[*1]

Supreme Court, Appellate Term, Second Department, September 10, 2008

APPEARANCES OF COUNSEL

Law Office of Alden Banniettis, Brooklyn (Jeff Henle of counsel), for appellant. Law Office of Karen C. Dodson, Melville (Janine Gentile of counsel), for respondent.

{**21 Misc 3d at 472} OPINION OF THE COURT

Memorandum.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved, pursuant to CCA 1201, for leave to serve a subpoena on defendant outside the City of New York compelling the production of an employee of defendant to testify at the trial. The lower court found that plaintiff did not offer a valid reason to allow service of a subpoena outside the jurisdiction. Plaintiff appeals from the order denying its motion.

In an action pending in the Civil Court of the City of New York, a subpoena may not be served outside the City of New York and the adjoining counties unless the Civil Court, upon a motion establishing to the satisfaction of the court that the interests of justice would be served thereby, permits service of such a subpoena (see CCA 1201). Inasmuch as plaintiff’s moving papers failed to establish that the interests of justice would be served by permitting plaintiff to serve, outside the City of New York and the adjoining counties, a subpoena which would require defendant’s employee to appear at trial, and, in addition, did not set forth the location at which plaintiff sought to serve the subpoena, plaintiff’s motion was properly denied.

To the extent that plaintiff argues that defendant’s response to its notice to admit was improper, the court below properly noted that plaintiff’s remedy lies in the procedure set forth in CPLR 3123 (c).

Pesce, P.J., Rios and Steinhardt, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, September 10, 2008

APPEARANCES OF COUNSEL

Law Office of Alden Banniettis, Brooklyn (Benjamin Sharav of counsel), for appellant.

{**21 Misc 3d at 50} OPINION OF THE COURT

Memorandum.

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. Defendant opposed the motion and cross-moved for summary judgment dismissing the complaint, asserting, inter alia, that plaintiff failed to establish its prima facie entitlement to summary judgment and that the complaint should be dismissed because the assignor failed to appear at scheduled examinations under oath (EUOs). By order entered August 10, 2007, the court below denied plaintiff’s motion and granted defendant’s cross motion, finding that plaintiff did not comply with defendant’s verification requests. As limited by its brief, plaintiff appeals from so much of the order as granted defendant’s cross motion for summary judgment dismissing the complaint. Plaintiff contends, inter alia, that defendant did not comply with the EUO scheduling regulations since the initial EUO was not scheduled within 30 days of defendant’s receipt of plaintiff’s claim.

It is uncontroverted that the accident occurred on April 3, 2005, and defendant issued a denial form, dated September 7, 2005, which stated, inter alia, that defendant received the claim on May 18, 2005, and that it was being denied because the assignor failed to attend scheduled EUOs.

In 1974, Department of Insurance Regulation 68 (11 NYCRR part 65), implementing New York’s No-Fault Law, was first promulgated. Effective April 5, 2002, Regulation 68 was revised, and the pertinent part of the revised Regulation 68-C (Insurance Department Regulations [11 NYCRR] § 65-3.5 [d]) stated that if “the additional verification required by the insurer is an examination under oath or a medical examination, the insurer shall schedule the examination to be held within 30 calendar days from the date of receipt of the prescribed verification forms” (emphasis added). However, on April 11, 2002, the Insurance Department promulgated an emergency first amendment to the revised Regulation 68, effective April 5, 2003, which deleted the phrase “an examination under oath or” from Regulation 68-C{**21 Misc 3d at 51} (Insurance Department Regulations [11 NYCRR] § 65-3.5 [d]). Although there were subsequent amendments to Regulation 68-C in 2004 and 2007, the deleted language was never reinstated. The Insurance Department’s decision to delete the foregoing phrase and its subsequent decision not to reinstate such deleted language is a clear indication that such phrase’s “exclusion was intended” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 285 [1997]; cf. S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists 2004] [decided under the April 5, 2002 regulation]; contra All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co., 20 Misc 3d 554 [Civ Ct, Kings County 2008]; All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co., 17 Misc 3d 950 [Civ Ct, Kings County 2007]).

Notwithstanding the foregoing, insurers may not employ red tape dilatory practices and schedule EUOs in an unreasonable manner. The Insurance Department Regulations require that verification proceed “as expeditiously as possible” (Insurance Department Regulations [11 NYCRR] § 65-3.2 [c]; see also State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d at 285; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 722 [2006]).

A review of the record indicates that defendant demonstrated that the insurance policy in effect when the EUOs were sought contained an endorsement authorizing such verification (cf. Capio Med., P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 129[A], 2005 NY Slip Op 50526[U] [App Term, 2d & 11th Jud Dists 2005]; Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56 [App Term, 2d & 11th Jud Dists 2004]). Defendant established that the EUO scheduling letters were timely mailed, on May 25, 2005 and July 5, 2005 (see Insurance Department Regulations [11 NYCRR] § 65-3.5 [b]; § 65-3.6 [b]), by setting forth the standard office practices or procedures used to ensure that such items are properly addressed and mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). The date selected for the initial EUO, June 27, 2005, was not unreasonable, and defendant established that the assignor failed to appear at the scheduled EUOs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d at 722). Plaintiff’s remaining{**21 Misc 3d at 52} contentions are either improperly raised for the first time on appeal or lack merit.

Accordingly, the court below properly granted defendant summary judgment dismissing the action as premature inasmuch as plaintiff’s claims were not overdue (see Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]).

Pesce, P.J., Rios and Steinhardt, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, September 10, 2008

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellant. Marshall & Marshall, Jericho (Barbara Carabell of counsel), for respondent.

