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 August 18, 2005. The order denied plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was supported by an affirmation from plaintiff’s counsel, an affidavit by a corporate officer of plaintiff and various documents annexed thereto. The affidavit executed by plaintiff’s corporate 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 plaintiff’s moving papers did not proffer facts in admissible form so as to establish plaintiff’s prima facie entitlement to judgment as a matter of law. The court denied plaintiff’s motion, holding that there was an issue of fact as to whether the services were rendered by an independent contractor. The instant appeal by plaintiff ensued.

Since the affidavit submitted by plaintiff’s corporate officer was insufficient to establish that said officer possessed personal knowledge of plaintiff’s practices and procedures so as to lay a foundation for the admission, as business records, of the documents annexed to plaintiff’s moving papers, plaintiff failed to make a prima facie showing of its entitlement to summary judgment (see Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, [*2]2d & 11th Jud Dists 2006]). Consequently, plaintiff’s motion for summary judgment was properly denied albeit on other grounds. In light of the foregoing, we reach no other issue.

Golia, J.P., Rios and Belen, JJ., concur.

Civil Court of the City of New York, Kings County

97323/04

Lila P. Gold, J.

This Order to Show Cause was brought by the defendant in Special 1 in order to clarify the Court’s Decision and Order dated May 16, 2006 granting Plaintiff’s motion for summary judgment.

The Decision and Order dated May 16, 2006 granted judgment for Plaintiff in the amount of $1714.00 plus statutory interest, attorneys’ fees and costs/fees of $65.00.

Defendant made payment to Plaintiff upon receipt of the Order in the amount of $2,460.16 and $557.03. Plaintiff claims that approximately $450.00 of the judgement amount has not been paid. The discrepancy in the amount due to Plaintiff is the based upon the date from which interest, and attorneys’ fees thereon, begin to accrue. It is Defendant’s position that interest should be calculated from the filing of the summons. Plaintiff’s contends that interest should be calculated from thirty (30) days after Defendant received Plaintiff’s bills for no-fault benefits.

This court is asked to determine at what point interest begins to accrue on an untimely denial and/or improper denial under the no-fault regulations. It is plaintiff’s contention that interest on untimely and/or improper denials received by an assignee/medical provider should begin to accrue 30 days after an insurer receives a proper proof of claim. Defendant argues that interest should not accrue until the no-fault claimant requests arbitration or institutes a lawsuit. Plaintiff and Defendant both presented a civil court decision, East Acupuncture, P.C. v. Allstate Ins. Co., 2005 NY Slip Op 25242, 2 (NY Misc. 2005), which was directly on point regarding this issue. Plaintiff based their position on the holding in East Acupuncture, P.C. (Id.) that interest is to accrue from the thirtieth day after submission of a bill if the Defendant issues a late or improper denial. Defendant’s papers respectfully submitted that the court in East Acupuncture, P.C. erred in its decision.

Subsequent to Defendant’s filing of the Order to Show Cause, the Appellate Term of the Supreme Court for the 2nd and 11th Districts reversed the order of the J. Matos entered June 28, 2005. East Acupuncture, P.C. v. Allstate Ins. Co., 2007 NY Slip Op 27109 (NY Misc. 2007). In this decision, the Appellate Term concluded that “the regulations, read as a whole in accordance with the rules of construction, the deference to be accorded the Superintendent’s assertion of intent, and the undesirable consequences of exempting assignees from the limitation imposed by 11 NYCRR 65-3.9 (c), lead to the conclusion that the reference to “applicant” in 11 NYCRR 65-[*2]3.9 (c) includes an eligible injured person’s assignee.” East Acupuncture, P.C. (Id.) Therefore, concluding that interest does not begin to accrue on an untimely denial and/or improper denial under the no-fault regulations until the no-fault claimant requests arbitration or institutes a lawsuit.

Based upon the foregoing, interest did not begin to accrue on this claim until the filing of the summons.

Accordingly, Defendant’s Order to Show Cause is hereby granted. Marshal’s Notice of Levy and Sale is vacated, Defendant has satisfied the underlying order in this matter dated May 16, 2006.

This opinion constitutes the decision of the Court. A copy of this decision will be mailed to the parties.

Dated:May 30, 2007

____________________________

Lila P. Gold, J.C.C.

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Plaintiff, as limited by its brief, appeals from that portion of an order of the Civil Court of the City of New York, Bronx County (Mitchell J. Danziger, J.), entered February 5, 2007, which granted defendant’s motion to dismiss to the extent of directing the deposition of Dr. Noel Howell.

PER CURIAM:

Order (Mitchell J. Danziger, J.), entered February 5, 2007, modified to vacate so much of the order as directed the deposition of Dr. Noel Howell, and as modified, affirmed, with $10 costs.

