City Court of Buffalo

21078

Daniel Morris, Esq,

Scott Mancuso, Esq.

E. Jeannette Ogden, J.

The Plaintiff medical provider, Daniel C. Cox, D.C., commenced this action to recover payment of first-party no-fault benefits for chiropractic services provided to its assignor, Valerie Lesniowski, [hereinafter referred to as the “insured”] for personal injuries that she sustained in an automobile accident. Defendant, who provided no fault insurance benefits to the insured, denied payment of benefits for said services on the grounds that they were not medically necessary, based upon the Independent Medical Examination Report of Dr. Melvin M. Brothman; an orthopedic surgeon.

The parties entered into a Stipulation which states that all but three (3) of the No Fault Claim forms referenced in the Plaintiff’s Complaint were timely and properly sent from the Plaintiff to the Defendant; that the Defendant has not issued payment to any person, including the Plaintiff, for any of the claims referenced in the Complaint which are now overdue; that the Defendant sent timely and proper No Fault Denial Claim forms for each and all of the claims referenced in the Complaint excluding Causes of Action No.1, 67 & 159 and that the Plaintiff received timely and proper No Fault Claim forms for each and all of the claims referenced in the Complaint, excluding causes of action #1, 67 & 159.

The parties further stipulated that there are two issues to be decided at trial. The first is whether the Plaintiff properly submitted bills for the chiropractic treatment alleged in Causes of Action #1,67 & 159 of the Complaint, totaling $216.88.

The second issue is whether the chiropractic treatment rendered to the insured totaling $7,868.83 was medically necessary.

A Non Jury Trial on the aforementioned two issues was had before the undersigned on May 19, [*2]2011. The parties stipulated that they would not call witnesses and the two issues would be decided entirely on documentary submissions and oral arguments. The parties stipulated into evidence the independent medical examination report of Dr. Brothman and written submissions outlining their respective positions, along with the legal authority relied upon in support thereof.

The Court listened to the oral arguments of counsel and reserved decision. Now, having fully considered the stipulations of Counsel, the evidence presented and the oral argument offered in support of the respective positions of the parties, and due deliberation having been had thereon, the Court hereby makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

Plaintiff, Dr. Daniel C. Cox, is the Assignee of the insured [Valerie Lesniowski], who sustained personal injury in an automobile accident that occurred on February 10, 2003. At the time of the

accident, she was insured under a no fault insurance policy issued by the Defendant, Erie Insurance Company. Subsequent to the accident, she received chiropractic care and treatment from February, 2003 until August, 2005. It appears from the report of Dr. Brothman that the chiropractic treatment received during this period was based upon the Defendant’s receipt of a letter of medical necessity and payment for said treatment is not in dispute.

The insured received continued chiropractic care and treatment from Dr. Cox from August 31, 2005 until September 10, 2009. The no-fault benefits for payment of these services were properly assigned to Dr. Cox, who timely submitted claim forms to the Defendant in the amount of $7,868.83. The claim forms were timely received by the Defendant; payment thereof has not been made and is overdue.

The Plaintiff did not offer any evidence regarding the transmission of claims for the bills set forth in causes of action # 1, 67 and 159 of the Complaint. There was also no evidence regarding the payment or denial of payment of said bills. The stipulation of the parties expressly excluded the bills set forth in causes of action # 1, 67 and 159. The parties stipulated to Plaintiff’s prima facie case regarding the bills in the remaining causes of action in the Plaintiff’s complaint. The parties also stipulated to the Defendant’s timely denial of the claims on the grounds of lack of medical necessity.

An independent medical examination and evaluation of the insured was performed by Melvin M. Brothman, M.D., F.A.C.S., an Orthopedic Surgeon, at the request of the Defendant. Thereafter, Dr. Brothman prepared a written report dated August 16, 2005. In his report, Dr. Brothman notes the report of Dr. Cameron Huckell, an orthopedic spine surgeon, dated June 1, 2004, indicating that the insured was experiencing on going pain. He also notes reports from Dr. Marc Tetro, an orthopedic upper extremity surgeon, who performed arthroscopic surgery on the insured in December of 2004 and treats her every six months. [*3]

Dr. Brothman’s diagnosis of the insured states “status post arthroscopic surgery, right shoulder, for a labral tear, anterior impingement syndrome and persistent complaints; MRI evidence but no physical evidence of degenerative disc disease at L4-5 and 5-S1 of the lumbar spine.”

He concluded that there is a causal relationship between the motor vehicle accident and the insured’s complaints; that her current complaints are related to the motor vehicle accident and at the time of his examination, further treatment was required.

As far as chiropractic care for the insured was concerned, at that point in time, Dr. Brothman did not feel it would be of any value. “Further diagnostic testing was required.” As a result, Defendant denied payment of claims for the chiropractic services rendered by Dr. Cox from August 31,2005 through September 10, 2009 on the grounds that they were not medically necessary.

A medical report in letter form from Dr. Cameron Huckell to Dr. Murak, family physician of the insured, dated December 20, 2005 indicates that “continued chiropractic care twice per week seems reasonable given the fact that it reduces her pain.”

