SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Norman Janowitz, J.), dated May 14, 2007. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment as to the sum of $1,937.58, representing an unpaid balance of a February 15, 2001 no-fault insurance claim.

Order, insofar as appealed from, reversed without costs, plaintiff’s motion for summary judgment upon the $1,937.58 unpaid portion of its claim dated February 15, 2001 granted and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees thereon.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Insofar as is relevant to this appeal, the court below denied plaintiff’s motion for summary judgment upon the unpaid $1,937.58 balance of its NF-3 claim form dated February 15, 2001 on the ground that defendant raised an issue of fact as to medical necessity. This appeal by plaintiff ensued.

An insurance carrier is required to either pay or deny a claim for no-fault benefits within 30 days of the date the insurer receives the proof of claim (see Insurance Department Regulations [11 NYCRR] § 65.15 [g] [3], now Insurance Department Regulations [11 NYCRR] § 65-3.8; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]). Insurance [*2]Department Regulations (11 NYCRR) § 65.15 (d) (2) provides that additional verification required by an insurer is to be requested within 10 business days of receipt of a prescribed claim form. Where, as here, defendant requested additional verification 12 business days after receiving plaintiff’s NF-3 claim form, the 30-day period within which defendant was required to pay or deny plaintiff’s claim was correspondingly reduced to 28 days (Insurance Department Regulations [11 NYCRR] § 65.15 [g] [10], now Insurance Department Regulations [11 NYCRR] § 65-3.8 [j]; see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 318 [2007]). Since defendant concedes that it received the requested verification on May 16, 2001, defendant was required to pay or deny the claim at issue on or before June 13, 2001. As defendant did not deny plaintiff’s claim until June 14, 2001, defendant’s denial of plaintiff’s claim was untimely and defendant is precluded from raising its proffered defense of lack of medical necessity (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997], supra).

Accordingly, plaintiff was entitled to summary judgment upon the $1,937.58 unpaid portion of its claim dated February 15, 2001, and the matter is remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees thereon pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Rudolph, P.J., McCabe and Scheinkman, JJ., concur.
Decision Date: July 10, 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 (Richard Velasquez, J.), entered April 20, 2007. The order denied defendant’s motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground of res judicata. Defendant argued that plaintiff had previously commenced an identical action, which was dismissed pursuant to CPLR 3126 (3) for plaintiff’s failure to comply with a
so-ordered discovery stipulation. Plaintiff asserted that the action was proper since the prior action was not dismissed with prejudice. The court below denied defendant’s motion. The instant appeal by defendant ensued.

“Where a plaintiff’s noncompliance with a disclosure order does not result in a dismissal with prejudice, or an order of preclusion or summary judgment in favor of defendant so as to effectively close plaintiff’s proof, dismissal resulting from the noncompliance is not a merits determination so as to bar commencement of a second action” (Maitland v Trojan Elec. & Mach. Co., 65 NY2d 614, 615-616 [1985]; see Daluise v Sottile, 40 AD3d 801, 802-803 [2007]; Aguilar v Jacoby, 34 AD3d 706, 707 [2006]). In the case at bar, plaintiff’s prior action was [*2]dismissed after the court below granted defendant’s motion to strike the complaint pursuant to CPLR 3126 (3). Since plaintiff’s noncompliance did not “result in a dismissal with prejudice, or an order of preclusion or summary judgment,” plaintiff was not barred from commencing a second action (see Maitland, 65 NY2d at 615-616; Daluise, 40 AD3d at 802). Accordingly, the court below properly denied defendant’s motion for summary judgment dismissing the
complaint based on the doctrine of res judicata (cf. First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., ___ Misc 3d ___, 2008 NY Slip Op 51266[U] [App Term, 2d & 11th Jud Dists 2008] [so-ordered stipulation concerning discovery provided that a failure to provide the discovery would result in preclusion]).

Pesce, P.J., Rios and Steinhardt, JJ., concur.
Decision Date: July 10, 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 (Arlene Bluth, J.), entered November 29, 2006. The order denied defendant’s motion to vacate the default judgment entered against it and to extend its time to appear.

Order reversed without costs and defendant’s motion to vacate the default judgment entered against it and to extend its time to appear granted. Defendant shall serve and file its answer within 20 days of the date of the order hereon.

Plaintiff, a health care provider, obtained a default judgment in this action to recover assigned first-party no-fault benefits. Defendant’s motion to, inter alia, vacate the default judgment was denied on the ground that defendant’s papers did not establish the existence of a meritorious defense. This appeal by defendant ensued.