Defendant moved to dismiss on the ground that Dr. Noel Howell, alleged president of plaintiff provider, failed to appear for scheduled examinations under oath (EUOs). Even assuming that defendant’s letters requesting the examination of Dr. Howell constituted valid EUO requests, defendant failed to submit competent proof in admissible form to establish the dates of receipt of the subject claims, and hence, that its EUO requests were made in compliance with the time limits set forth in the verification procedures (see 11 NYCRR 65-3.5(b); 11 NYCRR 65-3.6(b); Bronx Med. Servs. P.C. v Windsor Ins. Co., 2003 NY Slip Op 50885[U][2003]). Inasmuch as noncompliance with the requests for EUOs was the sole ground for defendant’s motion to dismiss, there was no basis for Civil Court to direct a deposition of Dr. Howell.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: May 30, 2007

Supreme Court, Queens County

24107/06

James P. Dollard, J.

In this action for declaratory judgment and to recover damages for fraud and unjust enrichment, plaintiff St. Paul Travelers Insurance Company (Travelers) seeks an order (1) staying all no-fault collection lawsuits presently being prosecuted by defendant Dipak Nandi and co-defendants professional corporations against Travelers, pursuant to CPLR 2201; (2) granting a preliminary injunction enjoining the defendants from commencing future lawsuits against Travelers seeking reimbursement of no-fault benefits for acupuncture services pursuant to Insurance Law § 5101 et. seq. and the regulations promulgated thereunder, pending the determination of this action. Defendants cross-move in opposition and seek an order lifting any previously imposed stays affecting Civil Court lawsuits and dismissing the complaint pursuant to CPLR 3211(a)(4),(5) and (7).

Travelers issues automobile insurance policies and has either compensated, or refused to compensate the professional corporation defendants for acupuncture services rendered to plaintiff’s policyholders, under the state’s No-Fault Insurance laws and regulations.

Travelers alleges in its complaint is that defendants Triborough Medical Diagnostics PC, Sterling Medical Diagnostics PC, Millennium Diagnostics PC and Urban Medical Diagnostics PC are medical professional corporations that were fraudulently incorporated, were never licensed to provide acupuncture services and that all the services that were billed to it were performed by independent contractors. The complaint alleges that defendant Universal Acupuncture Pain Services PC (Universal) is an acupuncture professional corporation that billed Travelers for acupuncture services but was not entitled to payment because it was (a) fraudulently incorporated and (b) all or some of the services that were billed to Travelers were performed by independent contractors. It is alleged that defendants Optimum Medical Services PC and Statewide Medical Services PC are medical professional corporations that billed Travelers for acupuncture services but were not entitled to payment because (a) they were fraudulently incorporated, (b) were never licensed to provide acupuncture services and (c) all or some of the services billed to Travelers were performed by independent contractors.

Travelers alleges that defendants Delta Medical Acupuncture PC, Cosmopolitan Medical Acupuncture Services PC, Rose Medical Acupuncture PC, Continental Medical Acupuncture PC, [*2]Maple Medical Acupuncture PC are medical professional corporations that billed it for acupuncture services but were not entitled to payment because (a) they were never licensed to provide acupuncture services and (b) all or some of the services billed to Travelers were performed by independent contractors.

The complaint alleges that defendants Akita Medical Acupuncture PC, Bonsai Medical Acupuncture PC, Koi Medical Acupuncture PC, Maguro Medical Acupuncture PC and Miso Medical Acupuncture PC are medical professional corporations that billed Travelers for acupuncture services but were not entitled to payment because (a) they were not licensed to provide acupuncture services and (b) all or some of the services that were billed to Travelers were performed by independent contractors.

Travelers alleges that Triborough Healthcare Management Inc. is a management company which was created as a tool for Nandi to exercise control over some of the professional corporations and Universal, and to siphon off insurance proceeds that were paid to the professional corporations.

Defendant Dipak Nandi is a physician licensed to practice medicine in New York, and he was not certified as an acupuncturist until April 24, 2001. It is alleged that Nandi falsely represented to the Department of State and the Department Education that Dr. Robert Mallela, Dr. Swapnadip Lahiri and Dr. William Battaile would be the owners of Triborough; that Drs. Mallela and Lahiri would be the owners of Sterling, Millennium and Urban; that Dongxing Sun a licensed acupuncturist would be the owner of Universal; and that Dr. Hea Rean Lew would be the owner of Stateside; and that in fact all of these PCs were owned and controlled by Nandi. Dr. Mallela, in an affidavit submitted herein, that was provided in connection with a federal court action, admitted the following facts: (1) he had no true ownership interest in or control over Urban Medical, or any of the other three other PCs; (2) he never paid for the shares in Urban Medical or the other PCs he was given, (3) he was paid a fee to allow Nandi to use his name to obtain a certificate of authority from the DOE; (4) he did not manage or supervise the medical practice at Urban Medical or the other PCs, and (5) he never saw or treated patients for Urban Medical or the other PCs. Mr. Sun states in an affidavit submitted herein, which was prepared for another action, that he admittedly did not operate Universal or control the corporation in any way. He states that he “permitted Nandi to handle the affairs of’ Universal and accepted his word for everything,'” and had ” no idea what the business activity’ of Universal was before his dispute erupted with Nandi over ownership and control.”

