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 (Timothy Dufficy, J.), entered December 17, 2007. 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 denied both motions, finding, pursuant to CPLR 3212 (g), that plaintiff had proved the submission of its claim forms and that defendant had demonstrated that it had timely denied the claims based upon a peer review report, and declaring that medical necessity remained the sole issue for trial.

Defendant appeals from so much of the order as denied its cross motion for summary judgment, arguing that it established prima facie that the supplies billed for were not medically necessary and that plaintiff failed to rebut that showing. Plaintiff concedes the timeliness of defendant’s denials and that defendant’s affirmed peer review report raises a triable issue of fact as to medical necessity, but argues that the matter should not be resolved on a motion for summary judgment because a triable issue as to medical necessity exists.

Contrary to plaintiff’s contentions, once defendant submitted an affirmed peer review report that set forth a factual basis and medical rationale for its peer reviewer’s opinion that the medical equipment provided was not medically necessary, defendant established, prima facie, a lack of medical necessity for the equipment in question, shifting the burden to plaintiff to rebut defendant’s showing (see Pan Chiropractic, P.C. v Mercury Ins. Co., 24 Misc 3d 136[A], 2009 [*2]NY Slip Op 51495[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). Since plaintiff failed to rebut defendant’s evidence, defendant was entitled to summary judgment, and its cross motion should have been granted (see e.g. A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

Golia, J.P., Weston and Rios, JJ., concur.
Decision Date: April 13, 2010

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 February 3, 2009, deemed from a judgment of the same court entered March 4, 2009 (see CPLR 5501 [c]). The judgment, entered pursuant to the February 3, 2009 order granting plaintiff’s motion for summary judgment and denying defendant’s cross motion for summary judgment, awarded plaintiff the principal sum of $1,099.94.

ORDERED that the judgment is reversed without costs, the order entered February 3, 2009 is vacated, 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, and defendant cross-moved for summary judgment dismissing the complaint on the ground that plaintiff’s assignor had failed to appear for scheduled independent medical examinations (IMEs). The Civil Court granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment. This appeal by defendant ensued. A judgment was subsequently entered, from which the appeal is deemed to be 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 on the propriety of the determination of the Civil Court with respect thereto.

In opposition to plaintiff’s motion for summary judgment and in support of its cross motion for summary judgment, defendant submitted an affidavit by its litigation specialist which established that the letters scheduling the IMEs had been timely sent pursuant to defendant’s standard office practice or procedure designed to ensure that such items were properly addressed and mailed (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]). Thereafter, defendant submitted a supplemental affirmation, pursuant to the instructions of the Civil Court, from its examining physician. The physician stated therein that plaintiff’s assignor had failed to appear for scheduled IMEs. As a result, defendant established its prima facie case. Accordingly, the judgment is reversed, the order entered February 3, 2009 is vacated, plaintiff’s motion for summary judgment is denied and defendant’s cross motion for summary judgment dismissing the [*2]complaint is granted.

Golia, J.P., Weston and Rios, JJ., concur.
Decision Date: April 09, 2010

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 27, 2008. The order, insofar as appealed from as limited by the brief, denied so much of defendant’s cross motion for summary judgment as sought dismissal of the complaint.

ORDERED that the order, insofar as appealed from, is reversed without costs and the matter is remitted to the Civil Court for a hearing in accordance herewith and a new determination thereafter of defendant’s cross motion.

In this action by a provider seeking assigned first-party no-fault benefits, plaintiff moved for summary judgment and defendant cross-moved for summary judgment
dismissing the complaint on the ground that the equipment provided was not medically necessary. The Civil Court denied both plaintiff’s motion and defendant’s cross motion, finding that the sole issue for trial was the medical necessity of the supplies provided. Defendant appeals, arguing that its cross motion for summary judgment dismissing the complaint should have been granted because the doctor’s affirmation submitted by plaintiff in opposition to defendant’s cross motion was not in admissible form and was otherwise insufficient to rebut defendant’s peer review report.

We find that plaintiff’s doctor’s “affirmation” submitted in opposition to defendant’s cross motion, if admissible, is sufficient to demonstrate a triable issue of fact as to medical necessity. However, defendant argued, before the Civil Court and on appeal, that plaintiff’s doctor’s “affirmation” is not admissible because it impermissibly bears a stamped facsimile of the doctor’s signature. We recognize that such an allegation, when properly asserted, ordinarily raises an issue of fact that cannot be resolved solely by an examination of the papers submitted on a motion for summary judgment (see Seoulbank, NY Agency v D & J Export & Import Corp., 270 AD2d 193 [2000]; Dyckman v Barrett, 187 AD2d 553 [1992]; Mani Med., P.C. v Eveready Ins. Co., 25 Misc 3d 132[A], 2008 NY Slip Op 52697[U] [App Term, 2d & 11th Jud Dists 2008]; see also James v Albank, 307 AD2d 1024 [2003]). While the motion for summary judgment could simply be denied due to the existence of such an issue of fact, we are of the [*2]opinion, under the circumstances presented, that the better practice would be for the Civil Court to hold a hearing pursuant to CPLR 2218 on the limited issue of the validity of the signature upon plaintiff’s doctor’s “affirmation,” which will determine whether the “affirmation” was in admissible form (see also Uniform Rules for Civ Ct [22 NYCRR] § 208.11 [b] [4]) and, thus, whether defendant’s prima facie showing upon its cross motion was rebutted.