The sole issue raised on appeal is whether defendant established that it possessed a meritorious defense to the instant action. In our opinion, since the affidavit executed by defendant’s special investigator, which was submitted in support of defendant’s motion, “suffice[d] to [demonstrate] issues as to who really operated and controlled plaintiff” (Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 14 Misc 3d 131[A], 2007 NY Slip Op 50052 [App Term, 2d & 11th Jud Dists 2007]), defendant established the existence of a meritorious defense to the action. Accordingly, the order is reversed and defendant’s motion granted.

Pesce, P.J., Rios and Steinhardt, JJ., concur.
Decision Date: July 10, 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 15, 2007, deemed from a judgment 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 $1,328.63.

Judgment affirmed without costs.

In this action by a medical equipment 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.

Since defendant does not challenge plaintiff’s establishment of its prima facie case, we do not pass upon the propriety of the determination of the court below with respect thereto.

In opposition to plaintiff’s motion for summary judgment, defendant was required, in order to raise a triable issue of fact as to medical necessity, to proffer proof in admissible form (see A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 2004]). In its opposing papers, defendant submitted an affirmed peer review report which stated that there was a lack of medical necessity for the medical equipment provided by plaintiff. In its reply papers, plaintiff asserted that the peer review report upon which defendant relied was not in admissible form pursuant to CPLR 2106 because it bore a [*2]facsimile of the peer reviewer’s signature. Although defendant argues that plaintiff’s contention was improperly raised for the first time in plaintiff’s reply papers, the reply affirmation from plaintiff’s counsel was responsive to defendant’s papers, since defendant first proffered the peer review report in inadmissible form in opposition to plaintiff’s motion and plaintiff was pointing out said defect in form. Inasmuch as defendant concedes that the peer review report bears an electronic stamped facsimile of the doctor’s signature, and there is nothing in the record to indicate that the facsimile signature was placed on the report by the doctor who performed the peer review or at his direction, defendant failed to raise a triable issue of fact with respect to the claim at issue (see Vista Surgical Supplies, Inc. v Travelers Ins. Co., 50 AD3d 778 [2008]). Accordingly, the judgment is affirmed.

We note that the affirmation by Dr. Curley, annexed to defendant’s reply brief on appeal, may not be considered by the court as it is dehors the record (see Chimarios v Duhl, 152 AD2d 508 [1989]).

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

Golia, J., dissents in a separate memorandum.

Golia, J., dissents and votes to reverse the judgment, vacate the order entered March 15, 2007 and deny plaintiff’s motion for summary judgment.

A simple review of the record reveals that contrary to the holding of the lower court, this defendant did fully comply with the no-fault regulations by timely sending a NF-10 denial of claim form which contained the specific reason for denial, i.e, a peer review report.

It is, however, understandable that the lower court ruled as it did in view of the majority decision of the Appellate Term in the case of A.B. Med. Servs. PLLC v GEICO Cas. Ins. Co., 12 Misc 3d 30 [App Term, 2d & 11th Jud Dists 2006]) which found such grounds for denial of claim to be insufficient.

Subsequent to the lower court’s ruling, the Appellate Division reversed the majority’s holding in this Court and found that the regulation means what it says and the statement that a claim is being denied based upon a peer review report is sufficient (see A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co. 39 AD3d 778 [2007]).

Here, on appeal, my colleagues note that plaintiff in its reply papers timely raised the issue concerning whether or not a facsimile signature of Dr. Curley that was affixed to the peer review report was sufficient to qualify that report as “admissible” evidence. They reached this conclusion based upon the fact that the peer review report was submitted to the court in the opposition papers, and therefore plaintiff addressed the “signature” issue at the earliest possible opportunity. There were no further papers to be submitted to the court and therefore there was no response by defendant.

Notwithstanding, on appeal, defendant proffered an affirmation by Dr. Curley in which he states, under penalty of perjury, that his “facsimile” signature can only be affixed to a document by him personally and only by the use of a “secure password…and no other individual, either under my employ or otherwise, has the authority or ability to apply the signature.”

Whereas the assertion by the majority that Dr. Curley’s affirmation is “dehors” the record and should not be considered might technically be correct, it is also true that Dr. Curley did not have an opportunity or a reason to draft this affirmation until plaintiff contested the propriety of his “electronic” signature in its reply. Clearly, this appeal is the first opportunity defendant had to respond to the issue raised by plaintiff.
Decision Date: July 10, 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 (Dolores L. Waltrous, J.), entered March 26, 2007. The order, insofar as appealed from, denied defendant’s cross motion for summary judgment.