In the first cause of action for declaratory judgment Travelers seek a declaration that Universal and all of the PCs are not entitled to collect No-Fault benefits for any unpaid charges for acupuncture services that they have submitted to Travelers. In the second cause of action for common law fraud, seeks to recover the sums it paid to the defendants as No-Fault benefits, which totals more than $5 million dollars, as well as punitive damages. In the third cause of action for unjust enrichment, Travelers seeks to recover the sums it paid to the defendants as No-Fault benefits, which totals more than $5 million dollars.

Travelers now seeks an order (1) staying all no-fault collection lawsuits presently being prosecuted by defendant Dipak Nandi and co-defendants professional corporations against Travelers, pursuant to CPLR 2201; and (2) granting a preliminary injunction enjoining the defendants from commencing future lawsuits against Travelers seeking reimbursement of no-fault benefits for acupuncture services pursuant to Insurance Law § 5101 et. seq. and the regulations promulgated thereunder, pending the determination of this action. Defendants cross-move in opposition and seek [*3]an order lifting any previously imposed stays affecting Civil Court lawsuits and dismissing the complaint pursuant to CPLR 3211(a)(4),(5) and (7).

New York permits licensed professionals to incorporate if they are the sole organizers, owners and operators of the corporation. (Business Corporation Law §§ 1503(a),(b), 1508.) To incorporate, the licensed individual(s) must obtain a “certificate … issued by the [DOE] certifying that each of the proposed shareholders, directors and officers is authorized by law to practice a profession which the corporation is being organized to practice.” (Id. at § 1503[b]). The DOE may not issue a certificate of authority to a professional service corporation that does not meet these qualifications. (Education Law § 6507[4][c][i]). Once the PC is formed, shareholders may not transfer their voting power to any person who is not a licensed professional in the field. (See BCL § 1507). New York law prohibits non-physicians from sharing ownership in medical service corporations. (Business Corporation Law §§ 1507, 1508, and Education Law § 6507[4][c].) In order to provide acupuncture services, a professional corporation must be owned, organized and operated by persons who are licensed or certified to practice acupuncture. (See generally New York Business Corporation Law § 1503.) A physician who is licensed to practice medicine in New York need only obtain a certificate in order to practice acupuncture. (See Education Law §§ 8211, 8216[3]; 8 NYCRR § 60.9)

Under New York’s No-Fault system, the insured party is permitted to recover from insurers for “basic economic loss,” including medical expenses, that arise out of the use or operation of an insured vehicle. (Insurance Law § 5102.) The New York State Department of Insurance has stated that medically necessary acupuncture services rendered by a licensed acupuncturist are covered expenses, and are eligible for reimbursement under Insurance Law § 5102 (a)(1). (See Ops Gen Counsel NY Ins Dept 04-01-01.) Insurance Law § 5106(a) and 11 NYCRR § 65-3.8 require insurers to pay or deny a claim within thirty days after the claimant supplies proof of the fact and amount of loss sustained. Under a line of cases commencing with Presbyterian Hospital in the City of New York v Maryland Casualty Company (90 NY2d 274, [1997]) and Cent. Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]), the Court of Appeals has held that the failure of an insurer to comply with the thirty-day rule will result in the insurer being precluded from raising any defense to a claim for payment, other than defenses premised on lack of coverage. Applying Presbyterian Hospital and Central General, the courts have held that claims of fraud based upon fraudulent incorporation or staged accidents are not subject to preclusion. (See Metro Med. Diagnostics, P.C. v Eagle Ins. Co., 293 AD2d 751, [2002]; Midborough Acupuncture P.C. v State Farm Ins. Co., 13 Misc 3d 58, [2006]; A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71, 73 [2006]; Montgomery Med. v State Farm Ins., 12 Misc 3d 1169A [2006]; SK Med. Services, P.C. v NY Cent. Mut. Fire Ins. Co., 11 Misc 3d 1086A [2006]).

The regulations governing No-Fault claims presently provide that “[a] provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law 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].) This regulation was initially promulgated to take effect on September 1, 2001, but implementation was stayed by court order until April 4, 2002. Relying on this regulation, the Court of Appeals in State Farm Mut. Auto Ins. Co. v Mallela (4 NY3d 313,[2005]) held that fraudulently incorporated medical corporations were not entitled to reimbursement of no-fault benefits. The Court noted that 11 NYCRR § 65-3.16(a)(12), [*4]specifically “excluded from the meaning of basic economic loss payments made to unlicensed or fraudulently licensed providers, thus rendering them ineligible for reimbursement (Mallela, 4 NY3d at 320). The Court determined that “no cause of action for fraud or unjust enrichment would lie for any payments made by the carriers before … April 4, 2002.” (Id. at 322.) In an action by a medical provider for reimbursement, the defense that a provider is fraudulently licensed is a nonwaivable defense. (See First Help Acupuncture P.C. v State Farm Ins. Co., 12 Misc 3d 129[A] [2006]; see also Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 [2006]; see generally Metroscan Imaging P.C. v GEICO Ins. Co., 13 Misc 3d 35 [2006].)