Accordingly, the order, insofar as appealed from, is reversed and the matter is remitted to the Civil Court for a framed issue hearing (see CPLR 2218) to determine the admissibility of plaintiff’s doctor’s affirmation and for a new determination thereafter of defendant’s cross motion.

Rios, J.P., Pesce and Steinhardt, JJ., concur.
Decision Date: April 09, 2010

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, Queens County (Diane A. Lebedeff, J.), entered July 30, 2008. The judgment, entered pursuant to an order of the same court dated April 30, 2008 granting plaintiff’s motion for summary judgment and denying defendant’s cross motion for summary judgment dismissing the complaint, awarded plaintiff the sum of $3,553.29.

ORDERED that the judgment is reversed without costs, the order dated April 30, 2008 is vacated, 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, the Civil Court, by order dated April 30, 2008, granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment dismissing the complaint. Defendant appeals from the judgment which was entered, pursuant to the Civil Court’s order, on July 30, 2008, awarding plaintiff the sum of $3,553.29.

Contrary to defendant’s contention, the affidavit submitted by plaintiff’s billing manager 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]). Defendant’s assertion that plaintiff failed to prove submission of its claims to defendant lacks merit. Consequently, plaintiff established its prima facie entitlement to summary judgment. The burden then shifted to defendant to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

It is undisputed that defendant timely mailed its initial requests for verification and that plaintiff failed to provide the information requested. Plaintiff also did not provide the information requested in defendant’s follow-up verification requests, which were mailed on the 30th day after the initial verification requests, but prior to the expiration of the full 30-day period within which plaintiff was supposed to respond to defendant’s initial requests for verification. As the foregoing facts are nearly identical to those in Infinity Health Prods., Ltd. v Eveready Ins. Co. [*2](67 AD3d 862 [2009]), “the 30-day period within which the defendant was required to pay or deny the claim did not commence to run . . . [and] plaintiff’s action is premature” (id. at 865).

Accordingly, the judgment is reversed, the order dated April 30, 2008 is vacated, plaintiff’s motion for summary judgment is denied and defendant’s cross motion for summary judgment dismissing the complaint is granted.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: April 09, 2010

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 (Rudolph E. Greco, Jr., J.), entered October 22, 2008. The order, insofar as appealed from, denied defendant’s motion for summary judgment dismissing the complaint based upon plaintiff’s failure to comply with a conditional order of preclusion.

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

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff failed to serve complete responses to defendant’s discovery demands within 45 days as required by a conditional order of preclusion which, among other things, provided that if plaintiff failed to do so, plaintiff would be precluded from offering any evidence in any subsequent motion or at trial. As a result, the conditional order of preclusion became absolute upon plaintiff’s failure to comply (see Panagiotou v Samaritan Vil., Inc., 66 AD3d 979 [2009]; Calder v Cofta, 49 AD3d 484 [2008]; Callaghan v Curtis, 48 AD3d 501 [2008]; Michaud v City of New York, 242 AD2d 369 [1997]; Saavedra v Aiken, 25 Misc 3d 133[A], 2009 NY Slip Op 52207[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). In order to avoid the adverse impact of the conditional order of preclusion, plaintiff was required to demonstrate an excusable default and a meritorious cause of action (see Panagiotou, 66 AD3d 979; Calder, 49 AD3d 484; Callaghan, 48 AD3d 501; Michaud at 370). Since plaintiff failed to do so, plaintiff is precluded from establishing a prima facie case. Accordingly, the Civil Court should have granted defendant’s motion for summary judgment dismissing the complaint (see Panagiotou, 66 AD3d 979; Calder, 49 AD3d 484; Callaghan, 48 AD3d 501; Michaud, 242 AD2d 369; Saavedra, 25 Misc 3d 133[A], 2009 NY Slip Op 52207[U]).

Weston, J.P., Golia and Rios, JJ., concur.
Decision Date: April 09, 2010

[*1]

Supreme Court, Appellate Term, Second Department, April 9, 2010

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn (Massimiliano Valerio of counsel), for appellant. McDonnell & Adels, P.L.L.C., Garden City (Martha S. Henley of counsel), for respondent.

{**27 Misc 3d at 90} OPINION OF THE COURT

Memorandum.

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

In this action by a provider to recover assigned first-party no-fault benefits, by order entered October 16, 2008, insofar as appealed from, the Civil Court denied plaintiff’s motion for summary judgment and granted defendant’s cross motion “to the extent that plaintiff shall . . . respon[d] to defendant’s discovery requests on the subject of corporate status and/or other issues not precluded by defendant’s failure to timely deny the subject claims . . . [and] plaintiff must produce witnesses who have not appeared for depositions in response to defendant’s demands.” The instant appeal by plaintiff ensued.