{**21 Misc 3d at 19} {**21 Misc 3d at 19} OPINION OF THE COURT

Memorandum.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. In a supporting affidavit, plaintiff’s billing manager stated that he had mailed letters to defendant requesting copies of the peer review reports upon which the denial of claim forms were based and that defendant had failed to comply with said request. Plaintiff argued that defendant should therefore be precluded from asserting its defense of lack of medical necessity. In opposition, defendant argued that it had timely denied plaintiff’s claims on the ground that the supplies provided were not medically necessary. Defendant attached to its opposition papers copies of the affirmed peer review reports which set forth with specificity the defense of lack of medical necessity. Defendant, however, did not refute the fact that it had not previously provided plaintiff with copies of the reports. The court below denied plaintiff’s motion on the ground that there are triable issues of fact as to medical necessity. The instant appeal by plaintiff ensued.

An insurer’s submission of a denial of claim form which denies a provider’s claim based upon a peer review report is sufficient to raise the defense of lack of medical necessity. The Appellate Division, Second Department, has noted that such a denial of claim form need not set forth with particularity the factual basis and medical rationale upon which the defense was based, because the provider may, if it so desires, request a copy of the written peer review report from the insurer pursuant to Insurance Department Regulations (11 NYCRR) § 65-3.8 (b) (4) (New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co., 39 AD3d 832 [2007]; A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779 [2007]; A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co., 39 AD3d 778 [2007]). The Appellate Division further stated that “[h]ad it been the intent of the Department of Insurance to require the carrier to set forth a medical rationale in the prescribed denial of claim form . . . , it would have so provided” (New York Univ. Hosp. Rusk Inst., 39 AD3d at 833; A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d at 780; A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co., 39 AD3d at 779).

The Insurance Department Regulations provide no sanction for an insurer’s failure to provide a peer review report upon the written{**21 Misc 3d at 20}{**21 Misc 3d at 20} request for one by a provider (see e.g. A.B. Med. Servs. PLLC v Clarendon Natl. Ins. Co., 12 Misc 3d 143[A], 2006 NY Slip Op 51415[U] [App Term, 2d & 11th Jud Dists 2006]). While plaintiff urges the court to impose the sanction of preclusion here, we decline to do so because “[h]ad it been the intent of the Department of Insurance” to impose such a sanction, “it would have so provided” (New York Univ. Hosp. Rusk Inst., 39 AD3d at 833; A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d at 780; A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co., 39 AD3d at 779). Indeed, the application of a preclusion sanction would necessarily entail the wholesale creation of a regulatory scheme, as the Insurance Department Regulations do not provide a time frame within which the request for the peer review report must be made by the provider or complied with by the insurer. Absent these time frames, there is no way to know when a sanction for noncompliance is warranted, and we decline to read such a scheme into the Insurance Department Regulations.

We note that even in the absence of a sanction imposed by the Insurance Department Regulations, a provider is not without any recourse where an insurer fails to provide a requested peer review report. The prescribed NF-10 denial of claim form provides that a complaint may be made by the provider to the Insurance Department whose “regulations themselves provide for agency oversight of carriers” (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 322 [2005]). In any event, if the matter proceeds to the litigation stage, the provider may seek disclosure of the peer review report.

Accordingly, since defendant’s opposition papers established a triable issue of fact based on a defense of medical necessity, the court below properly denied plaintiff’s motion for summary judgment.

Pesce, P.J., Rios and Steinhardt, JJ., concur.

—[*1] Richard A. Dubi, P.C., Dix Hills, N.Y., for appellants.

McDonnell & Adels, P.C., Garden City, N.Y. (Korri Abrams Frampton and Martha Henley of counsel), for respondents.

In an action, inter alia, to recover damages for common-law fraud and unjust enrichment and for a judgment declaring that the plaintiffs have no obligation to pay no-fault claims submitted by the professional corporation defendants, the defendants David Stemerman and Proscan Imaging, P.C., appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Murphy, J.), entered August 14, 2007, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them and granted that branch of the plaintiffs’ cross motion which was for discovery of certain financial documents.

Ordered that the order is affirmed insofar as appealed from, with costs.

The plaintiff One Beacon Insurance Group, LLC, and its subsidiaries and affiliates (hereinafter the plaintiffs), are providers of automobile insurance policies which include coverage under the “no-fault” insurance law (Insurance Law § 5101, et seq.). The plaintiffs commenced this action against numerous professional medical service corporations (hereinafter the PCs), management companies, and the individuals who owned them, and licensed healthcare professionals, alleging that the PCs were fraudulently incorporated in the names of licensed healthcare professionals while, in fact, the PCs were owned, operated, and controlled by unlicensed persons and their management companies in violation of applicable statutes and regulations. The plaintiffs, inter alia, seek repayment of no-fault claims already paid to the PCs and a judgment declaring that they are not obligated to pay outstanding claims. The defendants David Stemerman and his radiology practice, Proscan Imaging, P.C. (hereinafter Proscan) (hereinafter together the appellants), moved for summary judgment dismissing the complaint insofar as asserted against them, and the Supreme [*2]Court denied their motion, finding the existence a triable issue of fact as to whether Proscan was fraudulently incorporated.

Applicable provisions of the no-fault law require insurers to reimburse patients or their medical provider assignees for “basic economic loss” (Insurance Law § 5102 [a] [1]). A provider of healthcare services is not eligible for reimbursement, however, “if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York” (11 NYCRR 65-3.16 [a] [12]). The Court of Appeals has interpreted 11 NYCRR 65-3.16 (a) (12) to allow insurance carriers to withhold reimbursement for no-fault claims from fraudulently licensed medical corporations and to “look beyond the face of licensing documents to identify willful and material failure to abide by state and local law” (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 321 [2005]). State law mandates that professional service corporations be owned and controlled only by licensed professionals (see Business Corporation Law § 1503 [a]; §§ 1507, 1508), and that licensed professionals render the services provided by such corporations (see Business Corporation Law § 1504 [a]).