At present there are at least 868 lawsuits pending in the Civil Court of the City of New York, primarily in Bronx and Queens County, in which individual medical providers, named as defendants herein, seek to recover from Travelers assigned first party No-Fault benefits. In addition, Travelers’ has settled some 300 cases involving the named medical providers.

Defendants in their cross motion to dismiss the complaint assert that as there are hundreds of pending actions between the medical providers and Travelers, the within complaint should be dismissed. It is asserted that declaratory judgment is inapplicable and unnecessary, as Travelers has raised the defenses of fraudulent incorporation, failure to comply with licensing requirements and the performance of services by independent contractors in the lower courts, and may continue to do so, and that as any such determination in the lower court would be subject to the doctrine of res judicata and collateral estoppel. Defendants thus assert that these issues should be litigated in the lower court actions.

Travelers, in opposition, asserts that this court is the appropriate forum for the resolution of all common issues of law and fact between itself and the 17 separate professional corporations that are alleged to be owned and controlled by Dipak Nandi. It is asserted if Travelers prevails in this action, then it would have no obligation to pay any of the defendant professional corporations for claims presently pending in the Civil Court or District Court, and that a single determination in this court would resolve hundreds of current actions and foreclose future actions involving these professional corporations. Travelers asserts that declaratory judgment is not available in the lower courts, and that it is in the interest of judicial economy to have the issues determined here, rather than litigating hundreds of claims in the lower courts. In addition it is asserted that a single determination of the matter would avoid the possibility of inconsistent results in the lower courts.

CPLR 3001 provides: “The supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed. If the court declines to render such a judgment it shall state its grounds.” An action is justiciable when the controversy presented touches the legal relations of the parties having adverse interests from which harm is presently flowing or could flow in the future in the absence of a court determination of the parties’ rights. The controversy must be capable of disposition and be presented in an adversarial context with a set of concrete facts. (Goodwill Adv. Co. v State Liq. Auth., 14 AD2d 658 [1961].) While a court may dismiss a declaratory judgment action in a proper exercise of discretion, the mere existence of other adequate remedies does not mandate dismissal. (See CPLR 3001; Lehigh Portland Cement Co. v New York State Dept. of Envtl. Conservation, 87 NY2d 136, 140 [1995]; Hudson Valley Oil Heat Council, Inc. v Town of Warwick, 7 AD3d 572, 574 [2004].) In addition, “[t]he fact that the court may be required to determine the rights of the parties upon the happening of a future event does not [*5]mean that the declaratory judgment will be merely advisory. In the typical case where the future event is an act contemplated by one of the parties, it is assumed that the parties will act in accordance with the law and thus the court’s determination will have the immediate and practical effect of influencing their conduct…” (New York Pub. Interest Research Group v Carey, 42 NY2d 527, 530-531 [1977].)

The court finds that a justiciable controversy exists here between the parties. Defendants assertion that a fair determination cannot be had simply because there are 17 PC defendants, the issues are complex and varied, will require extensive discovery and perhaps multiple hearings, is rejected. Furthermore, the fact that the PCs have instituted actions against Travelers in the Civil Courts does not warrant the dismissal of this action. An action for declaratory judgment can only be prosecuted in the Supreme Court and a determination here will obviate the need for future litigation between the parties as to claims for unpaid acupuncture services. Contrary to defendants assertions, a determination of the declaratory judgment action would not result in a return to the Civil Courts for a “trial on the merits.” Once a judgment and declaration is entered in the Supreme Court, whether in favor of the plaintiff or the defendant, there will be no need for the lower courts to conduct trials on the claims of fraudulent incorporation, licensure or the status of the acupuncturist. Furthermore, declaratory judgment will be dispositive of future claims by the defendant PCs for unpaid claims for acupuncture services against Traveler. It is in the interests of judicial economy to resolve the controversy in a single action, rather than require the parties and the lower courts to engage in piecemeal and repetitive litigation.

The court further notes that the issues raised by Travelers regarding fraudulent incorporation, lack of licenses, and the use of independent contractors, are also pertinent to the causes of action for fraud and unjust enrichment.