In opposition to plaintiff’s motion and in support of its cross motion to, among other things, compel discovery, defendant established that while facts may exist that are essential to justify the denial of plaintiff’s summary judgment motion, defendant was unable to set forth sufficient facts to establish one of its defenses, to wit, plaintiff’s alleged fraudulent incorporation (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]), since such information was within plaintiff’s possession and plaintiff had not complied with defendant’s discovery demands therefor (see CPLR 3212 [f]). As plaintiff failed to{**27 Misc 3d at 91} challenge the propriety of defendant’s discovery demands, the Civil Court should have granted defendant’s cross motion to compel plaintiff to provide the information sought in defendant’s interrogatories and notice for discovery and inspection with the exception of requests which were palpably improper or which sought information or documents which were privileged (see Fausto v City of New York, 17 AD3d 520 [2005]; Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [App Term, 2d & [*2]11th Jud Dists 2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]). Defendant is also entitled to examinations before trial (see CPLR 3101 [a]; Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co., 24 Misc 3d 139[A], 2009 NY Slip Op 51591[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [2008]).

Furthermore, there is no merit to plaintiff’s contention that the Civil Court lacks subject matter jurisdiction to address a defense predicated upon Mallela because it would amount to a declaratory judgment over which only the Supreme Court has jurisdiction pursuant to CPLR 3001. Defendant is clearly not seeking a declaratory judgment. Rather, defendant seeks a determination as to whether plaintiff established its prima facie entitlement to summary judgment. In any event, the Civil Court would have subject matter jurisdiction in a declaratory judgment involving an obligation of an insurer in which the underlying amount sought to be recovered did not exceed $25,000 (see Rivera v Buck, 25 Misc 3d 27 [App Term, 2d, 11th & 13th Jud Dists 2009]).

Plaintiff’s remaining contentions are either unpreserved for appellate review or lack merit. Accordingly, the order, insofar as appealed from, is affirmed.

Golia, J.P., Weston and Rios, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, April 9, 2010

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn (Darya Klein of counsel), for appellant.

{**27 Misc 3d at 68} OPINION OF THE COURT

Memorandum.

Ordered that the order, insofar as appealed from, is reversed without costs, the branch of defendant’s motion which sought summary judgment on the ground that the action was barred by collateral estoppel is denied, and the matter is remitted to the Civil Court for a determination of the remaining branch of defendant’s motion.

In this action by a provider to recover assigned first-party no-fault benefits for medical equipment provided to its assignors following automobile collisions on April 29, 1999 (assignors Elkin and Andreeva) and on June 8, 2000 (assignors Anderson and Leveile), defendant moved for summary judgment. Plaintiff opposed the motion and cross-moved for summary judgment, alleging, inter alia, the absence of proof of a defense that survived the preclusive effect of defendant’s concededly untimely denials. The Civil Court denied plaintiff’s cross motion for summary judgment, a determination that plaintiff does not challenge on this appeal, and granted defendant’s motion on the sole ground that default judgments issued by the Supreme Court, Nassau County, rendered plaintiff’s action “without merit.” Plaintiff appeals and we reverse.

Nearly two years after plaintiff had submitted its claims, and before plaintiff commenced this action, defendant obtained declaratory judgments, on default, in the Nassau County Supreme Court, which absolved defendant of its contractual duty to indemnify “any . . . person” seeking a monetary recovery for property damage or personal injury arising from the incidents of April 29, 1999 and June 8, 2000, on proof that the incidents were staged to defraud defendant. In the instant motion for summary judgment, defendant argued that the default judgments collaterally estopped plaintiff from recovering no-fault benefits on the basis of any claim arising from{**27 Misc 3d at 69} those incidents. In the alternative, defendant sought summary judgment on the ground that its proof established, prima facie, a lack of coverage, in that the incidents involved a scheme to defraud, a defense that survived the preclusive effect of its untimely denials. [*2]

Plaintiff herein was neither named nor served in the declaratory judgment actions nor, at the time, was it in privity with someone who was, and plaintiff otherwise had no full and fair opportunity to appear and defend its interests in those proceedings. Accordingly, the judgments do not collaterally estop plaintiff from recovering in this action (Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481 [1979]; Mid Atl. Med., P.C. v Victoria Select Ins. Co., 20 Misc 3d 143[A], 2008 NY Slip Op 51758[U] [App Term, 2d & 11th Jud Dists 2008]; see also Green v Santa Fe Indus., 70 NY2d 244, 253 [1987]). Moreover, as the declaratory judgments were obtained on default, there was no actual litigation of the issues and, therefore, no identity of issues (Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457 [1985]; Zimmerman v Tower Ins. Co. of N.Y., 13 AD3d 137, 139-140 [2004]; Chambers v City of New York, 309 AD2d 81, 85-86 [2003]; Holt v Holt, 262 AD2d 530, 530 [1999]).

As the Civil Court did not address the alternative ground asserted by defendant in its motion for summary judgment, the matter must be remitted to the Civil Court for a determination of that ground (e.g. McElroy v Sivasubramaniam, 305 AD2d 944 [2003]).

Golia J.P. (dissenting and voting to affirm the order, insofar as appealed from, in the following memorandum). My dissent turns on the unique nature and reality of the assignment of claims for first-party benefits under the Insurance Law and the no-fault regulations of this State.

Prior to addressing this issue, it is important to note the specific circumstances herein. In the case at bar, the indicia of fraud are so significant and unabashed that it is difficult to relegate them to the level of a “founded belief.” Even the most cursory examination of the facts of this case should elicit the reaction, “Are you kidding?”

