Civil Court of the City of New York, Richmond County

21817/07

Attorney’s for Defendant:

Gullo & Associates

520 86th Street

Brooklyn, New York 11209

Attorney’s for Plaintiff:

Phillips, Krantz & Levi, LLP

14 Avenue T

Brooklyn, New York 11223

Katherine A. Levine, J.

This case calls into question what precisely a peer review report, submitted by an insurance company in support of its denial for lack of medical necessity, must contain in order to defeat a plaintiff’s motion for summary judgment and/or to grant a defendant’s cross motion for summary judgment. As will be explained below, while a peer review report may be sufficient to defeat a plaintiff’s motion for summary judgment it may not be sufficient to warrant granting of summary judgment to the defendant insurer, even when the plaintiff does not submit evidence to rebut the report. This dichotomy, in the context of no-fault insurance, has not been definitively clarified by the higher courts.

Plaintiff Millennium Radiology, P.C, (“plaintiff” or “Millennium”) commenced this action to recover from defendant, New York Central Mutual Fire Insurance Company (“defendant” or “NY Central”), the sum of $1,791.71 for the two MRIs it performed upon its assignor, Adrine Grant (“Grant” or “assignor”). In support of its application for summary judgment, plaintiff contends that the defendant has not submitted competent medical evidence to support its denial of the claim for lack of medical necessity.

Defendant opposed plaintiff’s application and cross-moved for summary judgment on the [*2]grounds that the services provided by plaintiff were not medically necessary. In support of its denial, defendant submitted a copy of a peer review prepared by its chiropractor Albert Claps, D.C. who concluded that there was no justification for the MRIs performed upon the assignor because the referring provider failed to indicate whether the assignor was experiencing “an improvement or degradation with regard to her causally related symptoms” and because the doctor failed to reveal why the MRIs were ordered or how the outcomes of these tests would assist in the treatment of the assignor.

During oral argument, defendant maintained that the complaint should be dismissed because the plaintiff had failed to submit any medical evidence to rebut the peer review report. Plaintiff responded that it was under no duty to offer any evidence in rebuttal and that the conclusion of defendant’s expert regarding the medical necessity of the MRIs created an issue of fact which must be determined at trial.

A plaintiff makes a prima facie case “by submitting evidentiary proof that the prescribed statutory billing forms were mailed and received and that payment of no-fault benefits were was overdue.” A.B. Medical Services, v. Liberty Mutual Ins. Co., 39 AD3d 779, 780 (2d Dept. 2007). See, Ins. Law, §5106(a); 11 NYCRR 65-3.8(c); Nyack Hospital v. Metropolitan Property & Cas. Co., 16 AD3d 564 (2d Dept. 2005); Mary Immaculate Hospital v. Allstate Ins. Co., 5 AD3d 742– 43 (2d Dept. 2004). It is clear that plaintiff has established its prima facie case. The affidavit of plaintiff’s billing manager exhaustively details the record keeping procedures of the business, and clearly sets forth the procedures for the creation and retention of bills, of which she has personal knowledge. See Manhattan Medical v. State Farm Mutual Automobile, 2008 NY Slip Op. 51844(U), 20 Misc 3d 1144(A)(Civil Ct., Richmond Co.2008) citing Second Medical v. Auto One Ins., 20 Misc 3d 291, 294-95 (Civil Ct., Kings Co. 2008). The affidavit further details that the bills at issue were made and kept in the ordinary course of business at the time the services were rendered and sets forth the precise mailing procedure that was followed. Moreover, the billing manager personally mailed the bill and forms.

A presumption of medical necessity attaches to a defendant’s admission of the plaintiff’s timely submission of proper claim forms, and the burden then switches to the defendant to demonstrate the lack of medical necessity. Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins., 2007 NY Slip Op. 52273U, 2007 NY Misc. LEXIS 7860 (Dist. Ct., Nassau Co. 12/3/2007); A.B. Medical Services, PLLC v. NY Central Mutual Fire Ins. Co., 7 Misc 3d 1018(A), 801 NYS2d 229 (Civil Ct. Kings. Co. 2005); Citywide Social Work & Psychological Services v. Travelers Indemnity, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004). Defendant thus bears “both the burden of production and the burden of persuasion with respect to the medical necessity of the treatment or testing for which payment is sought.” See, Bajaj v. Progressive Ins. Co., 14 Misc 3d 1202(A) (N.Y.C. Civ. Ct. 2006). Thus, once a plaintiff has proven its prima facie case, the defendant must prove that the test was not medically necessary. Nir. v. Allstate Insurance Co., 7 Misc 3d 544, 546 (Civil Ct, Kings Co. 2005). A defendant may raise a triable issue of fact by submitting a denial of claim form stating that the claim is being denied based on a medical examination or peer review report requested by the insurer. The insurer need not set forth the medical rationale in its denial of claim form. Rather, the insurer need only submit a copy of that report to the applicant or its attorney upon written request. A.B. Medical Services, PLLC v GEICO, 39 AD3d 778, 779 ( 2d Dept. 2007); A B. Medical Services v. Liberty Mutual Ins. Co., 39 AD3d 779 ( 2d Dept. 2007). See, 11 NYCRR 65-3.8(b)(4).