Defendants’ assertion that the issues raised by Travelers pertaining to Universal’s fraudulent incorporation were previously raised and decided by the Civil Court, Bronx County in an action entitled Universal Acupuncture Pain Services, P.C., a/a/o Jose Alpizar v State Farm Insurance Company (Index No. 58595/2003, [Rodriquez,J.]) is misplaced. The court therein found that State Farm had failed to submit evidence in admissible form to sustain its allegations and thus denied the cross motion to dismiss the complaint, or to compel Dr. Nandi’s deposition. Contrary to defendants’ assertions the court therein made no determination on the merits as to whether Universal was fraudulently incorporated. It is noted that Travelers was not a party to that action. However, in several Civil Court, Bronx County actions in which Travelers is a defendant, it has asserted that the medical provider is not entitled to payment and has been granted the right to conduct discovery, including the deposition of Dipak Nandi, pertaining to its defense of fraudulent incorporation. (See Statewide Medical Services, P.C., a/a/o Luis Rodriguez v Travelers Insurance Company,13 Misc 3d 134A [2006]; Maple Med. Acupuncture Servs., P.C. v Travelers Ins. Co., 13 Misc 3d 134A [2006]; Delta Med. Acupuncture Servs., P.C. v Travelers Ins. Co., 13 Misc 3d 134A, [2006]; Continental Med. Acupuncture Servs., P.C. v Travelers Ins. Co., 14 Misc 3d 131A [2007].)

Accepting the plaintiff’s factual allegations as true and according them the benefit of every favorable inference, as required on a motion to dismiss for failure to state a cause of action (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]), the court finds that plaintiff has stated a cause of action for fraud and unjust enrichment. The essential elements of such a cause of action are “representation [*6]of a material existing fact, falsity, scienter, deception and injury.” (Channel Master Corp. v Aluminium Ltd. Sales Corp., 4 NY2d 403, 406-407 [1954].) Here, plaintiff alleges that, in violation of Section 1507 of the Business Corporation Law , Nandi used or bought the use of the names and medical licenses of others to form medical corporations so that he could own or control medical practices, profit from them, bill no-fault insurers for medical services and, in so doing, facilitate fraudulent billing practices. Plaintiff also alleges that Nandi used the name of a licensed acupuncturist in order to form an acupuncture practice which he owned and controlled at a time when he was not certified to practice acupuncture, and formed other PCs which were not licensed to perform acupuncture, and that acupuncture services were performed by independent contractors, and not employees of the PCs. It is alleged that the PC defendants regularly submitted no-fault claims to plaintiffs, falsely representing that the PC defendants were valid medical professional corporations, and that the services provided were provided by their employees. Plaintiff further alleges that it paid substantial amounts of money to the PC defendants based upon their justifiable reliance that the PC defendants comported with applicable statutes and administrative regulations governing the provision of health services.To prevail on a claim of unjust enrichment, “a party must show that (1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered’.” (Citibank, N.A. v Walker, 12 AD3d 480, 481, [2004], quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421 [1972], cert denied 41 US 829 [1973].) “Unjust enrichment, however, does not require the performance of any wrongful act by the one enriched.” (Ptachewich v Ptachewich, 96 AD2d 582, [1983].) “Innocent parties may frequently be unjustly enriched.” (Id.; see Simonds v Simonds, 45 NY2d 233, 242 [1978]; Cruz v McAneney, 31 AD3d 54 [2006].) Contrary to defendants’ assertions, plaintiffs are not required to allege the defendants engaged in fraudulent conduct or justifiably relied upon fraudulent statements in order to state a cause of action for unjust enrichment.

In Mallela the Court of Appeals held that no cause of action for fraud or unjust enrichment would lie for payments made to fraudulently incorporated providers before the revised regulations went into effect. By disallowing such claims for payments made before April 4, 2002, the Mallela Court recognized that the law as it existed prior to that date did not recognize claims to recoup payments from entities because they were fraudulently incorporated.

Under the common law of New York, compensation has been denied to unlicensed providers of services for which a regulatory license is required. (See Metroscan Imaging, P.C. v Geico Ins. Co., 13 Misc 3d 35, 38-39 [2006] [citing Spivak v Sachs, 16 NY2d 163 [1965]; Bendell v De Dominicis, 251 NY 305 [1929]; Mavco Realty Corp. v M. Slayton Real Estate, Inc., 12 AD3d 575, [2004]; Price v Close, 302 AD2d 374 [2003]; Gordon v Adenbaum, 171 AD2d 841 [1991].) However, the courts have distinguished between denying an unlicensed entity compensation and permitting the recovery of a fee after it has been paid. The lack of a license does not permit the recovery of a fee from the unlicensed provider after it has been paid. To the extent that Travelers seeks to recover payments that it made to the defendants on the grounds that the acupuncturists were independent contractors and not employees of the PCs, the court finds that no basis exists for carving out such an exception. Although the question certified to the court in Mallela was limited to fraudulent incorporation, prior to Mallela no private right of action existed which permitted an insurer to seek enforcement of the governing statutory provisions and regulations or to recover [*7]damages based upon the breach of the same. Therefore, Travelers’ causes of action for fraud and unjust enrichment to recover no-fault payments, whether based on the fraudulent incorporation, failure to obtain a license to perform acupuncture, or the use of independent contractors to perform the acupuncture services is limited to payments made after April 2, 2004. Travelers may not seek to recover no-fault payments it made the defendants prior to that date. (See Allstate Ins. Co. v Belt Parkway Imaging P.C., 33 AD3d 407 [2006]; Metroscan Imaging, P.C. v Geico Ins. Co., supra).

