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 April 3, 2008. The order, insofar as appealed from, (1) granted plaintiff’s motion to strike defendant’s answer pursuant to CPLR 3126 only to the extent of directing defendant to respond to plaintiff’s demand for written interrogatories and for discovery and inspection within 60 days of the date of the order or be precluded from offering or soliciting evidence at trial; (2) granted defendant’s cross motion, which sought to compel plaintiff to produce its owner, Valentina Anikeyeva, for a deposition and to provide discovery, to the extent of directing plaintiff to respond to items 1-3, 6, 8, 10, 11 and 14 of defendant’s supplemental demand for discovery and inspection, and (3) stated that defendant “reserves [its] right to re-notice owner for EBT.”

Order, insofar as appealed from, modified by providing that defendant’s cross motion to compel discovery is denied; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court granted plaintiff’s motion to strike defendant’s answer pursuant to CPLR 3126 to the extent of compelling defendant to respond to plaintiff’s demands for written interrogatories and for discovery and inspection within 60 days or be precluded from offering or soliciting evidence at trial. The court also granted defendant’s cross motion to compel a deposition and responses to discovery demands to the extent of compelling plaintiff to respond to items 1-3, 6, 8, 10, 11 and 14 of defendant’s supplemental demand for discovery and inspection. The court further stated that defendant “reserves [its] right to re-notice owner for EBT.”

Although plaintiff contends that the court erred when it failed to strike defendant’s answer due to defendant’s failure to provide responses to plaintiff’s discovery demands, “striking [a [*2]pleading] is inappropriate absent a clear showing that the failure to comply with discovery demands is willful, contumacious, or in bad faith” (Conciatori v Port Auth. of NY & N.J., 46 AD3d 501, 504 [2007]; see Espinal v City of New York, 264 AD2d 806 [1999]). In our view, plaintiff failed to make such a “clear showing” (Conciatori, 46 AD3d at 504). Accordingly, contrary to plaintiff’s contention, the record does not support “the extreme relief requested by the plaintiff[]” (id.).

However, plaintiff correctly argues that the Civil Court erred when it ordered plaintiff to respond to specified items set forth in defendant’s supplemental demand for discovery and inspection. By cross-moving to compel responses to its supplemental demand for discovery and inspection on the same day as it served said supplemental demand, defendant failed to give plaintiff an opportunity to respond to the supplemental demand or to object thereto. Indeed, defendant cross-moved before plaintiff even received the supplemental demand. As a result, defendant’s cross motion should have been denied as premature (see Sagiv v Gamache, 26 AD3d 368 [2006]).

Plaintiff further argues that defendant is not entitled to a deposition of plaintiff’s owner, Valentina Anikeyeva. We note that the Civil Court did not compel plaintiff to produce her for a deposition. In any event, under the facts of this case, such a contention lacks merit (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]).

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 31, 2009

SUPREME COURT OF THE STATE OF NEW YORK

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

Appeal from an order of the Civil Court of the City of New York, Kings County (Genine D. Edwards, J.), entered April 19, 2007, deemed from a judgment entered July 2, 2007 (see CPLR 5501 [c]). The judgment, entered pursuant to the April 19, 2007 order granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $4,267.13.

Judgment reversed without costs, so much of the order entered April 19, 2007 as granted plaintiff’s motion for summary judgment upon its claims pertaining to assignors Natasha Wright and Junior Ford vacated, said branches of plaintiff’s motion for summary judgment denied without prejudice, and matter remitted to the Civil Court for the calculation of statutory interest and attorney’s fees upon the $428.56 claim pertaining to assignor Steven Stryr.

Plaintiff commenced the instant action to recover first-party no-fault benefits assigned to it by Natasha Wright, Junior Ford and Steven Stryr. By order dated April 19, 2007, the Civil Court granted plaintiff’s motion for summary judgment, and this appeal ensued. The appeal is deemed to be from the judgment that was subsequently entered pursuant to the April 19, 2007 order (see CPLR 5501 [c]).

Contrary to plaintiff’s contention, the subject order was not entered upon defendant’s default inasmuch as the CPLR 2219 (a) recitation states that the court considered defendant’s opposing papers (see CPLR 2219 [a]; Mitchell v Sebrew, 17 Misc 3d 137[A], 2007 NY Slip Op 52301[U] [App Term, 2d & 11th Jud Dists 2007]; A.B. Med. Servs PLLC v New York Cent. Mut. Fire Ins. Co., 6 Misc 3d 133[A], 2005 NY Slip Op 50115[U] [App Term, 2d & 11th Jud Dists 2005]).

Defendant contends on appeal, as it did before the Civil Court, that plaintiff’s motion for [*2]summary judgment was made in violation of a previously ordered stay issued by the Supreme Court, Nassau County (Brennan, J.). Upon a review of the order issued by Justice Brennan, which was appended to defendant’s opposition papers, we find that the order barred plaintiff from moving for summary judgment upon plaintiff’s claims pertaining to assignors Natasha Wright and Junior Ford (see A.T. Med., P.C. v State Farm Ins. Co., 19 Misc 3d 138[A], 2008 NY Slip Op 50875[U] [App Term, 2d & 11th Jud Dists 2008]). Consequently, plaintiff’s motion for summary judgment is denied without prejudice with respect to these claims.

However, inasmuch as the stay is inapplicable to claims pertaining to assignor Steven Stryr, the stay did not bar the branch of plaintiff’s motion which sought summary judgment upon the $428.56 claim to recover assigned first-party no-fault benefits for services rendered to Stryr. As the sole argument raised on appeal by defendant concerns the stay issued by Justice Brennan, defendant failed to establish that plaintiff was not entitled to summary judgment upon the $428.56 claim pertaining to Stryr.

Accordingly, the judgment is reversed, so much of the order entered April 19, 2007 as granted plaintiff’s motion for summary judgment upon its claims pertaining to assignors Natasha Wright and Junior Ford is vacated, said branches of plaintiff’s motion for summary judgment are denied without prejudice, and the matter is remitted to the Civil Court for the calculation of statutory interest and an assessment of attorney’s fees due on plaintiff’s claim for $428.56, pertaining to assignor Steven Stryr, pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 31, 2009

Supreme Court, Queens County

25257/08

For the Plaintiffs: John E. McCormack, P.C., 41 Hilton Ave., Hempstead, NY 11550

For Defendants Bronx Park Medical, P.C., Inwood Hill Medical P.C., Dr. Noel Worrell Howell, Alexander Freed, Innessa Drabkin, Silver Pines Management Corp., Integra CBA Co., Inc., PKH Corp., and Michael Mazur: Lifshutz & Lifshutz, P.C., by Gary Burgoon, 501 Fifth Ave., suite 506, NY, NY 10017

For Defendant Healthbay Medical, P.C.: George T. Lewis, Jr., P.C., 485 Underhill Blvd., suite 101, Syosset, NY 11791

For Defendants Jean D. Miller, D.O., Jean Miller, D.O., P.C., and Acadian Medical P.C.: Kern Augustine Conroy & Schoppman, P.C., by Douglas M. Nadjari, Esq., 1325 Franklin Ave., Garden City, NY 11530

For Defendants Josh Vainer and SVG MGMT., Inc.: Matthew J. Conroy & Associates, P.C., by Matthew J. Conroy and Maria Campese Diglio, Esqs., 350 Old Country Road, suite 106, Garden City, NY 11530

For Defendants Simon Pevzner, ASPG MGNT., Inc., Veritas Management Corp., Group Square I.S. Ltd., Kritek, Inc., Strob, Inc., and Lokh Corp.: Schlam Stone Dolan, LLP, by Thomas A. Kissane and Samuel L. Butt, Esqs., 26 Broadway, NY, NY 10004

Other Defendants are either Pro Se and/or have not appeared.