Here, the appellants made a prima facie showing of their entitlement to judgment as a matter of law by submitting evidence that Stemerman, a licensed physician, was the sole shareholder of Proscan, performed or oversaw all medical services provided by Proscan, and was the sole signatory on Proscan’s bank account.

However, in opposition to the motion, the plaintiffs submitted sufficient evidentiary proof to raise an issue of fact as to whether Proscan was actually controlled by a management company owned by unlicensed individuals in violation of the Business Corporation Law (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d at 320-321; Montgomery Med., P.C. v State Farm Ins. Co., 12 Misc 3d 1169[A], 2006 NY Slip Op 51116[U] [2006]; A.T. Med., P.C. v State Farm Mut. Ins. Co., 10 Misc 3d 568, 569 [2005]; cf. A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co., 11 Misc 3d 137[A], 2006 NY Slip Op 50504[U] [2006]). Accordingly, the appellants’ motion for summary judgment was properly denied with respect to all three causes of action, which allege fraudulent incorporation.

The Supreme Court properly granted that branch of the plaintiffs’ cross motion which was for disclosure of certain financial documents. Contrary to the appellants’ contention, the plaintiffs were not required to make a showing of “good cause” for such disclosure (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d at 322; see Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno, Gerbino & Soriano LLP, 13 Misc 3d 970, 972-973 [2006]), as the documents were “material and necessary in the prosecution” of this action (see CPLR 3101 [a]). Spolzino, J.P., Santucci, Eng and Leventhal, JJ., concur.

Civil Court of the City of New York, Richmond County

11330/07

Katherine A. Levine, J.

This case raises the murky issue of what precise evidence a defendant insurer must present in support of its late denial based upon fraud to withstand the granting of summary judgment to a plaintiff medical services provider in a No-Fault case. It also raises anew whether the recent Court of Appeals decision in Fair Price Medical Supply Corp. V. Travelers Indemnity Co., 10 NY3d 556 (2008) requires an insurer to proffer the defense that a provider is fraudulently incorporated within 30 days or whether that defense remains non waivable.

Plaintiff, Manhattan Medical Imaging (“Manhattan Medical “or “plaintiff”), a medical service provider, seeks an order granting it summary judgment based upon a claimed prima facie showing that the bills were properly submitted and that the defendant State Farm Automobile Ins. Co. (“State Farm” or “defendant”) failed to pay or deny the claim within 30 days. Plaintiff also

asserts that defendant’s denial was untimely.

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 (2004); Zuckerman v, City of New York, 49 NY2d 557 (1980). A plaintiff establishes a prima facie entitlement to judgment as a matter of law “by submitting evidentiary proof that the prescribed statutory billing form has been mailed and received, and that payment of no -fault benefits was overdue.” Mary Immaculate Hosp. v. Allstate Ins.,, 5 AD3d 742, 743 (2d Dept. 2004); Second Medical v. Auto One Ins., 20 Misc 3d 291, 293 (Civil Ct., Kings Co. 2008).

State Farm asserts that plaintiff has failed to establish a prima facie case since the affidavit of plaintiff’s billing manager is “boilerplate” and not based upon her personal knowledge and therefore does not come in under the business records exception to the hearsay rule. The affidavit of plaintiff’s billing manager, Bella Kirzhner, clearly comes within the business records exception, as contained in CPLR 4518(a), as it 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. See, Second Medical v. Auto One supra at 294-95. It details that the bills were made and kept in the ordinary course of business at the time the services were rendered and sets forth the precise mailing procedure which were followed. In fact, Kirzhner “personally packaged, sealed, applied postage to and mailed the bill.” As such, plaintiff has made a prima facie showing of entitlement.

The burden then shifts to the defendant in a no fault case to show a triable issue of fact. Alvarez v Prospect [*2]Hosp., 68 NY2d 320, 324 (1986). To defeat an award of summary judgment to plaintiff, defendant must provide proof, in evidentiary form, that it either paid or denied the claim within 30 days of receipt or that it asserts a non- precludable defense. Carle Place Chiropractic v. NY Central Mutual Fire Ins. Co., 2008 NY Slip Op 51065U at 7, 19 Misc 3d 1139A (Dist. Ct. Nass. Co. 2008). See Central General Hospital v. Chubb Insurance Co, 90 NY2d 195 (1997); Presbyterian Hosp. City of NY v. Maryland Casualty Co., 90 NY2d 274 (1997).

Defendant contends that plaintiff’s motion should be denied because the evidence strongly suggests that 1) plaintiff’s assignor was engaged in a “staged accident” caused in furtherance of an insurance fraud scheme and therefore there is no coverage; and 2) plaintiff may be fraudulently incorporated since it’s facility may “possibly” be owned by a non licensed physician thereby violating the Business Corporation Law, the No Fault Regulations. Defendant asserts that these are non-precludable defenses, regardless of when it issued its denials. In fact, the denial of claim forms( NF-10′) dated December 12th and 26th 2001 assert as the basis of denial that the loss was not caused by a covered accident but by intentional collusive acts and also because there were violations of the fraud provision.

