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 (Raul Cruz, J.), dated January 30, 2006, which granted plaintiff’s motion for a directed verdict.

PER CURIAM

Order (Raul Cruz, J.), dated January 30, 2006, reversed, without costs, motion denied, and matter remanded for trial.

In this action to recover assigned, first party no-fault benefits, plaintiff moved to preclude defendant’s expert’s testimony on the ground that the expert did not personally undertake the peer review underlying defendant’s denial of the two claims here at issue. This was error, since the expert would be subject to full cross-examination and his testimony as to lack of medical necessity would be limited to the basis for denial set forth in the original peer review report (see generally General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]). Nor is defendant’s expert precluded from testifying because his opinion is based, at least in part, on his review of the assignors’ medical records. Plaintiff may not be heard to challenge the reliability of the assignors’ medical records and reports, which, in response to defendant’s verification requests, were affirmatively relied upon by plaintiff as proof of claim.

This constitutes the decision and order of the court. [*2]
Decision Date: February 26, 2007

[*1]

[*2]Civil Court of the City of New York, Queens County, February 23, 2007

APPEARANCES OF COUNSEL

Kenneth F. Nwele, Brooklyn, for Valley Stream Medical & Rehab, P.C., plaintiff. Alden Banniettis, Brooklyn (Damien Semel–DeFeo and Jeff Henle of counsel), for A.M. Medical Services, P.C., plaintiff. Bee Ready Fishbein Hatter & Donovan, LLP, Mineola (Lee–David Weiner of counsel), for Liberty Mutual Insurance Company, defendant. Bruno, Gerbino & Soriano, LLP, Melville (Akwei Oko Acquaye of counsel), for Allstate Insurance Company, defendant.

OPINION OF THE COURT

Diane A. Lebedeff, J.

Two motions bring up for review the treatment of attorney’s fee awards in court cases seeking payment of no-fault economic loss benefits. Treated together for the purposes of motion disposition, these cases form the basis for an inquiry into the recently disputed question of the proper formula to use for computation of a no-fault attorney’s fee award to a prevailing plaintiff’s [*3]counsel in routine no-fault litigation, as well as an exploration of the situations in which a plaintiff is not entitled to an attorney’s fee award.

The General Attorney’s Fee Rule for a Prevailing No-Fault Plaintiff

It is well established that a prevailing no-fault claimant may claim an award of attorney’s fees (Insurance Law § 5106 [a] [such attorney’s fees are “subject to limitations promulgated by the superintendent (of the NY State Department of Insurance)]”). A number of formulas for such fees may be found in the “thicket” of no-fault Insurance Department regulations (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 280 [1997], rearg denied 90 NY2d 937 [1997]).^[FN1]

There is, however, only a single provision governing an attorney’s fee award in routine court litigation for a no-fault unpaid economic loss claim, which is that such an “attorney’s fee shall be . . . 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the . . . court, subject to a maximum fee of $850” and a “minimum attorney’s fee . . . [of] $60” (11 NYCRR 65-4.6 [e], [c]). Long established appellate authority holds that such fees were to be calculated “per claim,” which means for each separate claim form submitted to an insurer (Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co., 207 AD2d 338, 339 [2d Dept 1994] [trial court “failed to follow the formula” of the regulations and “incorrectly interpreted the $850 ceiling to apply to the entire action, rather than to each claim, and failed to set a minimum fee of $60 per claim”]). This “per claim” calculation was accepted as the proper approach prior to and subsequent to that Second Department decision (see Hempstead Gen. Hosp. v Allstate Ins. Co., 120 Misc 2d 303, 311 [Sup Ct, Nassau County 1983], revd on other grounds 106 AD2d 429 [2d Dept 1984], affd 64 NY2d 958 [1985]; Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501, 501 [2d Dept 1994] [“per claim”]; St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641, 641 [2d Dept 1995] [fees to be fixed “per claim” and minimum applied to “each such claim”]).^[FN2]

This conclusion has seemingly been drawn into question by an opinion letter issued by [*4]the Office of the General Counsel of the Insurance Department on October 8, 2003. Entitled “No-Fault Attorney Fees for Multiple Provider Bills,” it opines that—specifically in relation to court actions—”the amount of attorney’s fees awarded will be based upon 20% of the total amount of first party benefits awarded” and that “the 20% calculation is based upon benefits awarded from the total number of disputed bills in a court action” (text appears at [accessed Feb. 23, 2007]), which would potentially lower legal fees awards by applying the dollar cap to all combined claims, instead of treating claims separately. The opinion letter represents that its conclusion springs from a plain reading of the regulations and it contains no legal rationale, points to no change in governing case law, and does not rest upon a contemporaneous amendment of the regulatory language.

