APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court of the City of New York, Bronx County (Raul Cruz, J.), entered June 7, 2010, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Raul Cruz, J.), entered June 7, 2010, affirmed, with $10 costs.

In this action to recover first-party no-fault medical benefits, defendant’s motion for summary judgment was properly denied since it failed to establish, prima facie, that the notices of the independent medical examinations (IMEs) were properly mailed to the assignor and that he failed to appear for the IMEs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721 [2006]; Marina v Praetorian Ins. Co., 28 Misc 3d 132[A], 2010 NY Slip Op 51292[U] [2010]; cf. Inwood Hill Med., P.C. v General Assur. Co., 10 Misc 3d 18, 19-20 [2005]). Given defendant’s failure to meet its burden, denial of its motion was required regardless of the sufficiency of plaintiff’s opposition papers (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 28, 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 (Carmen R. Velasquez, J.), entered February 25, 2010. The order, insofar as appealed from, denied defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is reversed, without costs, and defendant’s cross motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint. The Civil Court found that plaintiff had established its prima facie case, that defendant had demonstrated that it had timely denied plaintiff’s claim and that the sole issue for trial was the medical necessity of the supplies provided to plaintiff’s assignor. Defendant appeals from so much of the order as denied its cross motion for summary judgment dismissing the complaint.

In support of its cross motion, defendant submitted, among other things, medical peer review reports which set forth factual bases and medical rationales for the doctors’ determinations that there was a lack of medical necessity for the medical supplies at issue. Defendant’s showing that such supplies were not medically necessary was not rebutted by plaintiff.

In light of the foregoing, and the Civil Court’s implicit CPLR 3212 (g) finding that defendant had timely denied the claim based on a lack of medical necessity, a finding which plaintiff does not challenge, defendant’s cross motion for summary judgment dismissing the complaint should have been granted (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 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 & [*2]11th Jud Dists 2007]).
Pesce, P.J., Weston and Golia, JJ., concur.
Decision Date: April 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 (Carmen R. Velasquez, J.), entered February 25, 2010. The order, insofar as appealed from, denied defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is reversed, without costs, and defendant’s cross motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint. The Civil Court found that plaintiff had established its prima facie case, that defendant had demonstrated that it had timely denied plaintiff’s claim and that the sole issue for trial was the medical necessity of the supplies provided to plaintiff’s assignor. Defendant appeals from so much of the order as denied its cross motion for summary judgment dismissing the complaint.

In support of its cross motion, defendant submitted, among other things, an independent medical examination report which set forth a factual basis and a medical rationale for the doctor’s determination that there was a lack of medical necessity for the medical supplies at issue. Defendant’s showing that such supplies were not medically necessary was not rebutted by plaintiff.

In light of the foregoing, and the Civil Court’s implicit CPLR 3212 (g) finding that defendant had timely denied the claim based on a lack of medical necessity, a finding which plaintiff does not challenge, defendant’s cross motion for summary judgment dismissing the complaint should have been granted (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 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 [*2]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., Weston and Golia, JJ., concur.
Decision Date: April 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, Kings County (Dolores L. Waltrous, J.), entered February 18, 2010. The order granted plaintiff’s motion for the entry of a default judgment unless defendant served and filed an answer within 30 days of the date of the order, and implicitly denied defendant’s cross motion to dismiss the complaint pursuant to CPLR 3215 (c).

ORDERED that the order is reversed, without costs, plaintiff’s motion to enter a default judgment is denied, and defendant’s cross motion to dismiss the complaint is granted.

Plaintiff commenced this action to recover assigned first-party no-fault benefits by the service on October 17, 2006 of a summons with endorsed complaint. Defendant defaulted. Approximately two years and four months later, in February 2009, plaintiff moved for the entry of a default judgment. Defendant opposed the motion on the ground that it was supported by insufficient proof, and cross-moved to dismiss pursuant to CPLR 3215 (c). Plaintiff failed to offer any opposition to defendant’s cross motion. By order entered February 18, 2010, the Civil Court granted plaintiff’s motion to enter a default judgment unless defendant served and filed an answer within 30 days of the date of the order, and implicitly denied defendant’s cross motion to dismiss the complaint pursuant to CPLR 3215 (c).

Where, as here, a plaintiff fails to initiate proceedings for the entry of judgment within one year after the default, the plaintiff is obligated to offer a reasonable excuse for the delay in moving for leave to enter a default judgment, and must demonstrate that the complaint is meritorious, failing which the court, upon its own initiative or on motion, must dismiss the complaint as abandoned (CPLR 3215 [c]; see e.g. County of Nassau v Chmela, 45 AD3d 722 [2007]; Jones v Corely, 35 AD3d 381 [2006]; Kay Waterproofing Corp. v Ray Realty Fulton, Inc., 23 AD3d 624, 625 [2005]). Upon a review of the motion papers, we find that dismissal of [*2]the complaint was required pursuant to CPLR 3215 (c).

Accordingly, the order is reversed, plaintiff’s motion for the entry of a default judgment is denied, and defendant’s cross motion to dismiss the complaint is granted.

Pesce, P.J., Weston and Golia, JJ., concur.
Decision Date: April 26, 2011

[*1]

Supreme Court, Appellate Term, Second Department, April 26, 2011

APPEARANCES OF COUNSEL

G.H. Chen & Associates, P.C., New York City (Graeme H. Chen and David B. O’Connor of counsel), for appellant. John E. McCormack, P.C., Garden City (Erin M. Crowley of counsel), for respondent.

{**32 Misc 3d at 5} OPINION OF THE COURT

Memorandum.

Ordered that the judgment, insofar as appealed from, is affirmed, without costs.

In this action by a health care provider to recover assigned first-party no-fault benefits, defendant sought discovery of documents and information, and to depose Dr. Solomon, a principal of plaintiff, in relation to the propriety of plaintiff’s incorporation and operation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). After serving plaintiff with further discovery demands, defendant moved for an order, among other matters, consolidating this action with 201 other actions pending between the parties, compelling Dr. Solomon to appear for a deposition in relation to the consolidated actions, compelling discovery of the documents and information previously sought and authorizing additional discovery with respect to plaintiff’s contractual relationships with other corporate providers and with certain named individuals. Plaintiff opposed defendant’s motion, arguing that defendant had failed to plead a defense based on fraud, and, in any event, that the discovery demands were overbroad, and cross-moved, pursuant to CPLR 3103, for a protective order “denying defendant’s request for further discovery and/or depositions,” and, alternatively, compelling its own discovery. Plaintiff argued that defendant had produced no proof that plaintiff’s incorporation or operation violated state licensing laws, and that defendant’s failure timely to pay or{**32 Misc 3d at 6} deny the claim forfeited all defenses including those based on plaintiff’s alleged fraudulent incorporation or operation. Defendant opposed the cross motion and argued that plaintiff’s January 5, 2009 stipulation, in an unrelated no-fault benefits recovery action, to produce much of the discovery sought by the defendant therein, should be construed to evidence the absence of merit to plaintiff’s opposition to discovery. In an order entered June 11, 2009, the Civil Court denied plaintiff’s cross motion for a [*2]protective order, in part, because “[plaintiff had] stipulated to the exact relief it now wishes to dispute.” The order further granted defendant’s motion to the extent of consolidating the 202 actions “for the limited purpose of determining . . . issues of plaintiff’s fraudulent incorporation within the meaning of Mallela,” and directing that, within 90 days of the order, plaintiff must produce Dr. Solomon for a deposition “to answer questions concerning plaintiff’s fraudulent incorporation within the meaning of Mallela” and that, within 60 days, plaintiff must

“[p]rovide complete responses to defendant’s discovery demands including but not limited to all factoring agreements or assignment of the disputed bills in question, all federal, state and local income tax returns for Radiology Today, P.C. from 2006 to present, the names and addresses of all persons and entities with financial interest in the plaintiff as defined by Public Health Law § 238 . . . , all employee information as demanded . . . [and] all management agreements and personal tax return[s] of Dr. Robert Solomon from the year 2006 to [the] present.”