Order, insofar as appealed from, modified by providing that defendant’s cross motion for summary judgment is granted to the extent of dismissing the complaint insofar as it sought to recover upon plaintiff’s claim seeking the sum of $925.75; 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 and defendant cross-moved for summary
judgment dismissing the complaint on the ground of lack of medical necessity. The court denied both plaintiff’s motion and defendant’s cross motion, holding that the affidavits in support of the motion and cross motion were insufficient to establish either party’s entitlement to summary judgment. Defendant appeals from the order insofar as it denied its cross motion.

Defendant established that it timely mailed the denial of claim forms at issue, which denied plaintiff’s claims based upon either a peer review or an independent medical examination, pursuant to its 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 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Since the affirmed independent medical examination report submitted [*2]by defendant in support of its cross motion established prima facie that the supplies provided by plaintiff for which plaintiff sought to recover the sum of $925.75 were not medically necessary and plaintiff did not present any evidence refuting defendant’s prima facie showing, the court should have granted defendant’s cross motion for summary judgment dismissing the complaint insofar as it sought to recover upon said claim (see Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]). Inasmuch as the affirmed peer review report annexed to defendant’s cross motion did not establish that the supplies for which plaintiff sought to recover on the claim seeking the sum of $235.63 were medically unnecessary, defendant was not entitled to summary judgment dismissing said claim.

Golia, J.P., Rios and Steinhardt, JJ., concur.
Decision Date: July 10, 2008

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal, on the ground of inadequacy, from a judgment of the Civil Court of the City of New York, Queens County (Bernice Daun Siegal, J.), entered May 18, 2007. The judgment, after a nonjury trial, awarded plaintiff the principal sum of $33.55.

Judgment affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the sole issue at trial was the medical necessity of nerve testing of the assignor’s upper and lower extremities. Before trial, the parties stipulated that plaintiff proved its prima facie
case, that defendant timely and properly denied the claims and that the claims for certain diagnostic testing were in dispute and had not been paid. The trial court entered into evidence the claim forms, denial of claim forms and the transcript of the deposition testimony of defendant’s peer review doctor (see CPLR 3117 [a] [4]). After trial, the court awarded judgment in the principal sum of $33.55 to plaintiff. This appeal by plaintiff ensued on the ground of inadequacy.

“A decision rendered by a court after a nonjury trial should not be disturbed on appeal unless it is clear that its conclusions could not have been reached under any fair interpretation of the evidence” (Ardmar Realty Co. v Building Inspector of Vil. of Tuckahoe, 5 AD3d 517, 518 [*2][2004]). Since the parties stipulated to plaintiff’s prima facie case, the burden shifted to defendant to proffer sufficient evidence in support of a defense (see West Tremont Med. Diagnostic, P.C. v Geico Ins. Co., 13 Misc 3d 131[A], 2006 NY Slip Op 51871[U] [App Term, 2d & 11th Jud Dists 2006]). The testimony of defendant’s peer review doctor established that there was a lack of medical necessity for the medical services which are the subject of this appeal. As plaintiff did not offer any rebuttal evidence to show that the services were medically necessary (see id.), the record does not support plaintiff’s contention that the judgment is inadequate. As a result, the judgment is affirmed.

Pesce, P.J., Rios and Steinhardt, JJ., concur.
Decision Date: July 10, 2008

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, First District (Gary Franklin Knobel, J.), dated December 28, 2006. The order, insofar as appealed from as limited by the brief, directed plaintiff to provide defendant with an authorization executed by its assignor in order to obtain discovery of defendant’s no-fault file, and directed that plaintiff bear the costs of reproduction of said file (15 Misc 3d 270 [2006]).

Appeal dismissed.

The appeal from the order must be dismissed since no appeal as of right lies from an order which decides a motion which was not made on notice (UDCA 1702 [a] [2]; see Bottiglieri v Reilly, 15 Misc 3d 135[A], 2007 NY Slip Op 50750[U] [App Term, 9th & 10th Jud Dists 2007]; see also 1223 Bushwick, LLC v Williams, 19 Misc 3d 128[A], 2008 NY Slip Op 50512[U] [App Term, 2d & 11th Jud Dists 2008]). A motion is made on notice when a notice of motion or an order to show cause is served (CPLR 2211), and no notice of motion or order to show cause was served herein. Although, under appropriate circumstances, a court may deem a notice of appeal an application for leave to appeal and grant such leave (UDCA 1702 [c]; see e.g. Cervera v Bressler, 50 AD3d 837 [2008]; Vest v Vest, 50 AD3d 776 [2008]), we decline to do so in the instant case.