Further, it should be noted that the two underlying collisions before this court were previously addressed by the Supreme Court in the Tenth Judicial District. Two different Justices independently found that each of these collisions was actually part of a scheme to defraud the insurance carrier. Both Supreme{**27 Misc 3d at 70} Court Justices determined that the underlying policies were null and void as regards the collisions, and declared that all the individuals allegedly involved therein were not eligible injured persons.

Specifically, the April 29, 1999 collision involved a car that was owned by Mr. Rgevsky, driven by Mr. Vistocci, and had the assignors Mr. Elkin and Ms. Andreeva as passengers who were allegedly injured in that incident. That same auto, still being driven by Mr. Vistocci but bearing another passenger, was then involved in a collision approximately 10 hours later.

A mere three days thereafter, on May 2, 1999, that same auto was involved in a third collision. Amazingly, Ms. Andreeva, who was an allegedly injured passenger in Mr. Rgevsky’s car on April 29, 1999, is now an allegedly injured passenger in the car that Mr. Rgevsky’s car struck.

In addition, Mr. Rgevsky owned other vehicles which were involved in numerous other collisions. The driver, Mr. Vistocci, also owned several vehicles which were involved in several collisions. Coincidentally, Mr. Vistocci, although the owner of these vehicles, was not the driver involved in these numerous collisions. Additionally, I note that these vehicles were in collisions within 10 to 15 days of first being insured and the policies were then cancelled shortly thereafter [*3]due to nonpayment of premiums.

The June 8, 2000 collision involving assignors Anderson and Leveile is no less suspect. In fact, the subject collision was the second accident on that night involving the same car. Similar to the April 29, 1999 collisions, these collisions involved a car that was owned by one individual and driven by another and contained different passengers for each of the two collisions that occurred on the same date. In this instance, the two collisions were less than two hours apart. In addition, the driver involved in these two collisions was also involved in three more collisions within one month of the June 8, 2000 collisions. The facts establish that this driver was involved in at least five collisions in less than 12 days.

Furthermore, Mr. Anderson, one of the allegedly injured parties in one of the June 8, 2000 collisions, was also a passenger in a July 17, 2000 collision and also obtained insurance coverage in his own name on August 22, 2000. Six days later, he was then involved in his own collision on August 28, 2000 and again on September 6, 2000.{**27 Misc 3d at 71}

Several of the individuals involved herein simply failed to appear at defense-requested examinations under oath (EUOs). Mr. Anderson, however, appeared at an EUO and stated that he went for acupuncture once and refused to go again, which clearly contradicts the claim submitted for 43 separate acupuncture treatments.

It is important to note that, practically, the methodology of obtaining assignments under no-fault is directly opposite, indeed the mirror image, of obtaining assignments in many other circumstances where rights and obligations are assigned.

In those other circumstances, generally the assignor has either obtained or has otherwise come into possession of an obligation to receive something of value. The assignor thereafter assigns that obligation to the assignee, who then stands in the shoes of the assignor and possesses the right to demand payment of the obligation or receipt of the item of value under the terms of the original agreement. The assignee is now possessed with the right to any legal remedy that the assignor had possessed.

However, in nearly every instance involving the assignment of a no-fault claim, the claim only comes into existence after the assignment of first-party benefits is executed. In general terms, an individual (eligible injured person) who has been in an automobile accident goes to a medical provider for necessary medical treatment. Prior to obtaining that treatment, the medical provider obtains an executed “assignment of benefits” form that assures the medical provider that payment will be forthcoming from the insurance carrier. It is at that juncture that treatment is provided to the individual, and a claim is then generated and sent to the insurance carrier for payment.

There is another difference. Under the No-Fault Law, an insurance carrier is obligated to pay for any and all necessary medical treatments covered under the policy if that claim is properly completed and properly filed within 45 days of the treatment that was rendered. It is highly unusual outside the world of no-fault for an assignee to participate in “creating” the claim that is being assigned to them. Furthermore, under no-fault, the claim is, of necessity, always submitted after treatment is rendered and in almost every instance is submitted by the medical provider, which has first obtained an assignment from its patient. Indeed, this practice is so prevalent that the courts have held that an assignment need only contain a stamp which states “signature on file.” Additionally, another distinction,{**27 Misc 3d at 72} no less important, is that an assignor who [*4]fails to comply with his obligations under the no-fault regulations remains financially responsible for the cost of treatment in the event the claim is then denied by the insurance carrier.

My colleagues find support in the well-reasoned decision by the Court of Appeals, to wit, Gramatan Home Invs. Corp. v Lopez (46 NY2d 481 [1979]). In that case, the defendant homeowners purchased vinyl siding for their home and financed the cost by entering into a retail installment contract backed by a mortgage on the home. The note and bond were assigned to the plaintiff shortly after they were executed. Approximately two years later, the New York State Attorney General commenced a consumer-fraud action against the plaintiff’s assignor and obtained a judgment which declared the contract between the assignor and the homeowner void. The assignee then sued for payment, and the defendant homeowner moved for dismissal under the theory of collateral estoppel.

