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

[*1]

Civil Court of the City of New York, Bronx County, April 7, 2010

APPEARANCES OF COUNSEL

Ferdinand Diaz for claimant. Jaffe & Koumourdas (Peter Coates of counsel), for defendant.

{**28 Misc 3d at 861} OPINION OF THE COURT

Fernando Tapia, J.

In these nonpayment of no-fault insurance benefits cases before the Commercial Small Claims Part, this court, after oral testimony and review of submitted cases/statutes from claimant, hereby dismisses these cases without prejudice.

Does the Commercial Small Claims Part have subject matter jurisdiction to try a no-fault case when a specific No-Fault Part exists within New York City Civil Court? This court finds that it does not. Thus, under New York City Civil Court Act § 1805-A,^[FN1] the above-captioned case is transferred to the No-Fault Part for proper adjudication.

I. Factual Background

Claimant is an assignee for an individual patient who sought health care treatment from a motor vehicle accident. Claimant’s representative is not an attorney. On or about December 10, 2009 claimant’s representative appeared before the Commercial Small Claims Part to recover [*2]no-fault benefits from defendant Countrywide Insurance, which is represented by counsel.^[FN2]

Claimant seeks $4,365.52 and $5,000 from defendant for unpaid no-fault bills. Defendant argues that the cases should be dismissed for lack of subject matter jurisdiction because claimant became an assignee of the claim that originally belonged to an individual, and not to a commercial entity. Claimant’s representative counters with a First Department Appellate Term case (claimant’s representative relies on East End Med., P.C. v Oxford Health Ins., Inc. [12 Misc 3d 135(A), 2006 NY Slip Op 51229(U) (App Term, 1st Dept 2006)], which will be discussed later) which ruled in favor of the plaintiff, stating that the claim could be heard in the Small Claims Part.

II. The Small Claims Part: Truly a “People’s Court”

A. Brief Discussion on the Small Claims Part

Small claims court is an informal court that is part of Civil Court. (See A Guide to Small Claims Court, Unified Court System; see also Siegel, NY Prac § 581 [4th ed].) As such, there{**28 Misc 3d at 862} is no requisite motion practice involved. In fact, motion practice is discouraged in small claims. (See Weiner v Tel Aviv Car & Limousine Serv., 141 Misc 2d 339, 341 [Civ Ct, NY County 1988] [where movant sought to dismiss pro se claimant’s case, the Civil Court held that the Small Claims Part need not entertain a pretrial motion, absent extraordinary circumstances].)

Under CCA 1809 (1) (“Procedures relating to corporations, associations, insurers and assignees”),

“[n]o corporation, except a municipal corporation, public benefit corporation, school district or school district public library wholly or partially within the municipal corporate limit, no partnership, or association and no assignee of any small claim shall institute an action or proceeding under this article, nor shall this article apply to any claim or cause of action brought by an insurer in its own name or in the name of its insured whether before or after payment to the insured on the policy” (emphasis added).

The purpose of CCA 1809 (1) is to keep businesses from using the Small Claims Part as claimants. (See Siegel, Supp Practice Commentaries, McKinney’s Cons Laws of NY, CCA 1809, 2010 Electronic Update.) To address whether businesses can use the Small Claims Part, then, CCA 1809-A was enacted by the New York State Legislature. A discussion follows.

B. CCA Article 18-A: Legislative Enactment Governing the

1. Legislative History and Intent of Article 18-A

In 1987 the New York Legislature enacted CCA article 18-A, which outlines the [*3]jurisdictional parameters for commercial cases in the Small Claims Part.^[FN3]

Under CCA 1809-A (“Procedures relating to corporations, associations, insurers and assignees”), “[a]ny corporation . . . which has its principal office in the city of New York and an assignee of any commercial claim may institute an action or proceeding under this article” (CCA 1809-A [a] [emphasis added]).

Furthermore, under CCA 1801-A (“Commercial claims defined”), ” ‘commercial claim’ . . . shall mean and include any cause of action for money only not in excess of the maximum amount permitted for a small claim in the small claims part of{**28 Misc 3d at 863} the court . . . provided that . . . the claimant is a corporation, partnership or association.” (CCA 1801-A [a].)^[FN4]

Commercial litigants can therefore initiate suit in the Commercial Small Claims Part. The Unified Court System also has a booklet titled A Guide for the Use of the Commercial Claims Part which is available to the public.