Three courts recently addressed this 2003 no-fault attorney’s fee opinion letter. In A.M. Med. Servs. P.C. v New York Cent. Mut. Fire Ins. Co. (NYLJ, July 24, 2006, at 25, col 1 [Civ Ct, Queens County 2006, Raffaele, J.]), the court declined to follow the opinion letter and calculated attorney’s fees based upon each claim form, noting that the “total award” basis “flies in the face of existing decisional precedent,” “gives the defendant insurers a windfall by limiting their exposure for litigation fees,” “provides carriers with a disincentive to settlement, and encourages . . . no-fault litigation.” In Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. (14 Misc 3d 673 [Civ Ct, Queens County 2006, Siegal, J.]), the court found the opinion letter unpersuasive, for similar reasons. In Marigliano v New York Cent. Mut. Fire Ins. Co. (13 Misc 3d 1079 [Civ Ct, Richmond County 2006, Sweeney, J.]), the court deferred to the opinion letter on the basis of limited arguments.

This court finds the attorney’s fee opinion letter does not merit departure from settled law for three interrelated reasons. First, it must be recognized that this document is not a regulation adopted in conformity with the State Administrative Procedure Act (State Administrative Procedure Act § 101 et seq.), and facially falls in the class of exempt “interpretive statements and statements of general policy which in themselves have no legal effect but are merely explanatory” (State Administrative Procedure Act § 102 [2] [b] [iv]). Courts often find such opinion letters merit no weight (see State Farm Mut. Auto. Ins. Co. v Mallela, 175 F Supp 2d 401, 418 n 12 [ED NY 2001, Sifton, J.] [declining to follow a Department of Insurance opinion letter and noting that another opinion letter “relied upon by plaintiff, was authored at the instance of lead counsel for the insurers in . . . (a) matter pending in state court, who provided the Department with a five-page exposition of the issues presented”]).

Second, Insurance Department opinion letters which endorse a litigation or arbitration result contrary to existing judicial dictates specifically find little judicial favor. Such dismissive treatment was given to a 2000 Insurance Department opinion letter entitled “No-Fault Burden of Proof,” which was generally recognized to be an administrative attempt to avoid the Court of Appeals preclusion rule announced in Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co. (supra) by requiring a no-fault claimant to prove medical necessity even if the issue were not preserved by a timely denial. That 2000 opinion letter was given so little regard that its rejection was not even discussed in Matter of Pradip Das/N.Y. Med. Rehab v Allstate Ins. Co. (297 AD2d 321 [2d Dept 2002]), although extensively argued therein, which was described at length in Matter of Park Radiology v Allstate Ins. Co. (2 Misc 3d 621 [Civ Ct, Richmond County 2003]) and Preferred Med. Imaging, P.C. v Liberty Mut. Fire Ins. Co. (11 Misc 3d 1059[A], 2006 NY Slip Op 50278[U] [Suffolk Dist Ct 2006]).

Third and most compelling, absent any change in statutory law or regulations, common-[*5]law precedent principles require all lower trial courts view as binding applicable Appellate Division decisions, unless and until there is any conflicting authority (People v Towndrow, 187 AD2d 194, 195 [4th Dept 1993], lv dismissed 81 NY2d 1021 [1993] [“It should hardly need to be stated that trial courts are bound to follow the holdings of the Appellate Division”]; Mountain View Coach Lines v Storms, 102 AD2d 663, 664 [2d Dept 1984, Titone, J.] [“doctrine of stare decisis requires trial courts in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or this (department) pronounces a contrary rule” which doctrine is “necessary to maintain uniformity and consistency”]). Given stare decisis precepts, this court is not free to depart from settled legal precedent and is barred from according any weight or consequence to the subject opinion letter.

Based on the foregoing, the court determines that the prevailing no-fault claimant’s attorney’s fees herein are to be calculated on a per claim basis under settled principles of law. Accordingly, the court rejects the contrary argument raised in A.M. Med. Servs., P.C. v Allstate Ins. Co. and, because there is no objection to the plaintiff’s mathematical calculation, awards legal fees in the amount requested by the successful plaintiff for the two claim forms at issue.

Exceptions to the General Rule for No-Fault Plaintiff’s Attorney’s Fee

There are also situations in which a no-fault plaintiff is not entitled to an attorney’s fee under the regulations, directly or by construction. No legal fee is available, of course, in cases in which a plaintiff has no valid claim at the outset of the action (11 NYCRR 65-4.6 [a] [“If . . . a court action was commenced by an attorney on behalf of an applicant and the claim or portion thereof was not denied or overdue at the time . . . the action was commenced, no attorney’s fees shall be granted”]). And, in certain defined situations, litigation concerning a no-fault fee schedule dispute might not support an attorney’s fee (11 NYCRR 65-4.6 [i] [“if the charges by a health care provider . . . exceed the limitations contained in the (fee) schedules established pursuant to section 5108 of the Insurance Law, no attorney’s fee shall be payable” unless the litigation “involve(s) interpretation of such schedules or inadvertent miscalculation or error”]).

