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

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from a decision of the Civil Court of the City of New York, Queens County (Lee A. Mayersohn, J.), dated August 15, 2006, deemed from a judgment of the same court entered January 11, 2007 (see CPLR 5520 [c]). The judgment, after a nonjury trial, awarded plaintiff the principal sum of $2,228.36.

Judgment affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the parties stipulated that plaintiff proved its prima facie case, that defendant timely and properly denied the claims and that the claims were denied based upon an injury causation analysis prepared by defendant’s expert witness. The sole issue at trial was whether plaintiff’s assignor’s alleged injuries were caused by the accident. The only witness was defendant’s expert, who testified, without objection, that the force of the impact was minimal and that plaintiff’s assignor’s injuries could not have been caused by the accident. He further stated that his opinion was based upon his review of the police accident report, which included statements by the drivers of the vehicles, photographs of the vehicles and a repair estimate. The court entered judgment for plaintiff, holding that because the expert’s testimony and report relied almost exclusively upon statements and documents which were hearsay, defendant failed to sustain its burden of proof. This appeal by defendant ensued.

“[A]n expert may rely on out-of-court material if it is of a kind accepted in the profession as reliable in forming a professional opinion’ ” (Hambsch v New York City Tr. Auth., 63 NY2d 723, 726 [1984], quoting People v Sugden, 35 NY2d 453, 460 [1974]). The proponent of such testimony may satisfy its “burden of showing acceptance in the profession . . . through the testimony of a qualified expert” (People v Goldstein, 6 NY3d 119, 124-125 [2005]). In the [*2]instant case, defendant did not elicit any testimony from its expert which could support a conclusion that the material he relied upon in forming his opinion was “of a kind accepted in the profession as reliable in forming a professional opinion” (Goldstein, 6 NY3d at 125; see also Sugden, 35 NY2d at 460). Consequently, the testimony of the expert witness and his report were inadmissible (Hambsch, 63 NY2d at 726).

Although defendant contends that it was nevertheless entitled to judgment dismissing the complaint because plaintiff did not object to the testimony by defendant’s expert, “[n]o judgment, even in a small claims action, can rest entirely on hearsay evidence” (Zelnik v Bidermann Indus. U.S.A., 242 AD2d 227, 228 [1997]; see also Arnold Herstand & Co. v Gallery: Gertrude Stein, Inc., 211 AD2d 77 [1995]; Levins v Bucholtz, 2 AD2d 351 [1956]; Prince, Richardson on Evidence § 8-108 [Farrell 11th ed] [citations omitted]). Accordingly, the judgment is affirmed.

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, Kings County (Genine D. Edwards, J.), entered January 24, 2007. The order granted defendant’s motion to sever multiple causes of action.

Order affirmed without costs.

Plaintiff commenced this action to recover no-fault benefits as assignee of three individuals. Defendant moved, pursuant to CPLR 603, to sever the causes of action into separate actions, arguing that there are three separate and distinct claims involving different questions of fact and law. The court below granted the motion. This appeal by plaintiff ensued.

The decision to grant severance (see CPLR 603) is an exercise of judicial discretion which, in the absence of a party’s showing of prejudice to a substantial right should not be disturbed on appeal (King’s Med. Supply, Inc. v GEICO Cas. Ins. Co., 14 Misc 3d 136[A], 2007 NY Slip Op 50232[U] [App Term, 2d & 11th Jud Dists 2007]). In the instant matter, the claims arose out of three separate motor vehicle accidents and three insurance policies were at issue. The particular facts relating to each claim at issue are likely to raise few, if any, common issues of law or fact (see Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co., 12 AD3d 185 [2004]; Ladim DME, Inc. v GEICO Gen. Ins. Co., 15 Misc 3d 139[A], 2007 NY Slip Op 50997[U] [App Term, 2d & 11th Jud Dists 2007]; S.I.A. Med. Supply Inc. v GEICO Ins. Co., 8 Misc 3d 134[A], 2005 NY Slip Op 51170[U] [App Term, 2d & 11th Jud Dists 2005]; Metro Med. Diagnostics, P.C. v Motor Veh. Acc. Indem. Corp., 6 Misc 3d 136[A], 2005 NY Slip Op 50238[U] [App Term, 2d & 11th Jud Dists 2005]). A single trial involving different sets of facts regarding three underlying accidents and injuries would pose the danger of being unwieldy [*2]and confusing (see King’s Med. Supply, Inc. v GEICO Cas. Ins. Co., 14
Misc 3d 136[A], 2007 NY Slip Op 50232[U] [2007], supra). Accordingly, the order granting defendant’s motion to sever the causes of action is affirmed.

