[*1]

Civil Court of the City of New York, Richmond County, April 3, 2009

APPEARANCES OF COUNSEL

Phillips, Krantz & Levi, Brooklyn, for plaintiff. Law Offices of Teresa M. Spina, Woodbury, for defendant.

{**24 Misc 3d at 543} OPINION OF THE COURT

Katherine A. Levine, J.

This case presents the novel issue of whether an insurance company must notify prospective medical service providers that it will not reimburse them for any services they may provide to an assignor after a determination has been made, pursuant to an independent medical examination (IME) performed on the assignor, that further medical services are not medically necessary. As will be set forth below, since the notice requirements for verification requests, as contained in 11 NYCRR 65-3.5 and 65-3.6, do not apply to IMEs that are noticed and performed prior to the insurance company’s receipt of claim forms (preclaim IMEs), such notification is not necessary.

Plaintiff Bayside Rehab & Physical Therapy, P.C. (plaintiff or Bayside or assignee), a medical service provider, brings this action pursuant to Insurance Law § 5106 (a) seeking to recover $814.19 and $1,131.47 for services it provided to its assignors Aleisha Allen and Angela Allen (collectively referred to as the Allens or assignors), for injuries they sustained in an automobile accident. Bayside moves for summary judgment based upon a claimed prima facie showing that its bills were properly submitted and that the defendant GEICO Insurance Company (defendant or GEICO) failed to pay or deny the claims within 30 days.

Defendant claims that plaintiff is not entitled to summary judgment because it failed to provide adequate proof that its claims were generated or mailed within the regular course of business. In the alternative, defendant argues that plaintiff failed to submit several claims within the statutorily prescribed period of 45 days as prescribed by 11 NYCRR 65-1.1. In its reply papers, plaintiff contends that since the defendant did not notify it about the IME cutoff, it was “not fair” and “not proper” for defendant to issue a denial of claims based upon the IME cutoff. Defendant responded, during oral argument, that because it informed the assignors that no more benefits would be paid as a result of the IME, the assignors were under an obligation to inform any future medical providers of this determination of lack of medical necessity. In light of the [*2]above, defendant contends that the matter should proceed to trial.

The Allens were involved in an automobile accident on June 17, 2006. Pursuant to a request by defendant, the assignors{**24 Misc 3d at 544} underwent IMEs by three different doctors on November 2, 2006. The three doctors determined that no further orthopedic, chiropractic, acupuncture or other types of medical services were medically necessary for the injuries suffered by either Allen related to the accident. Defendant GEICO thereupon terminated all benefits for the various types of medical treatment indicated in the IME reports, effective November 9, 2006. Absent from defendant’s papers is any indication as to how or if defendant notified the assignors of the termination of benefits much less notification of the IME cutoff to plaintiff.

Plaintiff subsequently provided medical services to both assignors in the spring of 2007 and submitted two bills on behalf of Aleisha on May 17, 2007 and June 12, 2007, respectively and three bills on behalf of Angela on May 17, June 6 and June 19, 2007, respectively. Defendant denied the May 17, 2007 bills based on plaintiff’s noncompliance with the 45-day rule and denied all the bills based on lack of medical necessity pursuant to the IME cutoff date of November 9, 2006.

To grant summary judgment, “it must clearly appear that no material and triable issue of fact is presented.” (Forrest v Jewish Guild for the Blind, 3 NY3d 295, 314 [2004, Smith, J., concurring]; Zuckerman v City of New York, 49 NY2d 557 [1980]; see Manhattan Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 1144[A], 2008 NY Slip Op 51844[U] [Civ Ct, Richmond County 2008].) A plaintiff establishes a prima facie entitlement to judgment as a matter of law “by submitting evidentiary proof that the prescribed statutory billing forms ha[ve] been mailed and received, and that payment of no-fault benefits [i]s overdue.” (Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742-743 [2d Dept 2004]; Second Med., P.C. v Auto One Ins. Co., 20 Misc 3d 291, 293 [Civ Ct, Kings County 2008].)

To lay a proper evidentiary foundation on a summary judgment motion that the tendered records were produced within the regular course of a medical provider’s business, plaintiff must provide a supporting affidavit by an individual who possesses personal knowledge of the office practices. (Complete Orthopedic Supplies, Inc. v State Farm Ins. Co., 16 Misc 3d 996, 999 [Civ Ct, Queens County 2007], citing CPLR 4518 [a]; North Acupuncture, P.C. v State Farm Ins. Co., 14 Misc 3d 130[A], 2006 NY Slip Op 52523[U] [App Term, 2d Dept 2006]; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44, 45 [App Term, 2d Dept 2006].) Plaintiff meets this burden by{**24 Misc 3d at 545} providing an affidavit of its business manager who exhaustively details the record-keeping procedures of the business that created the records and clearly details the dates of the services, the amounts due, and her personal knowledge of the billing practices. (Manhattan Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., supra, citing Second Med., P.C. v Auto One Ins. Co., 20 Misc 3d at 294-295.) In addition, the billing manager personally packaged, sealed, applied postage to and mailed the bills. As such, plaintiff has made a prima facie showing of entitlement. [*3]

Defendant contends that plaintiff failed to submit several bills within the statutorily required period of 45 days as prescribed by 11 NYCRR 65-1.1. Pursuant to Insurance Law § 5106, a complete proof of claim is a prerequisite to receiving no-fault benefits. All automobile insurance policies issued or renewed after April 5, 2002 are required to include a revised mandatory personal injury protection endorsement which provides that claims for medical treatment must be submitted within 45 days after services are rendered. (11 NYCRR 65-1.1 [b]; 65-2.4 [c]; Rockman v Clarendon Natl. Ins. Co., 21 Misc 3d 1118[A], 2008 NY Slip Op 52093[U], *4 n 2 [Civ Ct, Richmond County 2008], citing Matter of Medical Socy. of State of N.Y. v Serio, 298 AD2d 255 [1st Dept 2002]; Eagle Chiropractic, P.C. v Chubb Indem. Ins. Co., 19 Misc 3d 129[A], 2008 NY Slip Op 50525[U] [App Term, 2d Dept 2008].) Where one proof of claim is submitted for several medical treatments, the 45-day period commences the day after the first treatment is rendered. (SZ Med. P.C. v Country-Wide Ins. Co., 12 Misc 3d 52, 55 [App Term, 2d Dept 2006], citing Ops Gen Counsel NY Ins Dept No. 03-06-30 [June 2003].)

Although a health care provider is required to submit its proof of claim within 45 days after the services were rendered, an insurer is precluded from asserting the defense of a provider’s untimely submission of claim if it does not issue a timely denial of claim. (Rockman v Clarendon Natl. Ins. Co., supra, citing Mid Atl. Med., P.C. v Travelers Indem. Co., 12 Misc 3d 147[A], 2006 NY Slip Op 51579[U] [App Term, 1st Dept 2006].) Pursuant to both the Insurance Law and the regulations promulgated by the Superintendent of Insurance, an insurer is required to either pay or deny a claim for no-fault automobile insurance benefits within 30 days from the date an applicant supplies the proof of claim. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997], citing Insurance Law § 5106 [a]; 11 NYCRR former 65.15 [g] [3].){**24 Misc 3d at 546}

Here, plaintiff submitted claims on May 17, 2007 for services provided on March 9, 12, 16, 20 and 28, 2007, which is more than 45 days after each service was provided. Furthermore, since defendant timely denied these claims on May 30, 2007, within 30 days of their receipt, defendant is entitled to assert its defense that the claims were untimely submitted.

As to plaintiff’s contention that the denial based upon the IME cutoff was somehow unfair or defective since defendant assignee never notified plaintiff about the IME cutoff based on lack of medical necessity, an analysis of precedent on what if any notification requirements attach to preclaim IMEs is in order. This issue was recently addressed by this court in Prime Psychological Servs., P.C. v Nationwide Prop. & Cas. Ins. Co. (24 Misc 3d 230, 2009 NY Slip Op 29100 [2009]) wherein the court found that the notice requirements for verification requests, as contained in 11 NYCRR 65-3.5 and 65-3.6, do not apply to examinations under oath (EUOs) that are noticed prior to the insurance company’s receipt of claim forms (preclaim EUOs). The same reasoning applies to preclaim IMEs.