Article 18-A has been criticized for simply paralleling the existing article 18 instead of being an independently distinct rubric for commercial claims being brought to the Small Claims Part. (See Siegel, General Practice Commentary on “Commercial” Small Claims Article, McKinney’s Cons Laws of NY, Book 29A, UCCA 1801-A, at 815-816.) Nevertheless, there are relevant sections germane to the cases at hand that explain why the Commercial Small Claims Part is not the proper venue.

2. Implications of Article 18-A Regarding the Above-Captioned Cases

As mentioned earlier, motion practice is discouraged in small claims. No-fault matters, on the other hand, command motion practice because of their complicated nature.^[FN5] It therefore follows that these two no-fault cases be transferred to the No-Fault Part for proper adjudication in the interest of justice, so that the assignee can be accommodated accordingly.

According to CCA 1802-A (“Parts for the determination of commercial claims established”), the Commercial Small Claims Part “[s]hall not be exclusive of but shall be alternative to the procedure . . . with respect to actions commenced in the court by the service of a summons.” That is, Commercial Small Claims Part is to be used as an alternative forum, not an exclusive one.

In the cases at hand, the most relevant section is CCA 1809-A (“Procedures relating to corporations, associations, insurers and assignees”), which states that no individuals or corporations shall take an assignment of any claim or demand, with the intent and for the purpose of bringing an action or proceeding in the Commercial Small Claims Part (CCA 1809-A [b]). As assignment by an individual to a corporation is neither a small claim nor a commercial claim because it was assigned; neither is it a commercial claim because it was not originally commercial{**28 Misc 3d at 864} when the [*4]assignment was made.^[FN6] This effectively precludes the bringing of a common medical benefits case in the Small Claims Part.

Thus, an assignee may bring a case in the Commercial Small Claims Part, as long as it does not exceed five such suits per month, and as long as its main reason is to have the case tried on its merits, and not as a procedural legal strategy to get a favorable outcome from a forum such as small claims.^[FN7]

Here, claimant relies on East End Med., P.C. v Oxford Health Ins., Inc. (12 Misc 3d 135[A], 2006 NY Slip Op 51229[U]) to put forth its argument that the Commercial Small Claims Part is the proper forum to resolve these cases. In East End Medical, the health care provider (the appellant) sought to recover no-fault insurance benefits from 13 of its patient assignors in this consolidated action. The majority opinion ruled that the appellant’s no-fault case was prematurely dismissed because the merits were not seriously considered. (2006 NY Slip Op 51229[U] at *1.)

It is, however, the cursory sua sponte discussion of subject matter jurisdiction in the dissent that ignites the relevance of East End Medical with respect to the case at hand.^[FN8] According to the dissent, because the claimant’s case was not originally “commercial” as defined pursuant to CCA 1809-A,^[FN9] it could not have been brought in the Commercial Small Claims Part under CCA 1809-A. (2006 NY Slip Op 51229[U] at *2.)

This court, therefore, agrees with the dissent that where there is a more proper forum that specifically addresses claims by{**28 Misc 3d at 865} health care providers for nonpayment of basic economic loss claims, it is that forum that should be regarded as having subject matter jurisdiction. The proper forum with jurisdiction to entertain the type of claim at issue in the instant matter, however, presupposes the existence of a statute that permits through logical reasoning the creation of a judicial forum to most effectively adjudicate no-fault medical benefits claims.

III. Insurance Law Article 51: New York State Comprehensive Automobile Insurance Reparations Act (Also Known as the No-Fault Law)

The No-Fault Insurance Law was created in 1973 for the express purpose of promoting “prompt resolution of injury claims, limit[ing] cost to consumers and alleviat[ing] unnecessary burdens on the courts.” (Byrne v Oester Trucking Inc., 386 F Supp 2d 386, 391 [SD NY 2005], citing [*5]Pommells v Perez, 4 NY3d 566 [2005].)

At the crux of no-fault insurance litigation is the issue of whether the injured party sustained a “serious injury” as defined by Insurance Law § 5102 (d). This “serious injury” threshold, as defined, “provides that in order for a victim of an automobile accident to bring an action for ‘non-economic loss,’ [such as] pain and suffering, he or she must demonstrate ‘serious injury’ [resulting from the accident].” (Lamana v Jankowski, 13 AD3d 134, 136 [1st Dept 2004].)