CONCLUSIONS OF LAW

To establish a prima facie case, the Plaintiff medical provider must submit proof of the transmission of its claim for no-fault benefits within 45 days and that the Defendant insurer received the claim but failed to pay or validly deny the claim within 30 days or failed to request verification. [Globe Surgical Supply v GEICO Ins. Co.,59 AD3d 129, 143, 871 N.Y.S.2d 263].

In order to be entitled to judgment, as a matter of law, a Plaintiff medical provider must submit evidentiary proof that the prescribed statutory billing forms were timely mailed to the insurer and received by the insurer, and that payment of the no-fault benefits was overdue. [Nyack Hospital, as Assignee of John Watson v Metropolitan Property & Casualty Insurance Company, 16 AD3d 564, 791 N.Y.S.2d 658].

As a result of the exclusion contained in the stipulation on this issue, coupled with the absence of any evidence regarding the Plaintiff’s transmission of claims for payment of the 3 bills contained in Causes of Action # 1, 67 and 159 of the Complaint, the Plaintiff has failed to sustain its burden of proof with respect to Defendant’s denial of payment for the aforementioned claims totaling $288.66. Accordingly, the 1st, 67th, and 159th Causes of Action in the Plaintiff’s Complaint are hereby DISMISSED.

The Plaintiff has made a prima facie showing of entitlement to judgment, as a matter of law, in the amount of $7,868.83 by virtue of the stipulation, subject to the Court’s finding on the issue of medical necessity.

A presumption of medical necessity attaches to a timely submitted no fault claim. Since the parties have stipulated to the Plaintiff’s prima facie case, the medical necessity for the [*4]chiropractic services is presumed. The burden then shifts to the Defendant to rebut this presumption of medical necessity. The Court finds that Defendant has failed to sustain this burden for the following reasons.

A denial of no-fault coverage premised on a lack of medical necessity must be supported by competent evidence, such as an independent medical examination or peer review, or other proof, which sets forth a factual basis and a medical rationale for denying the claim. [Healing Hands Chiropractic PC v. Nationwide Assurance Co., 5 Misc 3d 975, 787 N.Y.S.2d 645; A.B. Medical Services PLLC v. Peerless Insurance Co., 13 Misc 3d 25, 822 N.Y.S.2d 223].

In order to sustain this burden, the Defendant must establish both a factual basis and medical rationale for the conclusion of Dr. Brothman that the chiropractic services provided to the insured were not medically necessary. [Nir v Allstate Insurance, 7 Misc 3d 544, 546-547, 796 N.Y.S.2d 857].

In determining whether the services rendered by the chiropractor are medically necessary, the Court must determine the generally accepted standard of care in the field of chiropractics and whether the provision of said services was in accordance with those generally accepted chiropractic standards.

The Plaintiff contends that expert testimony is required to establish what the generally accepted medical/professional practices are and why the chiropractic services rendered were not necessary according to generally accepted medical/professional standards.

Plaintiff further contends that the Independent Medical Examination report that formed the basis of the denial of chiropractic services for the insured was written by a medical doctor and not by an expert in chiropractics; that chiropractics is separate and distinct from the practice of medicine and therefore a medical doctor’s standard of care is not controlling upon a chiropractor in the practice of his/her profession.

The Court rejects this argument. Although a chiropractor and orthopedic surgeon differ in techniques, they both deal with the human musculoskeletal system. Therefore, the generally accepted standard of care used by orthopedic surgeons may, as in this instance, be deemed controlling upon a chiropractor.

However, even though the Defendant’s expert, Dr. Brothman, is qualified to render an opinion on the issue of medical necessity, his report is insufficient to rebut the presumption of medical necessity. The report of Dr. Brothman is conclusory and lacks a factual basis for denial of the claim.

Dr. Brothman’s independent medical examination report merely stated that chiropractic treatment “would not be of any value” and “further diagnostic testing is required,” despite an MRI report, given by the Western New York MRI Center, identifying issues with the Plaintiff’s lumbar spine. [*5]Although Dr. Brothman physically examined the insured and provided an extensive report, he failed to support his conclusion with generally accepted medical/professional practice standards. Accordingly, the report fails to set forth an adequate medical rationale and is deficient to support a finding of lack of medical necessity.

In accordance herewith, judgment in favor of the Plaintiff is GRANTED in the amount of $7,868.83 with interest from the date of the commencement of the action, together with the costs, disbursements and statutory attorney’s fees associated herewith.

__________________________________

Hon. E. Jeannette Ogden, BCCJ

Dated: June 13, 2011

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Defendant Rhondi Bleeker appeals from that portion of an order of the Civil Court of the City of New York, New York County (Manuel J. Mendez, J.), dated June 7, 2010, which denied her motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Manuel J. Mendez, J.), dated June 7, 2010, insofar as appealed from, modified to the extent of granting defendant-appellant partial summary judgment dismissing plaintiff’s cause of action for medical expenses it paid on behalf of its subrogor and so much of the complaint as sought recovery of the initial $5,200 in workers’ compensation payments made to the subrogor; as modified, order affirmed, without costs.