STAGED ACCIDENT DEFENSE

In Fair Price Medical v. Travelers Ins., 10 NY3d 556 (2008), the Court of Appeals clarified when an insurance company would not be precluded from offering a defense to its refusal to pay no – fault benefits even though it denied the claims beyond the 30 day period. There, Travelers issued its denial nearly two years after receiving the claim, based upon the assignor’s statement that he had never received medical supplies from the plaintiff. The Civil Court denied plaintiff’s motion for summary judgment, finding that defendant was not precluded by the 30 day rule since it had asserted fraud as a defense. The Appellate Division affirmed the Appellate Term’s reversal of the lower court’s order denying plaintiff summary judgment on the grounds that :

in this case, unlike a staged accident case, there was an actual automobile accident, which

caused Nivelo to sustain actual injuries, for which he was treated by actual health care providers, who issued actual prescriptions for medical supplies to treat his injuries. Nivelo’s undisputably real accident had resulting injuries triggered with the coverage provided for in his insurance policy with the defendant” Fair Price Med. Supply Corp. V. Travelers Indem. Co. 42 AD3d 277, 284 (2d Dept. 2007) affg 9 Misc3d 76 (App. Term 2d and 11th Jud. Dist 2005).

In sum, the Appellate Division concluded that while Travelers could contest the assignor’s claim as fraudulent, it must do so within the tight deadlines imposed by the no -fault system. 42 AD3d at 286.

The Court of Appeals affirmed . It first cited to its recent review of the legal framework behind the No – Fault Law in Hospital for Joint Diseases v. Travelers Prop. Cas. Ins., 9 NY3d 312, 317 (2007); namely that the no fault insurance system was 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. ” In furtherance of these goals, the Superintendent of Insurance promulgated regulations implementing the No Fault Law ( Ins. Law art. 51) including “circumscribed time frames for claim procedures” 9 NY3d at 317. The accident victim must submit a notice of claim to the insurer no later than 30 days after the accident (11 NYCRR 651.1, 65-2.4(b) and the insurance company must pay or deny the claim within 30 days after receipt of the proof of the claim (see Ins. Law §5106 (a), 11 NYCRR 65-3.8 ©). Substantial consequences flow from an insurer’s failure to company with this 30 day requirement including preclusion from asserting a defense against payment of a claim. Fair Price , 10 NY3d at 563 citing Hospital for Joint Diseases, 9 NY3d at 317-318. See, Presbyterian Hosp., supra, 90 NY2d at 278 (1997);Mt. Sinai Hosp. V. Chubb Group of Ins. Co., 43 AD3d 889-90 (2d Dept. 2007).

In Hospital for Joint Diseases, supra, the Court, citing to its prior decision in Central General Hospital, supra, cautioned that there was only one “narrow” exception to the preclusion rule for those situations where an insurance company raises the defense of lack of coverage. 9 NY3d at 318 . The Court explained that in such cases [*3]“an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. Fair Price, 10 NY3d at at 563 citing Joint Diseases, 9 NY3d at 318. See, e.g. Tahir v. Progressive Casualty Ins. Co., 12 Misc 3d 657, 662 (Civil Ct., NY Co., 2006) (“staged accident fraud” actually posed an issue of non coverage as opposed to fraud because under no -fault concepts, insurance coverage is limited to an “accident” ).

Thus, the “key issue” in every case is whether the ” facts fit within the narrow no-coverage exception to the preclusion rule” 10 NY3d at 564. A court, in determining whether a specific defense is precluded under the 30 day rule or falls within the exception entails a judgment as to whether the defense is more like a “normal exception ” from coverage such as a policy exclusion or a lack of coverage in the first instance, i.e. a defense “implicating a coverage matter”. 10 NY3d at 565.

It is well settled, as noted by the Appellate Division in Fair Price, that the defense of a staged automobile accident survives preclusion and, if substantiated would constitute a “complete defense to the action. 42 A.D. at 354. See, Mtr of Liberty Mutual Insurance Co. v Goddard, 29 AD3d 698, 699 (2d Dept. 2006); Melbourne Medical P.C. v Utica Mutual Ins. Co., 4 Misc 3d 92, 94 ( App. Term 2d Dept. 2004). A court must first ascertain , however, whether a defendant has adduced proof in admissible form sufficient to create a triable issue of fact. Melbourne Medical, supra. Plaintiff herein alleges that the defendant failed to rebut its prima facie case since the allegations of a non covered accident or a “staged” event are not supported by evidence in admissible form and that defendant failed to present a “founded belief” that the injuries did not arise out of the accident .

The general standard the insurer must assert for a lack of coverage or fraud defense is one “premised on the fact or founded belief that the alleged injury does not arise out of an insured

incident” but was a deliberate event staged in furtherance of a scheme to defraud the insurer.” Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d at 199., See also, Metro Medical Diagnostics, P.C. v Eagle Ins. Co., 293 AD2d 751 (2d Dept 2002). Thus, the insurer has the burden to come forward with proof in admissible form to establish “the fact” or “foundation for its belief” that the alleged incident was a staged event to defraud the insurer. Mt. Sinai Hospital v Triboro Coach Inc., 263 AD2d 11(2d Dept 1999).