The insurance regulations provide for IMEs and EUOs as part of an insurer’s “entitlement to ‘additional verification’ following the insurer’s receipt of a provider’s statutory claim forms.” (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 19 [App Term, 2d [*4]Dept 2004], affd in part 35 AD3d 720 [2d Dept 2006]; see 11 NYCRR 65-1.1 [d]; 65-3.5 [d]; see also All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co., 20 Misc 3d 554 [Civ Ct, Kings County 2008]; Lumbermens Mut. Cas. Co. v Inwood Hill Med., P.C., 8 Misc 3d 1014[A], 2005 NY Slip Op 51101[U] [Sup Ct, NY County 2005]; Inwood Hill Med. v Allstate Ins. Co., 3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U] [Civ Ct, NY County 2004].) Where an EUO or IME is requested as additional verification after receipt of the claim, the insurer must schedule the IME within the same time frame as medical examinations—within 30 days from the date of receipt of the prescribed verification form (11 NYCRR 65-3.5 [d])—and must schedule an EUO within a reasonable time frame and as “expeditiously as possible.” (Eagle Surgical Supply, Inc. v Progressive Cas. Ins. Co., 21 Misc 3d 49, 51 [App Term, 2d Dept 2008].)

11 NYCRR 65-3.6 (b) provides that if the requested postclaim verification

“has not been supplied to the insurer 30 calendar days after the original request, the insurer shall,{**24 Misc 3d at 547} within 10 calendar days, follow up with the party from whom the verification was requested, either by telephone call . . . or by mail. At the same time the insurer shall inform the applicant and such person’s attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested.” (Emphasis added.)

“A claim need not be paid or denied until all demanded verification is provided” (New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2d Dept 2004]; see Insurance Law § 5106 [a]; 11 NYCRR 65-3.5 [c]; 65-3.8 [a] [1]).

In addressing whether these requirements applied to preclaim EUO requests, this court looked to Stephen Fogel Psychological (supra), where the Appellate Term found that an insurer had the right to conduct an IME prior to its receipt of the statutory claim form or its statutory equivalent which “under the regulations, triggers the verification process.” (7 Misc 3d at 20-21.) The Stephen Fogel Psychological court then found that the right to an IME “at this juncture is not afforded by the verification procedures and timetables” because section 65-1.1 (d) “is not, on its face or contextually, a ‘verification’ provision, and because the detailed and narrowly construed verification protocols are not amenable to application at a stage prior to submission of the claim form.” (Id. at 21.) The only party that needed to be notified of the preclaim IME was the assignor-injured party. (Stephen Fogel Psychological, 35 AD3d at 721.) In All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co. (20 Misc 3d 554 [2008]), Judge Sweeney extended this reasoning to EUOs, finding that an insurance company acted within its rights under the endorsement by scheduling an EUO before it had received the claim.

Based upon the above, this court, in Prime Psychological Servs. (supra), found that the postclaim notice requirements did not apply to preclaim EUOs, or by analogy to the instant matter, to preclaim IMEs, and that it therefore was of no consequence that neither the insurer’s Special Investigation Unit investigator nor its claims representative mentioned whether the EUO notices were sent to the assignor’s attorney. As such, this court determined that an insurer’s timely denial of a claim, [*5]based upon an insured’s failure to appear for a preclaim EUO, which constitutes a breach of a condition precedent to payment, is a valid ground upon which to award summary judgment to the defendant.{**24 Misc 3d at 548}

The same analysis governs what, if any, notice requirements attach to IME cutoff determinations based upon a lack of medical necessity. Where such a determination is made prior to the submission of a claim, there is no statutory requirement as to whom the insurer has to notify. Even the postverification notice requirements, which are inapplicable to preclaim EUOs and IMEs, do not mandate that the assignee medical provider be notified.^[FN*] 11 NYCRR 65-3.5 (e) discusses where EUOs and IMEs are to be held and then sets forth that “[t]he insurer shall inform the applicant at the time the examination is scheduled that the applicant will be reimbursed.” The term “applicant” within the context of 11 NYCRR 65-3.5 (e) specifically refers to the injured party (the assignor). (East Acupuncture, P.C. v Allstate Ins. Co.,61 AD3d 202, 2009 NY Slip Op 01191 [2d Dept 2009].) 11 NYCRR 65-3.6, entitled “Follow-up requirements,” which was ruled upon in Prime Psychological Servs. (supra), refers to the eligible injured person as the applicant in subdivision (a) where it mandates that insurers mail a second application for motor vehicle no-fault benefits to the “eligible injured person.”

Second, from a purely logical vantage point, it would be an exercise in futility to require an insurance company to send a preclaim IME cutoff notice to the assignee since, by definition, an insurance company cannot prophesize which medical service entity, out of the hundreds which exist in the metropolitan area, an injured party might seek services from. Statutory construction must be sought which is “consistent with achieving [the statute’s] purpose and with justice and common sense.” (Freeman v Kiamesha Concord, 76 Misc 2d 915, 920 [Civ Ct, NY County 1974].) The courts are to adopt a construction of a statute “which will not cause objectionable results, or cause inconvenience . . . or absurdity.” (McKinney’s Cons Laws of NY, Book 1, Statutes § 141, at 281; Matter of Medical Socy. of State of N.Y. v State of N.Y. Dept. of Health, 83 NY2d 447, 451-452 [1994].) The common mandate of statutory construction is to assume that the Legislature “did not intend a patently absurd result.” (Covington v Walker, 307 AD2d 908, 909 [2d Dept 2003,{**24 Misc 3d at 549} Feuerstein, J., dissenting]; see Statutes § 145; see In re Adamo, 619 F2d 216, 219 [2d Cir 1980].)

Here, the IME was conducted and the IME cutoff date became effective approximately six months before the Allens even sought treatment from, much less assigned their benefits to, plaintiff. Hence, it would be absurd to require defendant to notify this particular plaintiff provider about the IME cutoff as it had no way of discerning that the Allens might seek [*6]treatment at this provider at some date in the future. Plaintiff implicitly concedes that the Allens were notified of the IME cutoff date by contending that the “IME cut-off was never advised to assignee” and that the “IME exam was kept secret from the assignee” until the denial (reply ¶ 10). Since the Allens attended the IMEs and apparently knew that their no-fault benefits were cut off, they were under an obligation to inform plaintiff and any other medical provider from whom they sought treatment of this cutoff.

In light of the above, and the timely denials submitted by defendants, plaintiff’s motion for summary judgment is denied and this case will proceed to trial.

Footnotes

Footnote *: Parenthetically, in the one apparent case that discusses this issue, the court held that either the medical service provider or the assignor must be notified about the IME cutoff. (Mollins v GEICO, 15 Misc 3d 1103[A], 2007 NY Slip Op 50467[U] [Civ Ct, NY County 2007].) This case, however, provides little guidance since the IME and subsequent cutoff date occurred at or about the same time that the services were rendered at the medical service provider.

Civil Court, New York County

044447 CVN 2008

Attorneys for plaintiff:

Leon Kucherovsky

By: David Forman, Esq.

Attorneys for defendant:

Saretsky, Katz, Dranoff & Glass, LLP

By: Howard J. Newman, Esq.

Manuel J. Mendez, J.

Upon a reading of the foregoing cited papers on this motion and cross motion for summary judgment it is the decision of this court that the motion is granted, plaintiff is awarded judgment in the amount of $2,610.00 with interest at 2% per month from July 19, 2008, plus attorneys fees of 20% of judgment plus interest amount not to exceed $850.00, plus costs. The cross motion is denied.

This motion was returnable on November 13 2008. On the return date the court adjourned the motion to December 17, 2008 at which time defendant filed a cross motion and opposition to the motion. The court then adjourned the motion and cross motion to March 11, [*2]2009 for a reply. On March 11, 2009 there being no reply this court took the motion on submission and ordered plaintiff to submit its reply by March 25, 2009. Plaintiff has submitted its reply and this court now decides the motion.