In this subrogation action, plaintiff insurer seeks reimbursement for, inter alia, medical expenses and workers’ compensation benefits paid in lieu of first-party no-fault benefits to its subrogor for injuries he sustained as a result of an automobile accident with defendant, which occurred in New York during the course of subrogor’s employment. Since plaintiff provided a workers’ compensation insurance policy to subrogor’s employer, Knorr Brake Corporation, a Maryland-based company, subrogor initially received temporary benefits processed by Maryland’s Workers’ Compensation Commission. Ultimately, however, subrogor, as a New Jersey resident, successfully pursued his additional and final workers’ compensation benefits with the New Jersey Division of Workers’ Compensation.

Following discovery, defendant Rhondi Bleeker moved for summary judgment dismissing plaintiff’s complaint on the grounds that choice of law principles dictate this action to be governed, and consequently barred, by New Jersey and New York laws. Plaintiff cross-moved for partial summary judgment, countering, inter alia, that Maryland law governed. In the order appealed from, Civil Court denied defendant’s motion and plaintiff’s cross motion for [*2]summary judgment, while agreeing with plaintiff that Maryland law applied, thus permitting the continuation of this action. We modify.

While Civil Court properly determined that the law and forum where workers’ compensation benefits were paid will govern an action for reimbursement of those benefits (see New Jersey Mfrs. Ins. Co. v Steckert, 264 AD2d 314, 315 [1999], citing Matter of O’Connor, 21 AD2d 333, 335 [1964]; see Carminucci v Pepsico, Inc., 236 AD2d 499, 501 [1997]; Canfield v Child World, 209 AD2d 569, 569-570 [1994]), and that under Maryland’s Workers’ Compensation Act, an insurer is entitled to assert a subrogation claim for reimbursement of benefits paid (see Podgurski v OneBeacon Ins. Co., 374 Md 133, 140 [Md Ct of Appeals 2003]), Civil Court erred in concluding that this action is governed by the law of Maryland.

To the contrary, the record indicates and it is undisputed that plaintiff’s subrogor ultimately pursued his claim with the New Jersey Division of Workers’ Compensation, which culminated in an award approving the parties’ “settlement” of the claim based upon a “finding” that “the terms of the settlement are fair and just,” and awarding him permanent disability benefits and deeming the temporary disability awarded in Maryland and medical bills “adequate as p[ai]d.” Since subrogor invoked New Jersey’s Workers’ Compensation provisions for an adjudication of his claim and received a final award thereunder, this action is governed by the law of the State of New Jersey (see Williams v A & L Packing and Storage, 314 NJ Super 460, 465-466 [NJ App Div 1998]; Phillips v Oneida Motor Freight, Inc., 163 NJ Super 297, 305 [NJ App Div 1978]; see also Cramer v State Concrete Corp.,39 NJ 507, 511 [NJ 1963]).

Applying New Jersey law to the instant matter, most of plaintiff’s subrogation claims fail. Although New Jersey law authorizes an employer to institute an action against a responsible tortfeasor if the injured person does not do so, “the third party shall be liable only to the same extent as he would have been liable had the employee himself instituted suit within a year of the accident” (Patterson v Adventure Trails, 364 NJ Super 444, 447 [NJ Super 2003], quoting Continental Ins. Co. v McClelland, 288 NJ Super 185, 189-190 [NJ App Div 1996]). As such, plaintiff’s subrogation claim for medical expenses in the principal sum of $7,884.97, and workers’ compensation payments up to the sum of $5,200, that would otherwise have been collectible under a standard personal injury protection endorsement covering the subject loss (see NJSA 39:6A-4; see also Rutgers Cas. Ins. Co. v Ohio Cas. Ins. Co., 153 NJ 205, 210 [NJ 1998]), cannot be recovered against defendant (see Patterson v Adventure Trails, 364 NJ Super at 447). Accordingly, defendant’s motion for summary judgment dismissing these claims should have been granted only to the extent provided.

However, the record is inconclusive as to plaintiff’s entitlement to reimbursement for disability payments, if any, in excess of the above stated sum of $5,200 (see e.g. NJSA 39:6A-10), and resolution of this issue must await a more fully developed record.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: June 10, 2011

District Court of Nassau County, Second District

19937/10

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Esqs., 100 Garden City Plaza, Suite 500, Garden City, NY 11530, Attorney for Plaintiff

Freiburg, Peck & Kang, LLP, 49 West 37th Street, 9th Floor, New York, NY 10018

Michael A. Ciaffa, J.

Plaintiff, R.E.G. Flushing Medical, P.C., provided medical services and treatment to Hector Gomez following a June 2009 auto accident. The accident took place in Queens, New York. Pursuant to an assignment obtained from Mr. Gomez, plaintiff sought no-fault payments from Mr. Gomez’ insurer, defendant Integon National Ins. Co. d/b/a GMAC Ins. Co. Mr. Gomez was described on plaintiff’s claim forms as being a resident of Woodhaven, New York. However, his address, on defendant’s records, was in North Carolina, where his vehicle was registered and insured. Defendant denied plaintiff’s claims on the ground that Mr. Gomez “does not meet the definition of an eligible risk under North Carolina statute NCGS 58-2-164.” This no-fault action followed.