Finally, contrary to defendants’ assertions, the statute of limitations for the fraud and unjust enrichment causes of action have not expired. The statute of limitations for fraud is the greater of six years from when the cause of action accrued or two years from the time the plaintiff discovers the fraud. (CPLR 213[8].) The statute of limitations for unjust enrichment is six years. (CPLR 213[1].) Prior April 4, 2002 when the revised regulation became effective, an insurer did not have a right to recoup payments made to fraudulently incorporated or improperly licensed medical providers. Since these claims are limited to payments Travelers made on or after April 4, 2002, the commencement of the within action on November 2, 2006 is timely as to all of the defendants. Defendants’ request to dismiss the claims against Mr. Nandi on the grounds of statute of limitations, therefore, is rejected.

Turning now to plaintiff’s motion, CPLR 2201 provides that “[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just.” Thus, while this court may issue a stay of an action pending before it in the Supreme Court, it lacks statutory authority to stay actions pending in the Civil Court or District Court. Plaintiff’s motion for a “stay” of the pending lower court actions is in fact one for a preliminary injunction. (See Siegel, NY Prac § 255 [4th ed].) Plaintiff also seeks a preliminary injunction enjoining the defendants from commencing future lawsuits against it for reimbursement of no-fault benefits for acupuncture services pending the determination of this action. A preliminary injunction may issue only if the moving party can demonstrate (1) the likelihood of success on the merits; (2) irreparable injury if the preliminary injunction is not granted, and (3) a balancing of the equities in its favor. (Doe v Axelrod, 73 NY2d 748 [1988]; Preston Corp. v Fabrication Enters., 68 NY2d 397 [1986]; W.T. Grant Co. v Srogi, 52 NY2d 496 [1981].) “Preliminary injunctive relief is a drastic remedy that will not be granted unless a clear right to it is established under the law … and the burden of showing an undisputed right rests upon the movant.” (Zanghi v State of New York, 204 AD2d 313, 314 [1994].) Here, plaintiff has submitted depositions of Mr. Nandi, and other individuals who were involved in the formation of some of the defendant PCs, which were prepared for actions involving some of the same defendants. It is noted that some of the PCs and Nandi were defendants in the Mallela action. Plaintiff has also submitted affidavits, certificate of incorporation and other documentary evidence which supports its claim that at least some of the PCs were fraudulently incorporated or were not authorized to perform acupuncture at the time the PCs were incorporated. In addition, it is undisputed that Travelers made payments to the defendants after April 4, 2002, and it has also withheld payments to the PCs for acupuncture services. Plaintiff’s evidence is sufficient to establish the likelihood of success on the merits of at least a portion of its claims. In addition, in view of the multiplicity of lawsuits and the possible inconsistent outcomes in the absence of an injunction, plaintiff has established the elements of irreparable injury and the balancing of the equities in its favor.

Accordingly, defendants’ cross motion to dismiss the complaint is granted to the extent that [*8]plaintiff’s causes of action to recover damages for fraud and unjust enrichment is limited to payments it made to the defendant on or after April 4, 2002. The request for punitive damages is dismissed. The remainder of defendant’s cross motion is denied. Plaintiff’s motion for a preliminary injunction enjoining all No-Fault collection actions for acupuncture services presently pending between the parties in the New York City Civil Courts and in the Nassau and Suffolk County District Courts, pending the determination of this action, is granted. That branch of plaintiff’s motion which seeks a preliminary injunction enjoining the defendants from commencing future lawsuits against Travelers seeking reimbursement of no-fault benefits for acupuncture services pursuant to Insurance Law § 5101 et. seq. and the regulations promulgated thereunder, pending the determination of this action, is granted. Plaintiffs are directed to post a bond in an amount to be set forth in the order to be entered hereon. The parties are to submit affidavits to the court as to the amount of the bond, along with the proposed order.

Settle order.

J.S.C.

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 (Joseph Esposito, J.), entered March 6, 2006. The order denied plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. The court below denied the motion on the ground that defendant’s opposing papers demonstrated the existence of a triable issue of fact. Plaintiff appeals from the denial of its motion for summary judgment.

On appeal, defendant asserts that the affidavit by plaintiff’s corporate officer, submitted in support of the motion, 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. We agree. The affidavit submitted by plaintiff’s corporate 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. 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]; 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.

Pesce, P.J., Weston Patterson and Golia, JJ., concur.
Decision Date: May 25, 2007

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 January 19, 2006. The order denied plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the court denied plaintiff’s motion for summary judgment finding that there was an issue of fact as to whether plaintiff’s bill used an improper code. The instant appeal by plaintiff ensued.