A determination that the “serious injury” threshold has not been met, however, does not preclude a no-fault claimant from recovering any basic economic loss incurred as a result of a motor vehicle accident (MVA). With a limit of up to $50,000 per person, a claimant can seek to recover for medical services, lost wages, and other reasonable and necessary expenses. It is these types of claims that constitute the overwhelming majority of the No-Fault Part Civil Court case calendar.

In an attempt to handle these claims fairly and expeditiously pursuant to the spirit and letter of the No-Fault Law, a “No-Fault Part” was created in Bronx Civil Court. The No-Fault Part is a specialized court created in Bronx County^[FN10] to handle no-fault basic economic loss claims. This court would have the exclusive authority for entertaining all motions and trials pertaining to these claims.

The No-Fault Part has greatly facilitated the removal of the vast majority of MVA claims from the sphere of common-law{**28 Misc 3d at 866} tort litigation into a quick, sure and efficient system for obtaining compensation for economic loss suffered from a car accident.^[FN11] The nature of the claims exclusively involves payment demands by health care providers (always represented by counsel), as assignees, for health care services and treatment rendered parties (assignors) involved in MVAs.

Likewise, the defendants are exclusively insurance carriers and also invariably represented by counsel. In addition to representation by counsel, limited discovery is allowed in the No-Fault Part. The daily court calendar is divided such that during the morning calendar call, all procedural and nonprocedural motions are heard and orally argued, if not taken on submission. In the afternoon, all bench trials are conducted.^[FN12] This approach, suffice it to say, has generated a fair, uniform, and expeditious adjudication of an otherwise crushing volume of [*6]no-fault cases.

The court’s singular focus on medical benefits claims has allowed judges, attorneys, and court staff to develop the No-Fault Part into an efficient mechanism for the adjudication of these claims. This efficiency is predicated first upon a narrow body of law effectively interpreted and applied by a judge with the sole responsibility of adjudicating medical benefits claims that, secondly, are handled by experienced counsel on a daily basis in an adversarial, but nonconfrontational courtroom setting in the disposition of these claims. The functional structure of the No-Fault Part is consistent, therefore, with one of the No-Fault Law’s goals: the expeditious handling of basic economic loss claims. From a commonsense policy standpoint, the No-Fault{**28 Misc 3d at 867} Part is the proper forum to bring medical benefits claims actions.

IV. Conclusion

In sum, these two cases at hand are not “commercial” per se, based on CCA 1809 (1), as assignees are barred from initiating suit in the Small Claims Part. Instead, they should be adjudicated in the No-Fault Part. Wherefore these cases are hereby dismissed without prejudice so that they can be transferred to the No-Fault Part, which is the proper forum.

Footnotes

Footnote 1: Pursuant to New York City Civil Court Act § 1805-A (b), “[t]he court shall have power to transfer any commercial claim or claims to any other part of the court upon such terms as the rules may provide, and proceed to hear the same according to the usual practice and procedure applicable to other parts of the court.”

Footnote 2: Peter Coates of Jaffe and Koumourdas appeared on the record.

Footnote 3: This took effect on January 1, 1991.

Footnote 4: The amount is currently $5,000.

Footnote 5: An example of a small claims case is where a store customer sues a furniture store for defective furniture. Such a case does not require motion practice, unlike no-fault cases where expert testimony of health care professionals is generally part of proving a plaintiff’s case as to the medical necessity of a treatment or service.

Footnote 6: Dunrite Auto Body & Motors v Liberty Mut. Ins. Co., 160 Misc 2d 168, 171 (Suffolk Dist Ct 1993); see also Arthur F. Engoron, Small Claims Manual: A Guide to Small Claims Litigation in the New York State Courts, at 35 (5th ed 2001).

Footnote 7: To start a commercial claims case, the commercial claimant must give a statement to the commercial claims court clerk as to why she/he is starting a lawsuit. The claimant must also pay a $20 filing fee to the clerk, plus the cost of mailing the notice of the lawsuit to the defendant. The claimant must also file a verification that no more than five commercial claims have been initiated by that claimant anywhere in New York State during a calendar month. (See A Guide for the Use of the Commercial Claims Part, at 2 [1996].)

Footnote 8: In East End Medical, subject matter jurisdiction was neither raised nor briefed by the party on appeal. The Appellate Term therefore broached the issue on its own.