Charles J. Markey, J.

The plaintiffs have moved for a preliminary injunction, inter alia, prohibiting defendant Pueblo Medical Treatment, PC, defendant Nagle Medical Plaza, PC, defendant Kingsbridge Community Medical, PC, defendant Inwood Hill Medical, PC, defendant Bronx Park Medical, PC, and defendant Healthbay Medical, PC from the further prosecution of pending lawsuits and arbitration proceedings brought by them against the plaintiffs to recover No Fault first-party medical benefits.

The complaint alleges that the plaintiffs are domestic and foreign insurance companies that issue automobile policies in New York State providing benefits payable pursuant to the Comprehensive Automobile Insurance Reparations Act (the No-Fault Law) presently codified in article 51 of the Insurance Law. The plaintiffs are required by law to pay an insured’s No-Fault benefits directly to a health care provider who has been assigned his right to benefits covering medically necessary treatments and tests. Some of the defendants, termed “the Management Defendants,” are the true owners of certain medical facilities also named in the complaint and termed “the provider defendants.” Some of the defendants, termed “the licensed defendants,” hold or did hold medical licenses and fronted as the owners of the provider defendants. The licensed defendants “essentially sold the use of their names and licenses to “the Management Defendants.”

There are three groups of defendants each comprised of some of the licensed defendants, provider defendants, and management defendants:
(1) The Pevzner management group allegedly using the licenses of Dr. Miller, Dr. Mukendi, and Dr. Kadianakis (Group 1),
(2) the Kargman management group allegedly using the licenses of Dr. Garcia, Dr. Iroku, Dr. Richie, and Dr. Chiarmonte (Group 2), and
(3) the Drabkin/Freed management group allegedly using the licenses of Dr. Howell and Dr. Iroku (Group 3).

The following chart sets forth the three groups of defendants: [*2]

Group 1

Group 2

Group 3

The defendants have allegedly defrauded the plaintiff insurers by submitting bills pursuant to New York State’s No-Fault Law for medical services rendered by corporations not truly owned by holders of medical licenses. On or about October 15, 2008, the plaintiffs (over 20 insurance companies) began this lawsuit asserting six causes of action, the first for common-law fraud, the second for unjust enrichment, the third for a declaratory judgment concerning fraudulent incorporation, the fourth for declaratory judgment concerning illegal fee splitting, the fifth for reimbursement based on Public Health Law § 238-a, and the sixth for a declaratory judgment concerning medical services allegedly rendered by independent contractors.

In order to obtain a preliminary injunction, the plaintiffs had to show (1) a likelihood of ultimate success on the merits, (2) irreparable injury if provisional relief is withheld, and (3) a weight of the equities in their favor (see, Aetna Insurance Co. v. Capasso, 75 NY2d 860 [1990]; McNeil v. [*3]Mohammed, 32 AD3d 829 [2nd Dept. 2006]). The plaintiffs successfully carried this burden (see, St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, 2007 NY Slip Op 51154[U] [Sup Ct Queens County, Dollard, J.] [in action involving alleged fraudulently incorporated medical providers, preliminary injunction granted prohibiting defendants from prosecuting pending lawsuits and commencing future lawsuits against No Fault insurer]).

In regard to the first requirement, the plaintiffs established a likelihood of ultimate success on the merits by making a prima facie showing that they can prove their causes of action based on fraudulent incorporation (see, McNeil v Mohammed, 32 AD3d 829, supra ; Trimboli v Irwin, 18 AD3d 866 [2nd Dept. 2005]; Four Times Square Associates, L.L.C. v Cigna Investments, Inc., 306 AD2d 4 [1st Dept. 2003]). The verified complaint, the affidavit of James Beadle (an investigator for plaintiff Autoone Insurance Company), and the deposition and examination transcripts from other cases show prima facie that certain of the licensed defendants did not truly own and operate the provider defendants against whom injunctive relief is sought. “State law mandates that professional service corporations be owned and controlled only by licensed professionals (see, Business Corporation Law §§ 1503[a]; 1507, 1508), and that licensed professionals render the services provided by such corporations (see, Business Corporation Law § 1504[a])” (One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, 740 [2nd Dept. 2008]).

In State Farm Mut. Auto. Ins. Co. v Mallela, (4 NY3d 313 [2005]), an action for, inter alia, a declaratory judgment brought by an insurer against defendants allegedly operating the same type of scheme allegedly involved in the case at bar, the Court of Appeals held that, on the basis of 11 NYCRR 65-3.16(a)(12), insurers may deny no-fault payments to fraudulently incorporated health care providers to which patients have assigned their claims. In regard to the requirement of irreparable injury, the plaintiffs adequately demonstrated that equitable relief is a more efficient remedy than monetary damages (see, People by Abrams v Anderson, 137 AD2d 259 [4th Dept. 1988]; Poling Transp. Corp. v A & P Tanker Corp., 84 AD2d 796 [2nd Dept. 1981]).

The plaintiffs have shown that the issuance of a preliminary injunction is necessary to prevent the repetitive litigation and arbitration of numerous No Fault claims for reimbursement by medical providers where the insurers raise the same defense of fraudulent incorporation. In regard to the weight of the equities (see, Reuschenberg v Town of Huntington, 16 AD3d 568 [2nd Dept. 2005]; Credit Index, L.L.C. v Riskwise Intern. L.L.C., 282 AD2d 246 [1st Dept. 2001]; McLaughlin, Piven, Vogel, Inc. v W.J. Nolan & Co., Inc., 114 AD2d 165 [2nd Dept.], appeal denied, 67 NY2d 606 [1986]; Metropolitan Package Store Ass’n, Inc. v Koch, 80 AD2d 940 [3rd Dept. 1981]; Nassau Roofing & Sheet Metal Co., Inc. v Facilities Development Corp., 70 AD2d 1021 [3rd Dept], appeal dismissed, 48 NY2d 654 [1979]; 67A NY Jur2d, “Injunctions,” § 31), the issuance of a preliminary injunction will not unduly cause hardship to any of the defendants, but, to the contrary, all parties will benefit from having the issue of fraudulent incorporation determined in one action.

Accordingly, the plaintiffs’ motion for a preliminary injunction is granted. The parties may submit affidavits concerning the proper amount of the undertaking at the time of the settlement of the order to be entered hereon (see, NSA, Inc. V. L.I.C. Food Court, Inc., 2009 WL 1904683, 2009 NY Slip Op 51411 [U] [Sup Ct Queens County 2009] [decision by the undersigned]; Chiu Cheuk Chan v. 28-42, LLC, 2009 WL 129893, 2009 NY Slip Op 50080 [U] [Sup Ct Queens County 2009] [decision by the undersigned]; Nand Land LAL v. Shiri Guru Ravidas Sabha of New York Inc., 2008 NY Slip Op 51720[U] [Sup Ct Queens County 2008]; Daily Bread Café Inc. v. City Lights at Queens [*4]Landing Inc., 2007 WL 3375899, 2007 NY Slip Op 52158 [Sup Ct Queens County 2007]; Molyneux-Petraglia v. Northbridge Capital Mgmt. Inc., 2007 WL 1203597, 2007 NY Slip Op 50845[U] [Sup Ct NY County 2007]; Citadel Mgt. Inc. v. Hertzog, 182 Misc 2d 902, 906 [Sup Ct Queens County 1999]; Connor v. Cuomo, 161 Misc 2d 889, 897 [Sup Ct Kings County 1994]; Jewelry Realty Corp. v. 55 West 47 Co., 90 Misc 2d 407, 408 [Sup Ct NY County 1977].)