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, Kings County (Loren Baily-Schiffman, J.), entered May 30, 2006, deemed from a judgment of the same court entered June 14, 2006 (see CPLR 5501 [c]). The judgment, entered pursuant to the May 30, 2006 order granting plaintiff’s motion for summary judgment, awarded plaintiff the principal sum of $1,839.34.

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

In this action by a provider to recover assigned first-party no-fault benefits, the court granted plaintiff’s motion for summary judgment. The instant appeal by defendant ensued. A judgment was subsequently entered.

On appeal, defendant asserts that the affidavit by plaintiff’s officer, submitted in support of plaintiff’s motion for summary judgment, failed to lay a proper foundation for the admission of the documents annexed to plaintiff’s moving papers and that, as a result, plaintiff failed to establish a prima facie case. We agree. The affidavit submitted by plaintiff’s officer was insufficient to demonstrate that he 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. Accordingly, plaintiff failed to make a prima facie showing of its entitlement to summary judgment (see Bath Med. Supply, Inc. v Deerbrook Ins. Co., 14 Misc 3d 135[A], 2007 NY Slip Op 50179[U] [App Term, 2d & 11th Jud Dists 2007]; Dan Med. P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). Consequently, the judgment is reversed, the order granting plaintiff’s motion for summary judgment is vacated and plaintiff’s motion for summary judgment is denied. [*2]

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

Appeals from an order of the Civil Court of the City of New York, Queens County (Thomas D. Raffaele, J.), entered May 23, 2006, and from a judgment of the same court entered December 26, 2006. The order granted plaintiff’s motion for summary judgment. The judgment, entered pursuant to the May 23, 2006 order, awarded plaintiff the principal sum of $7,791.06.

Appeal from order dismissed.

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

At the outset we note that the appeal from the order entered May 23, 2006 is dismissed since the right of direct appeal therefrom terminated with the entry of the judgment (Matter of Aho, 39 NY2d 241 [1976]). The issues raised on the appeal from the order are brought up for review on the appeal from the judgment.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant opposed the motion, arguing, inter alia, that plaintiff did not make a prima facie showing because the affidavit executed by its corporate officer did not establish that the claims were submitted to defendant. The court granted plaintiff’s motion for summary judgment, and a judgment was subsequently entered. This appeal by defendant ensued.

A provider establishes a prima facie entitlement to summary judgment by proof that it submitted a claim, 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]). A provider generally establishes the submission of the claim form by demonstrating proof of proper mailing, which gives rise to the presumption that the claim [*2]form was received by the addressee. The presumption may be created either by proof of actual mailing or by proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001]). Here, the affidavit of plaintiff’s corporate officer and the post office ledger annexed thereto were insufficient to establish that plaintiff mailed the claims to defendant (see New York Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2006]; IVB Med. Supply, Inc. v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 126[A], 2006 NY Slip Op 51660[U] [App Term, 2d & 11th Jud Dists 2006]). Moreover, plaintiff’s attorney’s affirmation consisted of allegations by a person without personal knowledge that the claims were actually mailed to defendant and, as such, is unsubstantiated hearsay which has no probative value (see Warrington v Ryder Truck Rental, Inc., 35 AD3d 455 [2006]). In addition, as argued by defendant, the affidavit by plaintiff’s corporate officer, submitted in support of plaintiff’s motion for summary judgment, failed to lay a proper foundation for the admission of the documents annexed to plaintiff’s moving papers (see Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). Accordingly, plaintiff failed to make a prima facie showing of its entitlement to summary judgment. Consequently, plaintiff’s motion for summary judgment is denied.

In view of the foregoing, we do not reach defendant’s remaining contention.

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