Summary judgment is a “drastic and harsh” remedy and “should be used sparingly.” Utica National Ins. Group v. Providian Medical Services, P.C.,2008 N.Y Slip. Op.52610U, 22 Misc 3d 1107A ( Sup. Ct., Queens Co., 2008). See Epstein v. Scally, 99 AD2d 713, 714 (1st Dept. 1984 ). Summary judgment cannot be resolved by conflicting affidavits. Epstein v. Scally, [*3]supra . To grant summary judgment, it must clearly appear, on the papers alone, ” that no material and triable issue of fact is presented”. Forrest v. Jewish Guild for the Blind, 3 NY3d 295 (2004); Zuckerman v, City of New York, 49 NY2d 557 (1980); Utica Nat’l Ins. Group, supra . The court’s function on a motion for summary judgment is issue finding rather than issue determination. Precision Diagnostic Imaging, P.C., v. Travelers Insurance Co., 8 Misc 3d 435, 436 ( Civil Ct., N.Y Co. 2005), citing Brown v Achy, 9 AD3d 30, 33 n 2 (1st Dept. 2004). Once such proof has been offered, in order for the opposing party to defeat the motion for summary judgment, it must “show facts sufficient to require a trial of any issue of fact.” Inwood Hills Medical P.C. v. Bronx Neurodiagnostics P.C., 3 Misc 3d 1110A, 787 NYS2d 678 (Civil Ct., NY Co., 2004) quoting CLR 3212 (b). See, Alvarez v. Prospect Hospital, 68 NY2d 320 (1986).

To defeat a plaintiff’s motion for summary judgment, the report must be in admissible form; i.e. signed and sworn to. See, Radiology Today v. GEICO, 20 Misc 3d 70

(App. Term, 2d Dept. 2008); A.B. Medical Services PLLC v. Lumbermens Mutual Cas. Co., 4 Misc 3d 86 (App. Term, 2 & 11th Jud. Dists. 2004). Some courts have also held that in additional to being in admissible form, the peer review report or medical examination must raise a triable issue of fact for lack of medical necessity by setting forth “a sufficiently detailed factual basis and medical rationale for the claim’s rejection.” Nir, supra at 546 citing Amaze Medical Supply v. Eagle Ins., 2 Misc 3d 134A, 2004 NY Slip Op. 51701U (App. Term, 2d and 11th Jud. Dists. 2003). Cross bridge Diagnostic Radiology, PC v. Progressive Ins. Co. 2008 NY Slip Op 51761U , 20 Misc 3d 143A (App. Term, 2d Dept. 2008); Delta Diagnostic v. Chubb Insurance Co., 17 Misc 3d 16 (App. Term, 2d Dept. 2007). The quantum of evidence presented in the peer review report need not rise to the level of evidence presented at trial through the peer review doctor to substantiate the peer review report’s conclusion as to lack of medical necessity. Nir, supra at 546-547.

Plaintiff errs in contending that its motion should be granted since the peer review report does not contain competent medical evidence to support a finding of medical necessity, as a party cannot establish its entitlement to judgment “merely by pointing to gaps in the opponent’ s proof.” Falah v. Stop & Shop Companies, Inc., 41 AD3d 638 (2d Dept. 2007). Furthermore, the peer review report is in admissible form and contains a sufficient rationale so as to create an issue of fact concerning medical necessity. While somewhat bare bones, the report does in artfully state that the MRI studies appear to be medically unnecessary because the referring doctor does not indicate whether the claimant experienced improvement or degradation with regard to her causally related symptoms, and there was no indication from the referring doctor why the MRIs were ordered or how the anticipated outcome of the tests would assist with the management of the assignor’s case.

However, while a peer review report may be sufficient to defeat a motion for summary judgment by the plaintiff, at trial, the peer review report must be supported by testimony regarding the “generally accepted medical/professional practice. “Nir, supra at 547 citing CityWide Social Work & Psychological Servs. v. Travelers Indemnity Co., 3 Misc 3d 608, 612 (Civil Ct., Kings Co. 2004). Generally accepted practice “is that range of practice that the profession will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling. CityWide, supra at 616. As this court held in H.M. Parekh v. Allstate Ins. Co., Index No. 2041/07, Civil Ct, Richmond County, 3/04/08, at trial a defendant must show by medical evidence “that the treatment or services would be ineffective or that the insurer’s preferred health care treatment or lack of treatment would lead to an equally good outcome.” H.M. Parekh v. Allstate Ins. Co., supra , citing Fifth Ave. Pain Control Center v. Allstate Ins. Co., 196 Misc 2d 801, 807-08 (Civ. Ct. Queens Co. 2003).