Plaintiff moves for summary judgment to recover for services rendered its assignor under the No-fault provision of the Insurance Law. Plaintiff alleges that as a result of an automobile accident on July 19, 2002, it provided services to its assignor on August 15 to August 29, 2002 and on September 23, 2002 submitted a bill to the defendant for these services in the amount of $630.00. It provided services on September 3 to September 26, 2002 and on October 8, 2002 submitted a bill to the defendant for these services in the amount of $900.00. It provided services on October 1 to October 28, 2002 and on November 5, 2002 submitted a bill to the defendant for these services in the amount of $720.00. It provided services on November 1 to November 13, 2002 and on December 5, 2002 submitted a bill to the defendant for these services in the amount of $270.00. It provided services on December 20, 2002 and on January 7, 2003 submitted a bill to the defendant for these services in the amount of $90.00. The total for all the bills submitted by plaintiff to the defendant is $2,610.00.

In support of its motion plaintiff annexes the affidavit of Yevgeny Gorbatov, LAC, its owner who has personal knowledge that the claims were mailed because it is his responsibility to insure that the claims were mailed. He bases his affidavit on personal knowledge and a review of the file. He further states that the services were provided and bills mailed as indicated in this court’s factual recitation. Finally, he provides the office practice and procedure in place at the time these services were performed and bills generated to ensure that items are properly addressed and mailed( See Moving papers Exh. A).

Plaintiff also annexes to its moving papers the denial of claims issued by the defendant. In these denials, all dated February 17, 2003, defendant acknowledges receipt of the claims and denies all of the claims submitted based on lack of coverage ( See moving papers Exh. E). There was no verification requested to toll the 30 day period within which defendant had to pay or deny the claim.

Defendant cross moves for summary judgment on the basis that the assignor is perpetrating a fraud and has failed to cooperate. Its denial of claim form gives as a reason for the denial of all claims the following: ” All New York no-fault benefits are denied to the above injured person based on the loss not being accidental; violation of the fraud provisions of the policy; failure to cooperate, we base our conclusion on your failure to cooperate on evidence of your giving false or misleading information throughout the presentation of the claim; the injuries did not arise our of the use or operation of the insured vehicle; and engaging in fraudulent conduct in connection with this loss.”

In support of its motion defendant annexes an attorney’s affirmation, the affidavit of Christopher Maresco, a claims representative, and the denial of claims forms (NF-10). Absent from defendant’s submission is an affidavit from an investigator from its special investigations [*3]unit and a copy of the assignor’s examination under oath.There was no request for verification of claim or additional verification tolling the time within which to pay or deny plaintiff’s claim. All the claims were denied on February 17, 2003 more than 30 days after the last bill for $90.00 had been submitted. Rosemarie Tulino, not Christopher Maresco, was the adjustor assigned to this claim.

Defendant claims the denial is due to a number of factors all of which taken together establish that there was fraud perpetrated by its insured, including the assignor. The affidavit of Chistopher Maresco states that his knowledge is based on a review of the file and on his personal knowledge. He states that “he has been assigned to oversee the handling of this claim which was referred to the special investigations unit to resolve questions of merit since this loss had multiple fraud indicators which support State Farms’s founded belief that the collision was fraudulent and not an accident.” The affidavit goes on to indicate that there are “Fraud Indicators” leading defendant to its conclusion of fraud. Mr. Maresco goes on to state that ” When all the information was carefully investigated and analyzed it formed State Farm’s founded belief that the purported accident was not a covered accident, but instead it was an intentional act which is not covered under State Farm’s policy of insurance.”

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.(Klein V. City of New York, 89 NY2d 833; Ayotte V. Gervasio, 81 NY2d 1062, Alvarez v. Prospect Hospital, 68 NY2d 320). 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; Amatulli V. Delhi Constr. Corp.,77 NY2d 525; Iselin & Co. V. Mann Judd Landau, 71 NY2d 420). 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; Martin V. Briggs, 235 [1992]).

In an Action to recover first-party no-fault benefits for health care services provided to an assignor, a plaintiff establishes a prima facie entitlement to summary judgment by proof that it submitted a claim, setting forth the fact and amount of the loss sustained and that payment of no-fault benefits is overdue ( Insurance Law § 5106[a]; Mary Immaculate Hosp. , v. Allstate Ins. Co., 5 AD3d 742[2004]; Amaze Med. Supply v. Eagle Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51701[U][App. Term 2nd. & 11th Jud. Dists. 2003]). A no-fault benefits applicant may cure deficiencies in its proof of mailing by annexing to its motion papers an insurer’s denial of claim form wherein the insurer acknowledges the claims’ receipt ( Fair Price Med. Supply Corp., v. ELRAC Inc., 12 Misc 3d 119 [App. Term 2nd. & 11th, Jud. Dists. 2006]). Plaintiff has established a prima facie entitlement to summary judgment through the affidavit of Yevgeny Gorbatov and the exhibits annexed to its moving papers which show that a claim was submitted and payment is overdue. Any deficiencies in Mr. Gorbatov’s affidavit are cured by the defendant’s denial of claim forms which acknowledge receipt of plaintiff’s claims. [*4]

The burden now shifts to defendant to raise a material issue of fact. Defendant had 30 days to pay or deny the claim, counting from the date it receives the bills in question ( See 11 NYCRR§ 65-3.8(a)). Defendant did not pay or deny the claim within 30 days of receipt of the bill, and did not request verification of the bills within 15 days of its receipt ( See 11 NYCRR§ 3.5 (a)). However, this has no effect on its defense of lack of coverage.( See Presbyterian Hospital v. Maryland Casualty Co., 90 NY2d 274[1997]; Central General Hospital v. Chubb Group of Ins. Co.,90 NY2d 195, 659 N.Y.S. 2d 246 [1997]) which may be asserted after the time to pay or deny the claim has expired, premised on a “fact or founded belief” that the alleged injury does not arise out of an insured accident.

While the untimely denial does not preclude defendant from interposing the lack of coverage defense based on fraud, it remains defendant’s burden to demonstrate ” a fact or founded belief” that the injuries did not result from an insured event ( See Central General Hospital v. Chubb Group of Ins. Co., 90 NY2d 195, 199 [1997] Supra). Thus, defendant’s proof has been found lacking when an “investigator’s report alleged only that the uncooperative insured, but not the assignor, had been involved in prior accidents alleged to be “suspicious” ( A.B. Medical Services PLLC v. Eagle Insurance Co., 3 Misc 3d 8, 776 N.Y.S. 2d 434 [App. Term 2nd. Dept. 2003]), the motion is supported by an affirmation of defendant’s counsel without personal knowledge of the facts and an affidavit of a claim representative likewise with no personal knowledge of defendant’s investigation into the incident ( Oleg Barshay, D.C., P.C., v. State Farm Ins. Co., 14 Misc 3d 74, 831 N.Y.S. 2d 821 [App. Term 2nd. Dept. 2006]; Comprehensive Mental v. Allstate Ins. Co., 14 Misc 3d 130(A), 836 N.Y.S. 2d 484[ App. Term 9th & 10th Jud. Dists. 2007]) when the statements in the affidavit of the investigator are conclusory (Great Wall Acupuncture v. Utica Mutual Ins. Co., 14 Misc 3d 144 (A), 836 N.Y.S. 2d 499 [App. Term 2nd. & 11th Jud. Dists. 2007]).

“To interpose a defense of staged-accident fraud sufficient to raise a triable issue of fact, defendant must establish the fact or founded belief that the alleged injuries do not arise out of an insured incident. The discrepancies in the testimony given by two passengers during their examinations under oath are insufficient to establish a founded belief that the alleged injuries did not arise out of a covered accident. The affidavit of defendant’s claims representative and the attached exhibits failed to substantiate the conclusory allegations of the assignor’s participation in a ring that stages traffic incidents to defraud insurers” (Webster Diagnostic Medicine, P.C., v. State Farm Ins. Co., 15 Misc 3d 97, 838 N.Y.S. 2d. 343 [App. Term 9th & 10th Jud. Dists. 2007]).