Settle order.

___Hon. Charles J. MarkeyJustice, Supreme Court, Queens County

Appearances:

Supreme Court, Queens County

25257 2008

For the Plaintiffs:

John E. McCormack, P.C., 41 Hilton Ave., Hempstead, NY 11550

For Defendants Bronx Park Medical, P.C., Inwood Hill Medical P.C., Dr. Noel Worrell Howell, Alexander Freed, Innessa Drabkin, Silver Pines Management Corp., Integra CBA Co., Inc., PKH Corp., and Michael Mazur: Lifshutz & Lifshutz, P.C., by Gary Burgoon, 501 Fifth Ave., suite 506, NY, NY 10017

For Defendant Healthbay Medical, P.C.: George T. Lewis, Jr., P.C., 485 Underhill Blvd., suite 101, Syosset, NY 11791

For Defendants Jean D. Miller, D.O., Jean Miller, D.O., P.C., and Acadian Medical P.C.: Kern Augustine Conroy & Schoppman, P.C., by Douglas M. Nadjari, Esq., 1325 Franklin Ave., Garden City, NY 11530

For Defendants Josh Vainer and SVG MGMT., Inc.: Matthew J. Conroy & Associates, P.C., by Matthew J. Conroy and Maria Campese Diglio, Esqs., 350 Old Country Road, suite 106, Garden City, NY 11530

For Defendants Simon Pevzner, ASPG MGNT., Inc., Veritas Management Corp., Group Square I.S. Ltd., Kritek, Inc., Strob, Inc., and Lokh Corp.: Schlam Stone Dolan, LLP, by Thomas A. Kissane and Samuel L. Butt, Esqs., 26 Broadway, NY, NY 10004

Other Defendants are either Pro Se and/or have not appeared.

Charles J. Markey, J.

Defendant Jean D. Miller, D.O., defendant Jean D. Miller, D.O., P.C., and defendant Acadian Medical, P.C. (collectively “the Miller defendants”) have moved for, inter alia, an order pursuant to CPLR 3211(a)(7) dismissing the complaint against them. Defendant Simon Pevzner, defendant ASPG Mgnt Inc., defendant Veritas Management Corp., defendant Group Square I.S. Ltd., defendant Kritek, Inc., defendant Strob, Inc., and defendant Lokh Corp., (collectively “the Pevzner defendants”) have moved for, inter alia, an order pursuant to CPLR 3211(a)(7) [*2]dismissing the complaint against them. Defendant Josh Vainer and defendant SVG Mgmt, Inc. (collectively “the Vainer defendants”) have moved for an order dismissing the complaint against them pursuant to CPLR 3211(a)(7).

The complaint alleges the following: The plaintiffs are domestic and foreign insurance companies which issue automobile policies in New York State providing benefits payable pursuant to the Comprehensive Automobile Insurance Reparations Act (the No-Fault Law) presently codified in article 51 of the Insurance Law. The plaintiffs are required by law to pay an insured’s No-Fault benefits directly to a health care provider who has been assigned his right to benefits covering medically necessary treatments and tests. Some of the defendants, termed “the Management Defendants,” are the true owners of certain medical facilities also named in the complaint and termed “the Provider Defendants.” Some of the defendants, termed “the Licensed Defendants,” hold or did hold medical licenses and fronted as the owners of the provider defendants. The licensed defendants “essentially sold the use of their names and licenses to the Management Defendants.”

There are three groups of defendants each comprised of some of the licensed defendants, provider defendants, and management defendants:
(1) The Pevzner management group allegedly using the licenses of Dr. Miller, Dr. Mukendi, and Dr. Kadianakis (Group 1),
(2) the Kargman management group allegedly using the licenses of Dr. Garcia, Dr. Iroku, Dr. Richie, and Dr. Chiarmonte (Group 2), and
(3) the Drabkin/Freed management group allegedly using the licenses of Dr. Howell and Dr. Iroku (Group 3).

The following chart sets forth the three groups of defendants:

Group 1

Group 2

Group 3

The defendants have allegedly defrauded the plaintiff insurers by submitting bills pursuant to New York State’s No-Fault Law for medical services rendered by corporations not truly owned by holders of medical licenses. On or about October 15, 2008, the plaintiffs, over 20 insurance companies, began this lawsuit asserting six causes of action, the first for common law fraud, the second for unjust enrichment, the third for a declaratory judgment concerning fraudulent incorporation, the fourth for declaratory judgment concerning illegal fee splitting, the fifth for reimbursement based on Public Health Law § 238-a, and the sixth for a declaratory judgment concerning medical services allegedly rendered by independent contractors.

“State law mandates that professional service corporations be owned and controlled only by licensed professionals (see, Business Corporation Law §§ 1503[a], 1507, & 1508), and that licensed professionals render the services provided by such corporations (see, Business Corporation Law § 1504[a])” (One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, 740 [2nd Dept. 2008]).

Business Corporation Law section 1503(a) provides in relevant part: “Notwithstanding any other provision of law, one or more individuals duly authorized by law to render the same professional service within the state may organize, or cause to be organized, a professional service corporation for pecuniary profit under this article for the purpose of rendering the same professional service” (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra).

Business Corporation Law section 1507 provides in relevant part: “A professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice” (see, Sangiorgio v Sangiorgio, 173 Misc 2d 625 [Sup. Ct. Richmond County 1997]). State licensing requirements prohibit non-physicians from owning or controlling medical service corporations (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).

Insurance Law § 5102 et seq. requires no-fault insurers to reimburse patients or their medical provider assignees for “basic economic loss.” However, pursuant to state regulation (11 NYCRR 65-3.16[a][12]): “A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.” (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, [*4]supra).

In State Farm Mut. Auto. Ins. Co. v Mallela (id.), an action for, inter alia, a declaratory judgment brought by an insurer against defendants allegedly operating the same type of scheme allegedly involved in the case at bar, the New York Court of Appeals held that, on the basis of 11 NYCRR 65-3.16(a)(12), insurers may deny no-fault payments to fraudulently incorporated health care providers to which patients have assigned their claims. In One Beacon Ins. Group, LLC v Midland Medical Care, P.C. (54 AD3d at 738, supra), another action similar to the case at bar, the insurers sought damages for common-law fraud and unjust enrichment and a declaration that they had no obligation to pay no-fault claims submitted by fraudulent professional corporations. The Appellate Division, Second Department, affirmed the denial of a motion for summary judgment by a defendant physician and a defendant corporation, finding that material issues of fact existed as to whether the physician’s professional corporation was actually controlled by a management company owned by unlicensed individuals in violation of state law.

That branch of the motion by the Pevzner defendants seeking an order, pursuant to CPLR 3013, dismissing the complaint against them is denied. The complaint adequately provides “the court and parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved and the material elements of each cause of action.” (see, CPLR 3013; Stavisky v Koo, 54 AD3d 432 [2nd Dept. 2008]; Trinity Products, Inc. v Burgess Steel LLC, 18 AD3d 318 [1st Dept. 2005]). The complaint makes factual, not merely conclusory, allegations. (see, Serio v Rhulen, 24 AD3d 1092). The defendants may obtain greater specificity by serving a demand for a bill of particulars or by utilizing the many disclosure devices available under CPLR article 31 (see, Serio v Rhulen, id.; Pernet v Peabody Engineering Corp., 20 AD2d 781 [1st Dept. 1964]).