By agreement between the parties, they asked the Court to determine the action upon documentary evidence and the legal arguments of counsel. Their attorneys stipulated at trial that plaintiff had established a prima facie case for no-fault benefits through timely submission of bills that defendant had not paid. They further stipulated to the timely issuance of denials by defendant.

The Court was thus asked to decide whether defendant could lawfully avoid paying plaintiff’s no-fault claims pursuant to its denials. At the outset, the Court needs to address which state’s law governs the substantive issues presented. Each claim was filed by a New York based medical provider seeking payment from a North Carolina based auto insurer. The claims were each filed on a New York State no-fault form (NF-3) documenting treatments provided within the State of New York. Although each claim was denied on a New York State no-fault denial of claim form (NF-10), each denial form cited to North Carolina law (NCGS §58-2-164) as the basis for the denial. The cited [*2]section governs “Rate evasion fraud” in North Carolina. It generally applies to circumstances involving alleged misrepresentations by an insured regarding the insured’s residence address, and the places insured motor vehicles are garaged. Id.

Under applicable choice of law principles, the validity of the insurer’s defense to

this action turns upon whether New York or North Carolina has a greater interest in the

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outcome of the case. Under the “grouping of contacts” approach which governs conflict of laws issues in an insurance coverage matter, see Matter of Liquidation of Midland Ins Co., 16 NY3d 536, 2011 NY Slip Op 02716 (decided April 5, 2011), the jurisdiction with the most “significant relationship to the transaction and the parties” will usually be the jurisdiction “which the parties understood was to be the principal location of the insured risk, . . . unless with respect to the particular issue, some other [jurisdiction] has a more significant relationship.” Id, quoting Zurich Ins Co. v. Shearson Lehman Hutton, 84 NY2d 309, 318 (1994), quoting Restatement [Second] of Conflict of Laws §193.

All indications point to North Carolina as “the principal location of the insured risk.” First and foremost, the subject auto policy was issued to Mr. Gomez in North Carolina. The policy lists his address as Wilson, North Carolina. Furthermore, on a page headed “INSURED’S STATEMENT”, Mr. Gomez was asked whether the insured vehicles were “garaged at the address listed.” His answer was “YES.” On another page, headed “APPLICANT’S CERTIFICATION”, Mr. Gomez certified that his “principal residence/place of vehicle garaging is North Carolina ten (10) or more months each year and the principal location of the vehicle is correct.”

The policy goes on to include a provision covering accidents “in any state or province other than the one in which your covered auto is principally garaged.” It includes “Medical Payment Coverage” providing for the payment of “reasonable expenses for necessary medical . . . services because of bodily injury . . . [s]ustained by an insured.” However, a separate provision respecting “FRAUD OR MATERIAL MISREPRESENTATION” states “We do not provide coverage for any insured . . . [i]f a named insured made a material misrepresentation in the application for this policy of insurance.” Another provision allows the insurer to cancel coverage under the policy if the insured became “a nonresident of North Carolina.”

Finally, the policy’s “Choice of Law” provision states: “This policy is issued in accordance with the laws of North Carolina and covers property or risks principally located in North Carolina. Any and all claims or disputes in any way related to this policy shall be governed by the laws of North Carolina.”

In the face of these indicia, the laws of North Carolina must be applied, unless this Court finds that New York has “a more significant relationship” to the issues presented in this action. [*3]See Matter of Liquidation of Midland Ins. Co., supra; Zurich Ins. Co. v. Shearson Lehman Hutton, supra. On the latter score, the Court acknowledges that New York’s interest in the issues is significant. As Justice McKeon noted in his concurring opinion in AA Acupuncture Service, P.C. v. Safeco Ins. Co. of America, 25 Misc 3d 30, 2009 NY Slip Op 29311 (App Term, 1st Dept), “the practice of

New Yorkers fraudulently registering motor vehicles in foreign states seems to be burgeoning, likely costing our state government, insurance companies and honest consumers significant sums in lost revenue and increased premiums and casting a pall

over the integrity of automobile registry systems in New York and other states.”

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On balance, however, these interests do not outweigh North Carolina’s in determining whether the instant claims are covered by the subject policy. Since defendant maintains that this North Carolina auto insurance policy provides no coverage for the instant claims based upon a specific section of North Carolina’s statutes, the issue will be decided under applicable statutory provisions and caselaw precedents from the State of North Carolina.

The starting point for analysis is the wording of North Carolina’s statute governing “Rate evasion fraud” (NCGS §58-2-164). In pertinent part, it provides: “If an applicant [for auto insurance] provides false and misleading information as to the applicant’s or any named insured’s status as an eligible applicant and that fraudulent information makes the applicant or any named insured appear to be an eligible applicant when that person is in fact not an eligible applicant, the insurer may do any or all of the following:

(1)Refuse to issue a policy.

