follows: Plaintiff, through counsel, drafted and presented a proposed settlement agreement, dated October 21, 2008, which set forth all material terms of the settlement and provided, in paragraph 4, that “[t]his case is not settled unless this stipulation is signed by a representative of defendant and faxed back to [plaintiff’s attorney].” Upon receipt of plaintiff’s proposal, defense counsel made and initialed several handwritten changes to paragraph 2 of the document—addressing the consequences of a payment default on defendant’s part—with the changes designed to extend the time allotted to defendant to comply with the agreement’s payment terms and, more importantly here, to reduce defendant’s payment obligations in the event it failed to comply. So far as shown, plaintiff voiced no objection to the modifications proposed by defendant nor took any other action in the case for a full six months after defense counsel marked up and returned the stipulation, until March 2009, when plaintiff entered judgment in accordance with the original terms of the stipulation favorable to it.

Given the particular facts and circumstances of this case, and since plaintiff itself acknowledges that the parties’ correspondence yielded an enforceable settlement agreement, we conclude that plaintiff, through “acquiescent conduct” (Eldor Contr. Corp. v County of Nassau, 272 AD2d 509, 509 [2000])—including its election to forgo any further litigation activity on its no-fault claim—accepted and is bound by the stipulation’s revised terms (see Minelli Constr. Co., Inc. v Volmar Constr., Inc., 82 AD3d 720, 722 [2011]). Accordingly, the amount of the consent [*2]judgment issued below must be reduced to the stipulated principal sum of $950, together with the stipulated attorney’s fees ($196) and costs ($105) due plaintiff.

We note finally that the judgment at issue “is not a default judgment as that term is used in pleading and practice, and [the{**35 Misc 3d at 68} motion court’s] application of law relating to vacating default judgments was erroneous” (Furgang v Epstein, 106 AD2d 609, 610 [1984]).

Torres, J.P., Shulman and Hunter, Jr., JJ., concur.