Footnote 9: “Commercial” means any corporation, partnership, or association with its principal office in New York State can initiate suit in the Commercial Small Claims Part, so long as the entity is not a collection agency or entity that take assignments of debts. (See CCA 1809-A; see also A Guide for the Use of the Commercial Claims Part, at 1 n 1 [1996].)

Footnote 10: Both Brooklyn and Queens Civil Court have created a similar No-Fault Part to accommodate such cases.

Footnote 11: The purpose of no-fault auto insurance is to encourage expeditious resolution of claims without the necessity of imposing an additional burden on courts. (See Matter of Gretka [General Acc. Group], 100 Misc 2d 170 [Sup Ct, Erie County 1979].)

Benefits to be paid on a “no-fault” basis were adopted by the New York State Legislature as a means of reducing the caseload of the courts and to provide a fair and adequate way of recovering for those injured in auto accidents. (See Gamble v Randolph, 91 Misc 2d 436 [Rochester City Ct 1977].)

The object of Insurance Law of 1939 § 670 et seq. was to assure prompt compensation to accident victims of substantially all of their economic loss without regard to fault. (See Matter of Criterion Ins. Co. of Wash., D.C. [Commercial Union Assur. Co.], 89 Misc 2d 36 [Sup Ct, Nassau County 1976].) This same tenet is echoed in the current No-Fault Law, along with Ohio Cas. Ins. Co. v Continental Ins. Co. (101 Misc 2d 452 [Sup Ct, Erie County 1979]).

Footnote 12: Although nonjury trials are officially held during the morning calendar call and motions during the afternoon calendar call, most motions are able to be resolved in the mornings as well. If not, then they are resolved in the afternoon calendar.

[*1]

District Court of Suffolk County, Third District, April 7, 2010

APPEARANCES OF COUNSEL

Law Offices of Karen C. Dodson, Melville, for defendant. Rapuzzi, Palumbo & Rosenberger, P.C., Wantagh, for plaintiff.

{**27 Misc 3d at 929} OPINION OF THE COURT

C. Stephen Hackeling, J.

Ordered that the defendant’s application for summary judgment is granted in part and denied in part. This action is for medical provider first-party no-fault benefits. Plaintiff raises the threshold issue of whether this application is timely, and asserts that it is procedurally barred as it was made later than 120 days following the filing of the notice of trial.

Summary Judgment Procedural Distinction Supreme Versus District Court

The 120-day requirement is found in CPLR 3212 (a). Pursuant to this statute, applications for summary judgment relief must be made no later than 120 days after filing of the “note of issue,” unless the court has set an earlier date. The note of issue is part of the calendar practice of the supreme and county courts. It is not utilized in District Court practice, in which a “notice of trial” is employed (compare CPLR 3402 and 22 NYCRR 202.21, with UDCA 1301 and 22 NYCRR 212.17 [a]). In enacting the 120-day requirement for summary judgment motions in supreme and county courts, the legislature chose not to enact an amendment to the Uniform District Court Act or to otherwise expressly provide that the reference in CPLR 3212 (a) to the note of issue should be treated as a reference to the notice of trial. The legislature’s election to differentiate between a “notice of trial” and a “note of issue” in fashioning its 120-day section 3212 (a) limitation must be respected. In construing New York’s statutes, the legislature has proscribed that the court follow the Latin maxim “expressio unius est exclusio alterius,” i.e., “where a law expressly describes a particular act . . . an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded.” (McKinney’s Cons Laws of NY, Book 1, Statutes § 240; see also Doyle v Gordon, 158 NYS2d 248 [Sup Ct, NY County 1954].)

Additionally, although UDCA 1001 reads, in part, that “[m]otion practice in [district] court, including time provisions for the making . . . of motions . . . shall be governed by the CPLR,” this provision is not a basis for applying the 120-day{**27 Misc 3d at 930} time limitation of CPLR 3212 (a) to summary judgment motions in this court, as the latter statute only refers to the note of issue. If ever UDCA 1301 and the court rules are amended to require a note of issue instead of a notice of trial, the UDCA 1001 120-day limitation found in CPLR 3212 (a) will apply here. At present, however, the legislature appears to have deemed the litigation delays once existing in supreme and county court calendar practice (which it addressed in 1996 by adding the 120-day limitation to CPLR 3212 [a]) to be of insufficient magnitude in District Court to apply the limitation here. The court is also persuaded by Judge Straniere’s opinion in Panicker v Northfield Sav. Bank (12 Misc 3d 1153[A], 2006 NY Slip Op 50880[U] [Civ Ct, Richmond County 2006]), holding that the 120-day limitation of CPLR 3212 (a) is inapplicable to Civil Court summary judgment motions. Accordingly, the defendant’s application is not barred as untimely, and the court will consider it upon the merits.