The defendant must come forth with proof in admissible form which is more than just “unsubstantiated hypotheses and suppositions.” These are insufficient to raise a triable issue of the assignor’s fraud ( A.B. Medical Services, PLLC v. Eagle Ins. Co., 3 Misc 3d 8, 776, N.Y.S. 2d 434 [2003]; Oleg Barshay, D.C., P.C., v. State Farm Ins. Co., 14 Misc 3d 74, 831 N.Y.S. 2d 821 [2006];Comprehensive Mental v. Allstate Ins. Co., 14 Misc 3d 130(A), 836 N.Y.S. 2d 484 [2007];Great Wall Acupuncture v. Utica Mutual Ins. Co., 14 Misc 3d 144 (A), 836 N.Y.S. 2d 499[ 2007] Supra). [*5]

Defendant has failed to come forth with more than mere unsubstantiated hypothese and suppositions in support of its motion. Its attorney’s affirmation is without probative value as he has no personal knowledge of the facts ( See Melbourne Med., P.C., v. Utica Mut. Ins. Co., 4 Misc 3d 92 [App. Term 2nd. & 11th Jud. Dists. 2004]). The affidavit of Christopher Maresco is also without probative value as he has no personal knowledge of the investigation. He is not a member of the investigation Unit and was not the investigator assigned to investigate plaintiff’s assignor’s claims. In fact his affidavit does not state the name of the investigator investigating this claim. His affidavit, which is based on his review of the file is conclusory and provides no more than the hypothese and suppositions which the courts have previously rejected as insufficient to support or oppose a motion for summary judgment. Mr. Maresco alludes to discrepancies in the Examinations Under Oath of the various passengers in the vehicle at the time of the accident. However, the transcripts are not annexed to the cross moving papers for the court to review. The court is left to rely on the analysis of these transcripts by Mr. Maresco who reaches the conclusion that the accident was not a covered accident. His affidavit without more is insufficient to defeat plaintiff’s entitlement to summary judgment.

Accordingly, it is the decision and order of this court that the motion for summary judgment is granted. Plaintiff is awarded a judgment in the amount of $ $2,610.00 with interest at 2% per month from July 19, 2008, plus attorneys fees of 20% of the judgment plus the interest amount not to exceed $850.00, plus costs. The cross motion is denied.

This constitutes the decision and order of this court.

Dated: April 2, 2009__________________________

Manuel J. Mendez

Judge Civil Court

[*1]

Argued February 11, 2009; decided April 2, 2009

LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 46 AD3d 1290, reversed.

{**12 NY3d at 221} OPINION OF THE COURT

Pigott, J.

Plaintiffs, two medical providers that treated various automobile accident victims insured by defendant State Farm Mutual Automobile Insurance Company, commenced this action against State Farm after it denied no-fault insurance benefit claims assigned to plaintiffs by the insureds. Plaintiffs asserted one cause of action for each insured treated, alleging that State Farm failed to pay or deny multiple bills within the requisite 30 days. [*2]

Plaintiffs were granted summary judgment awarding them, among other things, attorneys’ fees and interest. As relevant to this appeal, attorneys’ fees were awarded “on each claim within each cause of action”; in other words, attorneys’ fees were calculated on each bill submitted for each insured. This amount differed substantially from that proposed by State Farm, which sought a calculation of attorneys’ fees on a per insured basis.

In addition, Supreme Court awarded plaintiffs interest at the statutory rate of 2% per month, without applying the tolling provision set forth in the Insurance Department regulations, which provide for the suspension of interest 30 days after denial of payment until plaintiffs commence an action seeking payment.

On appeal, the Appellate Division rejected State Farm’s contention that Supreme Court failed to properly apply the tolling provision in awarding interest to plaintiffs (46 AD3d 1290 [2007]). The court held that because State Farm did not issue a proper and timely denial to plaintiffs’ no-fault claims, it was not entitled to the benefit of the tolling provision.

As it pertained to attorneys’ fees, the court held that Supreme Court properly awarded fees on a per bill basis rather than a per insured basis. The court expressly rejected an opinion letter of the Superintendent of Insurance, finding it in conflict with the express language of Insurance Law § 5106, as well as case law. This Court granted defendant leave to appeal (10 NY3d 717 [2008]) and we now reverse.

“New York’s no-fault automobile insurance system is designed ‘to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists’ ” (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007] [citation{**12 NY3d at 222} omitted]). We recently reiterated that the no-fault scheme’s core objective is “to provide a tightly timed process of claim, disputation and payment” (id. at 319, quoting Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 281 [1997]). In furtherance of this objective, an insurer’s failure to pay or deny a claim within the requisite time period carries significant consequences, including the payment of attorneys’ fees and interest.

Insurance Law § 5106 (a) provides that “[if] a valid claim or portion was overdue, the claimant shall . . . be entitled to recover his attorney’s reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim . . . .” Pursuant to the authority delegated to him by section 5106 (a), the Superintendent of Insurance promulgated regulation 11 NYCRR 65-4.6 establishing a minimum attorneys’ fee and further providing that the “attorney’s fee shall be limited as follows: 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the . . . court, subject to a maximum fee of $850” (11 NYCRR 65-4.6 [e]).

On October 8, 2003, the Superintendent issued an opinion letter interpreting that regulation and stating that the minimum amount of attorneys’ fees awarded to an assignee health [*3]care provider pursuant to Insurance Law § 5106 is

“based upon the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which had been submitted and denied. The minimum attorney fee . . . is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action” (Ops Gen Counsel NY Ins Dept No. 03-10-04 [Oct. 2003]).

In referring to the regulations, specifically 11 NYCRR 65-4.6 (e), the Superintendent stated:

“[That provision] makes it clear that the amount of attorney’s fees awarded will be based upon 20% of the total amount of first party benefits awarded. That total amount is derived from the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured” (id.).{**12 NY3d at 223}

We have long held that the Superintendent’s “interpretation, if not irrational or unreasonable, will be upheld in deference to his special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision” (Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448 [1985]). The responsibility for administering the Insurance Law and, in particular, fair claims settlement under the No-Fault Law rests with the Superintendent (see Insurance Law §§ 301, 5106 [a]). For purposes of calculating attorneys’ fees, the Superintendent has interpreted a claim to be the total medical expenses claimed in a cause of action pertaining to a single insured, and not—as the courts below held—each separate medical bill submitted by the provider. Because this interpretation is neither irrational, unreasonable, nor counter to the clear wording of the statute, it is entitled to deference. Thus, this Court accepts the Insurance Department’s interpretation of its own regulation and, upon remittitur, directs Supreme Court to calculate attorneys’ fees based on the aggregate of all bills for each insured.

State Farm next contends that the Appellate Division erred in finding that an insurance company that fails to issue a proper and timely denial is not entitled to the benefit of the tolling provision. We agree.

Pursuant to Insurance Law § 5106 (a), interest accrues on overdue no-fault insurance claims at a rate of 2% per month. A claim is overdue when it is not paid within 30 days after a proper demand is made for its payment (Insurance Law § 5106 [a]; 11 NYCRR 65.15 [g]). The Superintendent’s regulation tolls the accumulation of interest if the claimant “does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations” (11 NYCRR 65-3.9 [c]). [*4]

The Superintendent has interpreted this provision to mandate that the accrual of interest is tolled, regardless of whether the particular denial at issue was timely. That interpretation is similarly entitled to deference given that it is “not irrational or unreasonable” (Matter of Council of City of N.Y. v Public Serv. Commn. of State of N.Y., 99 NY2d 64, 74 [2002]). Indeed, it is consistent with section 5106, entitled “Fair claims settlement,” the purpose of which is to encourage claimants to swiftly seek to resolve any dispute concerning their entitlement to no-fault benefits. Once a denial is issued, even if an untimely one, a{**12 NY3d at 224} claimant should still be encouraged to act to resolve the dispute quickly. Supreme Court is therefore directed to calculate appropriate interest on each claim, taking into consideration the tolling provision of section 5106 (a) as interpreted by the Superintendent of Insurance.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, with costs, and the matter remitted to Supreme Court for further proceedings in accordance with this opinion.