The order also stated that plaintiff’s failure to provide the discovery granted would “support motions to dismiss.” Plaintiff declined to comply with the order insofar as it granted defendant’s motion to compel discovery, and, by order dated October 9, 2009, the Civil Court dismissed the 202 consolidated actions. A judgment was entered on November 16, 2009. Plaintiff appeals from so much of the judgment as dismissed the complaint in the case at bar.

The defense that plaintiff is ineligible to receive no-fault benefits because it failed to comply with state or local licensing requirements “is not waived by the failure to assert it in a denial of claim form nor is it precluded as a result of an untimely denial” (Multiquest, P.L.L.C. v Allstate Ins. Co., 17 Misc 3d 37, 39 [App Term, 2d & 11th Jud Dists 2007] [citations omitted]).{**32 Misc 3d at 7} No-fault benefits may not be paid to medical service corporations which submit “materially false filings with state regulators” (Mallela, 4 NY3d at 321) or, if properly formed under the “facially valid cover of . . . nominal physician-owners” (id. at 319), are operated by nonphysicians (id. at 321). In the latter case, “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law” (id.), in particular, “New York State or local licensing requirement[s]” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]).

Plaintiff contends that the discovery order was improper because, in the answer and in support of its motion to compel discovery, defendant failed to “state[ ] in detail” the “circumstances constituting the wrong,” citing CPLR 3016 (b). There is no requirement that a defense predicated upon the failure to comply with “New York State or local licensing requirement[s]” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]) be pleaded with particularity pursuant to CPLR 3016 (b) (see generally V.S. Med. Servs., P.C. v Allstate Ins. Co., 25 Misc 3d 39 [App Term, 2d, 11th & 13th Dists 2009]). In addition, while mere conclusory allegations are never sufficient to obtain discovery with respect to a Mallela-based defense, defendant’s motion papers were sufficient to demonstrate that a Mallela-based defense [*3]was potentially meritorious.

Plaintiff’s motion for a protective order, filed nearly four months after defendant had served its supplemental discovery, was untimely (see CPLR 3122 [a]; Fair Price Med. Supply Corp. v ELRAC Inc., 12 Misc 3d 119, 122 [App Term, 2d & 11th Jud Dists 2006]). The failure of a party to timely challenge the propriety of discovery demands normally “obligate[s] [it] to produce the information sought” (New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 134[A], 2009 NY Slip Op 51396[U], *2 [App Term, 9th & 10th Jud Dists 2009]; see Fausto v City of New York, 17 AD3d 520, 522 [2005]), with the exception of items which are palpably improper or privileged (see Fausto, 17 AD3d at 522; Marino v County of Nassau, 16 AD3d 628 [2005]). As most of the discovery demands were not palpably improper or privileged, and in light of plaintiff’s failure to provide any discovery, the judgment, insofar as appealed from, dismissing the complaint in the case at bar is affirmed.

In view of the foregoing, we pass on no other issue.

Golia, J.P., Pesce and Steinhardt, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

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

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Robin S. Garson, J.), entered August 12, 2009. The judgment, entered pursuant to an order of the same court dated June 8, 2009 granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $1,204.50.

ORDERED that the judgment is reversed, without costs, the order dated June 8, 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 for medical supplies furnished to its assignors who were allegedly injured in a motor vehicle accident, defendant moved for summary judgment dismissing the complaint on the ground that it had not issued an insurance policy to the person who purportedly owned the vehicle involved in the accident, and that, therefore, there was no coverage. Plaintiff opposed the motion, and the Civil Court (Alice Fisher Rubin, J.), in an order entered September 12, 2007, denied the motion on the ground that triable issues of fact exist. Thereafter, plaintiff moved for summary judgment, and defendant argued in opposition to the motion that the motion should be denied since the September 12, 2007 order had already determined that there were triable issues of fact. Defendant’s opposition papers consisted of essentially the same documentation that had been submitted to the court in support of its own motion for summary judgment, i.e., a police accident report indicating that plaintiff’s assignor, Reuven Hafizov, was the operator of a vehicle registered to Aharon Shimonov and insured by defendant; a copy of an application for no-fault benefits seeking benefits under a purported policy issued to the purported policyholder under a purported policy number; claim denial forms denying the bills received by defendant because defendant’s records indicated that Aharon Shimonov did not have a policy with defendant; and an affidavit of a claims representative stating that a search of defendant’s records revealed that State Farm did not issue an insurance policy to Aharon Shimonov under the purported policy number. In an order dated June 8, 2009, the Civil Court (Robin S. Garson, J.) granted plaintiff’s motion, finding that plaintiff had established its prima facie entitlement to summary judgment and that defendant had failed to raise a triable issue of fact, since it had failed to describe what steps were [*2]undertaken to search its databases in order to determine that there was no policy. A judgment was subsequently entered in favor of plaintiff, from which defendant appeals.

Since defendant raised no issue in the Civil Court or on appeal with respect to plaintiff’s establishment of its prima facie case, we do not pass on the propriety of the Civil Court’s determination with respect thereto. With regard to defendant’s contention that the Civil Court violated the law of the case doctrine, even if this contention is correct, this court is not bound by that doctrine and may consider the motion on its merits (see Meekins v Town of Riverhead, 20 AD3d 399 [2005]).

In our opinion, while defendant’s proof did not establish as a matter of law that there was a lack of coverage (see Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 [2005]; Vincent Med. Servs., P.C. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 142[A], 2008 NY Slip Op 52442[U] [App Term, 2d & 11th Jud Dists 2008]), it was sufficient to raise a triable issue of fact with respect to the existence of coverage (see Hospital for Joint Diseases, 21 AD3d 348). Contrary to the finding of the Civil Court, defendant was not required to describe in detail the steps which it had taken in searching its records in order to demonstrate that there was no coverage in effect at the time of the accident (see Lenox Hill Radiology v Government Empls. Ins. Co., 28 Misc 3d 141[A], 2010 NY Slip Op 51638[U] [App Term, 1st Dept 2010]). Accordingly, the judgment is reversed, the order granting plaintiff’s motion for summary judgment is vacated, and plaintiff’s motion for summary judgment is denied.