That branch of the motion by the Pevzner defendants, pursuant to CPLR 3016(b), seeking dismissal of the first cause of action asserted against them, for common law fraud, is denied. Although fraud must be pleaded in “detail” (see, CPLR 3016[b]; 1205-15 First Ave. Associates, LLC v McDonough, 7 AD3d 363 [1st Dept. 1964]), “the standard is simply whether the allegations are set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of” (Caprer v Nussbaum, 36 AD3d 176, 202 [2nd Dept. 2006], quoting Lanzi v Brooks, 43 NY2d 778, 780 [1977]). The complaint in the case at bar meets that standard (see, PDK Labs, Inc. v Krape, 277 AD2d 211 [2nd Dept. 2000]). The complaint makes factual, not merely conclusory, allegations. Just recently, the New York Court of Appeals, in Sargiss v Magarelli (12 NY3d 527 [2009], modifying 50 AD3d 1117 [2nd Dept. 2008]) stated that, while “the basic facts” of the fraud allegedly perpetrated need to be sufficiently stated, they need not be elaborated in exquisite detail or accompanied by “unassailable” proof of pinpoint precision.

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking dismissal of the first cause of action asserted against them, pursuant to CPLR 3211(a)(7), are granted to the extent that the first cause of action seeks damages accruing before April 4, 2002. The Court notes initially that, as the plaintiffs concede, no cause of action for fraud by No-Fault insurers based on 11 NYCRR 65-3.16(a)(12) can be stated to recover payments made before April 4, 2002, the effective date of the regulation (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, supra; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 [1st Dept. 2006]; Metroscan Imaging, P.C. v Geico Ins. Co., 13 Misc 3d 35 [App. [*5]T. 2nd Dept. 2006]; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, 2007 NY Slip Op. 51154[U] [Sup. Ct., Queens County 2007] [Dollard, J.]). Otherwise, the first cause of action sufficiently states a claim for fraud (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra] [action by no-fault insurer against alleged fraudulently incorporated medical corporations]).

In determining a motion brought pursuant to CPLR 3211(a)(7), the court “must afford the complaint a liberal construction, accept as true the allegations contained therein, accord the plaintiff the benefit of every favorable inference and determine only whether the facts alleged fit within any cognizable legal theory” (1455 Washington Ave. Assoc. v Rose & Kiernan, 260 AD2d 770, 770-771 [3rd Dept. 1999]; Esposito-Hilder v SFX Broadcasting Inc., 236 AD2d 186 [3rd Dept. 1997]).

In order to state a cause of action for fraud, a plaintiff must allege that:

(1) that the defendant made material representations that were false or concealed a material existing fact,

(2) the defendant knew the representations were false and made them with the intent to deceive the plaintiff,

(3) the plaintiff was deceived,

(4) that the plaintiff justifiably relied on the defendant’s representations, and

(5) that the plaintiff was injured as a result of the defendant’s representations (see, Lama Holding Co. v Smith Barney, 88 NY2d 413 [1996]; New York Univ. v Continental Ins. Co., 87 NY2d 308 [1995]; Watson v Pascal, 27 AD3d 459 [2nd Dept. 2006]; Cerabono v Price, 7 AD3d 479 [2nd Dept. 2004], appeal denied, 4 NY3d 704 [2005]; New York City Transit Authority v Morris J. Eisen, P.C., 276 AD2d 78 [1st Dept. 2000]; American Home Assur. Co. v Gemma Const. Co., Inc., 275 AD2d 616 [1st Dept. 2005]; Swersky v Dreyer & Traub, 219 AD2d 321 [1st Dept. 1996], appeal withdrawn, 89 NY2d 983 [1997]).

In the case at bar, the plaintiffs have adequately alleged that the defendants with the requisite intent and scienter concealed material facts and made material misrepresentations concerning the provider defendants’ status as legal professional service corporations and in reliance on the material misrepresentations and concealments the plaintiffs made “substantial payments” to the provider defendants (see, St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). A medical corporation fraudulently incorporated under Business Corporation Law section 1507, moreover, has no right to reimbursement by insurers under the No-Fault Law and its implementing regulations for medical services rendered (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, supra). The complaint adequately alleges fraud in the incorporation and operation of the Provider Defendants with the complicity of the Management Defendants and Licensed Defendants.

That branch of the motion by the Pevzner defendants requesting dismissal of the plaintiffs’ first cause of action to the extent that it seeks punitive damages is granted (see, St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra) Punitive damages will not be awarded unless the fraud “is aimed at the public generally, is gross, and involves high moral culpability.” (Kelly v Defoe Corp., 223 AD2d 529 [2nd Dept. 1996]; see, Ross v Louise Wise Services, Inc., 8 NY3d 478, 489-490 [2007] [punitive damages were not available in a claim of adoption fraud or concealment claim in light of lack of malicious and vindictive intent], [*6]modifying 28 AD3d 272 [1st Dept. 2006]; Crispino v Greenpoint Mtge. Corp., 2 AD3d 478 [2nd Dept. 2003]). In the case at bar, the alleged tortfeasors directed their conduct at No-Fault insurers, not the public generally.

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking, pursuant to CPLR 3211(a)(7), dismissal of the second cause of action, for unjust enrichment, are granted to the extent that the second cause of action seeks damages accruing before April 4, 2002. The plaintiffs cannot successfully state a cause of action for unjust enrichment based on 11 NYCRR 65-3.16(a)(12) to recover payments made before April 4, 2002, the effective date of the regulation (see, State Farm Mut. Auto. Ins. Co. v Mallela,4 NY3d 313, supra; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). Otherwise, the complaint adequately states a cause of action for unjust enrichment (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). “A cause of action for unjust enrichment arises when one party possesses money or obtains a benefit that in equity and good conscience they should not have obtained or possessed because it rightfully belongs to another” (Mente v Wenzel, 178 AD2d 705, 706 [3rd Dept. 1991], appeal denied in part & dismissed in part, 82 NY2d 843 [1993]; see, Strong v Strong, 277 AD2d 533 [3rd Dept. 2000]). The plaintiffs, in the case at bar, have adequately alleged that the defendants fraudulently obtained no-fault payments from them which they were not obligated to pay under the No-Fault Law and its implementing regulations.

That branch of the motion by the Pevzner defendants requesting dismissal of the first and second causes of action to the extent that they seek damages for payments made before April 4, 2002 is granted. No cause of action for fraud or unjust enrichment lies to recover payments made by the carriers before April 4, 2002, the effective date of 11 NYCRR 65-3.16(a)(12) (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, supra; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra.)

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking, pursuant to CPLR 3211(a)(7), dismissal of the third cause of action for a declaratory judgment concerning alleged fraudulent incorporation, are denied (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). The plaintiffs allege that the provider defendants have not withdrawn outstanding claims for payment and, on some claims, have begun suit or arbitration even as the plaintiffs continue to deny an obligation to make payment because of alleged fraudulent incorporation. This action, which seeks a judgment declaring that the plaintiffs are “under no obligation to pay any of the no-fault claims of the Provider Defendants, past, present, or future,” presents a justiciable controversy appropriate for declaratory relief (see, Buller v Goldberg, 40 AD3d 333 [1st Dept. 2007]; Long Island Lighting Co. v Allianz Underwriters Ins. Co., 35 AD3d 253 [1st Dept. 2006], appeal dismissed, 9 NY3d 10003 [2007], cited with approval in Liberty Mut. Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 814-816, 967 A.2d 1, 31-32 [2009]).