While opposition papers often stumble upon the failure to present evidentiary material in admissible form, an insurer may avoid this pitfall by submitting an opposition affidavit which “sets forth names of witnesses, the substance of their testimony, how it was known what their testimony would be and how the witnesses acquired their knowledge.” Complete Orthopedic Supplies, Inc. V. State Farm Insurance Co., 16 Misc 3d 996 (Civil Ct., Queens Co. 2007) citing Phillips v. Kantor & Co., 31 NY2d 307, 311-12 (1972). It is clear that “unsubstantiated hypotheses and suppositions,” such as an unsworn report of an investigator alleging that an “uncooperative” insured (but not assignor) had been involved in prior accidents alleged to be suspicious , are insufficient to raise a triable issue of the assignor’s fraud. A.B Medical Services PLLC v. Eagle Insurance Co., 3 Misc 3d 8, 10 (App. Term, 2 Dept. 2003). However, there is a dearth of case law as to what what precisely must be included within an investigator’s affidavit so as to defeat a plaintiff’s motion for summary judgment. See, Complete Orthopedic Supplies. Supra; PDG Psychological, P.C. v. State Farm Ins., Co, 12 Misc 3d 1183A, 824 N.Y.S. 2d 766 (Civil Ct., Kings Co. 2006); Inwood Hill Medical P.C. Bronx Neurodiagnostics v. Allstate Ins. Co., 3 Misc 3d 1110A, 787 N.Y.S.2d 678 (Civil Court, NY, Co. County 2004).

In a number of cases, defendant insurers have been permitted to proceed to trial based upon affidavits of investigators employed by the insurance company’s Special Investigations Unit (“SIU”) who allege personal knowledge of the alleged fraud. See, American Honda Finance Corp. V Progressive Casualty Ins. Co., 290 AD2d 850 (3d Dept. 2002) (“at this preliminary stage of the proceeding, a question of fact is lurking as to whether Perez committed fraud or made other material representations such that policy exclusion would preclude recovery); Northern Medical v. State Farm Mutual Automobile I ns. Co., 2008 NY Slip Op. 50753U, 19 Misc 3d 1117A (Civil Ct., Queens Co., 2008). [*4]

In PDG Psychological v. State Farm Ins. Co., 12 Misc 3d 1183 A, 824 N.Y.S. 2d 766 (Civil Ct. Kings Co. 2006), the defendant, in support of its defense of an intentional collision, proffered the testimony of an SIU investigator who stated that the claims had been denied because the accident occurred two months after the assignor’s policy had been instituted and because there were several discrepancies between the transcripts of the examinations under oath (“EUOs”) of the passengers and the assignor, including where they were going, when they all met, the time of the accident, where the car was at the time of the impact and the names of the passengers. These discrepancies, coupled

with the other driver’s statement, raised factual issues.

The evidence presented by defendant is somewhat similar to that presented in PDG Psychological, supra. Defendant presented statements of the assignors which, although unsworn and unsigned, were certified by the transcriber, and the signed and sworn to affidavit of Lee Ann Fink, who is employed in the Special Investigations Unit (“SIU”). Fink memorialized the somewhat minor inconsistencies in the various assignors’ statements, including the color and make of the car they were in that was supposedly involved in the accident, different reasons as to why they were all together with the same driver, who was seated in the front of the car at the time of the accident and whether the car was stopped at the point of the accident.

While this court does not believe that defendant presents a strong case of a staged accident, it presents enough inconsistencies to rise above the base level of “unsubstantiated hypothesis and suppositions” so as to permit this defense to go to trial. The court is not troubled that the statements of the assignors were not verified or signed since their transcribed statements were certified by the transcriber. See R. M. Newell Co. V. Rice, 236 AD2d 843, 844 ( 4th Dept. 1997), ( deposition transcripts certified as accurate by transcriber admissible on summary judgment motion even though unsigned). Nor is the court concerned that Fink was not present during the taking of the statements See, e.g, PDG Psychological, supra, Northern Medical, P.C., supra ((trial held despite late denial based upon SIU investigators’s finding that there was a staged accident based upon his review of the file for the first time a few weeks before the trial and his running a prior claim history on the assignor).

In sum, this court denies plaintiff’s motion for summary judgment with respect to defendant’s denial based upon a staged accident.

PROVIDER FRAUD

Defendant similarly is not precluded from raising its defense that plaintiff may be fraudulently incorporated since it is ” possibly” owned by both a physician and non physician, the latter of which is prohibited by both the Business Incorporation Law, the No – fault regulations and the seminal case of State Farm Mutual Auto Ins. V. Mallela, 4 NY3d 313 (2005).^[FN1]

`In Mallela, the Court of Appeals held that insurers may withhold payment for medical services provided by fraudulently licensed medical service corporations to which patients, who are covered by no-fault insurance, have assigned their claims. Insurance Law §5102 requires no-fault carriers to reimburse patients or their medical provider assignees for “basic economic loss”. In order to combat incidences of fraud, the Superintendent of Insurance promulgated 11 NYCRR 65-3.16(a)(12) , which excludes payments made to fraudulently licensed providers from the meaning of basic economic loss as contained in Section 5102. 4 NY3d at 320. After finding this regulation valid, the Court held that carriers “may look beyond the face of licensing documents to identify wilful and material failure to abide by state and local law.” Id at 321-22. See Cambridge Medical P.C. v. Nationwide Property and Casualty Ins. Co., 19 Misc 3d 1110A, 859 N.Y.S. 2d 901 ( Civil Ct., Richmond Co. 2008).

In Eastern Medical P.C. v. Allstate Ins. Co., 19 Misc 3d 775 (Dist. Ct. Nassau Co. 2008), the court rejected [*5]Allstate’s contention that Fair Price had reshaped the analysis of fraud based defenses so as to make a Mallela/ fraudulent incorporation defense untimely if not made within the 30 day denial period. The court first noted that there was no support for the premise behind defendant’s argument: that the Court of Appeals was ignorant of its own precedent when it decided Mallela and that the Fair Price Court chose to somehow abrogate Mallela in its decision. The court then noted that while the Court of Appeals precedent cited in Fair Price ^[FN2] dealt “with contract interpretation” or “the interplay between policies of insurance and applicable laws and regulations,” the Malella court dealt solely with statutory interpretation, 19 Misc 3d at 779. The Mallela defense was thus not predicated upon a policy exclusion or the extent of coverage provided by a contract of insurance but rather upon a statutory defense arising from a claimant’s failure to comply with applicable sections of the Business Corporation, Limited Liability and Education Laws. Id at 780.