Pesce, P.J., Weston and Rios, JJ., concur.
Decision Date: April 22, 2011

Supreme Court, Nassau County

9018/04

Michele M. Woodard, J.

Papers Read on this Motion:

Plaintiff’s Amended Notice of Motion06

Defendants’ Oppositionxx

Plaintiffs’ Replyxx

Defendant’s Notice of Supplemental Authorityxx

Defendant’s Notice of Motion08

Defendant’s Memorandum of Lawxx

Plaintiff’s Affirmation in Oppositionxx

Plaintiff’s Memorandum of Lawxx

Defendant’s Reply Memorandumxx

Plaintiff’s Reply Memorandum of Lawxx

In motion sequence number six, Plaintiff-Intervenors, Amer-A-Med Products, Inc., [hereinafter Amer-a-Med] and Meditek, Inc. [hereinafter Meditek], move pursuant to CPLR §3211(a)(5), (6), (7) and (10), as well as CPLR §3211(b), for an order dismissing the counterclaims and certain affirmative defenses as are asserted by defendant, Allstate Insurance Company [hereinafter Allstate].

Defendant, Allstate, moves pursuant to CPLR §902, for an order dismissing the plaintiffs’ [*2]class allegations (Sequence No.08).

Factual & Procedural Background

Globe Surgical Supply [hereinafter Globe], is a provider of Durable Medical Equipment [hereinafter DME] (see Bell Affirmation in Support at ¶4). Globe is the former proposed class representative in the underlying putative class action, the substance of which is alleged breach of contract due principally to Allstate’s “illegal reduction of reimbursements made to Globe and putative class members who submitted No-Fault claims” (see Bell Affirmation in Support at ¶4). Said reductions were allegedly in violation of Insurance Law §5101, as well as 11 NYCRR 65.10, the latter of which was the relevant insurance regulation in effect at the time of the purported illegal reductions (id.).

By order dated April 24, 2007, this Court denied an application interposed by Globe, which sought class certification pursuant to Article 9 of the CPLR (id. at ¶5; see also Exh. A). On April 21, 2009, the Appellate Division, Second Department, held that “Globe Surgical Supply, as assignee of Charles Charlotin, met all of the class certification prerequisites in the instant matter except adequacy of representation” (id. at Exh. A). Accordingly, the Appellate Division modified this Court’s decision dated, April 24, 2007, and held that the branch of Globe’s application for class certification “should have been denied without prejudice to renewal” (id.).

Thereafter, Allstate moved for summary judgment dismissing the complaint in response to which Amer-a-Med and Meditek cross-moved for an order granting leave to intervene so as to facilitate a renewal application for class certification (id. at ¶8; see also Exh. F). Simultaneously with their cross-application, Amer-a-Med and Meditek served an Amended Class Action Complaint [hereinafter the Complaint] (id. at ¶8; see also Exh. E). On December 15, 2009, this Court denied Allstate’s application and granted the motion interposed by Amer-a-Med and Meditek, for leave to intervene and ordered that said intervenors be substituted as party plaintiff’s so as to permit renewal of the application for class certification (id. at ¶9; see also Exh. F).

A review of the Complaint indicates that Amer-a-Med and Meditek are each suppliers of DME and provided same to their respective assignors (see Bell Affirmation in Support at Exh. E at ¶¶3, 4, 22). In connection therewith, Amer-a-Med and Meditek each obtained assignments from the assignors and together with same filed various claims with Allstate for reimbursement in relation to the DME provided (id. at ¶¶23-32). The plaintiffs allege that notwithstanding the submission of the requisite documentation, Allstate did not reimburse them for the amounts claimed and rather unilaterally reduced same by adjusting the amounts to conform to the “prevailing rates in the geographic location of the provider” (id.). The plaintiffs further allege that these unilateral reductions undertaken by Allstate are in direct contravention of “Part E of the Twenty-Third Amendment to Regulation No. 83 (11 NYCRR 68)”^[FN1] (id. at ¶¶ 10, 20).

On January 28, 2010, Allstate filed an Answer in response to the within Complaint, the contents of which did not contain any counterclaims (id. at ¶10). Thereafter, on February 16, [*3]2010, Allstate filed an Amended Answer, which contained various affirmative defenses and counterclaims (id. at ¶11; see also Exh. G). The instant applications, respectively interposed by the moving parties herein, thereafter ensued and are determined as set forth hereinafter.

Application by Amer-a-Med and MeditekThe Court initially addresses the application interposed by Amer-a-Med and Meditek, which seeks dismissal of the counterclaims and affirmative defenses interposed by Allstate.

A review of the Amended Answer dated, February 16, 2010, reveals that Allstate has asserted five counterclaims, the first of which sounds in common law fraud, the second and third of which are predicated upon the federal Rackateer Influenced and Corrupt Organizations statute, the fourth of which is predicated upon §349 of the General Business Law, and the fifth of which is for unjust enrichment (see Bell Affirmation in Support at Exh. G).

Fraud

With respect to Allstate’s first counterclaim, sounding in fraud, counsel for the plaintiffs contend, inter alia, that the applicable statute of limitations has expired warranting dismissal thereof (see Plaintiffs’ Memorandum of Law in Support at pp.13-15; see also Plaintiffs’ Reply Memorandum of Law at pp. 4-11).

In order to allege a cause of action sounding in common law fraud, the complaint must allege the following: the defendants made a material representation; the material representation was false; the defendants knew it was false and made it with the intention of deceiving the plaintiff; the plaintiff believed the representation to be true and justifiably acted in reliance thereon; and the plaintiff is damaged as a result thereof (Small v Lorillard Tobacco Co., Inc., 94 NY2d 43 [1999]). “In order to plead a prima facie case of fraud, a plaintiff must allege each of the elements of fraud with particularity and must support each element with an allegation of fact” (Fink v Citizens Mortg. Banking Ltd., 148 AD2d 578 [2d Dept 1989]; CPLR §3016[b]).

A cause of action sounding in fraud must be commenced within the six years following the date upon which the cause of action accrued or within the two years after the time during which the plaintiff could have discovered the fraud withdue diligence (Town of Poughkeepsie v Espie, 41 AD3d 701 [2d Dept 2007]; see also Espie v Murphy, 35 AD3d 346 [2d Dept 2006]). A cause of action which alleges fraud accrues at that point in time when the plaintiff is in possession of knowledge of the facts from which the alleged fraud “could have been discovered with reasonable diligence” (id.; see also Northridge Ltd. Partnership v Spence, 246 AD2d 582 [2d Dept 1998]). The party seeking the benefit of the discovery exception to the six-year statute of limitations bears the burden of demonstrating that the fraud could not have been previously discovered (Siler v Lutheran Social Services of Metropolitan NY, 10 AD3d 646 [2d Dept 2004]; Hillman v City of New York, 263 AD2d 529 [2d Dept 1999]; Lefkowitz v Appelbaum, 258 AD2d 563 [2d Dept 1999]).