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants, pursuant to CPLR 3211(a)(7), seeking dismissal of the fourth cause of action, [*7]for a declaratory judgment concerning alleged illegal fee-splitting, are denied. A licensed physician is generally prohibited from sharing fees with non-physicians (see, Education Law § 6530[19]; 8 NYCRR 29.1[b][4]; A.T. Medical, P.C. v State Farm Mut. Ins. Co., 10 Misc 3d 568 [NYC Civ. Ct. Queens County 2005] [Culley, J.] [improperly licensed provider]). The plaintiffs have adequately alleged that the licensed defendants have engaged in unlawful fee-splitting with the management defendants.

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking, pursuant to CPLR 3211(a)(7), dismissal of the fifth cause of action, for reimbursement, are granted. Public Health Law section 238-a(1)(a), “Prohibition of financial arrangements and referrals,” provides: “A practitioner authorized to order clinical laboratory services, pharmacy services, radiation therapy services, physical therapy services or x-ray or imaging services may not make a referral for such services to a health care provider authorized to provide such services where such practitioner or immediate family member of such practitioner has a financial relationship with such health care provider” (see, Ozone Park Medical Diagnostic Associates v Allstate Ins. Co., 180 Misc 2d 105 [App. T. 2nd Dept. 1999]; Stand-Up MRI of the Bronx v General Assur. Ins., 10 Misc 3d 551 [Dist. Ct. Suffolk County 2005]). The statute, in essence, prohibits a medical doctor from ordering specified medical services from an entity in which he or an immediate family member has a financial interest. The plaintiffs cannot successfully invoke the statute against “management defendants [who] control the referral of patients to the medical providers.”

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants requesting, pursuant to CPLR 3211(a)(7), dismissal of the sixth cause of action, for a declaratory judgment regarding the medical services provided by allegedly independent contractors, are denied. The complaint alleges that “the persons who provided health care services for some or all of the Provider Defendants were not employees of the Provider Defendants, but were independent contractors.” “[W]here a billing provider seeks to recover no-fault benefits for services which were not rendered by it or its employees, but rather by a treating provider who is an independent contractor, it is not a provider’ of the medical services rendered within the meaning of 11 NYCRR 65.15(j)(1) [now 11 NYCRR 65-3.11(a)] and is, therefore, not entitled to recover direct payment’ of assigned no-fault benefits from the defendant insurer” (Rockaway Blvd. Medical P.C. v Progressive Ins., 9 Misc 3d 52, 54 [App. T. 2nd Dept. 2005]). The complaint adequately states a cause of action for a judgment declaring that the plaintiff insurers have no obligation to pay for services billed by the provider defendants, but rendered by independent contractors.

Those branches of the motions by the Miller defendants and Pevzner defendants seeking, pursuant to CPLR 3024, that the plaintiffs serve a more definite statement are denied. The complaint is sufficiently specific for the defendants to frame a response (see, CPLR 3024[a]; Della Villa v Constantino, 246 AD2d 867 [3rd Dept. 1998]; Mirage Rest., Inc. v Majestic Chevrolet, Inc., 75 AD2d 808 [2nd Dept. 1980]).

That branch of the motion by the Miller defendants seeking severance of mis-joined parties and discontinuing the claims against them is granted to the extent that the court orders the severance of the causes of action against each group of defendants denominated herein as Group 1, Group 2, and Group 3. The causes of action asserted against Group 1 shall continue [*8]under this index number. Two separate index numbers shall be purchased for Group 2 and Group 3, and two separate actions shall be maintained against Group 2 and Group 3.

CPLR 1002, “Permissive joinder of parties,” allows the combination of parties as plaintiffs or defendants subject to the conditions that (1) the claims must arise from “the same transaction, occurrence, or series of transactions or occurrences,” and (2) a common question of law or fact is presented (see, Stewart Tenants Corp. v Square Industries, Inc., 269 AD2d 246 [1st Dept. 2000]). It is true that CPLR 1002 and its predecessor under the Civil Practice Act have been given an expansive application (see, Akely v Kinnicutt, 238 NY 466 [1924]; Hempstead General Hosp. v Liberty Mut. Ins. Co., 134 AD2d 569 [2nd Dept. 1987]; Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 1002; 3 Weinstein-Korn-Miller, NY Civ Prac ¶ 1002.05). One text even states that: “If there is a rational connection between the parties and causes of action, CPLR 1002 is satisfied” (3 Weinstein-Korn-Miller, NY Civ Prac ¶ 1002.05).

However, in the case at bar, each group of defendants operated separately from the other groups, and the plaintiffs did not demonstrate that there is a logical connection between the activities of each that suffices to meet the “same transaction . . . or series of transactions” requirement (see, Mount Sinai Hosp. v Motor Vehicle Accident Indemnification Corp., 291 AD2d 536, 536 [2nd Dept. 2002] [“The Supreme Court providently exercised its discretion in severing the remaining five causes of action, asserting claims on behalf of five unrelated assignees, involved in accidents on five different dates, with no common contract of insurance and no relation or similarity to each other, other than the fact that the no-fault benefits were not paid”]).

The Court notes that combining the multitude of claims by the numerous plaintiffs against three different groups of defendants is likely to cause juror confusion (see, Poole v Allstate Ins. Co., 20 AD3d 518 [3rd Dept. 2005] [severance required in action brought against insurer by assignee of 47 no-fault claims to recover unpaid no-fault benefits for medical services he allegedly provided to 47 different patients]; Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co., 12 AD3d 185 [1st Dept. 2004] [insurer’s motion to sever claims into separate actions properly granted in action brought by medical services provider against insurer to recover on 68 claims for no-fault insurance benefits that provider had been assigned by 68 assignors]; Andrew Carothers, M.D., P.C. v GEICO Indem. Co., 14 Misc 3d 92 [App. T. 2nd Dept. 2007]). Finally, although “[m]isjoinder of parties is not a ground for dismissal of an action,” (CPLR 1003), the Court has the authority to order severances (see, CPLR 1002 & 1003).

In sum, upon the foregoing papers, the following branches of the motions are granted in whole or in part:

1. Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants requesting dismissal of the first cause of action asserted against them pursuant to CPLR 3211(a)(7) are granted to the extent that the first cause of action seeks damages accruing before April 4, 2002;

2. That branch of the motion by the Pevzner defendants seeking dismissal of the plaintiffs’ first cause of action to the extent that it seeks punitive damages is granted;

3. Those branches of the motions by the Miller defendants, the Pevzner defendants, and [*9]the Vainer defendants, pursuant to CPLR 3211(a)(7), seeking dismissal of the second cause of action are granted to the extent that the second cause of action seeks damages accruing before April 4, 2002;

4. That branch of the motion by the Pevzner defendants, requesting dismissal of the first and second causes of action to the extent that they seek damages for payments made before April 4, 2002 is granted;

5. Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants, pursuant to CPLR 3211(a)(7), seeking dismissal of the fifth cause of action are granted; and, finally,

6. That branch of the motion by the Miller defendants seeking severance of mis-joined parties and discontinuing the claims against them is granted to the extent that the Court orders the severance of the causes of action against each group of defendants denominated above as Group 1, Group 2, and Group 3. The causes of action asserted against Group 1 shall continue under this index number. Two separate index numbers shall be purchased for Group 2 and Group 3, and two separate actions shall be maintained against Group 2 and Group 3, i.e., a separate action and index number for Group 2 and separate ones for Group 3.

The plaintiffs are directed to serve separate amended complaints within 40 days of the service of a copy of this order, bearing the date stamp of receipt by the Clerk, with notice of entry.

The remaining branches of the motions are all denied.

The foregoing constitutes the decision and order of the Court.