On appeal, defendant asserts that the affidavit by plaintiff’s corporate officer,
submitted in support of the motion, 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. We agree. The affidavit submitted by plaintiff’s corporate 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. 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]; 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, albeit on other grounds.
Pesce, P.J., Weston Patterson and Golia, JJ., concur.
Decision Date: May 25, 2007

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 (Joseph Esposito, J.), entered January 4, 2006. The order granted on default defendant’s motion for severance.

Appeal dismissed.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff is appealing from an order which granted defendant’s motion for severance. However, since plaintiff failed to submit opposition to defendant’s motion, the order which granted defendant’s motion for severance was entered on default and no appeal lies therefrom by plaintiff, the defaulting party (see CPLR 5511; Coneys v Johnson
Controls, Inc., 11 AD3d 576 [2004]; Marino v Termini, 4 AD3d 342 [2004]; Adamson v Evans, 283 AD2d 527 [2001]; Ava Acupuncture P.C. v Greyhound Lines, Inc., 14 Misc 3d 141[A], 2007 NY Slip Op 50356[U] [App Term, 2d & 11th Jud Dists]). As a result, the appeal is dismissed.

Golia, J.P., Rios and Belen, JJ., concur.
Decision Date: May 24, 2007

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 February 3, 2006. The order granted plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was granted. The sole issue raised on appeal is whether defendant proffered sufficient evidence to demonstrate that there was a triable issue of fact because it possessed a founded belief that the alleged injuries did not arise from a covered incident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). In the present case, defendant failed to establish such a founded belief. The accident reports and other documents offered by defendant do not constitute evidentiary proof in admissible form and are without probative value, as they were not sworn or supported by an affidavit of someone alleging personal knowledge of the facts included therein or of the preparation of said documents (see A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 10 Misc 3d 50, 52 [App Term, 2d & 11th Jud Dists 2005]).
Accordingly, defendant failed to demonstrate the existence of a triable issue of fact.

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

Golia, J., dissents in a separate memorandum.
Golia, J., dissents and votes to reverse the order and deny plaintiff’s motion for summary judgment in the following memorandum:

Contrary to the holding of the majority, I find that the sworn and detailed affidavit by the defendant’s Special Investigative Unit investigator established a “founded belief that the 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]). That affidavit, which referenced and was accompanied by police accident reports and other unsworn documents, reveals among other information, that the same vehicle that was involved in this accident was involved in at least two other accidents which occurred within one month of the policyholder first obtaining the underlying insurance policy. In addition, all of these “accidents” were remarkably similar to each other and similar to a series of other accidents that are under investigation. They all involve rear-end impacts, many of the addresses appear to be the same as that used by this insured, and in each loss there was only a single occupant in one vehicle and an operator with three passengers in the other vehicle.

These facts are sufficient to establish a founded belief that the alleged injuries did not arise out of a covered accident (see Ocean Diagnostic Imaging, P.C. v Lancer Ins. Co., 6 Misc 3d 62, 64-65 [Golia, J., dissenting]).
Decision Date: May 24, 2007

Civil Court of the City of New York, Bronx County

79629/02

Nelida Malave-Gonzalez, J.

Plaintiff commenced this action to recover no-fault first party benefits for unpaid medical services provided to Fabio Vargas in the amount of $2, 498.38. In support of its prima facie case, plaintiff submitted a Notice to Admit. Neither plaintiff nor defendant presented any witnesses.

To establish a prima facie case for first party no-fault benefits, proof of a properly submitted statutory claim form or its substantial equivalent is sufficient. The burden then shifts to the defendant to establish the lack of medical necessity. 11 NYCRR §§ 65.3.4(c), 65-3.8(c), CPLR § 5106.The issue before this Court is whether the submission of a Notice to Admit is sufficient to establish a prima facie case to recover no-fault first party benefits for unpaid medical services.

A Notice to Admit is ” . . . a written request for admission . . . of the genuineness of any papers or documents described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry. C.P.L.R. § 3123. Failure to timely respond to a Notice to Admit, either by denial or detailed reason as to why a denial or admission is not possible, shall result in those items requested deemed admitted. However, a Notice to Admit may not be used to elicit an admission of fundamental and material issues or ultimate facts. Meadowbrook-Richman, Inc. V. Cicchiello, (1st Dept. 2000); PDG Psychological, P.C. v. State Farm Ins. Co., 12 Misc 3d 1183(a)(2006).

The issue before the bench is considerably new. A cursory search of New York cases reveals no “on point” appellate decisions which would bind this Court. As such, an analysis of both arguments is worthwhile.

As defined above, a Notice to Admit may be used to settle any fact that is not at issue. A Notice to Admit should not contain any questions that would require that the opposing party concede any material facts. It is for this reason that failure to respond to a notice to admit is deemed as an admission. Conversely, if Notice to Admit is permitted as the sole evidence to [*2]establish a prima facie case, logical reasoning would follow that there was no material issues presented at trial and thus no prima facie case made.