(2)Cancel or refuse to renew a policy that has been issued.

(3)Deny coverage for any claim arising out of bodily injury or property damage suffered by the applicant. This subdivision does not apply to innocent third parties. (Emphasis added).

NCGS §58-2-164(g).

Two secondary issues are presented respecting the scope and meaning of these provisions. First, did Mr. Gomez provide false and misleading information to the defendant that made it appear that he was eligible for auto insurance coverage under North Carolina law? If he did, defendant contends that such misrepresentations allowed it to deny coverage for plaintiff’s claims under NCGS §58-2-164. Second, can plaintiff avoid defendant’s disclaimer of coverage pursuant to the “innocent third party” exception of NCGS §58-2-164(g)(3)? The issue cannot be decided without determining the meaning and intent of this exception.

The first issue turns, in large part, upon a close examination of the provisions respecting [*4]“eligible applicants” for auto insurance and the definition of “eligible risks.” Under North Carolina law, an “Eligible applicant” is a person who “is an eligible risk” (NCGS §58-2-164[a][3]). For the purpose of obtaining “nonfleet private passenger motor vehicle insurance,” an “Eligible risk” may involve a North Carolina resident who “owns a motor vehicle registered or principally garaged in [North Carolina]” (NCGS §58- 37-1[4][a]). However, an “Eligible risk” can also be presented by “a nonresident” who “owns a motor vehicle registered and principally garaged in [North Carolina].” Moreover, the definition of an “Eligible risk” extends to a North Carolina resident who

“has a valid driver’s license” issued by the State of North Carolina. NCGS §58-37-1 (4a)(b), (d).

Based upon the evidence submitted at trial, defendant failed to prove by a preponderance of evidence that Mr. Gomez was engaged in “Rate evasion fraud” as

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defined in the North Carolina statute. Since the denials relied only on the provisions of the cited statute, this case does not present a broader issue of whether Mr. Gomez made other misrepresentations in connection with the policy application and renewals of the policy. Moreover, the evidence respecting Mr. Gomez’ actual principal residence and the “principal location” of the vehicle was equivocal, at best.

Without hearing live testimony from Mr. Gomez and others, the Court is left with only a cold record, one replete with ambiguities and questions. While Mr. Gomez’s statements to an investigator raised legitimate doubts respecting his claimed North Carolina residence address (which he shared with his mother), defendant never pinned him down with respect to that residence or the vehicle’s principal garaged location between the date defendant first issued a policy for the vehicle (11/03) and the date of his accident (6/3/09). At most, defendant was able to show that Mr. Gomez had significant residential ties to both New York and North Carolina. When asked by defendant’s investigator “where do you live?” he answered “North Carolina.” He further claimed in his statement to defendant’s investigator that he was staying in New York “one week, two weeks” at a time. Although he admitted that he co-owned a grocery business and had a family with two children in New York, he also claimed he would “go back, stay with my mother” in North Carolina where he did “everything” before coming “back here” to his family and children in New York. He continued to maintain a North Carolina driver’s license that he kept current. The vehicle, itself, was always registered in North Carolina. Mr. Gomez also was able to show defendant a utility bill, in his name, bearing the same North Carolina address.

In short, although Mr. Gomez’s conflicting representations about his residence address raised legitimate issues for investigation, defendant’s defense of “rate evasion fraud” (NCGS §58-2-164) was not proven by a preponderance of the evidence submitted. To the contrary, the evidence shows that Mr. Gomez maintained significant, provable ties to the State of North [*5]Carolina, including a long standing North Carolina residence address, a North Carolina driver’s license, and close family ties with his mother in North Carolina. Accordingly, defendant’s evidence fails to establish that Mr. Gomez was not “an eligible applicant” under the definitions of North Carolina law. As a result, defendant remained responsible under the policy for “medical payment coverage” of “reasonable expenses for necessary medical . . . services” that were

provided to Mr. Gomez following an accident that occurred in New York State.

Turning to the second issue, the Court concludes, alternatively, that the defense of “rate evasion fraud” must be rejected on the ground that plaintiff is an “innocent third

party” within the meaning of North Carolina’s “rate evasion fraud” statute. Were this issue to be decided under New York law, the Court would be compelled to follow the lead of the Appellate Term, and to hold that New York’s “innocent third party” doctrine protects “only innocent third parties who are injured” by someone who is guilty of fraudulent procurement of insurance. See A.B. Med. Services PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8 (App Term, 2006). Thus, under New York caselaw, a health care provider acts “at its peril” when it accepts an assignment of no-fault benefits, and it

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remains equally subject to a defense that the insurance policy covering the assigned claim was “fraudulently procured” by the insured. Id.

The issue, here, is very similar, but the result ends up differently when analyzed under canons of statutory construction which require a court to give meaning to each part of a statute. As the Courts in North Carolina have recognized: “every part of the law shall be given effect if this can be done by any fair and reasonable intendment.” Huntington Properties, LLC v. Currituck County, 153 NC App 218, 224 (2002), quoting In re Hickerson, 253 NC 716, 721 (1952).