Hon. Charles J. MarkeyJustice, Supreme Court, Queens County

Dated: July 31, 2009

Long Island City, New York

Appearances:

For the Plaintiffs:

John E. McCormack, P.C., 41 Hilton Ave., Hempstead, NY 11550

For Defendants Bronx Park Medical, P.C., Inwood Hill Medical P.C., Dr. Noel Worrell Howell, Alexander Freed, Innessa Drabkin, Silver Pines Management Corp., Integra CBA Co., Inc., PKH Corp., and Michael Mazur: Lifshutz & Lifshutz, P.C., by Gary Burgoon, 501 Fifth Ave., suite 506, NY, NY 10017

For Defendant Healthbay Medical, P.C.: George T. Lewis, Jr., P.C., 485 Underhill Blvd., suite 101, Syosset, NY 11791

For Defendants Jean D. Miller, D.O., Jean Miller, D.O., P.C., and Acadian Medical P.C.: Kern [*10]Augustine Conroy & Schoppman, P.C., by Douglas M. Nadjari, Esq., 1325 Franklin Ave., Garden City, NY 11530

For Defendants Josh Vainer and SVG MGMT., Inc.: Matthew J. Conroy & Associates, P.C., by Matthew J. Conroy and Maria Campese Diglio, Esqs., 350 Old Country Road, suite 106, Garden City, NY 11530

For Defendants Simon Pevzner, ASPG MGNT., Inc., Veritas Management Corp., Group Square I.S. Ltd., Kritek, Inc., Strob, Inc., and Lokh Corp.: Schlam Stone Dolan, LLP, by Thomas A. Kissane and Samuel L. Butt, Esqs., 26 Broadway, NY, NY 10004

Other Defendants are either Pro Se and/or have not appeared.

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 (Lila Gold, J.), entered July 20, 2007. The order granted so much of defendant’s motion as sought to disqualify Gary Tsirelman, Esq., and Gary Tsirelman, P.C. from representing plaintiff in this action.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which granted so much of a motion by defendant as sought to disqualify Gary Tsirelman, Esq., and Gary Tsirelman, P.C. from representing plaintiff in this action.

“Whether counsel should be allowed to act as both attorney and witness is a matter addressed to the sound discretion of the court. . . In a disqualification situation any doubt is to be resolved in favor of disqualification” (Solomon v New York Prop. Ins. Underwriting Assn., 118 AD2d 695, 695-696 [1986] [citations omitted]). In the instant case, Gary Tsirelman is both counsel to and sole owner of plaintiff medical provider, and defendant has raised an issue of fact as to whether plaintiff is eligible to receive reimbursement of first-party no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). In light of defendant’s showing that Tsirelman will almost certainly be called as a witness, and that the ultimate determination may well hinge in part on his credibility, the Civil Court properly disqualified Gary Tsirelman, Esq., and Gary Tsirelman, P.C. from representing plaintiff in this action (see Code of Professional Responsibility DR 5-102 [22 NYCRR 1200.21], now Rules of Professional Conduct rule 3.7 [22 NYCRR 1200.29]; Luk Lamellen u. Kupplungsbau GmbH v Lerner, 167 AD2d 451, 452 [1990]; Solomon, 118 AD2d 695). [*2]

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 29, 2009

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 (Loren Baily-Schiffman, J.), entered February 28, 2008. The order denied plaintiff’s motion for summary judgment.

Order reversed without costs, plaintiff’s motion for summary judgment granted and matter remitted to the Civil Court for the calculation of statutory interest and an assessment of attorney’s fees.

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court denied plaintiff’s motion for summary judgment, holding that there are questions of fact as to whether plaintiff’s assignor is an innocent third party or was involved in, or had knowledge of, the identity theft which resulted in defendant’s issuance of the automobile insurance policy. The instant appeal by plaintiff ensued.

While defendant contends that plaintiff is not entitled to summary judgment because the insurance policy was obtained fraudulently as a result of identity theft, the record is bereft of any evidence that plaintiff’s assignor participated in or was aware of such a fraudulent scheme (cf. A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12 Misc 3d 8 [App Term, 2d & 11th Jud Dists 2006]). Since defendant did not cancel the insurance policy prior to the accident (see Vehicle and Traffic Law § 313), defendant failed to demonstrate the existence of an issue of fact so as to defeat plaintiff’s motion for summary judgment (see Matter of Metlife Auto & Home v Agudelo, 8 AD3d 571 [2004]; D.A.V. Chiropractic, P.C. v GEICO Indem. Co., 21 Misc 3d 138[A], 2008 NY Slip Op 52304[U] [App Term, 9th & 10th Jud Dists 2008]; cf. A.B. Med. Servs. PLLC, 12 Misc 3d 8). Accordingly, the order is reversed, plaintiff’s motion for summary judgment is granted, and the matter is remitted to the Civil Court for the calculation of statutory [*2]interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 29, 2009

—[*1] Craig Meyerson, Latham, N.Y., for appellants.

Stern & Montana, LLP, New York, N.Y. (Richard Montana of counsel), for respondent.

In an action to recover no-fault medical payments under certain contracts of insurance, the plaintiffs appeal, as limited by their brief, (1) from so much of an order of the Supreme Court, Westchester County (Bellantoni, J.), entered January 16, 2008, as denied their motion for summary judgment on the complaint and granted those branches of the defendant’s cross motion which were for summary judgment dismissing the first, third, fourth, fifth, sixth, eighth, ninth, tenth, eleventh, twelfth, fourteenth, fifteenth, and sixteenth causes of action, and (2) from so much of an order of the same court entered July 2, 2008, as, upon reargument, adhered to the original determination in the order entered January 16, 2008.

Ordered that appeal from the order entered January 16, 2008, is dismissed, as that order was superseded by the order entered July 2, 2008, made upon reargument; and it is further,

Ordered that the order entered July 2, 2008, is modified, on the law, by deleting the provisions thereof, upon reargument, adhering to the original determination in the order entered January 16, 2008, granting those branches of the defendant’s cross motion which were for summary judgment dismissing the first, third, fourth, fifth, sixth, eighth, ninth, tenth, eleventh, twelfth, fourteenth, fifteenth, and sixteenth causes of action, and substituting therefor a provision, upon reargument, vacating so much of the order entered January 16, 2008, as granted those branches of the cross motion; as so modified, the order entered July 2, 2008, is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for a new determination of those branches of the cross motion following a prompt application to the Workers’ Compensation Board to determine the parties’ rights under the Workers’ Compensation Law.

The plaintiffs, as assignees of no-fault benefits (see Insurance Law § 5101 et seq.), brought this action to recover for health services rendered to the beneficiaries of the defendant’s no-fault insurance contracts. Each assignor received medical treatment from the plaintiffs following separate automobile accidents. The complaint contained 17 causes of action. The plaintiffs moved for summary judgment on the complaint and the defendant cross-moved, inter alia, for summary judgment dismissing the complaint. The Supreme Court, inter alia, denied the plaintiffs’ motion, and granted those branches of the defendant’s cross motion which were to dismiss the first, third, fourth, fifth, sixth, eighth, ninth, tenth, eleventh, twelfth, fourteenth, fifteenth, and sixteenth causes [*2]of action. The court concluded that, because the assignors in the aforementioned causes of action were injured during the course of their respective employment, the plaintiffs were barred from recovery pursuant to Workers’ Compensation Law § 11. The plaintiffs moved, and the defendant cross-moved, for leave to reargue. Upon reargument, the court adhered to its original determination. We modify.