Judges Ciparick, Graffeo, Read, Smith and Jones concur; Chief Judge Lippman taking no part.

Order, insofar as appealed from, reversed, etc.

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 January 17, 2008. The order denied plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. In opposition, defendant argued, inter alia, that plaintiff’s affidavit did not lay a proper foundation to establish that the annexed documentation was admissible as business records pursuant to CPLR 4518. The court denied plaintiff’s motion, finding that plaintiff had “failed to establish its prima facie case.” The instant appeal by plaintiff ensued.

Since the affidavit submitted by plaintiff’s officer was insufficient to establish that said officer possessed personal knowledge of plaintiff’s practices and procedures, so as to lay a foundation for the admission, as business records, of the documents annexed to plaintiff’s moving papers, 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., 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]).

Plaintiff’s contention that the Civil Court below improvidently exercised its discretion in considering the untimely papers submitted by defendant in opposition to plaintiff’s motion lacks merit since the court also considered the reply papers submitted by plaintiff (see e.g. Vlassis v Corines, 254 AD2d 273, 274 [1998]; Kavakis v Total Care Systems, 209 AD2d 480 [1994]).

In view of the foregoing, the order is affirmed.

Weston Patterson, J.P., Golia and Steinhardt, JJ., concur.
Decision Date: April 01, 2009

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Andrea Phoenix, J.), entered December 17, 2007. The order, insofar as appealed from as limited by the brief, denied plaintiffs’ motion for summary judgment with respect to their no-fault claims which were denied by defendant on the ground that plaintiffs’ assignor failed to attend independent medical examinations.

Order, insofar as appealed from, reversed without costs, plaintiffs’ motion, insofar as it sought summary judgment upon the claims submitted by (1) plaintiff A.B. Medical Services, PLLC seeking to recover the sums of $443.92, $1,573.24, $376.32, $71.06, $125.44 and $130.32; (2) plaintiff D.A.V. Chiropractic, P.C. seeking to recover the sums of $235.90, $202.20 and $134.80; (3) plaintiff Lvov Acupuncture, P.C. seeking to recover the sums of $510.00, $510.00, $255.00, $510.00, and $170.00; and (4) plaintiff Sowell Chiropractic, P.C. seeking to recover the sum of $88.44, is granted, and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees thereon.

In this action by providers to recover assigned first-party no-fault benefits, plaintiffs moved for summary judgment. Defendant opposed the motion, arguing, insofar as is relevant to this appeal, that plaintiffs’ assignor failed to appear for independent medical examinations (IMEs). The court denied plaintiffs’ motion, finding that plaintiffs failed to make out a prima facie case. This appeal by plaintiffs ensued.

Plaintiffs established their prima facie entitlement to summary judgment by proving the [*2]submission of statutory claim forms, setting forth the fact and the amount of the loss sustained, 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]). We note that the affidavit submitted by plaintiffs’ billing manager demonstrated that the annexed claim forms constituted evidence in admissible form (see CPLR 4518; Fortune Med., P.C. v Allstate Ins. Co., 14 Misc 3d 136[A], 2007 NY Slip Op 50243[U] [App Term, 9th & 10th Jud Dists 2007]).

Although defendant denied certain claims on the ground that plaintiffs’ assignor failed to attend scheduled IMEs (claims from A.B. Medical Services, PLLC in the amounts of $443.92, $1,573.24, $376.32, $71.06, $125.44 and $130.32; from D.A.V. Chiropractic, P.C. in the amounts of $235.90, $202.20 and $134.80; from Lvov Acupuncture, P.C. in the amounts of $510.00, $510.00, $255.00, $510.00, and $170.00; and from Sowell Chiropractic, P.C. in the amount of $88.44), the affidavits submitted by defendant were insufficient to establish proper mailing of the IME scheduling letters, which would give rise to a presumption that the items were received by the addressee (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001]; see also Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Consequently, in light of defendant’s failure to timely deny said claims, it is precluded from interposing most defenses with respect to such claims, with exceptions not relevant in this case (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]). As a result, defendant failed to raise a triable issue of fact with regard to said claims, and plaintiffs are entitled to summary judgment upon the claims submitted by (1) plaintiff A.B. Medical Services, PLLC seeking to recover the sums of $443.92, $1,573.24, $376.32, $71.06, $125.44 ftlineand $130.32; (2) plaintiff D.A.V. Chiropractic, P.C. seeking to recover the sums of $235.90, $202.20 and $134.80; (3) plaintiff Lvov Acupuncture, P.C. seeking to recover the sums of $510.00, $510.00, $255.00, $510.00, and $170.00; and (4) plaintiff Sowell Chiropractic, P.C. seeking to recover the sum of $88.44, and the matter is remanded to the District Court for the calculation of statutory interest and an assessment of attorney’s fees due thereon pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Tanenbaum, J.P., Molia and LaCava, JJ., concur.
Decision Date: April 01, 2009

[*1]

Civil Court of the City of New York, Kings County, March 31, 2009

APPEARANCES OF COUNSEL

Sylvain R. Jakabovics, Brooklyn, for plaintiff. Freiberg & Peck, LLP, New York City, for defendant.

{**24 Misc 3d at 521} OPINION OF THE COURT

Peter P. Sweeney, J.

{**24 Misc 3d at 522}In this action to recover assigned first-party no-fault benefits, both plaintiff and defendant moved for summary judgment. In opposition to plaintiff’s motion and in support of its cross motion, defendant argued, inter alia, that the action is premature and should be dismissed because plaintiff did not provide the medical reports which it had requested as additional verification of the claims. The novel question presented is whether plaintiff, in response to defendant’s requests for additional verification of the claims, was obligated to do more than just inform defendant that it was not in possession of the medical reports that had been requested.

Factual Background

The facts are essentially undisputed. Plaintiff D & R Medical Supply is a provider of medical equipment. Plaintiff submitted admissible proof in support of its motion for summary [*2]judgment demonstrating that it had submitted to the defendant two claims for assigned first-party no-fault benefits for medical equipment that it had provided to its assignor. The claims were submitted on July 9, 2007 and July 25, 2007.

By letter dated July 23, 2007, defendant acknowledged receipt of the first claim. In the letter defendant stated as follows: “[a] report from the referring physician is required with comment regarding the medical necessity of the medical equipment.”

Plaintiff responded to defendant’s letter by its own letter, dated July 26, 2007, stating:

“We are in receipt of your letter dated July 23rd, 2007. Unfortunately D & R Medical Supply, Inc. is unable to provide you with referring physician report and/or any medical records that you are requesting for the above named patient. This type of documentation is not in our possession. We are medical supply company and provide supplies in accordance to the doctor’s prescription. Please request it directly from the medical provider.”

Defendant mailed a second copy of its July 23, 2007 letter to the plaintiff on August 24, 2007.

By letter dated August 11, 2007, defendant acknowledged receipt of the second claim and again stated that “[a] report from the referring physician is required with comment regarding the medical necessity of the medical equipment.” Plaintiff again informed defendant that it did not have such a report in its possession. On September 13, 2007, defendant mailed a second copy of its August 11, 2007 letter to the plaintiff.{**24 Misc 3d at 523}

To date, plaintiff has not provided the defendant with a report from any physician attesting to the medical necessity of the equipment at issue; for its part, defendant neither paid nor denied the claims at issue.

On its motion for summary judgment, plaintiff’s position is that it submitted its bills to the defendant who neither paid nor denied the claims pursuant to the No-Fault Law and regulations. In defense, and on its own cross motion, it is defendant’s position that the action on these claims is premature and must be dismissed. According to the defendant, the 30-day period within which it had to pay or deny the claims had not begun to run, inasmuch as plaintiff has yet to provide defendant with the reports of the referring physicians that had been timely requested as additional verification for each of the claims.

Analysis

Plaintiff established its prima facie entitlement to summary judgment by proving the submission of statutory claim forms, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary [*3]Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2d Dept 2004]). The court notes that the affidavit submitted by plaintiff’s billing manager demonstrated that the annexed claim forms constituted evidence in admissible form (see CPLR 4518; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d Dept 2006]). The burden thus shifted to defendant to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Defendant failed to meet this burden.