The instant peer review report, standing alone, does not rise to this standard and does not establish, as a matter of law, that the services rendered were not medically necessary. As such, this court finds the contents of the report to be insufficient to warrant the granting of defendant’s cross motion, even though the plaintiff failed to submit evidence to rebut the peer review.

Defendant cites a plethora of Appellate Term cases for the proposition that once the defendant insurer rebuts the inference that the services are not medically necessary, the plaintiff must refute this inference in order to create a triable issue of fact. The court first notes that the Appellate Term at times has not ruled that defendant must be awarded summary judgment unless plaintiff refutes the evidence offered by defendant, but only that “such proof may entitled the insurer to summary judgment.” Damadian MRI in Elmhurst v. Liberty Mutual Ins., 2 Misc 3d 128A, 787 NYS2d 919 (App. Term, 2d & 11th Jud. Dists 2004). See A.B. Medical Servs.v. NY Central Mutual Fire Ins., 3 Misc 3d 136A, 787 NYS2d 675 (App. Term 9 & 10th Jud. Dists. 2004)(“summary judgment may, in appropriate circumstances, be awarded to the defendant unless the plaintiff comes forward with admissible proof in reply to create a triable issue of fact). The Appellate Division has not addressed this dichotomy.

Since the report does not contain sufficient evidence to demonstrate the absence of any material issues of fact so as to warrant judgment to defendant (See, e.g.,. Delta Diagnostic v. Chubb, 17 Misc 3d 16, 18 (App. Term 2d Dept. 2007), this case will proceed to trial.

The foregoing constitutes the Decision and Order of the Court.

Dated: April 30, 2009______________________Honorable Katherine A. Levine

Judge, Civil Court

Civil Court of the City of New York, Bronx County

020438-08

Appearance of Counsel-

Plaintiff- Michael J Palumbo, 188 East Post Road, suite 300, White Plains, NY 10601, 914-681-7117

Defendant- Teresa M. Spina, 170 Froehlich Farm Blvd, Woodbury, NY 11797, 516-496-5800

Elizabeth A. Taylor, J.

The issue before the Court is whether the submission of a notice to admit is [*2]sufficient to establish a prima facie case to recover no-fault first party benefits for unpaid medical expenses.

Under CPLR §3123 a notice to admit is a “written request for admission by the latter of the genuineness of any papers or documents…described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry.” (CPLR §3123(a)). If a party fails to respond to a notice to admit within 20 days after service, the matters therein are deemed admitted for the purpose of the pending litigation. (CPLR §3123(a)). A notice to admit is a vehicle for resolving and eliminating matters that may be factually relevant but are not really in dispute, thus a notice to admit is not permissible to seek admissions to material issues. (Villa v. New York City Hous. Auth., 107 AD2d 619, 620 [1984][1st Dep’t]).

In order to establish a prima facie case for first party no-fault benefits a plaintiff must present the claim forms submitted to the insurer in admissible form, then establish that the payment of benefits is overdue, and prove the claim and assignment forms were served upon insurer. (Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742, 742-743 [2004][2nd Dep’t]). Laying the proper evidentiary foundation is commonly done by a witness who can testify that the claim form is a business record pursuant to CPLR §4518. However, it has become increasingly popular for plaintiffs to attempt to forgo the necessity of a witness through the use of interrogatory responses and responses or lack of responses to notices to admit to establish their prima facie case.

The Appellate Term, First Department has allowed the use of interrogatory responses to establish a prima facie case, stating “having admitted receipt of plaintiff’s claims for no-fault first party benefits, defendants may not now be heard to argue that plaintiff failed to establish that the claims had been mailed and received. (P.L.P. Acupuncture, P.C., v. Travelers Indem. Co., 19 Misc 3d 126(A) [2008][N.Y.App. Term 1st Dept.], quoting Fair Price Med. Supply, Inc. v. St. Paul Travelers Ins. Co., 16 Misc 3d 8,9 [2007][N.Y.App. Term 1st Dept.]). However, there are notable differences between the use of interrogatories and a notice to admit. As previously mentioned, a notice to admit may not be used to seek answers to material issues, whereas, an interrogatory is given under oath and may be used to address any relevant question. (Villa at 620). Furthermore, the use of a defendant’s response to interrogatory questions in which it is stated that the claims were mailed and received followed by a subsequent denial is much different than the scenario in which a defendant fails to respond to a notice to admit and it is therefore deemed admitted that they received the claim.

Courts differ drastically on the treatment of the notice to admit to establish a prima facie claim. A number of courts find that the use of a notice to admit seeking admissions as to the receipt of relevant claim forms, bills and defendant’s denial of the same goes to the “heart of the matter” or is a “material issue” and therefore, inadmissible to establish plaintiff’s prima facie case. (see RJ Med. P.C. v. All-State Ins. Co., 15 Misc 3d 1140(A) [2007][NY City Civ. Ct. Bronx County]; PDG Psychological, [*3]P.C. v. State Farm Ins. Co., 12 Misc 3d 1183(A) [2006][N.Y.City Civ. Ct. Kings County]). Meanwhile, other courts have held that the information requested in the notice to admit does not individually go to the “heart of the matter” even though collectively they may be dispositive. (see Seaside Med., P.C. v. General Assur. Co., 16 Misc 3d 758 [2007][NY Dist. Ct. Suffolk]). Further, other courts have held that the admissions of the receipt of relevant claim forms, bills and denials by notice to admit does not go to the “heart of the matter” and is therefore permissible; however, it does not establish a prima facie case because the formalities of the business record exception to the hearsay rule have not been observed. (Bajaj v. General Assur. Co., 18 Misc 3d 25, 28 [2007][NY App. Term 2nd Dept.]).