There has been no determination by the Workers’ Compensation Board as to whether the assignors are entitled to Workers’ Compensation benefits for their injuries (see Nunes v Window Network, LLC, 54 AD3d 834, 835 [2008]; cf. Thompson v Grumman Aerospace Corp., 78 NY2d 553 [1991]). The Workers’ Compensation Board has primary jurisdiction to determine factual issues concerning coverage under the Workers’ Compensation Law (see Botwinick v Ogden, 59 NY2d 909, 911 [1983]; Bastidas v Epic Realty, LLC, 58 AD3d 776 [2009]; Santigate v Linsalata, 304 AD2d 639, 640 [2003]). Where “a plaintiff fails to litigate that issue before the Board, ‘the court should not express an opinion as to the availability of compensation but remit the matter to the Board’ ” (O’Hurley-Pitts v Diocese of Rockville Ctr., 57 AD3d 633, 634 [2008], quoting Liss v Trans Auto Sys., 68 NY2d 15, 21 [1986]). Accordingly, in considering the defendant’s cross motion, the Supreme Court should not have entertained the defendant’s contention that the plaintiffs were barred from recovery pursuant to Workers’ Compensation Law § 11. Those claims must be referred to the Workers’ Compensation Board for a determination as to whether the plaintiffs have a valid cause of action to recover no-fault benefits, or whether they are relegated to benefits under the Workers’ Compensation Law (cf. O’Hurley-Pitts v Diocese of Rockville Ctr., 57 AD3d at 634; Nunes v Window Network, LLC, 54 AD3d at 835).

The Supreme Court properly denied the plaintiffs’ motion for summary judgment on the complaint, as the plaintiffs failed to demonstrate, prima facie, their entitlement to judgment as a matter of law.

The plaintiffs’ remaining contentions either are without merit or have been rendered academic in light of our determination. Skelos, J.P., Santucci, Balkin and Leventhal, JJ., concur.

[*1]

Civil Court of the City of New York, Queens County, July 27, 2009

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (Melissa A. Pirillo of counsel), for plaintiff. Law Office of Teresa M. Spina, Woodbury (John Dupuy of counsel), for defendant.

{**25 Misc 3d at 546} OPINION OF THE COURT

William A. Viscovich, J. [*2]

Due to the similarity of the factual background and legal issues to be determined in these matters, the two cases herein were consolidated for trial purposes before this court. After a pretrial conference, the parties stipulated on the record as follows as to both cases:

1. Plaintiff has established its prima facie case as a matter of law;

2. Defendant has issued timely verification requests to the plaintiff’s attorney;

3. The plaintiff’s attorney responded to those verification requests with identical “compliance letters” in each case.

Also, while not stipulated to on the record, the following facts are undisputed. In the first action (Isabel Graulan), plaintiff submitted one bill totaling $676.98 for supplies rendered to the claimant for date of service August 15, 2007. Along with the bill was a letter from plaintiff’s counsel requesting that any and all verification requests be directed to their office. Defendant timely received this bill on or about August 15, 2007. Thereafter, defendant timely requested from plaintiff’s attorney additional verification on August 24, 2007, with a follow-up request on September 24, 2007, both seeking a narrative report of the patient’s initial consultation from the prescribing/referring physician (specifically, naming one Dr. Goldman).{**25 Misc 3d at 547}

Likewise, in the second action (Cesare Iori), plaintiff timely submitted a bill totaling $372.98 for supplies rendered to the claimant for date of services July 17, 2007 (again with a letter from plaintiff’s attorney requesting that any and all verification requests be directed to their office), which defendant timely received on or about July 25, 2007. Thereafter, defendant timely requested additional verification on August 14, 2007, with a follow-up request made on September 18, 2007 seeking a manufacturer’s invoice documenting the cost of the medical equipment or supplies and proof of payment for the medical equipment or supplies.

In both cases, the plaintiff’s attorney responded to the verification requests after the follow-up letter had been sent. These self-titled “compliance letters” read, in part, as follows:

“Please be advised that the bills, medical reports, assignment of benefits and proof of claim were previously provided with the initial submission of the claim for the above-referenced patient. Be further advised that this response constitutes full compliance with any purported requests and constitutes the provider’s submission of all relevant documents in the provider’s possession. Any further requests should be directed to the party that possesses such other information. Therefore any further requests to this provider are deemed unnecessary and in violation of 11 NYCRR § 65-3.2 (c)” (emphasis added).

A review of the transcript of the proceeding reveals some confusion as to the exact nature of the issues to be decided. Nonetheless, based upon the transcript and the briefs submitted by the parties, the court has determined that the following issues control its decision in these matters:

1. Were defendant’s verification requests proper;

2. If so, were plaintiff’s responses to the defendant’s verification requests sufficient; and [*3]

3. If not, was defendant obligated to respond further to plaintiff in some form to communicate its position that the response was insufficient or could it remain silent?

Discussion of Law

Defendant’s Verification Requests Were Proper

An insurance carrier is permitted to request additional information from a claimant through a proper and timely verification{**25 Misc 3d at 548} request. (See generally 11 NYCRR 65-3.5 [b].) While the materials an insurer may request are not unlimited (see generally 11 NYCRR 65-3.5 [b]), the Insurance Law and regulations clearly outline an insurer’s right to request and receive information necessary to the processing of a provider’s claim for no-fault benefits. Furthermore, “[t]he insurer is entitled to receive all items necessary to verify the claim.” (See 11 NYCRR 65-3.5 [c].) As such, the issue for this court to determine is whether the verification requests in each of these cases were in some way inappropriate or otherwise beyond the scope of a proper verification request.

In the Graulan matter, the insurer requested “a narrative report of the patient’s initial consultation from the prescribing/referring physician (Dr. Goldman).” In the Iori matter, the insurer requested a “manufacturers invoice documenting the cost of the medical equipment or supplies” and “proof of payment for the medical equipment or supplies.” In both cases, the court finds that said requests were reasonable and in accordance with the statutory and regulatory framework of New York State’s no-fault insurance statutes and regulations.

As such, the court must now address the issue of the sufficiency of plaintiff’s responses to the defendant’s verification requests.

In the Graulan Matter, Plaintiff’s Response to Defendant’s Verification Request was Sufficient

In the Graulan matter, the defendant’s reasonable verification request was for “a narrative report of the patient’s initial consultation from the prescribing/referring physician (Dr. Goldman).” The plaintiff’s response, while pro forma, did clearly state that “further requests should be directed to the party that possesses such other information.” In this matter, that party seems to be one Dr. Goldman, who was likely known to the insurer, as evidenced by the doctor’s name being placed on the verification request.

Pursuant to 11 NYCRR 65-3.2 (e) and (f), an insurer is under a duty to “[c]learly inform the applicant” of its position and must “[r]espond promptly . . . to all communications from . . . attorneys,” including responses to verification requests. Indeed, an insurer is required to respond to a response to a verification request, regardless of whether it feels the response is sufficient. (See All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907 [Civ Ct, Queens County 2004, Agate, J.]; Lenox Hill Radiology, P.C. v Allstate Ins. Co., Civ Ct, NY County, 2008,{**25 Misc 3d at 549} Moulton, J., index No. 076/08; Media Neurology, P.C. v Countrywide Ins. Co., 21 Misc 3d 1101[A], 2008 NY Slip Op 51902[U] [Civ Ct, Kings County 2008, Ash, J.].) [*4]

At the very least, given that the response to the verification request was somewhat on point, the defendant should have responded to the verification response as being insufficient. More importantly, however, defendant should have forwarded a verification request to Dr. Goldman, or if it could not locate Dr. Goldman, the defendant should have requested that plaintiff provide contact information for him. Either way, had no response been forthcoming from either Dr. Goldman or plaintiff, this action would be premature and the court would be inclined to dismiss it as such due to the plaintiff’s failure to provide a legitimate verification response.