In the instant matter, a review of the Amended Answer reveals that Allstate sets forth numerous allegations of fraudulent activity undertaken by the plaintiffs herein, the last of which was on November 7, 2003. Relying upon this date, counsel for the plaintiffs argues that as the within counterclaim was not commenced until February 16, 2010, same is barred by the applicable statute of limitations (see Plaintiffs’ Memorandum of Law at pp. 13-15; see also Plaintiffs’ Reply Memorandum of Law at pp.4-11). [*4]

In opposing this branch of the plaintiffs’ application, counsel for Allstate initially argues that said defendant has sufficiently alleged facts which detail an “ongoing scheme,” which resulted in Allstate remitting payments to the plaintiffs between 1999 through 2008, and accordingly the fraud-based claims are within the applicable statute of limitations (see Allstate’s Memorandum of Law at pp. 10-15; see also Allstate’s Amended Answer at ¶163). Counsel further posits that it was not cognizant of the plaintiffs’ fraudulent scheme until they sought leave to intervene herein, at which time Allstate “was able to piece together facts regarding the ownership and interrelationship between plaintiffs, their owners and other entities and individuals, and the general nature of plaintiffs’ conduct” (see Allstate’s Memorandum of Law at p. 11).

In addition to the foregoing, counsel for Allstate further argues that as the subject counterclaims “arise out of the same transactions that form the basis of the claims asserted in plaintiff’s complaint” interposed in March of 2004, by operation of CPLR §203(f), said counterclaims are deemed timely (id. at p. 15).

In the instant matter, a review of the voluminous allegations contained in Allstate’s Amended Answer indeed demonstrates that the most recent date upon which the plaintiffs engaged in fraudulent conduct was November 7, 2003, clearly more than six years prior to the interposition of the counterclaim sounding in fraud (Town of Poughkeepsie v Espie, 41 AD3d 701 [2d Dept 2007], supra; CPLR §213[8]). Here, while Allstate asserts that it was unaware of the plaintiff’s fraudulent activities until they sought leave to intervene, this Court finds said argument unavailing (id.; Northridge Ltd. Partnership v Spence, 246 AD2d 582 [2d Dept 1998], supra). Allstate itself asserts that since 1999 through 2008, it paid the plaintiffs substantial payments. Accordingly, that Allstate did not detect any indicia of fraudulent conduct on the part of either of the plaintiffs during those ensuing nine years demonstrates, in this Court’s view, that Allstate did not exercise any diligence in attempting to discover the alleged fraud ( Town of Poughkeepsie v Espie, 41 AD3d 701 [2d Dept 2007], supra; see also Espie v Murphy, 35 AD3d 346 [2d Dept 2006], supra).

Finally, with respect to Allstate’s opposition arguments predicated upon CPRL §203[f], said statute provides that “[a] claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading.”

Here, Allstate’s original Answer does not contain any counterclaims against either Amer-A- Med, Meditk, or the particular assignors upon which the plaintiffs’ claims are predicated. Thus, the original answer could not have given any notice to the plaintiffs as to the “the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading (id.; Padua v Falow, 230 AD2d 834 [2d Dept 1996]; In Re David Nelson, M.D., 303 AD2d 499 [2d Dept 2003]).

Based upon the foregoing, Allstate’s counterclaim sounding in common law Fraud is hereby dismissed.

RICO Statute

The defendants’ Second and Third counterclaims are predicated upon violations of 18 USC §1962[c] and 18 USC §1962[d] of the Racketeer Influenced and Corrupt Organizations statute [hereinafter the RICO statute]. The elements which comprise civil RICO claims are “(1) conduct (2) of an enterprise (3) through a pattern * * * (4) of racketeering activity” Podraza v Carriero, 212 AD2d 331 [4th Dept 1995] quoting Sedima, S.P.R.L. v Imrex, Co., 473 US 479 [1985] at 496). The statute of limitations applicable to civil RICO actions is four years (Niagra Mohawk Power Corporation v Freed, 265 AD2d 938 [4th Dept 1999]). Such an action does not accrue “until a plaintiff both knows, or should have known, of the injury to business or property, and that the predicate act causing injury is part of a pattern of racketeering activity” (id. quoting Podraza v Carriero, 212 AD2d 331 [4th Dept 1995], supra). The term enterprise is defined by the statute as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity” (18 USC §1961[4]). The term “racketeering activity” includes various offenses including, mail fraud, in which Allstate has accused the plaintiffs of having engaged (id.).In support of the instant application, counsel for the plaintiffs sets forth numerous arguments including that the actions predicated upon the RICO statute are barred by the applicable statute of limitations (see Plaintiffs’ Memorandum of Law at pp. 16-17; see also Plaintiffs’ Reply Memorandum of Law at pp. 12-13).

In opposing the application, Allstate asserts that it has sufficiently alleged an ongoing scheme engaged in by the plaintiffs so as to defraud Allstate and that such scheme continued “at least until 2008”, which is well within the statutory period (see Defendant’s Memorandum of Law at pp. 19-23). Allstate additionally argues that whether the RICO claims are timed barred is a factual determination not susceptible to resolution herein (id. at pp.20, 21). To this point, Allstate posits that it could not have discovered the fraudulent scheme until the ensuing investigation, which occurred after the plaintiffs intervened herein (id. at p23).

Having reviewed Allstate’s voluminous Amended Answer, this Court finds that said defendant has sufficiently alleged an ongoing scheme undertaken by the plaintiffs and has raised factual questions vis a vis when it knew or should have known of the purported existence of a pattern of racketeering (Niagra Mohawk Power Corporation v Freed, 265 AD2d 938 [4th Dept 1999], supra; Podraza v Carriero, 212 AD2d 331 [4th Dept 1995], supra). Accordingly, that branch of the plaintiffs’ application which seeks dismissal of the defendant’s counterclaims predicated upon the RICO statute is hereby denied.

General Business Law §349

General Business Law §349 (a) declares as unlawful “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” In order for a plaintiff to establish a prima facie case under the statute, he or she must demonstrate that the challenged act or practice of the defendant was consumer-oriented, that it was misleading in a material way, and that the plaintiff suffered injury as a result of the deceptive act (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20 [1995]). A cause of action alleging violations of the statute is governed by a three-year statute of limitations (Gaidon v Guardian Life Insurance Company of America, 96 NY2d 201 [2001] ). Such an action accrues “when all of the factual circumstances necessary to establish a right of action have occurred, so that the plaintiff would be entitled to relief” (id.). [*6]

As extrapolated from the Amended Answer, Allstate alleges that the plaintiffs herein engaged in deceptive acts in violation of the statute and that “each separate bill, invoice, letter and report submitted to Allstate [by the plaintiffs] constituted a separate violation” of the statute (see Verified Answer at ¶¶172,173). The defendant further alleges that it “has been damaged by the actions of Meditek and Amer-A-Med in that Allstate has made substantial payments to Meditek totaling $305,000 and to Amer-A-Med totaling $56,229” (id. at ¶177).

In moving for dismissal thereof, counsel for the plaintiff again argues for dismissal on several bases including that said claims are barred by the applicable statute of limitations (see Plaintiffs’ Memorandum of Law at pp. 17; see also Plaintiffs’ Reply Memorandum of Law at p.13 -14).