However, the regulations facially do not address the situation where a plaintiff had a valid claim for unpaid no-fault benefits at the commencement of the litigation but, for reasons independent of the litigation, has no proper claim for no-fault damages at its conclusion. In Valley Stream Med. & Rehab, P.C. v Liberty Mut. Ins. Co., one of the two cases at bar, after service of the summons and complaint, the plaintiff itself subsequently pursued and secured a settlement in arbitration for the same claim through different counsel. Given these facts, plaintiff is unable to demonstrate that even some small part of the original claim remained unpaid (compare Dondysh v Lumbermans Mut. Ins. Co., 168 Misc 2d 121 [App Term, 2d Dept 1996] [some interest remained unpaid]). In short, there is no outstanding obligation on the part of the insurer shown.

As to the regulation, it bases a claimant’s attorney’s fee calculation upon consideration of “the amount of first-party benefits, plus interest thereon, awarded by the . . . court” (11 NYCRR 65-4.6 [e]), and the regulation is interpreted literally (Hempstead General Hosp. v Allstate Ins. Co., supra, 106 AD2d at 431 [modification of judgment because the ” ‘fee upon a fee’ awarded to plaintiff . . . is not authorized by the regulations”]). Here, given that neither benefits nor interest [*6]are due to plaintiff, there is no dollar figure to which the percentage calculation, the dollar maximum, or the dollar minimum attaches and there is no basis upon which legal fees may be awarded.

Accordingly, the court denies the application for legal fees in Valley Stream Med. & Rehab, P.C. v Liberty Mut. Ins. Co. The court does not address whether the client has any obligation to pay an attorney’s fee to its attorney of record, given that such an issue is outside the scope of the instant papers.

Footnotes

Footnote 1: Internet links to the text of the current regulations, the superseded older regulations effective through April 5, 2002, the no-fault statute, various no-fault fee schedules, and Insurance Department circular letters and opinion letters may be found at (accessed Feb. 23, 2007).

The current regulations’ provisions applicable to attorney’s fee awards in court proceedings appear within 11 NYCRR 65-4.6, to be distinguished from numerous other rules applicable in other situations, such as in claims processing and late payment of arbitration awards (11 NYCRR 65-3.10), lien and offset situations (11 NYCRR 65-3.19) and proceedings before a master arbitrator (11 NYCRR 65-4.10 [j]).

Footnote 2: Although the applicable language of the mathematical formula remained unchanged over time, amendments did increase the dollar amount of the maximum figures and changed the context in which the formula appeared. The older regulation is quoted in full in Hempstead General Hosp. v Allstate Ins. Co. (supra, 106 AD2d at 429-430).

[*1]

District Court of Nassau County, First District, February 23, 2007

APPEARANCES OF COUNSEL

Friedman, Harfenist, Langer & Kraut for plaintiff. Jaffe & Nohavicka for defendant.

OPINION OF THE COURT

Andrew M. Engel, J.

The plaintiff commenced this action to recover no-fault first-party benefits for medical services provided to its assignor on February 14, 2004, in the total sum of $1,791.73, which have not been paid. The action was commenced on or about June 6, 2005, and issue was joined on or about June 16, 2005. The plaintiff now moves for summary judgment. The defendant opposes the motion.

The plaintiff alleges that it properly served its bills dated February 27, 2004 upon the defendant and that same were received by the defendant on March 10, 2004. The defendant does not deny such receipt and admits same in its denial of claim, thereby curing any defect in the plaintiff’s proof of mailing. (Prestige Med. & Surgical Supply, Inc. v Clarendon Natl. Ins. Co., 13 Misc 3d 127[A], 2006 NY Slip Op 51672[U] [App Term, 2d & 11th Jud Dists 2006]; Magnezit Med. Care, P.C. v New York Cent. Mut. Fire Ins. Co., 12 Misc 3d 144[A], 2006 NY Slip Op 51434[U] [App Term, 2d & 11th Jud Dists 2006].)

The plaintiff further alleges that the defendant’s denial, alleging lack of medical necessity, albeit timely, was improper. According to the plaintiff, the defendant’s denial was not on a properly prescribed denial of claim form and that the form used by the defendant omitted many fields, all in violation of 11 NYCRR 65-3.4 (c) (11) and 65-3.8 (c) (1).