The court then noted that even though there was no contention in Mallela that medical payments were not otherwise required by the policy, the Mallela court did not qualify the insurer’s right to deny payment to the fraudulently incorporated provider by requiring a timely denial. 19 Misc 3d at 780. Rather, the challenged regulation in Mallela did not create a new category of exclusion but rather was “a condition precedent with which all claimants must comply in order to receive benefits.” Id at 780 citing 4 NY3d at 321 n.3. Therefore, Fair Price did not alter, much less address prior precedent that a fraudulent incorporation defense “is a non- waivable defense .and is therefore not subject to the 30-day preclusion rule” ( Midwood Acupuncture P.C. v. State Farm Mutual Auto, 14 Misc 3d 131A, 2007 N.Y Slip Op 50052 U ( App. Ter, 2d Dept. 2007). Id at 781. Nor is such a defense waived by the failure to assert it in a denial of claim form. Multiquest v. Allstate Ins. Co., 17 Misc 3d 37, 39 ( App. Term, 2d Dept. 2007).

Defendant is therefore not precluded from raising its defense of fraudulent incorporation provided that it presents a “founded belief”that the corporation is ineligible to obtain no-fault benefits by reason of a fraudulent corporate filing. Central General Hospital., supra,; Inwood Hill Medical AB Medical Services v. Prudential Property & Casualty Insurance Company, 11 Misc 3d 137 (A) (Appellate Term Second Dept. 2006). Defendant herein alleges that Dr. Brownstein is not the sole owner of Manhattan Medical but rather shares his ownership responsibilities with Sam Stern, a non physician. The attorney’s affirmation cites a number of certificates of incorporation which allegedly show a labyrinth of interconnections between plaintiff Manhattan Medical and Universal Diagnostic Imaging, the latter of which is purportedly owned by Stern. Defendant also alleges that Brownstein owns at least five other imaging companies and is allegedly facing civil fraud lawsuits stemming from his ownership of other entities. Also attached is an EBT of the assistant office manager of plaintiff who indicates that Stern is one of the other owners of plaintiff and the testimony of plaintiff’s business manager in another where she testified that Stern is a general partner of plaintiff.

The court finds that defendant has articulated a”founded belief” that plaintiff is fraudulently incorporated as it is actually controlled by a non-licensed professional. Defendant has therefore made

allegations sufficient to raise an issue of fact as to whether plaintiff is fraudulently incorporated. See,

Tahir v. Progressive Casualty Ins. Co., 12 Misc 3d 657, 664 (Civil Ct., NY Co. 2006)(“fraudulent intent is rarely established by direct proof, but we nevertheless conclude that there are sufficient badges of fraud’ in this case from which such intention can be inferred “citing Spires v. Mihou, 13 AD3d 1056,57 (4th Dept. 2007)).

The court directs plaintiff to respond to defendant’s discovery request within 60 days of this decision.

The foregoing constitutes the Decision and Order of the Court.

DATED: September 4, 2008

Hon. Katherine A. Levine [*6]

Judge, Civil Court

ASN byon

Footnotes

Footnote 1:This defense is typically referred to as the “Malella defense” or “fraudulent incorporation” defense.

Footnote 2:he precedents followed by Fair Price were Presbyterian Hospital ,supra and Central General Hosp., supra.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered March 5, 2007. The order granted plaintiff’s motion for summary judgment.

Order modified by granting plaintiff’s motion for summary judgment to the extent of awarding it summary judgment on its claims seeking the sums of $184.29, $98.01, $130.68, $32.67, $130.68, $98.01, $60 and $30, and the matter is remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees thereon, and for all further proceedings on the remaining claims; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant opposed the motion, and submitted two denials, which denied plaintiff’s claims on the grounds of concurrent care and the lack of medical necessity for the services rendered. The court granted plaintiff’s motion for summary judgment, finding that defendant’s opposition papers failed to “include a report showing the subject alleged concurrent care.” The instant appeal by defendant ensued.

While defendant contended that it timely denied plaintiff’s claims seeking to recover the sums of $184.29, $98.01, $130.68, $32.67, $130.68, $98.01 and $60, plaintiff asserted that the denials of said claims were either untimely or not issued. Since defendant’s claims manager did not personally mail the denials for these claims, and did not set forth defendant’s standard office practice or procedure to ensure that denials are properly addressed and mailed (see New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2007]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]), defendant did not [*2]establish that the denials, dated November 2005, were timely mailed. Thus, defendant is precluded from raising most defenses including its proffered defenses of concurrent care and lack
of medical necessity with respect to these claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Accordingly, plaintiff was entitled to summary judgment upon said claims.