In the instant matter, while Allstate generally asserts that between 1999 and 2008 it paid the sums of $305,000 and $56,229 to Meditek and Amer-A-Med, respectively a careful review of the factual allegations contained in the Amended Answer indicates that the last bill received by either of these plaintiffs was on November 7, 2003, which is clearly more than three years prior to the commencement of the subject counterclaim (Gaidon v Guardian Life Insurance Company of America, 96 NY2d 201 [2001], supra). Accordingly, the counterclaim is hereby dismissed (id.).

Unjust Enrichment

A cause of action sounding in unjust enrichment is governed by a six-year statute of limitations and accrues “upon the occurrence of the wrongful act giving rise to a duty of restitution” (Congregation Yetev Lev D’Satmar v 26 Adar N.B. Corp., 192 AD2d 501 [2d Dept 1993]; CPLR §213[1]). As noted above, the most recent allegation of wrongdoing undertaken by the plaintiff’s herein was on November 7, 2003 and more than six years prior to the commencement of the subject counterclaim (id.). Accordingly, the counterclaim is hereby dismissed.

Affirmative Defenses

The Court now addresses that branch of the plaintiff’s application which seeks dismissal of Allstate’s affirmative defenses numerically denominated ¶¶53, 54, 55, 61, 62, 63, 76, 77, 78, 81 and 82 (see Bell Affirmation in Support at ¶2).

CPLR §3211(b) provides that a party may move for judgment dismissing one or more defenses on the basis that a defense is not stated or has no merit. When entertaining such an application, “the defendant is entitled to the benefit of every reasonable intendment of the pleading, which is to be liberally construed” (Abney v Lunsford, 254 AD2d 318 [2d Dept 1998]). Where there is any doubt as to the availability of the defense, it should not be dismissed (Warwick v Cruz, 270 AD2d 255 [2d Dept 2000]; Fireman’s Fund Ins. Co. v Farrell, 57 AD3d 721 [2d Dept 2008]).

Within the context of the no fault statutory scheme, upon receipt of the requisite claims forms, an insurance carrier is required to pay or deny the claim within 30 calendar days thereafter (Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007]; Fair Price Medical Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008] ). If an insurance company fails to properly deny a claim within this 30-day period, is it “generally precluded from asserting [*7]a defense against payment of the claim” (Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007], supra; see also Presbyterian Hosp. in City of New York v Maryland Cas. Co., 90 NY2d 274 [1997] at 283-283). However, the Courts have set forth a narrowly circumscribed exception to the rule of preclusion where the insurance carrier has raised a defense sounding in lack of insurance coverage (Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). Under such circumstances, “an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed'”(Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007], supra at 318 quoting Matter of Worcester Ins. Co., v Bettenhauser, 95 NY2d 185 [2000]).

Informed by the foregoing general legal principles, the Court now turns to the various affirmative defenses alleged by Allstate. In paragraph denominated “53”, Allstate alleges that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery to the extent that they failed to provide the DME prescribed to the claimants, yet billed Allstate for that equipment” (see Bell Affirmation in Support at Exh. G).

In Fair Price Medical Supply Corp. v Travelers Indemnity Company, the Appellate Division, Second Department, held that a defense predicated upon a providers failure to furnish the supplies for which it billed is not one grounded in lack of coverage and “is more akin to a claim of overbilling (albeit an extreme form thereof)” (42 AD3d 277 [2d Dept 2007] at 283 affd 10 NY2d 556 [2008]). That Court went on to hold that while a defendant is entitled to challenge such a claim as being fraudulent, it was required to do so within the 30 days following submission of the claim (id. at 286; Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008]; see also Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d 195 [1997], supra). Here, as Allstate failed to raise the defense within the 30 days following the receipt of the relevant claim forms, it is therefore precluded from asserting same herein (id.). Based upon the foregoing, the affirmative defense as is alleged in paragraph “53”, is hereby dismissed.

In the paragraph denominated “54”, the defendant alleges that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery to the extent that they have failed to document their costs as required by Regulation 83, codified at 11 NYCRR §68.3, Appendix 17-C, Part E(b)(1).” Here, in this Court’s view, the substance of Allstate’s defense is that of overbilling in connection to the costs attendant to the DME provided. The courts have held that overbilling is not the equivalent of a defense predicated upon lack of coverage and to preserve such a defense, an insurer must raise same within the 30 days following receipt of the claim (Fair Price Medical Supply Corp. v Travelers Indemnity Company, 10 NY3d 556 [2008] at 564-565; Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d 195 [1997], supra at 199). Thus, as Allstate failed to raise this defense within the 30-day time frame, it is precluded from doing so herein and accordingly this defense is dismissed.

In the paragraph denominated “55”, Allstate claims that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery, to the extent alleged assignments to them from the alleged Allstate insureds are invalid or non-existent.” The [*8]Court of Appeals has specifically held that “any defect in [an] assignment * * * simply does not implicate a lack of coverage defense warranting exemption from the exclusion rule” (Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007], supra at 319). Therefore, as Allstate failed to assert said defense within the statutorily required time frame following the submission of the claims, it is precluded from raising said defense herein and accordingly same is dismissed (id.).

In paragraph “61”, Allstate alleges that “[s]ome or all of plaintiffs’ claims are barred by the doctrine of unclean hands.” Here, said defense is essentially one which alleges fraudulent conduct undertaken by the plaintiffs. While the Court is cognizant that an insurance carrier may indeed challenge suspected fraudulent activity, it must nonetheless do so with in the time period prescribed by the no fault statutory scheme ( Fair Price Medical Supply Corp. v Travelers Indemnity Company, 42 AD3d 277 [2d Dept 2007] at 286). Accordingly, as Allstate failed to allege said defense within the 30 days following receipt of the relevant claims, it is precluded from raising same herein and the defense is dismissed (id; Presbyterian Hosp. In City of New York v Maryland Cas. Co., 90 NY2d 274 [1997]).

In the paragraph denominated “62”, Allstate alleges that “[p]laintiff’s and other members of the purported class may be barred, in whole or in part, from recovery to the extent that the costs do not arise from a bona fide, arm’s-length transaction and for failure to document costs as required by the New York State Insurance Department.” As with the foregoing, the defense alleged herein essentially claims fraudulent conduct on the part of the plaintiffs. However, as noted above, given Allstate’s failure to allege same within the 30 days following receipt of the relevant claim forms, it is precluded from asserting said defense herein (id.). Accordingly, the affirmative defense is hereby dismissed.

In paragraph “63”, Allstate sets forth that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery to the extent they have engaged in fraud against defendants, by, inter alia: (1) charging grossly inflated prices for DME they purportedly sold to claimants, often up to three times the price for which the equipment could have been purchased in a bona fide, arm’s-length transaction in the commercial market place, (2) submitting false documentation’ of their costs for DME supplied to Allstate’s insured for the sole purpose of supporting grossly inflated prices charged for DME and collecting fraudulent charges from Allstate, (3) relying on recycled invoices from wholesale supplies to support claims that specific items of DME were purportedly provided to specific claimants, when, in fact, those specific items of DME were not provided to the specific claimant; and (4)staging accidents.”