The Court of Appeals analyzed the doctrine of collateral estoppel and its purpose, as well as the broader doctrine of res judicata. The Court’s analysis first addressed the issue of privity and found that although there is no requirement that collateral estoppel be confined to those named in the previous action, there must nevertheless be privity between those two parties. The Court then found that there must be “privity” in an assignor-assignee relationship inasmuch as such relationship “denote[s] a mutually successive relationship of the same rights to the same property” (id. at 486).

The Gramatan Court acknowledged that an assignor-assignee relationship is effectively a mutually successive relationship but found that the

“crucial inquiry focuses upon the juncture at which the relationship between the party to the first action and the person claimed to be his or her privy is established. In the assignor-assignee relationship, privity must have arisen after the event out of which the estoppel arises. Hence, an assignee is deemed to be in privity with the assignor where the action against the assignor is commenced before there has been an assignment” (id. at 486-487 [emphasis added]).

The reasoning for this determination is set forth in the very next sentence: “In that situation, at the time the assignee succeeded to the rights of the assignor . . . the assignee is charged{**27 Misc 3d at 73} with notice that his rights to the assignment are subject to [a] competing claim” (id. at 487).

I submit that this set of circumstances could not be possible in the realities of a no-fault claim. The simple fact is that a filed claim could not exist prior to the assignment of that claim. It would, therefore, be impossible for an action to be commenced prior to the assignment of a claim that had not yet come into existence.

Clearly, an important distinction in the realm of no-fault is that there is more than the simple privity borne of succession between the assignor (eligible injured person) and the assignee (medical provider). There is a virtual identity of interests by the very existence of the claim. In fact, there is an inextricable connection between the assignor eligible injured person and the assignee medical provider that is acknowledged by Insurance Department Regulations (11 NYCRR) § 65-3.11 (d), which provides for direct payments to the medical provider and states that”[i]f an assignment has been furnished to an insurer, the assignor . . . shall not unilaterally revoke the assignment after the services for which the assignment was originally executed were [*5]rendered.”

Under subdivision (b) (1) of the same section, the regulation allows for direct payment to the medical provider by means of an authorization to pay benefits, which provides for the payment of benefits but does not transfer all rights. Under those circumstances the assignor may still remain ultimately responsible for payment of the bill.

It is for these reasons that both the eligible injured person and the medical provider share the same identity when we view a no-fault claim for medical services.

The argument set forth in Gramatan, which is certainly applicable in the general circumstances of assignments, does not apply to no-fault assignments where the assignment comes simultaneously with the service provided and well before the “claim” is submitted. This interpretation was borne out in Long Is. Radiology v Allstate Ins. Co. (36 AD3d 763 [2007]), which essentially denied payment of assigned no-fault benefits to the assignee-plaintiff (medical provider), for services performed based entirely on the actions of the assignor (eligible injured person), which did not occur until after the assignment was made. In simple terms, the eligible injured person was involved in an accident and went to a medical provider, who determined that the insured needed to have an MRI study done and wrote a{**27 Misc 3d at 74} prescription for it. The eligible injured person went to a radiology group with the prescription, assigned his no-fault benefits and had the MRI study performed. The radiology group filed a claim, and it was denied because medical necessity was not established. In such case, the defendant’s objection to such treatment was not and could not have been raised until after the MRI study was done and after the assignment was completed. Nevertheless, the Appellate Division had no difficulty in dismissing the assignee’s claim.

To avoid any possible confusion that might arise by a comparison between my dissent in this matter and concurrence in the holding of Mid Atl. Med., P.C. v Victoria Select Ins. Co. (20 Misc 3d 143[A], 2008 NY Slip Op 51758[U] [App Term, 2d & 11th Jud Dists 2008]), I will address the facts in that case.

In Mid Atlantic, the actual named insured had made material misrepresentations on his application for the subject insurance policy, and, subsequently, a court in Virginia issued a declaratory judgment holding the policy to be void ab initio. Like the case at bar, the declaratory judgment action in Virginia was not commenced until after the eligible injured persons had assigned their rights to the medical provider claimants.

However, unlike the case at bar, those eligible injured persons were in no conceivable way involved in the fraudulent acts of the named insured when he made his material misrepresentations on his application for insurance. Therefore, unlike the case at bar, the assignors were completely unaware of any improper conduct or failure to comply with the requirements of no-fault such as would create grounds for a denial of payment.

Those circumstances are completely different from the matter at bar in which all the eligible injured persons were found to have been involved in a scheme to defraud the insurance carrier and the “accident” was found to have simply never occurred.

My colleagues who are in the majority in the present matter were also in the majority in A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co. (12 Misc 3d 8 [App Term, 2d [*6]Dept 2006]) and held “that only innocent third parties who are injured are protected . . . and not a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured’s no-fault benefits” (id. at 11).

In the case before us now, as opposed to the case of Mid Atlantic, the individuals who allegedly obtained medical treatment and assigned their rights knew at the time that they did{**27 Misc 3d at 75} not present themselves with clean hands in this case, that there was no legitimate accident, and that there were no necessary medical treatments required for an accident that did not occur.

That now resolves a further issue also relied on by the majority predicated on the clear holding of the Court of Appeals in Kaufman v Eli Lilly & Co. (65 NY2d 449, 456-457 [1985]):

“[It is well settled that] collateral estoppel . . . [applies only] to matters actually litigated and determined in a prior action. If the issue has not been litigated, there is no identity of issues between the present action and the prior determination. An issue is not actually litigated if . . . there has been a default” (internal quotation marks and citations omitted).