This Court is cognizant that the Second Department and First Department often differ on matters concerning no-fault litigation. However, since the First Department has yet to speak on the matter, this Court is bound by the Bajaj decision of the Appellate Term, Second Department. “The doctrine of stare decisis requires trial courts…in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or [the Appellate Division of this department] pronounces a contrary rule.” (Striver 140 v. Cruz, 1 Misc 3d 29, 31 [2003][NY App. Term 2nd Dept.]), quoting Mountain View Coach Lines v. Storms, 102 AD2d 663, 664 [1984][2nd Dept.]).

The Second Department has held that a plaintiff must lay a proper foundation for the admissibility under the business records exception to establish a prima facie case. (Bajaj at 28). According to Bajaj,the use of a notice to admit to ask the defendants if they have received the claim form is a proper use of the notice to admit. (id.). If defendant fails to respond to this notice to admit, it is then admissible that the defendant in fact received plaintiff’s claim form. (id.). However, an acknowledgment by defendant that they received the claim form is not a concession of the facts set forth in the claim. (id.). It remains the plaintiff’s burden to lay the sufficient foundation establishing that the claim form is a business record, and as such, is admissible to prove the truth of the matters asserted therein. (id.). This holding continues to be upheld by the Second Department. (see Vista Surgical Supplies, Inc. v. State Farm Mutual Ins. Co., 22 Misc 3d 128(A) [2009][N.Y.App. Term 2nd Dept.]).

Accordingly, the Court finds that an admission by notice to admit that defendant received plaintiff’s claim form is not a concession of the facts set forth in the claim form. The plaintiff still has the burden to establish the claim form is admissible as a business record exception to the hearsay rule to prove the truth of the matters asserted therein. Due to their failure to establish that the claim forms are business records, plaintiffs have not established a prima facie case. It is noted that the plaintiffs called no witnesses to testify.

Accordingly, plaintiff’s actions are dismissed.

The foregoing shall constitute the decision and order of this Court.

Dated: __April 30, 2009_______________

J.C.C.

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, Richmond County (Katherine A. Levine, J.), entered February 11, 2008. The order denied defendant’s motion for summary judgment dismissing the complaint.

Order reversed without costs and defendant’s motion for summary judgment dismissing the complaint granted.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground of lack of medical necessity. Plaintiff did not submit opposition papers. The Civil Court denied defendant’s motion for summary judgment, finding that an issue of fact exists as to whether the services rendered were medically necessary. The instant appeal by defendant ensued.

Defendant, through the submission of the affidavit of its claims support services supervisor and the affirmed independent medical examination report, made a prima facie showing that plaintiff’s claims were properly and timely denied based upon a lack of medical necessity (see A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779 [2007]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins. Cos., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Since plaintiff did not oppose defendant’s motion, defendant’s prima facie showing was unrebutted, thereby entitling defendant to summary judgment dismissing the complaint (see A. Khodadadi Radiology, P.C. v New York Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op [*2]51342[U] [App Term, 2d & 11th Jud Dists 2007]). Accordingly, the order is reversed and defendant’s motion for summary judgment dismissing the complaint is granted.

Weston Patterson, J.P., Golia and Rios, JJ., concur.
Decision Date: April 28, 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, Queens County (Lee A. Mayersohn, J.), entered October 24, 2007. The order denied the petition of State Farm Mutual Automobile Insurance Company to vacate the arbitrator’s awards in favor of the New York City Transit Authority dismissing the claims.

Order modified by adding thereto a provision confirming the arbitrator’s awards; as so modified, affirmed without costs.

State Farm Mutual Automobile Insurance Company (State Farm) commenced compulsory arbitration proceedings against the New York City Transit Authority (Transit Authority), pursuant to Insurance Department Regulations (11 NYCRR) § 65-4.10 (see Insurance Law § 5105), seeking reimbursement for no-fault benefits paid on behalf of its subrogors. After the arbitration hearing, the arbitrator issued two awards in favor of the Transit Authority dismissing State Farm’s claims. State Farm thereafter commenced this special proceeding to vacate the arbitrator’s awards. The Civil Court denied the petition. The instant appeal by State Farm ensued.