Given the defendant’s failure to take action on plaintiff’s marginally acceptable verification response, the court finds in favor of the plaintiff in the amount of $676.98 plus statutory interest, attorneys fees and costs and disbursements.

In the Iori Matter, Plaintiff’s Response to Defendant’s Verification Request was Insufficient and as Such Defendant was Not Obligated to Respond Further to Plaintiff in Some Form to Communicate Its Position the Response was Insufficient

Unlike the previous matter, the court finds that plaintiff’s response to the defendant’s request for verification was insufficient. As previously decided herein, the defendant’s verification request for a “manufacturers invoice documenting the cost of the medical equipment or supplies” and “proof of payment for the medical equipment or supplies” was eminently reasonable.

While plaintiff’s response in this matter was identical to the response in the previous matter, it was, at best, vague, disingenuous and totally lacking in any guidance that the defendant could find useful in obtaining the requested information. It contained neither the information requested nor alternative information sufficient to allow the defendant to expedite either payment or denial of the claim. Nor was there any indication, as in Graulan, that defendant might know whom to contact other than the plaintiff.

Here it should be pointed out that the requested items, unlike in the previous case, were likely in the control of, or at least accessible to the plaintiff. This court finds it extremely difficult to believe that plaintiff, with the assistance of counsel, who was basically acting as its billing agent (see Lenox Hill Radiology &{**25 Misc 3d at 550} MIA P.C. v Global Liberty Ins., 20 Misc 3d 434 [Civ Ct, NY County 2008, Bluth, J.], could not obtain either a manufacturer’s invoice or a proof of payment for the items provided. In that case, involving the same plaintiff’s firm, it seems that the response to the verification request therein was identical to the responses contained herein.

Courts have endorsed not only the legal obligation to respond to verification requests, but have distinctly addressed the contractual and professional obligation to likewise respond. In the case of Dilon Med. Supply Corp. v Travelers Ins. Co. (7 Misc 3d 927 [Civ Ct, Kings County 2005]), the court stated that “when a claimant submits bills to an insurer for payment, the claimant, who stands in the shoes of his assignor, must deal in good faith and cooperate with the insurer if it wants to get paid” (id. at 930). The court further outlined a good faith duty with [*5]respect to responses to verification requests, noting that “even if the claimant believes it cannot or need not comply with the insurer’s request, the claimant still has a duty to communicate with the insurer regarding the request” (id. at 931).

While in that case, unlike here, there was no response whatsoever to defendant’s verification request, the plaintiff’s response herein hardly constitutes good faith and is made more unacceptable by the language contained therein that it constituted “full compliance with . . . purported [verification] requests” and that “any further requests to this provider are deemed unnecessary and in violation of 11 NYCRR § 65-3.2 (c).”

As Judge Bluth stated in Lenox Hill Radiology & MIA PC v Government Empls. Ins. Co. (NYLJ, Aug. 27, 2008, at 27, cols 1, 2 [index No. 39CVN 2008]),

“[J]ust because plaintiff’s attorney labeled the letters ‘Verification Compliance’ does not make it so. The label is meaningless; in no way can any literate person possibly construe that letter as complying with the verification request. No verification was supplied. Those letters, which completely ignored defendant’s bona fide requests . . . specifically informed defendant that plaintiff would not be providing whatever information may have been requested. Plaintiff’s attorneys’ self-serving and threatening . . . letters did not call for a response—in fact, by specifically putting the defendant on notice that nothing else would be forthcoming{**25 Misc 3d at 551} and that any further request would be ‘unnecessary and in violation of 11 NYCRR § 65-3.2(c)’—plaintiff’s attorneys instructed defendant not to respond. Moreover, 11 NYCRR § 65-3.2 (f) only requires the insurer to respond when a response is indicated and here, no response was indicated” (emphasis added).

While the court is reluctant to impose this limitation on plaintiffs, given that the history and purpose of New York State’s enactment of the No-Fault Law is to ensure the prompt and expeditious payment of claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 284 [1997]), there is a somewhat competing policy concern that an insurer “is entitled to receive all items necessary to verify the claim” (see 11 NYCRR 65-3.5 [c]). Allowing the document submitted by plaintiff to qualify in this matter as a legitimate verification response could encourage no-fault plaintiffs to simply ignore verification requests based upon their own interpretation of what constitutes a valid response. As in this particular matter, they would then be able to provide nonresponsive “verifications” on their own terms, thus enabling them to move matters prematurely into litigation without a full prior vetting of the matter as anticipated by the no-fault statutes.

As such, the complaint in the matter of Custom Orthotics, LTD., as assignee of Cesare Iori v Government Empls. Ins. Co. is dismissed as premature.

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 (Kathryn E. Freed, J.), entered April 4, 2007, deemed from a judgment of the same court entered June 20, 2007 (see CPLR 5501 [c]). The judgment, entered pursuant to the April 4, 2007 order granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $578.90.

Judgment reversed without costs, order granting plaintiff’s motion for summary judgment vacated and plaintiff’s motion for summary judgment denied.

In this action by a provider to recover assigned first-party no-fault benefits, defendant appeals from an order of the Civil Court granting plaintiff’s motion for summary judgment. The appeal is deemed to be from the judgment that was subsequently entered pursuant to the order (see CPLR 5501 [c]).

Since plaintiff’s motion for summary judgment was supported by an affidavit of an employee of a third-party billing company which failed to comply with CPLR 4518, plaintiff failed to make a prima facie showing of its entitlement to summary judgment (see Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 15 Misc 3d 144[A], 2007 NY Slip Op 51161[U] [App Term, 2d & 11th Jud Dists, 2007], affd 55 AD3d 644 [2008]; Andrew Carothers, M.D., P.C. v GEICO Indem. Co., ___ Misc 3d ___, 2009 NY Slip Op 29155 [App Term, 2d, 11th & 13th Jud Dists 2009]; Bath Med. Supply, Inc. v Deerbrook Ins. Co., 14 Misc 3d 135[A], 2007 NY Slip Op 50179[U] [App Term, 2d & 11th Jud Dists 2007]; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). Consequently, plaintiff’s motion for summary judgment should have been denied.

In light of the foregoing, we reach no other issue.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 24, 2009

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 July 10, 2007. The order granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s cross motion seeking summary judgment and sanctions.

Order modified by providing that defendant’s motion for summary judgment is denied; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s cross motion seeking summary judgment and sanctions.

The affidavits proffered by defendant in support of its motion for summary judgment were executed out of state. Although the affidavits were accompanied by documents that purported to be certificates of conformity, the certificates did not comply with Real Property Law § 299-a and, thus, the affidavits did not comply with CPLR 2309 (c) (see Ford Motor Credit Co. v Prestige Gown Cleaning Serv., 193 Misc 2d 262 [2002]). Since this defect was duly objected to by plaintiff in the Civil Court, defendant failed to introduce competent evidence in admissible form establishing its entitlement to summary judgment (see Impulse Chiropractic, P.C. v New York Cent. Mut. Fire Ins. Co., 19 Misc 3d 127[A], 2008 NY Slip Op 50498[U] [App Term, 2d & 11th Jud Dists 2008]). Consequently, defendant’s motion for summary judgment should have been denied (id.).

Contrary to plaintiff’s contention, plaintiff’s cross motion for summary judgment was properly denied. Plaintiff failed to establish that its billing records constituted evidence in admissible form 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]; Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 132[A], 2006 NY Slip Op 51879[U] [App Term, 2d [*2]& 11th Jud Dists 2006]). Plaintiff’s remaining contentions lack merit.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 24, 2009