Summary Judgment on the Merits

The proponent of an application for summary judgment must make a prima facie showing of its entitlement to judgment as a matter of law. Should it fail to do so, its motion must be denied. However, once it makes a prima facie showing, but not until then, the party opposing summary judgment must show the existence of factual issues requiring trial. If the opposing party makes this showing then, again, the motion must be denied. When the opposing party has not shown the existence of factual issues for trial, the proponent having established its prima facie case, summary judgment in favor of the proponent is appropriate (see CPLR 3212 [b]). [*3]

Contrary to plaintiff’s position, the affidavits of defendant’s litigation examiner and mail service establish that defendant made partial payment and partial denial of plaintiff’s claim in timely fashion. Taken together, these affidavits create a presumption of mailing by “proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed.” (See Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2d Dept 2001].) The plaintiff has submitted no evidentiary proof to rebut this presumption.

Plaintiff, a health services provider, rendered his services to his assignor over 44 days from January 26, 2000 to May 23, 2000. The dispute with respect to the partial denial of much of plaintiff’s claim concerns defendant’s application of ground rule{**27 Misc 3d at 931} 11 of the medical fee schedule, which limits the payment for multiple procedures and modalities performed on the same day to the services plaintiff billed using current procedural terminology (CPT) codes 97010, 97032 and 97250. Defendant has made a prima facie showing that its interpretation and application of rule 11 is correct, and in its opposition plaintiff does not offer an adequate challenge to defendant’s interpretation. Defendant’s motion for summary judgment dismissing these portions of plaintiff’s claims is granted.

Defendant also disallowed a portion of plaintiff’s claims for March 13, 2000 and April 17, 2000 services under CPT code 99204 (code used by defendant in denying claim) or 99205 (code used by plaintiff in submitting claim). Whichever code is correct, both of them apply to office or other outpatient visits of new patients for purposes of evaluation and management. As the assignor was not a new patient, the denial of these portions of plaintiff’s claim was proper. The defense application for summary judgment dismissing these items of plaintiff’s claim is granted.

Part of plaintiff’s claim for January 31, 2000 was under CPT code 99213. Defendant has demonstrated that the computation of the amount for the service provided was incorrect, that the amount it paid was the correct amount, and that the plaintiff has not challenged defendant’s showing. Summary judgment dismissing this part of plaintiff’s claim is also granted.

The remaining disputes concern parts of the claim for services provided on January 27, 2000 and May 23, 2000. For January 27, 2000, plaintiff submitted its claim under CPT code 99244, which applies to office consultations. Defendant deemed the correct CPT code to be 99204, which applies to office visits, and made partial payment which accorded with the amount payable using CPT code 99204. Similarly, for May 23, 2000, plaintiff submitted a claim using CPT code 99214, which is for office or other outpatient visits that involve medical decisionmaking of moderate complexity. Defendant based its payment on CPT code 99213, for office or other outpatient visits involving medical decisionmaking of low complexity.

The defendant has submitted the affidavit of its certified professional coder in support of its application. In explaining her determination that CPT code 99204 should apply instead of CPT code 99244, the coder makes a conclusory allegation that “[b]ased on the submitted documentation, the 99204 code better reflects the service rendered” (affidavit of Jeanne [*4]MacLeod{**27 Misc 3d at 932}-Lang, Dec. 1, 2009, ¶ 12). Nothing is offered to explain her conclusion that 99204 is the better code. No mention is made at all of the determination to apply CPT code 99213 instead of 99214 for the May 23, 2000 claim. Defendant has failed to establish a prima facie case that it properly paid plaintiff for these two services, and so summary judgment with respect to them is inappropriate (CPLR 3212 [b]).

Accordingly, defendant’s motion for summary judgment is granted except for the following portions of plaintiff’s claim, described as they appear on plaintiff’s claim forms: (1) January 27, 2000, office, initial consultation visit, 99244, $182.18, and (2) May 23, 2000, office, follow-up visit, 99214, $71.

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 (Alice Fisher Rubin, J.), entered February 4, 2009. The order denied defendant’s motion for summary judgment and granted plaintiff’s cross motion for summary judgment.