Upon a review of the record, we find that the determination of the arbitrator, which denied State Farm’s claims for assigned first-party no-fault benefits, was supported by a reasonable hypothesis and was not arbitrary and capricious (see e.g. Matter of Motor Veh. Acc. Indem. Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 214, 224 [1996]; Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co., 18 AD3d 762, 763 [2005]). Accordingly, the Civil Court properly denied the petition to vacate the arbitrator’s awards. However, upon denying the petition, the court was required, pursuant to CPLR 7511 (e), to confirm the awards (see Matter of [*2]Exclusive Med. & Diagnostic v Government Empls. Ins. Co., 306 AD2d 476 [2003]).

Weston Patterson, J.P., Golia and Rios, JJ., concur.
Decision Date: April 24, 2009

—[*1] Mura & Storm, PLLC, Buffalo (Roy A. Mura of counsel), for defendant-appellant.

Longstreet & Berry, LLP, Syracuse (Martha Berry of counsel), for plaintiff-respondent.

Appeal from an order of the Supreme Court, Oneida County (Samuel D. Hester, J.), entered January 11, 2008. The order, insofar as appealed from, denied the motion of defendant for summary judgment.

It is hereby ordered that the order so appealed from is unanimously affirmed without costs.

Memorandum: Plaintiff commenced this action seeking to recover supplemental uninsured/underinsured motorist (SUM) benefits under an automobile insurance policy issued to her by defendant. Under the SUM endorsement, plaintiff was required to give defendant notice of a claim “[a]s soon as practicable.” Plaintiff promptly notified defendant of the motor vehicle accident, which occurred on May 22, 2000, and she filed a claim for no-fault benefits on July 20, 2000. On April 7, 2003, plaintiff gave defendant notice of her claim under the SUM endorsement. Defendant disclaimed coverage on the ground that plaintiff failed to provide timely notice of the SUM claim.

We conclude that Supreme Court properly denied defendant’s motion for summary judgment dismissing the complaint. “[W]here an insured previously gives timely notice of the accident, the carrier must establish that it is prejudiced by a late notice of SUM claim before it may properly disclaim coverage” (Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 476 [2005]). Here, it is undisputed that plaintiff timely notified defendant of the accident and, shortly thereafter, filed a claim for no-fault benefits. Defendant failed to establish that it was prejudiced by plaintiff’s delay in providing notice of the SUM claim (see id. at 475-476). Present—Hurlbutt, J.P., Peradotto, Carni, Green and Pine, JJ.

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Plaintiff appeals from an order of the Civil Court of the City of New York, New York County (Joan M. Kenney, J.), entered August 17, 2007, which denied its motion for summary judgment.

Per Curiam.

Order (Joan M. Kenney, J.), entered August 17, 2007, reversed, with $10 costs, and plaintiff’s motion for summary judgment in the principal sum of $554.76 is granted. The Clerk is directed to enter judgment accordingly.

Plaintiff established a prima facie entitlement to summary judgment by submitting evidentiary proof that the prescribed statutory billing forms had been mailed and received, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). In opposition, defendant failed to raise a triable issue. Even assuming that defendant timely denied plaintiff’s no-fault claims, the unsworn chiropractor’s report submitted by defendant in support of its defense of lack of medical necessity was not in admissible form, a defect which requires its exclusion from consideration (see CPLR 2106; Shinn v Catanzaro, 1 AD3d 195, 197 [2003]; Mollins v Motor Veh. Acc. Indem. Corp., 14 Misc 3d 133[A], 2007 NY Slip Op 50138[U] [2007]).
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
I concurI concur
Decision Date: April 22, 2009

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court of the City of New York, Bronx County (Fernando Tapia, J.), entered September 4, 2007, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Fernando Tapia, J.), entered September 4,
2007, affirmed, with $10 costs.

Although plaintiff’s claim for no-fault benefits was concededly submitted to defendant beyond the 45-day statutory period (see 11 NYCRR 65-1.1), the record shows that plaintiff’s claim submission included correspondence attempting to explain its delay in filing. Under the regulations, an insurer must not only provide a claimant the opportunity to submit a reasonable justification for any late notice (see 11 NYCRR 65-3.3[a]), but must also establish procedures to “ensure due consideration of denial of claims based upon late filings” and must give “appropriate consideration for situations where the claimant has difficulty ascertaining the insurer’s identity or inadvertently submits a claim to the incorrect insurer” (Matter of Medical Socy. of the State of New York v Serio, 100 NY2d 854, 863 [2003]). Inasmuch as the record does not indicate whether defendant gave any consideration to plaintiff’s explanation for its tardy submission as required by the regulations, we sustain the denial of defendant’s motion for summary judgment.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 20, 2009

Civil Court of the City of New York, New York County

74171 CVN 2007

Attorneys for the Plaintiff

By: Michael C. Rosenberger, Esq.

Law Offices of Bryan Rothenberg

Attorneys for the Defendant

By: Kenneth F. Popper, Esq

Manuel J. Mendez, J.

Defendant AIU Insurance Company, moves for summary judgment pursuant to CPLR §3212 alleging there exists no triable issues of fact because the underlying policy was retroactively cancelled and deemed void ab initio, based on a material misrepresentation in the insurance application, pursuant to the terms of the policy and under Virgina Law. This is an action to recover no-fault benefits for services from a transportation company rendered to the assignor.