With respect to those allegations surrounding overbilling and recycling of invoices, same have been held not to constitute a defense predicated upon lack of coverage (Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008], supra at 142). Accordingly, as Allstate has failed to previously raise same, it is precluded from asserting said defenses herein (id.). With respect to the assertions that various of the accidents were “staged,” such an allegation must be “premised on the fact or founded belief that the alleged injury does not arise out of an insured incident” (see Mount Sinai Hospital v Triboro Coach Inc., 263 AD2d 11 [2d Dept 1999]at 19). The burden is on the insurance carrier to come forth with admissible evidence, which either demonstrates that there is in fact no coverage or evidence which supports the insurer’s [*9]belief that there is no coverage (id.). Here, Allstate has failed to meet this burden (id.). The Court notes that in opposing the plaintiffs’ instant application, counsel for Allstate provides an affidavit from a Mr. D’Amato, who is employed as a claims examiner for the defendant (see Short Affirmation in Opposition at Exh.4 at ¶2). However, the substance of said affidavit does not support the “staging” of accidents but rather chronicles various instances in which the plaintiffs herein purportedly utilized fraudulent invoices (id. at ¶¶7, 10, 14, 16, 17). Accordingly, based upon the foregoing, the affirmative defense as set forth in paragraph “63”, is hereby dismissed.

In paragraph “76”, Allstate alleges that “[t]here is no coverage under the No Fault law for the DME at issue in this matter.” Initially, the Court notes that such a defense is contradicted by the record given that Allstate partially reimbursed the plaintiff for some of the equipment provided (CPLR §3211[b]). Moreover, said defense essentially asserts that the DME provided was excepted from the coverage provided under the no fault statute. However, an exception from coverage is not the equivalent of a lack of coverage, and accordingly as Allstate failed to assert same within the 30 days following the receipt of claim, it is hereby precluded from asserting same herein and the defense is dismissed (Fair Price Medical Supply Corp. v Travelers Indemnity Company, 42 AD3d 277 [2d Dept 2007], supra at 283-284).

In paragraph “77”, Allstate states that “[a]ny benefits available to the plaintiffs and other members of the putative class are expressly conditioned and limited by the terms, conditions, limits and provisions of the insurance policies at issue, which may preclude recovery on such claims.” Here again, the essence of this defense appears to be that certain of the DME provided may be accepted from the insurance polices is issue. However, as noted above, an exception to coverage is not the equivalent to a lack of coverage and thus given Allstate’s failure to assert same within the statutory time frame, it is precluded from raising same herein and the defense is dismissed (id.).

In paragraph “78”, Allstate alleges that “Amer-A-Med and Meditek engaged in misrepresentations and fraud in an effort to conceal the true wholesale cost of the DME they billed to Allstate” and that “Amer-A-Med and Meditek set forth invoices from Impact and Nutekmed, identifying Impact and Nutekmed as the wholesalers, and Amer-A-Med and Meditek, then based their markup upon these invoices.” Allstate further alleged that “Amer-A-Med and Meditek, however, did not engage in arm’s-length transactions with Nutekmed and Impact.” This defense alleges overbilling on the part of the plaintiff’s. However, as noted herein above, overbilling is not equivalent to a defense predicated upon lack of coverage and accordingly as Allstate failed to allege same within the 30 days following the receipt of the claims, the defense is dismissed (Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008], supra at 142).

Paragraph 81 states the “[p]laintiffs engaged in improper self-referrals and referrals between affiliated entities” Such potential fraudulent action on the part of the plaintiff’s, even if true, is not a defense-based lack of coverage for the subject incidents in which the assignors were involved (Fair Price Medical Supply Corp. v Travelers Indemnity Company, 42 AD3d 277 [2d Dept 2007], supra). According, the failure of Allstate to assert same within the 30 days after receipt of the relevant claims, requires dismissal thereof.

Finally, with respect to paragraph denominated “82”, Allstate alleges that it “specifically [*10]asked plaintiffs for verification by requesting copies of original invoices and/or manufacturer’s invoices.” Here again, said defense goes to issues surrounding overbilling and recycling of invoices, both of which must be asserted within the 30 days following receipt of the relevant claims ( Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008], supra at 142). Given Allstate’s failure to do so, the defense is dismissed (id.).

Allstate’s Cross-Application

The Court now addresses Allstate’s cross-application for an order pursuant to CPLR §902 dismissing the plaintiffs’ class allegations. In support thereof, counsel contends that as the plaintiffs have failed to move for class certification within the sixty days following Allstate’s service of its responsive pleading, the class allegations must be dismissed (see Zevgaras Affirmation in Support at ¶5;see also Defendant’s Memorandum of Law in Support).

CPLR §902 provides, in relevant part: “within sixty daysafter the time to serve a responsive pleading has expired for all persons named as defendants in an action brought as a class action, the plaintiff shall move for an order to determine whether it is to be so maintained.” In interpreting the statute, the Court of Appeals stated that “[t]he explicit design of Article 9 * * *, is that a determination as to the appropriateness of class action relief shall be promptly made at the outset of the litigation.” (O’Hara v Del Bello, 47 NY2d 363[1979] at 368; Alexander, Practice Commentaries, McKinney’s Cons Law of NY, Book 7B, CPLR C902:1).

In opposing the application, counsel for Amer-a-Med and Meditek contends that given the status of said plaintiffs as named defendants vis a vis the counterclaims asserted against them by Allstate, their time in which to interpose a responsive pleading has yet to begin as their dismissal applications are still pending (see Bell Affirmation in Opposition at ¶¶10, 11, 12). Counsel further argues that as the plaintiffs time in which to serve an Answer has yet to commence, the sixty-day period for moving for class certification has not yet expired (id.).

In the matter sub judice, the Court finds the argument posited by plaintiffs’ counsel unpersuasive and notes that no legal authority has been provided to support his position. Moreover, the counterclaims interposed by Allstate do not seek class relief and, as such, neither Amer-A-Med nor Meditek are defendants in a class action (CPLR§ 902). Accordingly, pursuant to CPLR §902, the plaintiffs were required to move for class certification within the sixty days following the service of Allstate’s Amended Answer (id.). As they have failed to do so, Allstate’s instant application, which

seeks an order dismissing the plaintiffs’ class allegations, is hereby Granted.

All applications not specifically addressed herein are Denied. It is hereby

ORDERED, that the previously issued stay is hereby vacated. It is further

ORDERED, that the parties are directed to appear for a Compliance Conference on May 10, 2011 at 11:00 a.m.

This constitutes the Decision and Order of the Court.

DATED:April 18, 2011

Mineola, NY 11501 [*11]

ENTER:_______________________________

HON. MICHELE M. WOODARD

J.S.C.

Footnotes

Footnote 1: Former Part E regulated and prescribed the amount of reimbursement to providers of DME and stated the following: “For medical equipment and supplies (e.g. TENS units, soft cervical collars) provided by a physician or medical equipment supplier, the maximum permissible charge is 150 percent of the documented costs of the equipment to the provider.”

Civil Court of the City of New York, Kings County

164656/07

Attorney for Plaintiff

Law Offices of Melissa Betancourt, P.C.