Rudolph, P.J., McCabe and Scheinkman, JJ., concur.
Decision Date: July 10, 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, Queens County (Gerald Dunbar, J.), entered February 2, 2006, deemed from a judgment entered February 5, 2007 (see CPLR 5501 [c]). The judgment, entered pursuant to the January 19, 2006 order granting plaintiff’s motion for summary judgment and denying defendant’s cross motion for summary judgment, awarded plaintiff the principal sum of $1,236.99.

Judgment reversed without costs, order entered January 19, 2006 vacated, plaintiff’s motion for summary judgment denied and defendant’s cross motion for summary judgment dismissing the complaint granted.

In this action by a provider to recover assigned first-party no-fault benefits for psychological services rendered in August and September 1999, plaintiff moved for summary judgment. Defendant cross-moved for summary judgment arguing, inter alia, that plaintiff was ineligible to receive reimbursement of no-fault benefits because plaintiff was fraudulently incorporated, relying on State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]). Holding that Insurance Department Regulations (11 NYCRR) § 65-3.16 (a) (12) was inapplicable to claims for services rendered prior to April 4, 2002, the court granted plaintiff’s motion for summary judgment and denied defendant’s cross motion seeking summary judgment dismissing the complaint. This appeal ensued. A judgment was subsequently entered.

In Allstate Ins. Co. v Belt Parkway Imaging, P.C. (33 AD3d 407 [2006]), the Appellate [*2]Division, First Department, held that Insurance Department Regulations (11 NYCRR) § 65-3.16 (a) (12) is to be given retroactive effect notwithstanding the fact that it would bar reimbursement of assigned first-party no-fault benefits for services rendered prior to April 4, 2002 (see also Metroscan Imaging, P.C. v GEICO Ins. Co. (13 Misc 3d 35, 37-39 [App Term, 2d & 11th Jud Dists 2006]). Defendant’s cross motion for summary judgment established that plaintiff performed psychological services in violation of Limited Liability Company Law sections 1203 and 1207. Consequently, based upon our prior determination in Multiquest, P.L.L.C. v Allstate Ins. Co. (17 Misc 3d 37 [App Term, 2d & 11th Jud Dists 2007]), plaintiff was ineligible to obtain reimbursement of assigned first-party no-fault benefits for such services and defendant was entitled to summary judgment dismissing the complaint.

Rios, J.P., Pesce and Golia, JJ., concur.
Decision Date: July 10, 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, Queens County (Diane A. Lebedeff, J.), entered January 24, 2007. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment.

Order, insofar as appealed from, reversed without costs, plaintiff’s motion for summary judgment granted, and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff established 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]; Mani Med. P.C. v NY Cent. Mut. Ins. Co., 19 Misc 3d 128[A], 2008 NY Slip Op 50508[U] [App Term, 2d & 11th Jud Dists 2008]). The burden then shifted to defendant to demonstrate the existence of a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

Inasmuch as defendant timely sought verification with respect to the medical necessity of the supplies furnished by plaintiff to its assignor, upon receipt of such verification on November 23, 2005, defendant’s 30-day claim determination period began to run (Insurance Department [*2]Regulations [11 NYCRR] § 65-3.5). While defendant argues that its time to pay or deny plaintiff’s claim was further tolled because defendant requested that plaintiff’s assignor submit to an examination under oath (EUO), the record does not indicate that defendant made such a request for additional verification within 15 days of defendant’s receipt of the letter of medical necessity. As a result, defendant failed to show that its 30-day claim determination period was still tolled (see Insurance Department Regulations [11 NYCRR] § 65-3.5). In view of the foregoing, defendant’s denial of claim form, which was not mailed until January 4, 2006, was untimely and defendant was precluded from raising fraudulent billing as a defense in this action (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Consequently, plaintiff’s motion for summary judgment should have been granted.

Accordingly, the matter is remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

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:

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.
Decision Date: July 10, 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 (Delores J. Thomas, J.), entered December 1, 2006. The order, insofar as appealed from, denied defendant’s motion to strike the complaint or, in the alternative, to compel discovery.