Plaintiff opposes the motion and claims that it is error to hold that a policy obtained using fraudulent misrepresentations could be void ab initio as indicated in Vehicle and Traffic Law §313. Plaintiff also claims that the defendant has not offered sufficient proof that the misrepresentation was material such that the insurer would refuse to make such a contract and [*2]provided no affidavit by an individual with personal knowledge of the investigation.

RELEVANT FACTS

Defendant issued a policy to the assignor, Jorge Garcia for a 1995 Dodge Caravan on or about April 21, 2007. At that time he listed his address as 424 Cornwallis Court, Ashland, VA 23005. The defendant claims that Jorge Garcia indicated on a residency request letter dated August 13, 2007, the car was garaged in Virginia, and that he had not changed his residency since he applied for the policy (a copy of the letter is annexed to the motion papers as part of “Exhibit E”). The policy issued contains specific language which the defendant alleges resulted in the policy being void ab initio as a result of the misrepresentations ( certified copy of the policy is annexed to the motion papers as part of “Exhibit C”).

Pursuant to its investigation of the claim regarding the accident of July 7, 2007, defendant held an Examination Under Oath and determined Jorge Garcia had been living in Bronx, New York and not Virginia at the time he signed the closing statement. The defendant cancelled the policy ab initio via letter dated October 24, 2007, with the rescission effective fifteen days from the date of receipt.

LEGAL ANALYSIS

In order to prevail on a motion for summary judgment, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence, eliminating all material issues of fact. Id.; Klein v. City of New York, 89 NY2d 833, 834-35 (1996) Ayotte v. Gervasio, 81 NY2d 1062, 1062 [1993], Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986) Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985), Zuckerman v. City of New York, 49 NY2d 557, 427NYS2d 595 (1980). Once the moving party has satisfied these standards, the burden shifts to the opponent to rebut that prima facie showing, by producing contrary evidence, in admissible form, sufficient to require a trial of material factual issues. Kaufman v Silver, 90 NY2d 204, 208 [*1997]; Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533-34 (1999); Iselin & Co. v Mann Judd Landau, 71 NY2d 420, 427 [1988]. In determining the motion, the court must construe the evidence in the light most favorable to the non-moving party. (SSBS Realty Corp.v. Public Service Mut. Ins. Co., 253 AD2d 583, 584-85 [1st Dept. 1998]; Martin v. Briggs, 235 AD2d 192, 196 [1st Dept., 1997]).

A conflict of law dispute concerning an insurance policy is resolved by application of the conflict of law rules that apply to contracts. Matter of Integon Insurance Co.v. Garcia, 281 AD2d 480, 721 NYS2d 660 [N.Y.A.D. 2nd Dept. 2001]. The test to determine which state law governs involves the “grouping of contacts,” the state with the most significant contacts to the dispute has the law which governs the outcome of the dispute. Eagle Insurance Co. v. Singletary, 279 AD2d 480, 717 NYS2d 351 [N.Y.AD2d Dept. 2000]. It has been held that “significant contacts” regarding an insurance contract include, “the place of contracting, … the place of negotiation and performance, the location of the subject matter of the contract and the domicile or place of business of the contracting parties.” Jones v. AIG Insurance Co., 15 Misc 3d 1123(A), [*3]841 NYS2d 219 [Sup. Ct. Queens County 2007], Matter of Integon Insurance Co.v. Garcia, 281 AD2d 480, supra , and Eagle Insurance Co. v. Singletary, 279 AD2d 480, supra .

The Appellate Division, Second Department, in Eagle Insurance v. Singletary, 279 AD2d 480, supra ,in a factual situation similar to that of the instant action, determined that New York’s governmental interests needed to be balanced against the significant contacts with Virginia. In finding that Virginia law applies, the Court identified Virginia as the location where the contract of insurance was negotiated and obtained by parties doing business and expected to reside in that state and there was an expectation that the vehicle would be garaged there, so that it had the most contacts. The Court also determined this interest takes precedence over New York State’s interest in protecting innocent third parties from denial of insurance coverage.

The policy in this action involves a company doing business in Virginia and an individual representing at the time the contract was entered into in Virginia, that he was a resident of that state. There are significant contacts with Virginia so that the law of that state applies to this action.

The Virginia Code §38.2-309, titled, “When answers or statements of applicant do not bar recovery on policy,” specifically states,

“All statements, declarations and descriptions in any application for an

insurance policy shall be deemed representations and not warranties.

No statement in an application or in any affidavit made before or after

loss under the policy shall bar recovery upon a policy of insurance unless

it is clearly proved that such answer or statement was material to the risk

when assumed and was untrue.”

The Supreme Court of Virginia, has interpreted the statute to apply to insurance companies contesting a claim on the basis of an insured’s misrepresentation and developed a two part test. The insurer is required to demonstrate,

“(1) that the statement or omission on the application was untrue

and

(2) that the insurance company’s reliance on the false statement

or omission was material to the company’s decision to

undertake the risk and issue the policy.”