Reading North Carolina’s “rate evasion fraud” law as a whole, the Court cannot envision any class of persons or entities who would fall into the “innocent third party” category, except for the assignees and subrogees of the insured. The statutory “innocent third party exception” comes into play only if an insurer is asked to pay a claim “arising out of bodily injury or property damage suffered by the applicant” (emphasis added). So worded, the “innocent third party” language logically extends those entities who are involved in treating “bodily injuries” or remedying “property damage” that the insured has suffered. Plaintiff, a medical provider, clearly falls into this category. Consequently, the Court sees no basis for limiting the “innocent third party” exception to “innocent third parties who are injured” by the insured. Cf. A.B. Med. Services, PLLC v. Commercial Mut. Ins. Co., supra.

Admittedly, the issue is not free from doubt, and the Court has found no North Carolina cases in point. Nor has it found any illuminating legislative history. But in the absence of [*6]contrary authority from North Carolina, the Court believes that penalizing plaintiff would be unwarranted. The plaintiff is an “innocent third party.” It provided medical services to a person who was insured by the defendant. It took an assignment in good faith, expecting to be paid. If Mr. Gomez committed a fraud, plaintiff was not a

party to it. Accordingly, the Court concludes that plaintiff, as an “innocent third party”,

should not be foreclosed from obtaining payment for its services solely on account of alleged “rate evasion fraud” by the insured.

For these reasons, the defense set forth in defendant’s denials is rejected, upon the facts and as a matter of law. Judgment is granted to plaintiff. Submit Judgment on Notice.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: June 2, 2011

—[*1] Joseph Henig, P.C., Bellmore, N.Y., for appellants. McDonnell & Adels, PLLC, Garden City, N.Y. (Jannine A. Gordineer of counsel), for respondent.

In an action to recover no-fault medical payments under an insurance contract, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Murphy, J.), entered December 29, 2010, as denied that branch of their motion which was for summary judgment on the first cause of action.

Ordered that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the plaintiffs’ motion which was for summary judgment on the first cause of action is granted.

The plaintiffs made a prima facie showing that the plaintiff Nyack Hospital, as assignee of Rochelle Ferguson, was entitled to judgment as a matter of law on its cause of action to recover no-fault insurance medical payments by submitting evidence that the prescribed statutory billing form had been mailed and received by the defendant and that the defendant had failed to either pay or deny the claim within the requisite 30-day period (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.5; Westchester Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 81 AD3d 929 [2011]; Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045, 1045-1046 [2009]).

In opposition to the motion, the defendant failed to raise a triable issue of fact. The defendant acknowledged that it failed to timely deny that claim, but contended that it raised a triable issue of fact by submitting evidence which indicates that Ferguson intentionally caused her injury in an attempt to commit suicide. However, the failure to establish timely denial of the claim results in the preclusion of the defense that Ferguson’s allegedly intentional act was the cause of the accident and subject to exclusion under the insurance contract (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 286 [1997]; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). Accordingly, the Supreme Court should have granted that branch of the plaintiff’s motion which was for summary judgment on the first cause of action.

In light of our determination, we need not address the plaintiffs’ remaining contention. Mastro, J.P., Leventhal, Austin and Cohen, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered November 19, 2009, deemed from a judgment of the same court entered December 23, 2009 (see CPLR 5501 [c]). The judgment, entered pursuant to the November 19, 2009 order granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $2,971.57.

ORDERED that the judgment is reversed, without costs, the order entered November 19, 2009 is vacated and plaintiff’s motion for summary judgment is denied.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant opposed the motion on the grounds that the services rendered lacked medical necessity and that the provider billed in excess of the workers’ compensation fee schedule. By order entered November 19, 2009, the Civil Court granted plaintiff’s motion for summary judgment, and this appeal by defendant ensued. A judgment was subsequently entered, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

Inasmuch as defendant raises no issue on appeal with respect to plaintiff’s prima facie case, we do not pass upon the propriety of the Civil Court’s determination with respect thereto.

Defendant established that the denial of claim forms at issue were timely mailed in accordance with defendant’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]). With respect to the claim at issue in plaintiff’s first cause of action, which was denied on the ground of lack of medical necessity, defendant submitted an affirmed peer review report which set forth a [*2]factual basis and medical rationale for the doctor’s conclusion that there was a lack of medical necessity for the services at issue. As a result, defendant demonstrated the existence of a triable issue of fact with respect to plaintiff’s first cause of action (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]). Similarly, with respect to the claim at issue in the second cause of action, an issue of fact was presented as to whether plaintiff is seeking to recover in excess of the amount permitted by the worker’s compensation fee schedule. Accordingly, the judgment is reversed, the order entered November 19, 2009 is vacated and plaintiff’s motion for summary judgment is denied.