155 Kings Highway, 3rd Floor

Brooklyn, NY 11223

Attorney for Defendant

Law Offices of Daniel J. Tucker

American Transit Insurance Co.

330 West 34th St., 10th Floor

New York, NY 10001

Katherine A. Levine, J.

This motion raises the issue of whether an insurer must issue a denial within 30 days of an injured party’s failure to appear for a post claim IME. The court concludes that since a failure [*2]to appear for a post claim is a violation of a condition precedent to the contract, as opposed to a policy exclusion, a denial on this ground is not subject to the preclusion rule.

Plaintiffs Neomy Medical, P.C., Perfect Point Acupuncture, P.C., and Chiropractic Back Care, P.C., (collectively “plaintiffs”), all medical service companies, commenced this action pursuant to Insurance Law 5106(a) to recover the sum of $5,854.55 for medical services they provided to their assignor Fan fan Both (“assignor” or “Both”). Defendant American Transit Ins. Co. (“American” or “defendant”) cross moved for summary judgment based on its claim that the assignor failed to appear at an independent medical examination (“IME”)(“IME no show”).

During oral argument, defendant conceded that only some of its denials were timely; ie mailed within 30 days of receipt of claim form. Defendant contended, however, that its late denials were not fatal since failure to appear for an IME is a violation of a condition precedent to the insurance policy which vitiates the contract and makes such s violation a non- precludable defense which survives a late denial. Plaintiff countered that an IME no show is a precludable defense. The court requested briefs solely on this issue.

To grant summary judgment, “it must clearly appear that no material and triable issue of fact is presented. Forrest v. Jewish Guild for the Blind, 3 NY3d 295 (2004); Zuckerman v, City of New York, 49 NY2d 557 (1980). A plaintiff establishes a prima facie entitlement to judgment as a matter of law by submitting evidentiary proof that the prescribed statutory billing form has been mailed and received, and that payment of no-fault benefits was overdue.” Mary Immaculate Hosp. v. Allstate Ins., 5 AD3d 742, 743 (2d Dept.2004); Second Medical v. Auto One Ins., 20 Misc 3d 291, 293 (Civil Ct., Kings Co.2008).

Condition Precedent

11 NYCRR 65-1.1 (d) provides for the mandatory personal injury protection endorsement (“PIP”). Under the subheading entitled “Conditions”, “Action against Company,” the regulation provides that “No action shall lie against the [c]ompany unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage.” One provision under this subheading provides that the eligible person shall submit to medical examinations by physicians selected by or acceptable to the insurer…when, and as often as, the Company may reasonably require.” 11 NYCRR §65 – 1.1(d)[Sec. I. Conditions, Proof of Claim (b)]. Another condition to coverage under this section is that an eligible person shall, as may reasonably be required, submit to examinations under oath (“EUO”) by any person named by the insurer. Id. ^[FN1]

In Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 7 Misc 3d 18, 20 (App. Term, 2d Dept. 2004) aff’d 35 AD3d 720 (2d Dept. 2006), the Appellate Term found that [*3]an insurer had the right to conduct an IME prior to its “receipt of the statutory claim form or its statutory equivalent which “under the regulations, trigger the verification process.” The right to an IME, at this juncture was not afforded by the verification procedures, as the “detailed and narrowly construed verification protocols are not amenable to application at a stage prior to submission of a claim form.” Id at 21. The court then noted the “Conditions” section in the Mandatory PIP predicates the right to commence an action against the insurer upon an eligible injured person’s (“assignor”) compliance with the terms of coverage. Fogel, supra, 7 Misc 3d at 25 (Golia, J., conc. in part and diss. in part).”Where an eligible injured person fails to submit to a reasonably requested IME, the insurance policy, by its terms…affords no coverage for the otherwise eligible injured person.” 7 Misc 3d at 25 citing to Orr. v Continental Cas. Co., 205 AD2d 599 (2d Dept. 1994) (Under New York law, the insurer has the right to declare the contract at the end where the insured breaches a term upon which the contract was conditioned). Thus, an insured’s refusal to comply with a reasonably requested IME which was not opposed or adequately refuted, constitutes a complete defense to the claim warranting dismissal. 7 Misc 3d at 25.

In affirming the Appellate Term, the Second Department found that there was no distinction between the contractual remedies available for failure to appear for pre claim as opposed to post claim IMEs and that the ” appearance of the insured for IMEs at any time is a condition precedent to the insurer’s liability on the policy.” Fogel v. Progressive Cas. Ins. Co., 35 AD2d 720, 721 (2d Dept. 2006).^[FN2]

The First Department subsequently found failure to comply with a request for an IME, whether pre-or post claim was a violation of a condition of coverage which would preclude an action against an insurer for payment of health services provided. Inwood Hill Medical, P.C. v. General Assurance Co., 10 Misc 3d 18. 20 (App. Term, First Dept. 2005).In Inwood Hill Medical, P.C. v. General Assurance Co., 10 Misc 3d 18, 20 (1st Dept. 2005), the First Department ruled that “inasmuch as attendance at a medical examination is a condition of coverage under Section 65-1.1, it follows that an eligible injured person’s failure to comply with a request for an IME precludes an action against an insurer for payment of health services provided.”

Preclusion Rule

Insurance Law § 5106(a) sets forth that no fault benefits “are overdue if not paid within 30 days after the claimant provides proof of the fact and the amount of loss sustained.” Similarly 11 NYCRR §65-3.8 c require that “(w)ithin 30 calendar days after proof of claim is received, the insurer shall either pay or deny the claim in whole or part.” See Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274, 278-79(1997) (“30 day rule”). [*4]

A timely disclaimer is not required, however, when the policy on which the claim rests does not, by its terms, cover the incident giving rise to liability. Handlesman v. Sea Insurance Co., 85 NY2d 96 (1994). “Under those circumstances, the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. ” Mtr. Of Worcester Ins. Co. V. Bettenhauser, 95 NY2d 185, 189 ( 2000). However, a timely disclaimer is necessary when the denial of coverage is based upon a policy exclusion or a breach of a policy condition without which the claim would be covered. Id. See, Zappone v, Home Ins. Co., 55 NY2d 131 (1982),

Although there are legions of cases discussing the preclusion rule, “drawing the line” between a lack of coverage in the first instance ( requiring no disclaimer) and a lack of coverage based on a policy exclusion (requiring a timely denial) has proven to be “problematic”. Mtr. Of Worcester, supra , 95 NY2d at 189.

In Fair Price Medical v. Travelers Ins., 10 NY3d 556 (2008), the Court of Appeals further clarified when the non-preclusion rule applied. Citing to its prior decision in Central General Hospital v. Chubb Group, 90 NY2d 195 (1997), the Court cautioned that there was only one “narrow” exception to the preclusion rule for those situations where an insurance company raises the defense of lack of coverage.Fair Price, 10 NY3d at at 563. A determination as to whether a specific defense is precluded under the 30 day rule or falls within the exception entails a judgment as to whether the defense is more like a “normal exception ” from coverage such as a policy exclusion or a lack of coverage in the first instance, i.e. a defense “implicating a coverage matter.” 10 NY3d at 565.