With respect to defendant’s denial of plaintiff’s claims seeking to recover the sums of $90, $150 and $30, the record indicates that plaintiff, in effect, conceded that the denial of claim form pertaining to said claims was timely. These claims were denied on the ground of concurrent care. However, defendant failed to establish an issue of fact with respect to said defense since it did not submit an affidavit from a person with the relevant training and/or educational background to competently assess whether the claims sought payment for treatment which constituted concurrent care. These claims were also denied based upon an affirmed independent medical examination (IME) report, a copy of which was attached to defendant’s opposing papers. Since the IME report set forth a sufficient factual basis and medical rationale for the conclusion that the services rendered after the IME was conducted, for which plaintiff seeks to recover the sums of $90 and $150, were not medically necessary, plaintiff’s motion for summary judgment should have been denied as to these two claims (see A.B. Med. Servs. PLLC v American Tr. Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50680[U] [App Term, 2d & 11th Jud Dists 2007]). However, since plaintiff’s claim seeking the sum of $30 was for services rendered before the IME was conducted, the IME report, which indicated that, as of the date of the IME, there was no medical necessity for further treatment, is insufficient to demonstrate the existence of an issue of fact as to the medical necessity of such services. Consequently, plaintiff was entitled to summary judgment upon the $30 claim.

Accordingly, plaintiff is awarded partial summary judgment on its $184.29, $98.01, $130.68, $32.67, $130.68, $98.01, $60 and $30 claims, and the matter is remanded to the court below 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, and for all further proceedings on the remaining claims.

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

Golia, J., concurs in a separate memorandum.

Golia, J., concurs in the result only, in the following memorandum:

While I agree with the ultimate disposition in the decision reached by the majority, I wish to note that I am constrained to agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.
Decision Date: September 03, 2008

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Alice Fisher Rubin, J.), entered March 13, 2007. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment.

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

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was supported by an affirmation from plaintiff’s counsel, an affidavit by an officer of plaintiff and various documents annexed thereto. The affidavit executed by plaintiff’s officer stated in a conclusory manner that the documents attached to plaintiff’s motion papers were plaintiff’s business records. In opposition, defendant argued, inter alia, that the affidavit by plaintiff’s officer failed to lay a proper foundation for the documents annexed to plaintiff’s moving papers and that, as a result, plaintiff failed to establish a prima facie case. Defendant also cross-moved for summary judgment on the ground that the action was premature because plaintiff failed to provide verification which defendant requested. The court denied plaintiff’s motion for summary judgment on the ground that plaintiff did not prove that the claim forms were mailed to defendant and granted defendant’s cross motion, finding that the action was premature. This 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 [*2](see Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). Consequently, plaintiff’s motion for summary judgment was properly denied.

However, defendant failed to demonstrate that it timely mailed the verification and follow-up verification requests (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Consequently, defendant’s cross motion failed to establish that plaintiff’s action was premature due to plaintiff’s failure to respond to timely verification requests (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [a]; cf. Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2004]). Accordingly, defendant’s cross motion for summary judgment should have been denied.

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

Golia, J., concurs in part and dissents in part in a separate memorandum.

Golia, J., concurs in part and dissents in part and votes to affirm the order in the following memorandum:

I concur with the majority’s finding that plaintiff failed to make a prima facie showing of its entitlement to summary judgment, in line with our holding in Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co. (14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]).

However, I disagree and dissent from its determination that “defendant failed to demonstrate that it timely mailed the verification and follow-up verification requests . . . .” I find that the record demonstrates that defendant timely mailed the verification and
follow-up verification requests, all in accordance with my dissenting opinions in Uptodate Medical Services, P.C. v Lumbermens Mut. Cas. Co. (20 Misc 3d 135[A], 2008 NY Slip Op 51502[U] [App Term, 2d & 11th Jud Dists 2008]) and Horton Med., P.C. v New York Cent. Mut. Fire Ins. Co. (___ Misc 3d ___, 2008 NY Slip Op [App Term, 2d & 11th Jud Dists 2008]).

Inasmuch as plaintiff has failed to respond to those requests, defendant’s cross motion for summary judgment dismissing the action as premature was properly granted by the motion court (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [a]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]).

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered July 31, 2006. The order denied plaintiff’s motion for summary judgment.

Order modified by providing that plaintiff’s motion for summary judgment is granted to the extent of awarding plaintiff summary judgment upon its claims seeking to recover the sums of $1,999.12, $532.20, and $1,786.18, and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees thereon, and for all further proceedings on the remaining claim; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment upon four claims. Defendant opposed the motion. The court denied plaintiff’s motion, finding that triable issues of fact existed as to medical necessity. The instant appeal by plaintiff ensued.

Plaintiff established its prima facie entitlement to summary judgment by proof that it submitted the 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]). The burden then shifted to defendant to show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

The affidavit of defendant’s senior operations staff analyst was sufficient to establish that the NF-10 denial of claim forms pertaining to plaintiff’s claims seeking the sums of $1,999.12 and $746.01 were timely mailed in accordance with defendant’s standard office practice and procedure (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud [*2]Dists 2007]).

As to the claim seeking $1,999.12, defendant did not rebut plaintiff’s prima facie showing because the affirmed peer review report upon which this claim was denied, and which is annexed to defendant’s opposing papers, does not set forth a factual basis and medical rationale sufficient to establish the defense of lack of medical necessity, inasmuch as the reviewer asserted that she had insufficient documentation and information (see A.B. Med. Servs. PLLC. v American Tr. Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50680[U] [App Term, 2d & 11th Jud Dists 2007]). Since defendant did not demonstrate that it sought to obtain such information by means of a verification request, defendant did not establish a triable issue of fact as to this claim (see id.; A.B. Med. Servs. PLLC v American Mfrs. Mut. Ins. Co., 6 Misc 3d 133[A], 2005 NY Slip Op 50114[U] [App Term, 2d & 11th Jud Dists 2005]). Consequently, plaintiff is entitled to summary judgment on its $1,999.12 claim.