It is my belief that such holding is inapplicable in this case, largely for the reasons set forth above, that is, that the medical provider and the eligible injured person are so inextricably connected to each other and to the creation of the claim at issue, that the actions of one must be referable to the legal position of the other.

The Court of Appeals understood that there are a myriad of circumstances which cannot be anticipated by the courts. Therefore, any analysis of the application of collateral estoppel requires

“consideration of the realities of litigation . . . [and] competing policy considerations, including fairness to the parties, conservation of the resources of the court and the litigants, and the societal interests in consistent and accurate results. No rigid rules are possible, because even these factors may vary in relative importance depending on the nature of the proceedings” (Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 153 [1988] [internal quotation marks and citations omitted]).

My findings are that the circumstances in this case, as set forth in some detail above, require a finding that fairness, consistency and societal interests are best served by dismissing this action.

In addition, as is demonstrated in the recent case of Gaston v American Tr. Ins. Co. (11 NY3d 866 [2008]), the Court of Appeals does not adhere to a hard and fast rule that “[a]n issue is not actually litigated if . . . there has been a default” (Kaufman, 65 NY2d at 456-457). In fact, the Court of Appeals’ holding in Gaston stated that{**27 Misc 3d at 76}

“[t]he plaintiffs proffered two default judgments that resolved the coverage issue against the insurer while the insurer demonstrated that the same . . . question had been adjudicated in a third proceeding resulting in a judgment in the insurer’s favor. In light of these conflicting judgments on the same issue, application of the [*7]doctrine of collateral estoppel was not warranted” (11 NY3d at 867-868 [emphasis added]).

As can be seen, the Court of Appeals considered the default judgments as adjudications that were in conflict with another judgment holding the opposite position on the same issue. Inasmuch as the Court of Appeals considers default judgments as adjudications on the merits for the purpose of denying collateral estoppel, we should not consider the statement in Kaufman as much a bright-line rule as it appears.

Finally, I disagree with the majority’s finding that the order of the Civil Court which is the subject of this appeal granted defendant’s motion solely on the grounds of collateral estoppel and that it did not address the second ground for relief, to wit, “that the underlying incidents . . . were staged events rather than ‘accidents.’ ”

The Civil Court in its order stated that “[d]efendant has shown, upon papers and proof submitted, that plaintiff’s cause of action is without merit” (emphasis added). The court then went on to state, “A declaratory judgment has the effect of a final judgment even when issued on default.”

Clearly, the second statement cited relates to the first branch of defendant’s motion which seeks dismissal of the complaint pursuant to the doctrine of res judicata, of which collateral estoppel is a subset. Indeed, in the first statement from the court’s decision, the judge found that defendant had submitted proof that established that plaintiff’s cause of action was without merit. That was not a finding of issue preclusion due to collateral estoppel, but rather a finding on the merits that plaintiff’s cause of action lacked merit.

It is for all these reasons that I dissent and vote to affirm the order of the Civil Court, insofar as appealed from.

Pesce and Rios, JJ., concur; Golia, J.P., dissents in a separate memorandum.

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 (Kathy J. King, J.), entered August 11, 2008. The order granted plaintiff’s motion for summary judgment and denied defendant’s cross motion to compel discovery.

ORDERED that the order is reversed without costs, defendant’s cross motion to compel plaintiff to provide discovery, including the production of Dr. Ronald Collins for a deposition, is granted, except for such matters as are palpably improper or privileged, and plaintiff’s motion for summary judgment is denied.

In this action by a provider to recover assigned first-party no-fault benefits, defendant sought various forms of discovery. Plaintiff subsequently moved for
summary judgment. Defendant opposed the motion and cross-moved to compel a deposition of Dr. Ronald Collins, plaintiff’s owner, and to require plaintiff to provide answers to defendant’s interrogatories as well as documents responsive to defendant’s notice for discovery and inspection. The Civil Court granted plaintiff’s motion for summary judgment and denied defendant’s cross motion. This appeal by defendant ensued.

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.

In opposition to plaintiff’s motion and in support of its cross motion to compel discovery, defendant established that while facts may exist that are essential to justify the denial of plaintiff’s summary judgment motion, defendant was unable to set forth sufficient facts to establish one of its defenses, to wit, plaintiff’s alleged fraudulent incorporation (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]), since such information was within plaintiff’s possession and plaintiff had not complied with defendant’s discovery demands therefor (see CPLR 3212 [f]). As plaintiff failed to challenge the propriety of defendant’s discovery demands, the Civil Court should have granted defendant’s cross motion to compel plaintiff to provide the information sought in defendant’s interrogatories and notice for discovery and inspection with the exception of requests which were palpably improper or which sought information or documents which were [*2]privileged (see Fausto v City of New York, 17 AD3d 520 [2005]; Midwood Acupuncture, P.C. v State Farm Fire and Cas. Co., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [App Term, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]). Defendant further established its entitlement to depose plaintiff’s owner, Dr. Ronald Collins (see CPLR 3101 [a]; Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co., 24 Misc 3d 139[A], 2009 NY Slip Op 51591[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Midwood Acupuncture, P.C., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U]; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]).