The oft cited distinction between policy exclusions and lack of coverage was further elaborated upon in State Farm Mut. Auto Ins. V. Mallela, 4 NY3d 313 (2005). In finding that medical corporations that are fraudulently incorporated are not entitled to reimbursement the Court of Appeals pointed to 11 NYCRR 65-3.16(a)(12), which excludes from the meaning of “basic economic loss” payments made to unlicensed or fraudulently licensed providers “thus rendering them ineligible for reimbursement” 4 NY3d at 320. These revised regulations (which include the PIP) do not ” create not a new category of exclusion, but rather merely a condition precedent with which all claimants must comply in order to receive benefits under statute”. 4 NY3d at 321 citing Mtr. Of Medical Society of NY v. Serio, 100 NY2d 854.866 (2003).

In Travelers indemnity Co. v. Milan Medical, 2009 NY Slip Op. 31604U, 2009 NY Misc LEXIS 3867 (Sup. Ct. NY Co. 2009), the court found that the Mallela defense was a “coverage defense: and as such was not subject to the preclusion rule. Id at 5. See Multiquest PLLC v. Allstate Ins. Co., 17 Misc 3d 37 (App. Term, 2d Dept. 2007); Crossbay Acupuncture v. State Farm Mut. Auto. Ins. Co., 15 Misc 3d 110 (App. Term, 2d dept. 2007); Eastern Medical P.C. v. Allstate Ins. Co., 19 Misc 3d 775, 790 ( the challenged regulation in Mallela did not create a new category of exclusion but rather was “a condition precedent with which all claimants must comply in order to receive benefits.” ). The court rejected the defendant’s contention that the [*5]defense of fraudulent incorporation did not fit within the “tight restrictions of the exception to preclusion outlined in General Hospital v. Chubb, 90 NY2d 199. Chubb, like Mallela, “spoke to a threshold coverage matter” Id.

In the very recent decision of Unitrin Advantage Ins. Co. V. Bayshore Physical Therapy, 2011 NY Slip Op 1948 (App. Div., 1st Dept. 3/17/11), the First Department explicitly found that “the failure to appear for IMEs requested by an insurer…is a breach of a condition precedent to coverage under the No-Fault policy, and therefore fits squarely within the exception to the preclusion doctrine. Id at 2 citing Central General Hosp. V. Chubb, 90 NY2d 195 (1997)(defense that injured person’s condition and hospitalization were unrelated to the accident was non precludable ). The First Department justified its finding that an IME no show was a non -precludable defense on the ground that a “breach of a condition precedent to coverage voids the policy ab initio.” Thus, the failure to appear for an IME cancels the contract as if there was no coverage in the first instance and the insurer has the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely. Id.

In light of the afore-mentioned precedent, it is clear that the claimant’s failure to comply with a condition precedent to coverage voids the contract ab initio and defendant is not obligated to pay the claim, regardless of whether it issued denials beyond the 30 day period. Furthermore, since the contract has been vitiated, defendant may deny all the claims retroactively to the date of loss. In light of the above, the case is dismissed with prejudice.

This constitutes the Amended Decision and Order of the Court which replaces the Decision and Order of the Court dated March 30, 2011, which is hereby recalled and vacated.

DATED: April 7, 2011__________________________

KATHERINE A. LEVINE

JUDGE, CIVIL COURT

Footnotes

Footnote 1:Since the right to conduct EUOs and IMEs both appear in the PIP, and thus constitute conditions precedent to coverage, the case law treats both of these examinations in the same fashion.

Footnote 2: The majority found that the language mandating compliance with the terms of the coverage as a condition precedent to bringing a lawsuit applied solely to “an insureds cooperation with the post claim verification protocols with regard to IMEs.” 7 Misc 3d at 22.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Fred J. Hirsh, J.), dated March 22, 2010. The order denied plaintiff’s motion to strike defendant’s demand for a trial de novo.

ORDERED that the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the parties participated in a mandatory arbitration proceeding (see Rules of the Chief Judge [22 NYCRR] part 28). Following the arbitration hearing, the arbitrator found in favor of plaintiff. Thereafter, defendant timely served and filed a demand for a trial de novo (see Rules of the Chief Judge [22 NYCRR] § 28.12). Plaintiff moved to strike the demand, asserting that, while defense counsel had appeared at the arbitration hearing, that appearance was tantamount to a default since defendant had attempted to establish its defense of lack of medical necessity through non-evidentiary submissions of counsel, and had not produced its doctor to testify. As a result, plaintiff contended, defendant was not entitled to demand a trial de novo (see Rules of the Chief Judge [22 NYCRR] § 28.12 [a]). The District Court denied plaintiff’s motion to strike defendant’s demand for a trial de novo, and this appeal by plaintiff ensued.

The order is affirmed (see B.Y., M.D., P.C. v Geico Indem. Co., 30 Misc 3d 132[A], 2011 NY Slip Op 50036[U] [App Term, 9th & 10th Jud Dists 2011]).

Tanenbaum, J.P., Molia and LaCava, JJ., concur. [*2]
Decision Date: April 06, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Fred J. Hirsh, J.), dated November 18, 2009. The order granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment dismissing the complaint.

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

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant cross-moved for summary judgment dismissing the complaint on the ground that it had timely denied plaintiff’s claims based on the assignor’s failure to appear at two scheduled examinations under oath (EUOs). The District Court granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment, holding that although defendant had established the timely mailing of the EUO scheduling letters and the nonappearance of the assignor at the EUOs, defendant had failed to show that the EUO was “based upon the application of objective standards so that there is a specific objective justification supporting the use of such examination.” This appeal by defendant ensued.

In support of its cross motion for summary judgment dismissing the complaint, defendant submitted affidavits of its no-fault examiner and its mailroom supervisor. The affidavits sufficiently established that the EUO notices had been sent to plaintiff’s assignor in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond v [*2]Government Empls. Ins. Co., 50 AD3d 1123, 1124 [2008]; Richard Morgan Do, P.C. v State Farm Mut. Auto. Ins. Co., 22 Misc 3d 134[A], 2009 NY Slip Op 50242[U] [App Term, 9th & 10th Jud Dists 2009]; Chi Acupuncture, P.C. v Kemper Auto & Home Ins. Co., 14 Misc 3d 141[A], 2007 NY Slip Op 50352[U] [App Term, 9th & 10th Jud Dists 2007]). Defendant also submitted an affidavit of the investigator who was to perform the EUOs, which established that the assignor had failed to appear therefor (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]). In addition, defendant sufficiently established that the denial of claim forms had been timely mailed in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond, 50 AD3d at 1124).

The papers substantiate the basis for the EUO request. Moreover, plaintiff does not claim to have responded in any way to defendant’s request for an EUO. Therefore, plaintiff will not be heard to complain that there was no reasonable basis for the EUO request (cf. Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Mary Immaculate Hosp. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 130[A], 2008 NY Slip Op 52046[U] [App Term, 9th & 10th Jud Dists 2008]).

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

Tanenbaum, J.P., Molia and LaCava, JJ., concur.
Decision Date: April 06, 2011