Pesce, P.J., Golia and Steinhardt, JJ., concur.
Decision Date: May 26, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered July 17, 2009, deemed from a judgment of the same court entered August 6, 2009 (see CPLR 5501 [c]). The judgment, entered pursuant to the July 17, 2009 order granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $370.34.

ORDERED that the judgment is reversed, without costs, the order granting plaintiff’s motion for summary judgment is vacated and plaintiff’s motion for summary judgment is denied.

In this action by a provider to recover assigned first-party no-fault benefits, defendant appeals from an order granting plaintiff’s 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 defendant’s contention, the affidavit submitted by plaintiff’s billing administrator was sufficient to establish that the documents annexed to plaintiff’s moving papers were admissible pursuant to CPLR 4518 (see Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2008]; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). However, as the pertinent facts concerning the failure of plaintiff’s assignor to appear for an examination under oath are the same as those in LDE Med. Servs., P.C. v Encompass Ins. (29 Misc 3d 130[A], 2010 NY Slip Op 51845[U] [App Term, 2d, 11th & 13th Jud Dists 2010]), for the reasons stated in that case, the judgment is reversed, the order granting plaintiff’s motion for summary judgment is vacated and plaintiff’s motion is denied. We reach no other issue. [*2]

Weston, J.P., Golia and Rios, JJ., concur.
Decision Date: May 24, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Genine D. Edwards, J.), entered June 19, 2009. The order, insofar as appealed from as limited by the brief, granted the branch of defendant’s cross motion seeking to compel plaintiff to provide bank account information and produce copies of its corporate tax returns and its billing and management agreements, and provided that the complaint would be dismissed in the event plaintiff failed to comply with the order.

ORDERED that the appeal is dismissed as academic.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals, as limited by its brief, from so much of an order of the Civil Court entered June 19, 2009 as granted the branch of defendant’s cross motion seeking to compel plaintiff to provide bank account information and produce copies of its corporate tax returns and its billing and management agreements, and provided that the complaint would be dismissed in the event plaintiff failed to comply with the order. Subsequent to the entry of the June 19, 2009 order, the Civil Court entered an order dismissing the action. The dismissal of the action rendered this appeal academic (see Livny v Rotella, 305 AD2d 377 [2003]; Delta Diagnostic Radiology, P.C. v Allstate Ins. Co., 2007 NY Slip Op 50673[U], 15 Misc 3d 131[A] [App Term, 2d & 11th Jud Dists 2007]; Vista Surgical Supplies, Inc. v Lumbermans Mut. Cas. Co., 13 Misc 3d 138[A], 2006 NY Slip Op 52221[U] [App Term, 2d & 11th Jud Dists 2006]; Fair Price Med. Supply Corp. v ELRAC Inc., 13 Misc 3d 33 [App Term, 2d & 11th Jud Dists 2006]).

Golia, J.P., Pesce and Steinhardt, JJ., concur.
Decision Date: May 24, 2011

—[*1] Joseph Henig, P.C., Bellmore, N.Y. (Marc Henig of counsel), for appellant.

Rossillo & Licata, LLP, Westbury, N.Y. (John J. Rossillo of counsel), for respondent.

In an action to recover no-fault medical payments under an insurance contract, the plaintiff, NYU-Hospital for Joint Diseases, as assignee of Gudrun Cancian, appeals from an order of the Supreme Court, Nassau County (McCarty III, J.), entered September 3, 2009, which denied its motion for summary judgment on the complaint.

Ordered that the order is affirmed, with costs.

On August 2, 2008, Gudrun Cancian was hospitalized at NYU-Hospital for Joint Diseases (hereinafter the hospital) after being injured in an automobile accident. She had been driving a vehicle insured by the defendant, Esurance Insurance Company (hereinafter Esurance). On September 5, 2008, the hospital, as Cancian’s assignee, mailed, among other things, an NF-5 form to Esurance, seeking payment of Cancian’s hospital bill. Esurance issued a denial of claim, which incorrectly stated the amount of the claim and the amount in dispute. Esurance denied the claim, inter alia, because Cancian allegedly was intoxicated at the time of the accident.

The hospital then commenced this action seeking payment of its bill, and moved for summary judgment on the complaint arguing, among other things, that the denial of claim was untimely, fatally defective for the above-mentioned mistakes, and that Esurance’s defense that Cancian was intoxicated was unsupported by the evidence.

“A proper denial of [a] claim [for no-fault benefits] must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]) and must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated’ ” (St. Barnabas Hosp. v Allstate Ins. Co., 66 AD3d 996, 996 [2009], quoting Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664 [2004]). A timely denial of a no-fault insurance medical claim alone does not, however, avoid preclusion where the “denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d at 665).

Here, the hospital established its prima facie entitlement to judgment as a matter of law [*2]based on the untimeliness of the denial of claim. It submitted evidentiary proof that the prescribed statutory billing forms were mailed and received, and that payment of no-fault benefits was overdue (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Westchester Med. Ctr. v State Farm Mut. Auto. Ins. Co., 44 AD3d 750, 752 [2007]; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]).