With respect to the claim seeking $746.01, defendant rebutted plaintiff’s prima facie showing because the affirmed peer review report upon which this claim was denied, and which is annexed to defendant’s opposing papers, set forth a sufficient factual basis and medical rationale so as to raise a triable issue of fact regarding medical necessity (see A.B. Med. Servs. PLLC. v American Tr. Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50680[U] [2007], supra). Contrary to plaintiff’s contention, the fact that the reviewer stated in the report that the “documentation did not reflect that this claimant had failed office-based physical therapy,” does not require the conclusion that the doctor considered the information insufficient to permit a medical necessity determination. Consequently, plaintiff is not entitled to summary judgment on its $746.01 claim.

With respect to the claims seeking the sums of $532.20 and $1,768.18, the affidavit of defendant’s senior operations staff analyst is insufficient to show that defendant timely mailed its denials for said claims since the affiant does not address the mailing of these denials in his affidavit. Consequently, defendant is precluded from interposing its proffered defense of lack of medical necessity with respect to these two claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Accordingly, plaintiff is entitled to summary judgment on said claims.

In view of the foregoing, plaintiff’s motion for summary judgment is granted to the extent of awarding plaintiff summary judgment on its claims seeking to recover the sums of $1,999.12, $532.20, and $1,786.18, and the matter is remanded to the court below 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, and for all further proceedings on the remaining claim.

Pesce, P.J., Weston Patterson and Rios, JJ., concur.
Decision Date: September 03, 2008

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Genine D. Edwards, J.), entered June 19, 2007. The order denied plaintiffs’ motion for summary judgment.

Order affirmed without costs.

In this action by providers to recover assigned first-party no-fault benefits, plaintiffs moved for summary judgment. In opposition, defendant argued, inter alia, that plaintiff was not entitled to summary judgment because there was an issue of fact as to whether the assignor’s injuries arose out of an insured incident. The court below denied plaintiffs’ motion, finding that the affidavit executed by plaintiffs’ medical billing manager was insufficient to lay a foundation for the admission, as business records, of the documents annexed to plaintiffs’ moving papers. This appeal by plaintiffs ensued.

The affidavits submitted by plaintiffs established their prima facie entitlement to summary judgment by proof that they submitted the claim forms, setting forth the facts and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; cf. Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). The burden, therefore, shifted to defendant to demonstrate the existence of a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320 [1986]).

Upon a review of the record, we find that the affidavits submitted by defendant’s investigators were sufficient to demonstrate that defendant possessed a “founded belief that the [*2]alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). Accordingly, defendant demonstrated the existence of a triable issue of fact as to whether there was a lack of coverage (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997], supra; Zuckerman v City of New York, 49 NY2d 557 [1980]).

Consequently, the order denying plaintiffs’ motion for summary judgment is affirmed, albeit on other grounds, and we reach no other issue.

Pesce, P.J., Rios and Steinhardt, JJ., concur.
Decision Date: September 02, 2008

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Richmond County (Johnny Lee Baynes, J.), entered March 16, 2007, deemed from a judgment of said court entered April 23, 2007 (see CPLR 5501 [c]). The judgment, entered pursuant to the March 15, 2007 order granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $826.

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

In this action by a medical equipment provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. In opposition, defendant asserted
that the medical equipment furnished by plaintiff was not medically necessary as per a peer review report. The court granted plaintiff’s motion for summary judgment, and defendant appeals.

Inasmuch as defendant raises no issue on appeal with respect to plaintiff’s prima facie case, we do not pass on the propriety of the determination of the court below with respect thereto.

The affidavit submitted by defendant’s claims representative was sufficient to give rise to a presumption that the denial of claim form at issue was mailed in accordance with defendant’s standard office practice and procedure (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Since defendant’s timely denial of claim form stated that the claim was denied pursuant to a peer review which found that the supplies furnished by plaintiff to its assignor were not medically necessary, it is sufficient to avoid preclusion of the defense of [*2]lack of medical necessity (see A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779 [2007]). In opposition to plaintiff’s motion for summary judgment, defendant annexed an affidavit by the chiropractor who executed the peer review report which set forth a factual basis and medical rationale for his opinion that the medical supplies at issue were medically unnecessary. As a result, defendant proffered sufficient evidence in admissible form to demonstrate the existence of a triable issue of fact as to medical necessity (see A.B. Med. Servs., PLLC v American Tr. Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50680 [App Term, 2d & 11th Jud Dists 2007]). Accordingly, plaintiff’s motion for summary judgment should have been denied (see Zuckerman v City of New York, 49 NY2d 557 [1980]).

To the extent defendant asks this court to search the record and grant it summary judgment, we decline to do so (see e.g. New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co., 39 AD3d 832 [2007]).

Rios, J.P., and Pesce, J., concur.

Golia, J., concurs in a separate memorandum.
SUPREME COURT OF THE STATE OF NEW YORK,
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : RIOS, J.P., PESCE and GOLIA, JJ.
ORTHOTIC SURGICAL & MEDICAL SUPPLY, INC.
as assignee of LUNA YARITZA,

Respondent,

-against- [*3]
GEICO INS. CO.,

Appellant.

Golia, J., concurs in the result only, in the following memorandum:

I am constrained to agree with the ultimate disposition in the decision reached by the majority. I, however, wish to note that I do not agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.

I do not believe this Court can choose to abrogate its responsibility to pass upon the most fundamental and pre-eminent issue to be determined in any litigation, that being whether or not the plaintiff has established a prima facie case (see Uptodate
Med. Serv., P.C v Lumbermens Mut. Cas. Co., Misc 3d , 2008 NY Slip
Op 51502[U] [App Term, 2d & 11th Jud Dists 2008] [dissenting op by Golia, J.]; see also Alvarez v Prospect Hosp., 68 NY2d 320 [1986]).
Decision Date: September 02, 2008