There is no merit to defendant’s argument that the statutory time period within which it had to pay or deny the claim was tolled due to plaintiff’s failure to provide it with the materials it had requested as additional verification of the claims. Assuming that the letters sent to plaintiff by defendant constituted valid initial and follow-up demands for additional verification of the claims, plaintiff unequivocally advised defendant that it was not in possession of the medical reports that defendant was seeking. Certainly, there is no evidence before the court suggesting that these materials were ever in plaintiff’s care, custody or control.

Even under the liberal discovery provisions embodied in article 31 of the CPLR, a party to a lawsuit is required to produce only those items “which are in the possession, custody or control of the party” (CPLR 3120 [1] [i]; see generally Saferstein{**24 Misc 3d at 524} v Stark, 171 AD2d 856 [2d Dept 1991]; Corriel v Volkswagen of Am., 127 AD2d 729, 730 [2d Dept 1987]; Lear v New York Helicopter Corp., 190 AD2d 7, 11 [2d Dept 1993]). While the no-fault regulations provide that an “insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested” (11 NYCRR 65-3.5 [c]), this should not be construed as requiring a provider to provide materials over which it has no control. A contrary construction would violate the core objective of the No-Fault Law: “to assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225 [1986]) and would frustrate one of the main purposes of the regulatory scheme, which is “to provide a tightly timed process of claim, disputation and payment” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 281 [1997]; see also New York Hosp. Med. Ctr. of Queens v Motor Veh. Acc. Indem. Corp., 12 AD3d 429, 430 [2d Dept 2004]). Imposing upon a medical provider the obligation to provide an insurer with materials that are not in its care, custody or control would also be illogical.

Finally, it is worth noting that defendant had a means of obtaining the materials it was seeking as additional verification of the claims. The no-fault regulations, particularly 11 NYCRR 65-3.5 (c), entitle an insurer to receive items necessary to verify a claim directly from persons others than applicants for no-fault benefits (see Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 2d Dept 2007]). In Doshi Diagnostic Imaging Servs., the appellate court held that the insurer acted within its rights when it sought medical necessity verification from the prescribing physician rather than from the plaintiff MRI provider and that the insurer’s request for verification to the prescribing physician tolled the statutory claim determination period (id. at 43-44). Pursuant to the holding in Doshi Diagnostic Imaging Servs., defendant could have requested the medical reports from the [*4]referring physicians, whom plaintiff had identified in the claim forms. Indeed, the court in Doshi Diagnostic Imaging Servs. suggested that the no-fault regulations would also allow an insurer to seek verification of a claim directly from the referring physician where the plaintiff applicant was a medical equipment provider who merely fills prescriptions, as is the case here (id. at 44).{**24 Misc 3d at 525}

The court has considered defendant’s remaining arguments in opposition to plaintiff’s motion and in support of its cross motion and finds them to be without merit.

Accordingly, it is hereby ordered that plaintiff’s motion for summary judgment is granted and plaintiff may enter judgment against the defendant in the amount of $2,448.13, together with interest and attorneys fees as provided for under the No-Fault Law, plus costs; and it is further ordered that defendant’s cross motion for summary judgment is denied.

—[*1] Joseph Henig, P.C., Bellmore, N.Y. (Mark Green of counsel), for appellant.

Bruno, Gerbino & Soriano, LLP, Melville, N.Y. (Charles W. Benton of counsel), for respondent.

In an action to recover no-fault medical benefits under an insurance contract, the plaintiff appeals from an order of the Supreme Court, Nassau County (Martin, J.), dated October 14, 2008, which denied its motion for summary judgment on the complaint.

Ordered that the order is reversed, on the law, with costs, and the motion is granted.

The plaintiff made a prima facie showing that it was entitled to judgment as a matter of law on its complaint to recover no-fault medical payments by submitting evidence that the prescribed statutory billing forms had been mailed and received, and that the defendant had failed to either pay or deny the claim within the requisite 30-day period (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.5; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317-318 [2007]; New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512, 513 [2006]; Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96, 100 [2005]; New York & Presbyt. Hosp. v AIU Ins. Co., 20 AD3d 515, 516 [2005]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004]). In opposition, the defendant failed to raise a triable issue of fact.

Contrary to the defendant’s contention, the two letters it sent to the plaintiff on March 31, 2008, and April 30, 2008, respectively, advising the plaintiff that the processing of its claim was being held pending an investigation of the loss, which included verifying the claimant’s involvement [*2]in the motor vehicle accident and conducting examinations under oath of any individuals with personal knowledge of the facts, did not serve to toll the 30-day statutory period (see 11 NYCRR 65-3.5 [a]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535, 536 [2005]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [1999]; see also Ocean Diagnostic Imaging P.C. v Citiwide Auto Leasing, Inc., 8 Misc 3d 138[A], 2005 NY Slip Op 51314[U] [2005]; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [2004]). We also reject the defendant’s contention that the 30-day statutory period was tolled pending the defendant’s submission of a no-fault application, as 11 NYCRR 65-3.5 (g) specifically requires an insurer to accept a completed hospital facility form (NYS Form N-F 5), as was submitted here, “[i]n lieu of a prescribed application for motor vehicle no-fault benefits” (see Nyack Hosp. v Encompass Ins. Co., 23 AD3d at 536).

The defendant also failed to raise a triable issue of fact, solely based on the hearsay statement of its investigator, as to whether the accident was covered by Workers’ Compensation benefits. Moreover, the defendant’s possible entitlement to offset any no-fault benefits it pays by any recovery pursuant to a Workers’ Compensation claim does not constitute a defense of lack of coverage, which is not subject to the requirement that there be timely service of the disclaimer (see 11 NYCRR 65-3.5 [a]; Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008]; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 318 [2007]; cf. Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997] [question of fact as to whether injuries were sustained in a separate, work-related accident]). Where, as here, the defendant’s denial of liability also was based upon an alleged breach of a policy condition, to wit, the failure of the plaintiff’s assignor to appear at an examination under oath, such an alleged breach does not serve to vitiate the medical provider’s right to recover no fault benefits or to toll the 30-day statutory period (see Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [1999]). Rather, such denial was subject to the preclusion remedy (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d at 199; Zappone v Home Ins. Co., 55 NY2d 131, 136-137 [1982]; cf. Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 279-280 [1997]). Skelos, J.P., Fisher, Santucci and Balkin, JJ., concur.

Supreme Court, Nassau County

018936/08

For the Plaintiff

Joseph Henig, P.C.

1598 Bellmore Avenue

Bellmore, New York 11710

(516) 785-3116

Randy Sue Marber, J.

The Defendant, by Order to Show Cause, moves for an order 1) vacating the judgment granted on default and entered by the clerk on December 12, 2008; 2) extending the Defendant’s time to answer the Plaintiff’s complaint; and 3) compelling the Plaintiff to accept the Defendant’s answer. The Plaintiff opposes the Order to Show Cause.

The Plaintiff, WESTCHESTER MEDICAL CENTER seeks to recover $345,472.88 for medical services provided to its assignor, Jamel Harris. The complaint in this action alleges that the Defendant insured the Plaintiff’s assignor under an automobile liability policy which contained a New York no-fault endorsement. On or about April 12, 2008, the Plaintiff’s assignor, Jamel Harris, was injured when he hit a tree while driving a 2005 Ford. The Plaintiff alleges that Jamel Harris, as the insured, was a covered person under the automobile policy issued by the Defendant and was entitled to reimbursement from the Defendant for health services rendered by the Plaintiff. The Plaintiff claims that the no-fault benefits for health services provided were duly assigned to the Plaintiff. The Plaintiff claims the Defendant is responsible for the payment of the assignor’s health services rendered to him in the amount of $330,925.85, plus interest.