It is not enough to prove a falsity, the insurer is required to clearly prove that the untruthful answers would have reasonably influenced the company’s decision to issue the policy. See Commercial Underwriter’s Insurance Company v. Hunt & Calderone, P.C., 261 Va. 38, 540 S.E. 2d 491(2001) and Montgomery Mutual Ins. Co. v. Riddle, 266 Va. 539, 587 S.E. 2d 513 (2003). [*4]

The defendant provides the Examination Under Oath (EUO) transcript of Jorge Garcia,

dated September 24, 2007 (annexed as “Exhibit D” to the motion papers), as proof of the material misrepresentation. Mr. Garcia states that although he was residing in New York at the time he entered into the policy in Virginia, he only worked and lived in New York and worked in a delicatessen for part of the year, and he would return and reside in Virginia during the summer when he did construction work. (EUO Transcript at pages 37-39) . Mr. Garcia also indicates that he had inquired of the person filling out the application for his policy, if he could change the listed address and was advised that he would have to wait until some bills arrived, and that since he was planning to return to Virginia he did not change the address. He indicates he was advised that a New York policy would be more expensive but that was not a factor in his decision to keep the address listed as Virginia (EUO Transcript at pages 51-52). The defendant also annexes the affidavit of Fae Pitts, an Underwriter III by AIG Marketing Inc., (annexed to the motion papers as “Exhibit E”) she bases her knowledge on a review of the records and indicates the policy was cancelled retroactively based upon material misrepresentations. Fae Pitts does not provide sufficient details as to the reliance on the misrepresentations being material to the company’s decision to undertake the risk. There is no statement from the individual responsible for filling out the insurance application or sufficient proof to confirm or deny the statements made by Jorge Garcia regarding dual residency.

CONCLUSION

This Court finds there is a conflict of law between Virginia and New York, and Virginia law prevails. Defendant has not met its burden of proof sufficient to obtain summary judgment concerning whether the policy was void ab initio. Defendant has provided proof that Jorge Garcia provided misrepresentations on his insurance policy, but has not clearly established that it relied on those misrepresentations when it undertook the risk or that truthful answers would have influenced the insurer’s decision to issue a policy. It is unclear based on the EUO testimony of Jorge Garcia, whether the individual responsible for preparing the application on behalf of the defendant was aware of the misrepresentations and continued have the policy issued. The defendant has not met its burden of proof, there is no need to address the deficiencies in the plaintiff’s papers.

Accordingly, for the foregoing reasons the defendant’s motion for summary judgment is denied.

The foregoing shall constitute the Decision and Order of the Court.

Dated: April 20, 2009

Manuel J. Mendez

Judge, Civil Court

[*1]

Supreme Court, Appellate Term, Second Department, April 20, 2009

APPEARANCES OF COUNSEL

Rivkin Radler LLP, Uniondale (Evan H. Krinick, Cheryl F. Korman, Stuart M. Bodoff and Melissa M. Murphy of counsel), for appellant.

{**23 Misc 3d at 43} OPINION OF THE COURT

Memorandum.

Order, insofar as appealed from, reversed without costs, defendant’s cross motion for leave to amend its answer and, upon such amendment, for summary judgment dismissing the complaint granted, and complaint dismissed.

In this action by a provider to recover assigned first-party no-fault benefits for services rendered, plaintiff moved for summary judgment. Defendant cross-moved for leave to amend its answer to assert the affirmative defense of collateral estoppel, and, upon such amendment, for summary judgment dismissing the complaint. The Civil Court denied plaintiff’s motion and defendant’s cross motion. Defendant appeals from so much of the order as denied its cross motion.

Generally, leave to amend a pleading pursuant to CPLR 3025 (b) should be granted where there is no significant prejudice or surprise to the opposing party and where the proof submitted in support of the motion indicates that the cause of action or defense to be{**23 Misc 3d at 44} asserted in the amendment may have merit (see Edenwald Contr. Co. v City of New York, 60 NY2d 957, 959 [1983]; Ingrami v Rovner, 45 AD3d 806, 808 [2007]). The court must examine the merits of the cause of action or defense to be asserted in the proposed amendment since leave to amend should not be granted where the cause of action or defense to be asserted is totally without merit or is palpably insufficient as a matter of law (see Ingrami, 45 AD3d at 808; Hill v 2016 Realty Assoc., 42 AD3d 432, 433 [2007]). [*2]

Defendant sought leave to amend its answer in order to interpose the affirmative defense of collateral estoppel because there was a prior arbitration proceeding between the parties in which plaintiff had sought to recover assigned first-party no-fault benefits for services rendered to a different assignor. In said proceeding, the arbitrator determined that plaintiff was ineligible to receive reimbursement of no-fault benefits because it was a fraudulently incorporated professional service corporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 322 [2005]). Inasmuch as plaintiff failed to demonstrate that prejudice or surprise would result from allowing the proposed amendment (see McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp., 59 NY2d 755 [1983]), and the proposed affirmative defense was neither devoid of merit nor palpably insufficient as a matter of law (see Ingrami, 45 AD3d at 808; Hill, 42 AD3d at 433), defendant should have been granted leave to amend its answer (see Ingrami, 45 AD3d at 808 [a defendant who has failed to assert a defense set forth in CPLR 3211 (a) (5) both in a motion to dismiss and an answer (see CPLR 3211 [e]) may nonetheless be granted leave to amend the answer to assert such defense under appropriate circumstances]).