Order, insofar as appealed from, modified by providing that defendant’s motion is granted to the extent of compelling plaintiff to produce its certificate of incorporation for discovery and inspection and to serve answers providing the information sought in numbers 1, 15, 18, 31, 37-40, and 44-46 of defendant’s demand for verified written interrogatories within 60 days of the date of the order entered hereon and that within 30 days thereafter, plaintiff shall produce its owner, Valentina Anikeyeva, for an examination before trial in the courthouse of the Civil Court of the City of New York, Kings County, or on such other date to which the parties agree, but in no event later than 60 days thereafter; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved to strike plaintiff’s complaint pursuant to CPLR 3126 or, in the alternative, to compel plaintiff to produce its owner, Valentina Anikeyeva, for an examination before trial (EBT), to respond to defendant’s demand for verified written interrogatories and to produce the documents demanded in defendant’s notice for discovery and inspection. Defendant’s moving papers established that after defendant sent a good faith letter requesting that plaintiff provide the requested discovery to avoid motion practice, plaintiff sent a letter rejecting defendant’s discovery demands in their entirety. In addition to opposing defendant’s motion, plaintiff cross-moved for a protective order. The court denied defendant’s motion, finding that defendant failed [*2]to submit sufficient factual evidence to establish its entitlement to an order compelling discovery. Plaintiff’s cross motion for a protective order was implicitly denied as academic. This appeal by defendant ensued.

Plaintiff was required, but failed, to challenge the propriety of defendant’s notice for discovery and inspection pursuant to CPLR 3120 within the time prescribed by CPLR 3122. Likewise, plaintiff failed to object to defendant’s demand for verified written interrogatories. As a result, plaintiff is obligated to produce the information sought except as to matters which are palpably improper or privileged (see Fausto v City of New York, 17 AD3d 520 [2005]; Marino v County of Nassau, 16 AD3d 628 [2005]; Garcia v Jomber Realty, 264 AD2d 809 [1999]; A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d & 11th Jud Dists 2006]).

To the extent the discovery demands concern matters relating to defenses which defendant is precluded from raising, they are palpably improper notwithstanding the fact that plaintiff did not specifically object thereto (see A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [2006], supra). However, the record reveals that defendant set forth detailed and specific reasons for believing that plaintiff may be ineligible to recover no-fault benefits as a fraudulently incorporated professional service corporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]), a defense which is not precluded. By obtaining discovery of, among other things, plaintiff’s certificate of incorporation, management agreements, and the names of plaintiff’s shareholders, defendant will be able to ascertain whether plaintiff is ineligible for reimbursement of no-fault benefits (see e.g. Preferred Med. Imaging, P.C. v Liberty Mut. Ins. Co., 11 Misc 3d 1069[A], 2006 NY Slip Op 50437[U] [Suffolk Dist Ct 2006]). As a result, defendant is entitled to production of plaintiff’s certificate of incorporation as
well as answers providing the information sought in interrogatories numbered 1, 15, 18, 31, 38-40 and 44-46 since said items were not palpably improper or privileged.

We further note that special circumstances exist which warrant the disclosure of plaintiff’s corporate income tax returns (see CPLR 3101 [a]; Statewide Med. Servs., P.C. v Travelers Ins. Co., 13 Misc 3d 134[A], 2006 NY Slip Op 52014[U] [App Term, 1st Dept 2006], revg 9 Misc 3d 1124[A], 2005 NY Slip Op 51773[U] [Civ Ct, Bronx County 2005]; Preferred Med. Imaging, P.C. v Liberty Mut. Ins. Co., 11 Misc 3d 1069[A], 2006 NY Slip Op 50437[U] [2006], supra; see also Dore v Allstate Indem. Co., 264 AD2d 804 [1999]; cf. Benfeld v Fleming Props., LLC, 44 AD3d 599, 600 [2007]; Altidor v State-Wide Ins. Co., 22 AD3d 435 [2005]). Accordingly, defendant is also entitled to an answer providing the information demanded in interrogatory number 37.

Inasmuch as plaintiff’s sole basis for opposing the branch of defendant’s motion seeking to compel plaintiff to produce its owner, Valentina Anikeyeva, for an EBT is predicated on the fact that she appeared for an EBT in another action with respect to a different professional service corporation owned by her, such an argument lacks merit since defendant’s defense to this action is based upon the alleged ineligibility of the plaintiff herein to receive reimbursement of assigned no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005], supra). Consequently, defendant is entitled to an EBT of Anikeyeva with respect to the instant plaintiff (see CPLR 3101 [a]).