On or about October 27, 2008, the Plaintiff served the Summons and Complaint in this matter upon the Defendant by serving the New York State Insurance Department in Albany. The Defendant alleges that The Insurance Department then sent the Summons and Complaint to [*2]Allstate’s agent, C.T. Corp., by regular mail, on October 28, 2008 and it was received by C.T. Corp. on November 3, 2008. Subsequently, the Defendant’s counsel alleges, C.T. Corp. sent the Summons and Complaint to Allstate’s offices in Hauppauge, New York, by overnight mail.

In an affidavit sworn to on January 23, 2009, Charles Jaekle, a Front Line Performance Leader employed by the Defendant, alleges that the Summons and Complaint in this action was then misindexed by an employee who “did not realize the time sensitive nature of the documents”. As a result, the Summons and Complaint was not received by the appropriate office to prepare responsive pleadings until January 5, 2009.

The default judgment had already been entered on December 12, 2008. The Defendant claims that the delay in answering the Summons and Complaint was not willful or deliberate nor was it extensive and the Defendant acted quickly to fix the situation once it was discovered.

The Plaintiff’s counsel opposes the motion and argues that the Defendant fails to provide a reasonable excuse for the default. The Plaintiff’s counsel argues that the Defendant has failed to substantiate its allegations and that same are “vague and unsubstantiated” explanations which do not rise to the level of reasonable excuse. The Plaintiff’s counsel cites Stoltz v. Playquest Theater Company, 257 AD2d 758, 683 NYS2d 339 (3d Dept. 1999) to support his argument that the Defendant’s failure to understand the need to respond in a timely fashion to the summons and complaint did not constitute excusable neglect. Such reliance is misguided as the facts in the Stoltz matter are distinguishable from the facts in the instant case. In Stoltz, the defendant sought legal advise upon being served with the summons and chose not to respond. Additionally, the Defendant in Stoltz did not attempt to vacate the default until collection proceedings were undertaken more than a year after entry of the default and the defendant ceased operations and vacated its business premises.

The Plaintiff’s counsel further relies on Harcztark v. Drive Variety, Inc., 21 AD3d 876, 800 NYS2d 613 (2d Dept. 2005), specifically stating in his Affirmation, dated February 17, 2009, that the Court refused to vacate a default of two months based upon “insurance company delay”. He further cites Harcztark quoting the Appellate Court as ruling, “This excuse has been rejected in this court time and again”. The Plaintiff’s counsel has misrepresented the ruling of the majority in the Harcztark matter. The Court in Harcztark rejected the premise that delay by an insurance company may never constitute all or part of a reasonable excuse by and insured for a default. The Court went on to say that determining whether there is a reasonable excuse for a default is a discretionary, sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits. (id at 877).

In order to vacate a default, the defaulting party must demonstrate that they had a reasonable excuse for the delay, that they have provided a meritorious defense, that the default was not willful, and that the plaintiff will not be prejudiced. Lichtman v. Sears, Roebuck & Co., 236 AD2d 373, 653 NYS2d 25 (2d Dept. 1997). A default by a defendant should be vacated where there is “minimal prejudice caused by the defendant’s short delay in answering, as well as the public policy in favor of resolving the cases on the merits.” Classie v. Stratton Oakmont, Inc., 236 AD2d 505, 653 NYS2d 377 (2d Dep’t 1997). Furthermore, “it is within the sound discretion of the Court to determine whether the proffered excuse and the statement of the merits are sufficient.” Navarro v. A. Trenkman Estate, Inc., 279 AD2d 257 719 NYS2d 34 (1st Dept. 2001) citing Mediavilla v. Gurman, 272 AD2d 146, 707 NYS2d 432 (1st Dept. 2001). The court also has discretion to consider whether the defendant acted promptly in curing the default without delay or prejudice to the [*3]plaintiff. Statewide Ins. Co. v. Bradham, 301 AD2d 606, 753 NYS2d 861, (2d Dept. 2003) citing Matter of Statewide Ins. Co. v. Bradham, 301 AD2d 606, 753 NYS2d 861 (2d Dept. 2003).

The Plaintiff’s counsel argues that the Defendant has failed to submit an affidavit of merit which demonstrates a meritorious defense to the action. Plaintiff’s counsel argues that the Defendant’s attorney does not have personal knowledge of the facts and the submission of her affirmation alone is insufficient to vacate a default judgment. In response to this argument, the Defendant’s counsel points out that an attorney’s affirmation can be submitted in lieu of an affidavit of merit if all the material allegations of the pleading are within the attorney’s personal knowledge. Additionally, the Defendant’s attorney further points out that her affirmation is supported by the affidavit of Charles Jaekle, who has personal knowledge of the facts. The Defendant’s attorney also alleges that she has personal knowledge that the Plaintiff’s assignor is not covered under the subject insurance policy based on the subject insurance policy itself.

In support of the requirement that there be a meritorious defense, the Defendant argues that the Plaintiff’s assignor was not covered by the Defendant’s insurance policy and that there exists no contractual relationship between the Plaintiff and the Defendant and that the Defendant has no obligation to pay the Plaintiff’s claims. The Defendant’s attorney asserts that the vehicle the Plaintiff’s assignor was driving on the date of the accident, a 2005 Ford, was not a covered vehicle under the subject policy. The Defendant’s attorney asserts that the subject policy covers a 1999 Nissan Maxima and a 1997 Acura. Additionally, the Defendant’s attorney asserts that the insurance policy issued to the Plaintiff’s assignor’s grandmother, Esther Harris, lists her address as 36 Peter Way, Kiamesha, New York whereas the police report for the accident involving Jamel Harris lists his address as 1120 Clay Avenue, Apt. 4A, Bronx, New York. As such, the Defendant’s attorney asserts that the Plaintiff’s assignor did not reside in the insured’s household and is not an “eligible injured person” under the policy.

The Plaintiff’s attorney argues that the defense to the action that the Defendant raises is precluded due to Allstate’s failure to have issued a Denial of Claim. In response to this argument, the Defendant’s attorney asserts that the insurer’s failure to timely disclaim coverage does not preclude it from later denying liability on the ground that the insurance agreement itself does not cover the particular automobile or person. In support of this proposition, the Defendant’s counsel cites Zappone v. Home Ins. Co., 55 NY2d 131, 138 (1982). Additionally, the Defendant’s counsel points out that at no time did the Defendant ever admit that it provided coverage for the subject vehicle. The affirmation submitted by the Defendant’s counsel, dated January 26, 2009, in support of the Order to Show Cause specifically states in paragraphs 14 and 15 that the Plaintiff’s assignor drove a 2005 Ford and that the policy insured a 1999 Nissan Maxima and a 1997 Acura. The Defendant’s counsel argues that the Plaintiff has failed to put forth any evidence to show that the Plaintiff’s assignor was an eligible injured person covered under the subject policy.

This Court, in its discretion, accepts the Defendant’s explanation for the delay incurred in answering the Summons and Complaint in this matter as an excusable delay. Additionally, the Defendant has provided a meritorious defense and sufficient evidence that the default was not willful. The delay was short and the Plaintiff will not be prejudiced by allowing the Defendant to interpose an answer.

Accordingly, the Defendant’s motion to vacate the default judgment is GRANTED. The Defendant’s proposed answer is deemed served and the preliminary conference in this matter shall be held on April 21, 2009 at 9:30 a.m. at the courthouse lower level.

This decision constitutes the order of the court. [*4]

DATED:Mineola, New York

March 25, 2009

______________________________

Hon. Randy Sue Marber, J.S.C.

[*1]

Supreme Court, Nassau County, March 23, 2009

APPEARANCES OF COUNSEL

Picciano & Scahill, P.C., Westbury (Jason Tenenbaum of counsel), for Interboro Mutual Indemnity Insurance Company. New York Liquidation Bureau, New York City (James E. d’Auguste, Andrew J. Lorin and Judy H. Kim of counsel), for Superintendent of Insurance of the State of New York. Ariel Aminov, PLLC, Forest Hills, for Grand Central Medical, P.C.