“The two elements that must be satisfied to invoke the doctrine of collateral estoppel are that (1) the identical issue was decided in the prior action and is decisive in the present action, and (2) the party to be precluded from relitigating the issue had a full and fair opportunity to contest the prior issue (see Kaufman v Lilly & Co. [65 NY2d 449,] at 455)” (Luscher v Arrua, 21 AD3d 1005, 1007 [2005]; see D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659 [1990]).

“The burden is on the party attempting to defeat the application of collateral estoppel to establish the absence of a full and fair opportunity to litigate” (D’Arata, 76 NY2d at 664; see also Kaufman, 65 NY2d at 456).

Collateral estoppel effect can, under appropriate circumstances, be given to arbitration awards (see Matter of American Ins. Co. [Messinger—Aetna Cas. & Sur. Co.], 43 NY2d 184 [1977]). Where a plaintiff has freely elected to proceed to arbitration with the assistance of counsel despite the availability{**23 Misc 3d at 45} of an alternate judicial forum and has had the opportunity to employ procedures substantially similar to those utilized in a court of law, it may be found that the plaintiff has had a full and fair opportunity to litigate the issue determined in the arbitration proceeding (Clemens v Apple, 65 NY2d 746 [1985]).

In the instant matter, defendant established that the issue of whether plaintiff was ineligible to receive reimbursement of no-fault benefits because it was a fraudulently incorporated professional service corporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d at 322) was identical to the issue previously decided by the arbitrator. In opposition to defendant’s cross motion, plaintiff failed to address the branch of the cross motion which sought summary judgment dismissing the complaint on the ground of collateral estoppel. Therefore, plaintiff failed to establish that it did not receive a full and fair opportunity to litigate in the arbitration proceeding. Thus, the branch of defendant’s cross motion seeking summary judgment should have been granted (see Uptodate Med. Serv., P.C. v State Farm Mut. Auto. Ins. Co., 22 Misc 3d 128[A], 2009 NY Slip Op 50046[U] [App Term, 2d, 11th & 13th Jud Dists 2009]).

Accordingly, the order, insofar as appealed from, is reversed, defendant’s cross motion for leave to amend its answer, and, upon such amendment, for summary judgment dismissing the complaint is granted, and the complaint is dismissed.

Pesce, P.J., Weston Patterson and Golia, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

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

Appeal from an order of the Civil Court of the City of New York, Kings County (Ellen M. Spodek, J.), entered June 8, 2007. The order, insofar as appealed from as limited by the brief, granted defendant’s cross motion for summary judgment dismissing the complaint.

Order, insofar as appealed from, 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, asserting that, based on a peer review report, it timely denied plaintiff’s claim on the ground that the supplies provided were not medically necessary. The Civil Court denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint, holding, inter alia, that defendant established its defense of lack of medical necessity based on a peer review report and plaintiff proffered no evidence in opposition thereto showing that the supplies provided were in fact medically necessary. Plaintiff appeals, as limited by its brief, from so much of the order as granted defendant’s cross motion.

Contrary to plaintiff’s contention, the denial of claim form submitted by defendant, which included a defense of lack of medical necessity as per a peer review report, was not fatally defective. Although defendant omitted certain sections from the denial of claim form, the sections were not relevant to the instant claim. The denial of claim form promptly apprise[d] the claimant with a high degree of specificity of the ground . . . on which the disclaimer [wa]s predicated . . .” (New York Univ. Hosp. Rusk Inst. v Hartford Acc. & Indem. Co., 32 AD3d 458, 460 [2006] [internal quotations and citation omitted]), and defendant established that said denial of claim form was approved by the New York State Department of Insurance (id.; see also All Borough Group Med. Supply, Inc. v GEICO Ins. Co., 20 Misc 3d 130[A], 2008 NY Slip Op [*2]51417[U] [App Term, 2d & 11th Jud Dists 2008]). Consequently, defendant’s defense of lack of medical necessity was not precluded.

Defendant’s cross motion papers, including the affirmed peer review report, established prima facie that there was no medical necessity for the supplies provided by plaintiff, which evidence was unrebutted. As a result, the Civil Court properly granted defendant’s cross motion for summary judgment (see Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

Plaintiff’s remaining contentions were improperly raised for the first time on appeal and, in any event, lack merit. Accordingly, the order, insofar as appealed from, is affirmed.

Pesce, P.J., Weston and Golia, JJ., concur.
Decision Date: April 16, 2009