One cannot deem any failure to respond to a Notice to Admit as an admission to a material fact. To allow such would spawn an abuse of this disclosure device and contradict the purpose of the Notice to Admit. Further, it would prevent attorneys from regarding their ethical duty to actively participate in the litigation of each case as well as timely responding to documents submitted by opposing counsel.

Recently, in Fair Price Medical Supply v. St. Paul Travelers Ins. Co., 2007 NY Slip Op. 27173, the Appellate Division, First Department affirmed a case where interrogatories were admitted to prove plaintiff’s prima facie case. Specifically, to establish that in response to the interrogatories, defendant admitted that it received the no-fault claims and made partial payment on the claims. The case at bar is distinguishable from Fair Price Medical Supply for many reasons. Although both discovery devices, the Interrogatory and a Notice of Admit function quite differently.^[FN1] First, an Interrogatory must be given under oath, where as a Notice to Admit need not be. Further, an Interrogatory may be used to unearth any relevant subject. However, as defined above, a Notice to Admit may not be used to seek answers to material issues to be resolved at trial. Sagiv v. Gamache, 26 AD3d 368 (2nd Dept. 2006).The instant case is further distinguished from Fair Price Medical Supply because that defendant responded to the Interrogatories. The Appellate Division found it contradictory that the defendant now claims that plaintiff’s did not submit proof that the claims were mailed, received or overdue although these issues were admitted under oath in response to the interrogatory. That is not the case here.

Plaintiff’s Notice to Admit requested the following admissions:

1. That the bill(s) attached to the Summons and Complaint was received by the defendant.

2. That said bill(s) was received on or before 12-01-2002.

3. That defendant did not mail a denial of claim form NF-10 to the plaintiff within thirtydays of receipt of said bill.

4. That defendant did not issue any requests for verification to the plaintiff.

5. That the occurrence of the underlying accident is not disputed.

6. That the assignor’s involvement in said accident is not disputed.

7. That there was a policy of insurance in effect covering the accident of 12/21/01.

8. That the injuries claimed were causally related to the motor vehicle accident.

9. That RJ Medical, P.C. is properly licensed in the State of New York.

10. That the assignor complied with all notice requirements.

11. That plaintiff complied with all notice requirements.

12. That the bill submitted was in accordance with the New York State WorkersCompensation Fee Schedule.

Plaintiff did not submit bills or any other documents to this Court to support the Notice to Admit. Defendant did not respond to the Notice to Admit and alleged at trial, that the plaintiff never submitted the requisite bills or forms with the Notice to Admit. Nor were said bills or [*3]forms previously provided. Defendant’s failure to respond to the Notice to Admit would deem the question of whether the bills were previously submitted as an admission and thus conceded at trial. Although technically correct, the requested admissions go to the heart of the matter. The requested admissions are of material issue at the trial. A no-fault first party benefits case requires only that the requisite bills, forms and substantially equivalent documents be admitted to prove a prima facie case. If admitted to by default during discovery, which is what happens when no response to the Notice to Admit is effectuated, it alleviates the plaintiff any burden of moving forward on its prima facie case. Thus, resulting in the plaintiff having established absolutely no material issue at trial upon which this court could hang the proverbial hat.

The plaintiff did not provide any additional evidence at trial and thus is unable to prove through admissible evidence that payment was not made on a timely submitted claim. As such, plaintiff’s action is dismissed.

The foregoing constitutes the Decision and Order of the Court.

Dated:______________________________________________

Hon. Nelida Malave-Gonzalez, J.C.C.

Footnotes

Footnote 1: CPLR 3130(1).

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court of the City of New York, Bronx County (Julia I. Rodriguez J.), dated October 18, 2005, which granted plaintiff’s motion for summary judgment in the principal sum of $6,139.59.

PER CURIAM:

Order (Julia I. Rodriguez J.), dated October 18, 2005, reversed, with $10 costs, motion denied and matter remanded for further proceedings.

In opposition to the plaintiff’s prima facie showing of entitlement to judgment as a matter of law, defendant raised a triable issue of fact by demonstrating that it timely denied plaintiff’s no-fault claim on the ground of lack of medical necessity based upon a peer review report. “The applicable regulations provide that if a no-fault claim is denied in whole or in part based on a medical examination or peer review report requested by the insurer, then the insurer shall release a copy of that report to, among others, the applicant or its attorney, upon written request (see 11 NYCRR 65-3.8[b][4]). Had 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 (see NYS Form N-F 10; 11 NYCRR 65-3.4[c][11]), it would have so provided” (A.B. Med. Servs., PLLC v Geico Cas. Ins. Co., AD3d , 2007 NY Slip Op. 03635 [2007]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
[*2]
Decision Date: May 23, 2007