To the extent defendant’s motion also sought to compel production of Anikeyeva’s personal federal and state income tax returns, defendant failed to establish its entitlement to such [*3]documents since “[i]t is well settled that tax returns are generally not discoverable in the absence of a strong showing that the information is indispensable to the claim and cannot be obtained from other sources” (Altidor, 22 AD3d at 435-436 [citations and internal quotation marks omitted]; see also Benfeld, 44 AD3d at 600). As a result, at this juncture, defendant failed to meet its burden of establishing that Anikeyeva’s personal income tax returns are properly discoverable, particularly where, as here, defendant is entitled to disclosure of plaintiff’s income tax returns and the requested financial information with respect to said corporation.

Pesce, P.J., and Steinhardt, 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 modify the order granting defendant’s motion to the extent set forth in the majority’s decision and to the further extent of compelling the production of the personal federal and state income tax returns of plaintiff’s principal, Valentina Anikeyeva, in the following memorandum:

I am generally in agreement with the analysis and reasoning of the majority. My disagreement concerns the majority’s determination that “defendant failed to meet its burden of establishing that [Valentina] Anikeyeva’s personal income tax returns are properly discoverable, particularly where, as here, defendant is entitled to disclosure of plaintiff’s [corporate] income tax returns and the requested financial information with respect to said corporation.”

The difficulty for me with this determination is that it does not take into consideration the special and unique circumstances of this matter.

I agree with the statement in the majority’s decision that “the record reveals . . . detailed and specific reasons for believing that plaintiff may be . . . a fraudulently incorporated professional service corporation . . . .” The fact that there are “detailed and specific reasons” to believe that Valentina Anikeyeva may be involved in a fraudulent scheme, appears to me to mandate that the insurance carrier be permitted to obtain sufficient facts to either prove the specific fraud or establish the bona fides of plaintiff.

I take this position being mindful with regard to the legal doctrine of falsus in uno, falsus in omnibus. That is, that one who has submitted false documents to create multiple professional service corporations may also be a person who is less than accurate in the keeping of corporate records and personal records, including income tax records. It is therefore conceivable that the corporate records may show substantial payments being made to Anikeyeva as the owner of the facility, but her personal taxes may not reflect such payments. Such a finding would lead to the conclusion that she is not the “actual” owner of the facility.

Indeed, defendant alleges that Anikeyeva is the sole shareholder of not less than 20 professional service corporations, which also may have been fraudulently incorporated (see e.g. Ava Acupuncture, P.C. v State Farm Ins. Co., 16 Misc 3d 138[A], 2007 NY Slip Op 51756[U] [App Term, 2d & 11th Jud Dists 2007]; Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 15 Misc 3d 110 [App Term, 2d & 11th Jud Dists 2007]; Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 14 Misc 3d 131[A], 2007 NY Slip Op 50052[U] [App Term, 2d & 11th Jud Dists 2007]; North Acupuncture, P.C. v State Farm Ins. Co., 14 Misc 3d 130[A], 2006 NY Slip Op 52523[U] [App Term, 2d & 11th Jud Dists 2006]; First Help Acupuncture P.C. v State Farm Ins. Co., 12 Misc 3d 130[A], 2006 NY Slip Op 51043[U] [App Term, 2d & 11th Jud Dists 2006]; Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90 [App Term, 2d & 11th Jud Dists 2006]). There is sworn testimony that it is Anikeyeva’s husband [*4]who is the actual owner of these professional service corporations and that he personally appeared and removed large sums of money (approximately $100,000 a month) from each of the 20 corporations. There is also information that employees were told to “stonewall” any investigation and were given letters containing false statements to sign and send to the Insurance Department.

We are aware and should be mindful of the numerous other matters involving the very same individual which have been determined by this and other courts, to contain pervasive fraud. For example, Anikeyeva has failed to appear for several examinations under oath; a Dr. Aziz who operated out of several facilities in which Anikeyeva also operated her professional service corporations was indicted for insurance fraud; there were links to three other individuals who were criminally charged with insurance fraud; and a suspicious burglary occurred at one of the facilities under investigation in which business files were stolen. It is a very suspect burglary when one breaks into an office and steals only certain business files but leaves behind office equipment, computers, etc.

Under normal circumstances, I would not permit the examination of personal income tax records, but this case does not present “normal” circumstances. Indeed, if any case can stand for the proposition that special and unique circumstances require special and unique treatment, this is that case.
Decision Date: July 10, 2008