{**24 Misc 3d at 1003} OPINION OF THE COURT

Edward W. McCarty, III, J. [*2]

{**24 Misc 3d at 1004}Motion by order to show cause by Interboro Insurance Company for: (1) an order pursuant to CPLR 2221 (a) (1) and (e) granting leave to renew the order of this court, dated February 1, 2007, and upon renewal, modifying said order by: (a) adding a tenth decretal paragraph decreeing: “No-fault interest shall not apply to claims that were submitted to Interboro Mutual Indemnity Insurance Company and to the New York State Liquidation Bureau as Rehabilitator prior to February 1, 2007, the date Interboro Mutual Indemnity Insurance Company exited rehabilitation”; (b) adding an eleventh decretal paragraph decreeing: “The failure to transmit timely or valid denials, as set forth in Insurance Law [§ ] 5106 (a) and 11 NYCRR 65-3.8 shall not apply to claims received or adjusted between April 4 [sic], 2004 and February 1, 2007″; and (c) adding a twelfth decretal paragraph decreeing: “All actions or arbitrations brought against Interboro Mutual Indemnity Insurance Company during the period of rehabilitation, commencing from April 4 [sic], 2004 and terminating on February 1, 2007 shall be dismissed as violating the stay order that was in effect prior to Interboro Mutual Indemnity Insurance Company’s exiting rehabilitation”; (2) an order compelling Grand Central Medical, P.C. to be named as a necessary party for the limited purpose of contesting the issue raised herein as to whether a no-fault penalty rate interest should be assessed against claims adjusted prior to Interboro Mutual Indemnity Insurance Company’s exiting rehabilitation; and (3) such other and further relief as this court deems just and proper, is granted, to the extent set forth herein.

On April 6, 2004, Interboro Mutual Indemnity Insurance Company was placed in rehabilitation and the New York State Superintendent of Insurance was appointed as rehabilitator, pursuant to article 74 of the Insurance Law. A plan of rehabilitation was adopted and approved by this court in an order dated February 1, 2007 and the rehabilitation terminated with the emergence of Interboro Insurance Company. The plan of rehabilitation approved by this court provided for certain payments to creditors during the claims administration period in full satisfaction of their claims. No provision for the payment of interest to any claimant was included in the plan of rehabilitation.

In 2007, subsequent to Interboro’s emergence from rehabilitation, Grand Central commenced an action in Civil Court, Queens County, against Interboro to recover no-fault medical payments. The payments at issue were due in 1999. Denials were not timely made, and, as a result, Grand Central seeks{**24 Misc 3d at 1005} interest from the time payments were due in 1999, pursuant to Insurance Law § 5106 (a).

Payment of no-fault interest to Grand Central for the period preceding and during the rehabilitation period would be inconsistent with the terms of the plan of rehabilitation, the policies and practice of the Superintendent of Insurance, and the purpose of Insurance Law § 5106 (a) in prohibiting any reward to a dilatory insurance company.

This application was properly brought to modify this court’s February 1, 2007 order, to clarify that interest is not available on claims due before or during the rehabilitation period. [*3]Moreover, Grand Central was properly made a party hereto for the limited purpose of clarifying this issue.

So much of Interboro’s motion as seeks to add a decretal paragraph that no-fault interest shall not apply to claims submitted to Interboro prior to February 1, 2007 is granted.

So much of Interboro’s motion as seeks to add a decretal paragraph that the failure to transmit denials shall not apply to claims received or adjusted during the rehabilitation period is also granted.

It should be noted that Interboro has withdrawn so much of its motion as seeks to dismiss all actions or arbitrations brought against it during the rehabilitation period.

Submit amended order, with notice of settlement.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Rhonda E. Fischer, J.), dated March 27, 2008. The order denied plaintiffs’ motion for summary judgment.

Order modified by providing that plaintiffs’ motion is granted insofar as it seeks summary judgment upon the claims submitted by Gentle Care Acupuncture, P.C. seeking to recover the sums of $1,045, $1,500, $1,375, $1,090, $350.56 and $250, and the claims submitted by Craigg Total Health Family Chiropractic Care, P.C. seeking to recover the sums of $88.44, $370.70, $404.40, $235.90, $269.60 and $67.40, and matter remanded to the District Court for the calculation of statutory interest and attorney’s fees thereon, and for all further proceedings on the remaining claims; as so modified, affirmed without costs.

In this action by providers to recover assigned first-party no-fault benefits, defendant served plaintiffs with various discovery demands. Thereafter, plaintiffs moved for summary judgment. In opposition, defendant argued that plaintiff RLC Medical, P.C. (RLC) was not entitled to summary judgment since RLC had failed to respond to defendant’s discovery demands which sought information as to whether RLC was ineligible for reimbursement of no-fault benefits because it was a fraudulently incorporated medical provider. Defendant also asserted that the billing submitted by plaintiffs Gentle Care Acupuncture, P.C. (Gentle Care) and Craigg Total Health Family Chiropractic Care, P.C. (Craigg) contained material misrepresentations regarding the services rendered to the assignor. The District Court denied plaintiffs’ motion, holding that defendant established that plaintiffs’ motion was premature because there was [*2]outstanding discovery and that, in any event, defendant raised issues of fact as to whether plaintiff RLC was ineligible for reimbursement of no-fault benefits. This appeal by plaintiffs ensued.

Plaintiffs established their prima facie entitlement to summary judgment by proving the submission of statutory claim forms, setting forth the fact and the amount of the loss sustained, 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]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists 2003]). We note that the affidavit submitted by plaintiffs’ billing manager demonstrated that the annexed claim forms constituted evidence in admissible form (see CPLR 4518; Fortune Med., P.C. v Allstate Ins. Co., 14 Misc 3d 136[A], 2007 NY Slip Op 50243[U] [App Term, 9th & 10th Jud Dists 2007]).

In opposition to plaintiffs’ motion, defendant established that while facts may exist that are essential to justify denial of the branch of the summary judgment motion seeking to recover upon claims submitted by RLC, defendant was unable to set forth sufficient facts to establish the defense of fraudulent incorporation (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) since such information was within RLC’s possession and RLC had not complied with defendant’s discovery demands therefor (see CPLR 3212 [f]). Consequently, the District Court properly denied the branch of the motion for summary judgment upon the claims submitted by RLC (see id.; Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 15 Misc 3d 110 [App Term, 2d & 11th Jud Dists 2007]; Midborough Acupuncture P.C. v State Farm Ins. Co., 13 Misc 3d 58 [App Term, 2d & 11th Jud Dists 2006]).

However, defendant failed to demonstrate the existence of an issue of fact with regard to claims from Gentle Care, in the amounts of $1,045, $1,500, $1,375, $1,090 and $250, and claims from Craigg, in the amounts of $88.44, $370.70, $404.40, $235.90 and $67.40. Defendant denied said claims on the ground that the “injured person” failed to attend scheduled examinations under oath (EUOs). However, defendant’s opposition papers allege that plaintiffs’ assignor appeared at the EUO. Consequently, since defendant’s stated reason for the denials of said claims is not supported by the record, defendant failed to raise a triable issue of fact with respect thereto.

Defendant denied Craigg’s $269.60 claim based upon the assignor’s EUO testimony. Since the purported EUO transcript annexed to defendant’s opposition papers is not in admissible form, we decline to consider it. Accordingly, Craigg was entitled to summary judgment upon said claim.

With regard to the $350.56 claim from Gentle Care, defendant denied it on the basis of Gentle Care’s failure to establish a prima facie case of medical necessity. However, defendant’s opposing papers did not contain any support for such defense (see Amaze Med. Supply, 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U]). Accordingly, Gentle Care was entitled to summary judgment upon said claim.

In light of the foregoing, we do not reach plaintiffs’ remaining contentions.

Accordingly, the order is modified by providing that plaintiffs’ motion for summary judgment is granted to the extent of granting Gentle Care summary judgment on its claims [*3]seeking to recover the sums of $1,045, $1,500, $1,375, $1,090, $350.56 and $250, and granting Craigg summary judgment on its claims seeking to recover the sums of $88.44, $370.70, $404.40, $235.90, $269.60 and $67.40, the matter is remanded to the District Court for the calculation of statutory interest and attorney’s fees thereon pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder, and for all further proceedings on the remaining claims.

Tanenbaum, J.P., Molia and LaCava, JJ., concur.
Decision Date: March 19, 2009