Accordingly, plaintiff’s motion for summary judgment is denied without prejudice to renewal pending the completion of the aforementioned discovery, and defendant’s cross motion for an order compelling plaintiff to provide discovery is granted to the extent set forth above.

Golia, J.P., Weston and Rios, JJ., concur.
Decision Date: April 08, 2010

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 (Rudolph E. Greco, Jr., J.), entered October 22, 2008. The order, insofar as appealed from, denied defendant’s motion for summary judgment dismissing the complaint based upon plaintiff’s failure to comply with a conditional order of preclusion.

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

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff failed to serve complete responses to defendant’s discovery demands within 45 days, as required by a so-ordered stipulation which, among other things, provided that if plaintiff failed to do so, plaintiff would be precluded from offering any evidence in any subsequent motion or at trial. As a result, the so-ordered stipulation was a conditional order of preclusion, which became absolute upon plaintiff’s failure to comply (see Panagiotou v Samaritan Vil., Inc., 66 AD3d 979 [2009]; Calder v Cofta, 49 AD3d 484 [2008]; Callaghan v Curtis, 48 AD3d 501 [2008]; Michaud v City of New York, 242 AD2d 369 [1997]; Saavedra v Aiken, 25 Misc 3d 133[A], 2009 NY Slip Op 52207[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). In order to avoid the adverse impact of the conditional order of preclusion, plaintiff was required to demonstrate an excusable default and a meritorious cause of action (see Panagiotou, 66 AD3d 979; Calder, 49 AD3d 484; Callaghan, 48 AD3d 501; Michaud at 370). Since plaintiff failed to do so, plaintiff is precluded from establishing a prima facie case. Accordingly, the Civil Court should have granted defendant’s motion for summary judgment dismissing the complaint (see Panagiotou, 66 AD3d 979; Calder, 49 AD3d 484; Callaghan, 48 AD3d 501; Michaud, 242 AD2d 369; Saavedra, 25 Misc 3d 133[A], 2009 NY Slip Op 52207[U]).

Weston, J.P., Golia and Rios, JJ., concur.
Decision Date: April 08, 2010

District Court of Nassau County, Second District

35416/07

McDonnell & Adels, P.C., 401 Franklin Ave. Garden City, NY 11530, Attorney for Plaintiff

Mandel & Santora, Esqs. 29 Broadway Lynbrook, NY 11563, Attorney for Defendant

Michael A. Ciaffa, J.

Plaintiffs move for summary judgment upon claims for no-fault benefits, or alternatively, for an order of preclusion. Defendant cross-moves for dismissal of the claim of plaintiff Naik on grounds of an EUO default.

Addressing plaintiffs’ motion first, the Court finds that plaintiffs’ moving papers fail to establish their entitlement to judgment as a matter of law. Their motion includes mis-dated copies of bills which cannot possibly be deemed admissible “business records” (CPLR 4518) in support of the motion. Indeed, as defendant’s opposition papers document, the copies submitted are each dated October 13, 2009 – – more than two years after the action was commenced. Moreover, the actual bills received by defendant in 2007 differ in certain respects from the copies submitted with plaintiffs’ motion. While it appears that the “bills” submitted by plaintiffs’ counsel were generated through a computer operator’s error, it remains plaintiffs’ burden on a summary judgment motion to adduce proof, in proper evidentiary form, establishing plaintiffs’ claims as a matter of law. Under the instant circumstances, they have not done so.

Defendant’s cross-motion presents a more difficult issue. In other contexts, this Court has not hesitated to grant dismissal of no-fault claims where a provider has been guilty of a provable EUO default. See Dynamic Med. Imaging, P.C. v. State Farm Mut. Auto Ins. Co., 2009 NY Slip Op 29478 (Dist Ct. Nassau Co.). However, before such a default may be found, the insurer must establish its “specific objective justification supporting the use of such examination.” Progressive Northeastern Ins Co. v. Arguelles [*2]Med. P.C., 2009 NY Slip Op 32353 (Sup Ct. NY Co.); see also Westchester Med Center v. GEICO, 2009 NY Slip Op 30914 (Sup Ct. Nassau Co.). In this Court’s

opinion, defendant’s cross-motion includes adequate proof from an investigator that objectively justified an examination of Dr. Naik under oath (see aff. of Gina McLaughlin). That proof included allegations suggesting that Dr. Naik “billed for services he did not render” and had submitted various “questionable” billings (id.). Since any refusal to pay on such grounds would necessarily have to be asserted in the insurer’s denial, or be forever precluded, see Fair Price Med. Supply Co. v. Travelers Under. Co., 10 NY3d 556 (2008), the insurer certainly had good reason, at the verification stage, to investigate these issues further.

Nevertheless, it is unclear, from defendant’s moving papers, whether defendant also possessed a “specific objective justification” for its extremely broad requests for extensive documentation relating to the Naik entity’s ownership, licencing, income, expenses, employment practices, and business relationships. In addition to wanting to investigate the particular claims at issue, defendant’s investigator believed that Dr. Naik’s medical practice was a fraudulently incorporated entity. See State Farm Mut. Auto Ins. Co. v. Mallela, 4 NY3d 313 (2005). Defendant’s EUO requests accordingly asked for “the following information”:

(i)documents evidencing ownership of the P.C., at the time of the treatment for which you seek payment, by one or more licensed professionals, including but not limited to a copy of the certificate of incorporation for the P.C., receipts for filing, stock certificates, and the stock ledger for the P.C.