ORDERED that the order is modified by providing that plaintiff’s cross motion for summary judgment is denied; as so modified, the order is affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court denied defendant’s motion for summary judgment dismissing the complaint and granted plaintiff’s cross motion for summary judgment, finding that defendant had failed to demonstrate that the denial of claim form, which denied plaintiff’s claim on the ground of lack of medical necessity, had been timely mailed. The instant appeal by defendant ensued.

Contrary to the finding of the Civil Court, the affidavit of defendant’s claims representative sufficiently established the timely mailing of the denial of claim form since the affidavit contained a detailed description, based on the affiant’s personal knowledge, of defendant’s standard office practices or procedures used to ensure that the denial was properly addressed and mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). The papers submitted in support of defendant’s motion included a sworn peer review report by defendant’s psychologist, which set forth a factual basis and medical rationale for his opinion that there was a lack of medical necessity for the psychological services at issue (see A.B. Med. Servs., PLLC v American Tr. Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50680[U] [App Term, 2d & 11th Jud Dists 2007]; Amaze Med. Supply Inc. v Allstate Ins. Co., 12 Misc 3d 142[A], 2006 NY Slip Op 51412[U] [App Term, 2d & 11th Jud Dists 2006]). [*2]In view of the foregoing, defendant made a prima facie showing of its entitlement to summary judgment dismissing the complaint (see Pan Chiropractic, P.C. v Mercury Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d, 11th & 13th Jud Dists 2009]), and the burden shifted to plaintiff to raise a triable issue of fact regarding medical necessity.

In opposition to defendant’s motion, plaintiff submitted, among other things, a letter of medical necessity sworn to by the psychologist who had examined plaintiff’s assignor, which was sufficient to raise a triable issue of fact as to the medical necessity of the services rendered (see A.B. Med. Servs., PLLC, 15 Misc 3d 132[A], 2007 NY Slip Op 50680[U]). In view of the existence of a triable issue of fact, defendant’s motion for summary judgment was properly denied and plaintiff’s cross motion should have been denied. The order is modified accordingly.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: April 02, 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, Kings County (Kathy J. King, J.), entered May 12, 2008. The order granted defendant’s motion to vacate a judgment and the underlying order granting plaintiff’s prior motion for summary judgment on default, and, upon such vacatur, in effect, granted defendant’s prior cross motion for summary judgment.

ORDERED that the order is affirmed without costs.

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. Defendant failed to appear on the return date of the motion, and plaintiff’s motion was granted on default. A judgment was subsequently entered pursuant to the order. Thereafter, defendant moved to vacate the default judgment and the underlying order. The Civil Court granted defendant’s motion and, upon vacating the judgment and order, in effect granted defendant’s prior cross motion for summary judgment dismissing the complaint.

In order to vacate the judgment and underlying order pursuant to CPLR 5015 (a) (1), defendant was required to establish both a reasonable excuse for its default and a meritorious defense to the action (see e.g. Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Mora v Scarpitta, 52 AD3d 663 [2008]). Defendant provided a reasonable excuse for its default in appearing by its attorney’s affirmation, which sufficiently justified the default and included a detailed explanation of the oversight (see Incorporated Vil. of Hempstead v Jablonsky, 283 AD2d 553, 554 [2001]; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432, 433 [2004]; cf. A.B. Med. Servs., P.C. v GLI Corp. Risk Solutions, Inc., 25 Misc 3d 137[A], 2009 NY Slip Op 52322[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). Defendant [*2]also established a meritorious defense to the action, as the affidavit of its claims specialist showed that defendant had timely and properly mailed the NF-10 denial of claim forms and verification request, by describing, in detail, based on the affiant’s personal knowledge, defendant’s standard office practices and procedures used to ensure that such documents were properly addressed and mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). In addition, affirmed peer review reports were annexed to defendant’s cross motion, which made a prima facie showing that the services provided were not medically necessary. Plaintiff failed to rebut this showing, and its remaining contentions lack merit.

Consequently, the Civil Court did not improvidently exercise its discretion in vacating the default judgment and order, and, upon vacatur, properly, in effect, granted defendant’s prior cross motion for summary judgment dismissing the complaint (see e.g. Vista Surgical Supplies, Inc. v GEICO Ins. Co., 23 Misc 3d 133[A], 2009 NY Slip Op 50739[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]). Accordingly, the order is affirmed.

Weston, J.P., Golia and Rios, JJ., concur.
Decision Date: April 02, 2010