In opposition to the motion, however, Esurance raised a triable issue of fact as to whether the denial of claim was timely issued by submitting the affidavit of an employee with knowledge of its “standard office practices or procedures designed to ensure that items were properly addressed and mailed” (St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d at 1124), wherein he attested that a denial of claim was timely issued to the hospital. We note that while the denial of claim contained errors, they were not significant by themselves, and did not pose any possibility of confusion or prejudice to the hospital under the circumstances; thus, the denial was not rendered a nullity (see St. Barnabas Hosp. v Penrac, Inc., 79 AD3d 733, 734 [2010]; see also Westchester Med. Ctr. v Government Empls. Ins. Co., 77 AD3d 737, 738 [2010]).

Further, Esurance raised a triable issue of fact as to whether Cancian was “injured as a result of operating a motor vehicle while in an intoxicated condition” (Insurance Law § 5103 [b] [2]). Contrary to the hospital’s contention, the personal observations of the police officer present at the scene of the accident as recorded in the police accident report were properly considered by the Supreme Court under the business record exception to the hearsay rule (see CPLR 4518 [a]; Westchester Med. Ctr. v State Farm Mut. Auto. Ins. Co., 44 AD3d at 753).

Accordingly, the Supreme Court properly denied the hospital’s motion for summary judgment on the complaint. Prudenti, P.J., Angiolillo, Dickerson and Roman, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Peter Paul Sweeney, J.), entered October 2, 2009. The order granted defendant’s motion for 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 Civil Court granted defendant’s motion for summary judgment dismissing the complaint, which motion was based upon, among other things, plaintiff’s assignor’s failure to attend independent medical examinations (IMEs), which had been scheduled by Hudson Valley Medical Consultants (HVMC).

In support of its motion, defendant submitted an affidavit of an employee of HVMC which sufficiently established that the IME requests had been timely mailed in accordance with HVMC’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 an affidavit of an employee of the office manager of the psychologist who was to perform the IMEs, which was sufficient to establish that plaintiff’s assignor 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 no-fault specialist demonstrated that the claim denial forms, based on plaintiff’s assignor’s nonappearance at the IMEs, had been timely mailed pursuant to defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond, 50 AD3d 1123; Delta Diagnostic Radiology, P.C., 17 [*2]Misc 3d 16). Since an assignor’s appearance at an IME “is a condition precedent to the insurer’s liability on the policy” (Stephen Fogel Psychological, P.C., 35 AD3d at 722; see also Insurance Department Regulations [11 NYCRR] § 65-1.1), defendant properly denied plaintiff’s claim based upon the assignor’s failure to satisfy a condition precedent to coverage and, thus, was not precluded from raising such issue (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2d Dept 2009]; but see Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, ___ AD3d ___, 2011 NY Slip Op 01948 [1st Dept 2011]). Accordingly, the Civil Court’s order granting defendant’s motion for summary judgment dismissing the complaint is affirmed. In light of our determination, we need not reach the remaining contentions raised on appeal.

Weston, J.P., Golia and Rios, JJ., concur.
Decision Date: May 23, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered October 21, 2009, deemed from a judgment of the same court entered December 1, 2009 (see CPLR 5501 [c]). The judgment, entered pursuant to the October 21, 2009 order denying defendant’s motion for summary judgment dismissing the complaint and granting plaintiff’s cross motion for summary judgment, awarded plaintiff the principal sum of $2,670.40.

ORDERED that the judgment is reversed, without costs, the order entered October 21, 2009 is vacated, defendant’s motion for summary judgment dismissing the complaint is granted and plaintiff’s cross motion for summary judgment is denied.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground of fraudulent procurement of the insurance policy by virtue of the assignor misrepresenting his state of residence in connection with the issuance of the insurance policy in question. Plaintiff cross-moved for summary judgment. The Civil Court denied defendant’s motion for summary judgment and granted plaintiff’s cross motion for summary judgment. This appeal by defendant ensued. A judgment was subsequently entered, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

The affidavit submitted by defendant’s claims adjuster was sufficient to establish that defendant’s denial of claim forms were timely mailed in accordance with its 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 [*2][App Term, 2d & 11th Jud Dists 2007]). Accordingly, defendant was not precluded from raising its defense of fraudulent procurement of the insurance policy (cf. Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603 [2011]). As the affidavits annexed to defendant’s motion papers established that the assignor had misrepresented his state of residence, the assignor was ineligible to receive first-party no-fault benefits under the insurance policy in question (see A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12 Misc 3d 8 [App Term, 2d & 11th Jud Dists 2006]). Plaintiff, as assignee, stands in the assignor’s shoes and, thus, may not recover in this action (see Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293 [2000]; A.B. Med. Servs. PLLC, 12 Misc 3d 8). Accordingly, the judgment is reversed, the order denying defendant’s motion for summary judgment dismissing the complaint and granting plaintiff’s cross motion for summary judgment is vacated, defendant’s motion for summary judgment dismissing the complaint is granted and plaintiff’s cross motion for summary judgment is denied.

Pesce, P.J., Golia and Steinhardt, JJ., concur.
Decision Date: May 23, 2011