(ii)documents relating to the income and expenses of the P.C., including but not limited to tax returns and financial statements for the past two years, and bank statements and general ledgers of the P.C. for the past twelve months.

(iii)a list of the individuals who provided and/or supervised the health care service for which you seek payment, identification of the type of professional license each individual holds and any practice specialty of each, and documents (i.e., W-2, 1099, etc) identifying the relationship between the individual and the P.C. (E.g. whether the individual is an employee or independent contractor and how that individual is compensated),

(iv)a list of the days of the week and hours that any owner of the P.C. provides or supervises services for the P.C. during the period for which payment is sought for services rendered;

(v)all documents, including all schedules, attachments or addenda,

related to the relationship between the P.C., and/or any entity or individual that leases equipment or space to or from the P.C., or provides management, consulting, [*3]administrative or billing services to the P.C. and any payments made to any person or entity that rendered such services to the P.C.

Although an investigation into Mallela issues is sometimes warranted at the verification stage of a claim, the Insurance Superintendent’s regulations allow insurers to delay payments through the pendency of the verification process “solely for good cause.” See Andrew Carothers, MD, PC v. Insurance Companies, 13 Misc 3d 970, 2006 NY Slip Op 26372 (Civ Ct Richmond Co.), quoting Mallela, supra. The verification protocols of 11 NYCRR 65-3.5 should ordinarily be “narrowly construed,” lest they be used to promote improper delays by insurers in making required no-fault payments. Cf. Prime Psych. Serv., P.C. v. ELRAC, 2009 NY Slip Op 52579 (Civ Ct. Richmond Co.). Toward this end, it seems inappropriate to allow insurers to go far beyond the intended scope of the verification rules governing particular claims through far-reaching requests for Mallela documentation.

EUOs, in general, are supposed to afford providers an opportunity “to establish proof of claim” in doubtful cases. See §65-3.5(e). While defenses that might be precluded by Fair Price certainly may be explored, Mallela defenses present a different balance. Since a Mallela defense can be asserted in a no-fault case regardless of whether it formed a basis for the insurer’s denial, see Mulitquest, PLLC v. Allstate Ins, Co., 2007 NY Slip Op 27366 (App Term), the insurer has a less important need, at the verification stage, to engage in a far-reaching exploration of the plaintiff’s corporate structure and business practices. Moreover, it generally may do so only in circumstances where it has a founded belief that the provider is guilty of behavior “tantamount to fraud.” See Andrew Carothers, MD, PC., supra, quoting Mallela, supra.

Consequently, in circumstances such as those presented, it would have been proper for Dr. Naik to have objected, in part, to defendant’s request for such extensive document disclosure in connection with defendant’s verification and EUO requests. Cf. Cambridge Med., P.C. v. Nationwide Prop. & Cas. Ins. Co., 2008 NY Slip Op 50629 (Civ Ct Richmond Co.). But Dr. Naik did not do so. That failure to object shifts the balance back in defendant’s favor.

Most importantly, Dr. Naik’s opposition to the cross-motion makes no effort to explain his default. He does not deny receipt of the EUO notices. He does not question whether defendant had an objectively reasonable basis for seeking an EUO. And he does not raise any issue respecting the burdensome nature of the request for extensive documentation.

Instead, Dr. Naik’s sole contention is that the second EUO request was mailed three days late. The argument is unavailing. It hinges on the assumption that the

second EUO request letter “should have been mailed within 10 calendar days of the first alleged no-show.” However, the ten-day period for sending a follow-up notice runs, not from the date of the scheduled first EUO, but from a date “30 calendar days after the original request.” See section 65-3.6(b). In any event, failure to strictly comply with [*4]the time-table for making additional verification requests is not necessarily fatal. See Infinity Health Products, Ltd. v. Eveready Ins. Co., 67 AD3d 862 (2d Dept. 2009). Since

plaintiff Naik twice flouted his obligation to submit to an EUO and to provide verification of his claim, it would be inequitable, to say the least, to allow him to belatedly interpose a technical defense to his default. See Infinity Health Products, Ltd., supra.

In these circumstances, the Court concludes that defendant is entitled to summary judgment dismissing plaintiff Naik’s complaint on grounds of EUO default.

Finally, the Court rejects defendant’s argument that Dr. Gegerson’s claim must fail due to lack of causation. Defendant did not cross—move for such relief, and while plaintiffs’ summary judgment motion allows the Court to grant relief to defendant through a search of the record, the proof in the record, as a whole, at best presents a triable issue as to causation. If plaintiff Gegerson requires additional disclosure respecting defendant’s denial in order to prepare for trial on that issue, his attorneys should serve further discovery requests promptly. However, the Court sees no basis, at this time, for granting an order of preclusion to this plaintiff or granting him other relief under CPLR 3126.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: April 8, 2010

CC:Mandel & Santora, Esqs.

McDonnell & Adels, P.C.

MAC:ju