The defendant argues that, because its denial was timely, the plaintiff will only be entitled to summary judgment if plaintiff eliminates the defense of lack of medical necessity as a matter of law, as part of its prima facie motion. According to the defendant, having failed to [*2]proffer competent medical evidence demonstrating that the subject medical services were necessary, the plaintiff’s motion must be denied.

To make out a prima facie case, the plaintiff must establish the proper submission of its claim and the carrier’s failure to either pay or issue a valid denial within 30 days. (11 NYCRR 65-3.8 [c]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2d Dept 2004]; Westchester Med. Ctr. v AIG, Inc., 36 AD3d 900 [2d Dept 2007]; New York Craniofacial Care, P.C. v Allstate Ins. Co., 11 Misc 3d 1071[A], 2006 NY Slip Op 50500[U] [Civ Ct, Kings County 2006].) As will be discussed below, the plaintiff has established its prima facie right to the relief requested.

Although the timeliness of the defendant’s denial is admitted and not in issue, it must still be demonstrated that it was facially sufficient to have any effect. (Nyack Hosp. v State Farm Mut. Auto. Ins. Co., supra; Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [App Term, 2d & 11th Jud Dists 2004].)

In relevant part, 11 NYCRR 65-3.8 (c) (1) provides: “If the insurer denies a claim in whole or in part involving elements of basic economic loss or extended economic loss, the insurer shall notify the applicant or the authorized representative on the prescribed denial of claim form.” 11 NYCRR 65-3.4 (c) provides that Appendix 13 of the regulations includes the “prescribed claim forms that must be used by all insurers, and shall not be altered unless approved by the superintendent: . . . (11) Denial of Claim Form (NYS Form N-F 10).”

The defendant does not dispute the plaintiff’s documented allegations that its denial of claim was not on the prescribed form, was on a form disapproved for use by the New York State Insurance Department after May 1, 2003, and that the form used by the defendant redacted 15 areas of inquiry. Viewing this uncontroverted evidence in a light most favorable to the defendant (Corvino v Mount Pleasant Cent. School Dist., 305 AD2d 364 [2d Dept 2003]; Tassone v Johannemann, 232 AD2d 627 [2d Dept 1996]), the court finds no genuine issue of fact (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 [1957]; Rotuba Extruders v Ceppos, 46 NY2d 223 [1978]) to be resolved at trial concerning the propriety of the defendant’s denial, which is insufficient as a matter of law. (Nyack Hosp. v State Farm Mut. Auto. Ins. Co., supra; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2d Dept 2005], lv denied 5 NY3d 713 [2005]; Spineamericare Med., P.C. v United States Fid. & Guar. Co., 12 Misc 3d 138[A], 2006 NY Slip Op 51293[U] [App Term, 9th & 10th Jud Dists 2006].)

The defendant’s argument that the plaintiff must still demonstrate the medical necessity for the services rendered is without merit. It is well established that:

“proof of a properly submitted statutory claim form, or its substantial equivalent, establishes a prima facie case of medical necessity on a plaintiff’s motion for summary judgment (Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists 2003]; see also Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U] [App Term, 9th & 10th Jud Dists]). The burden then shifts to defendant who, if not precluded, may rebut the presumption and establish the lack [*3]of medical necessity by submitting proof, such as a detailed peer review report or the results of an IME, that the health benefits provided were not medically necessary (Amaze Med. Supply v Eagle Ins. Co. 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [2003], supra; see also Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U] [2003], supra).” (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 21-22 [App Term, 2d Dept 2004], affd 35 AD3d 720 [2d Dept 2006].) The defendant has offered nothing to substantiate its claim of lack of medical necessity.

It being uncontested, and determined as a matter of law, that the plaintiff’s claim was timely submitted and that the defendant failed to pay or properly deny that claim within 30 days, having failed to raise a claim of fraud or lack of coverage, the defendant is precluded from raising a defense to the plaintiff’s suit. (New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583 [2d Dept 2002]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613 [2d Dept 1996]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999].)

Based upon the foregoing, the plaintiff’s motion for an order granting it summary judgment is granted; and the plaintiff is entitled to the entry of a judgment in the sum of $1,791.73, plus interest and attorney’s fees. The question has arisen, however, as to when interest begins to run. The plaintiff suggests interest accrues beginning 30 days after proper submission of its claims. The defendant suggests interest did not begin to accrue herein until the commencement of this action. Approximately 15 months of interest is in question.

There is no dispute that the applicable regulatory provisions governing an award of interest are 11 NYCRR 65-3.8 (a) (1); (c) and 65-3.9 (a) and (c). The dispute, as noted in Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. (14 Misc 3d 673 [Civ Ct, Queens County 2006]), lies in how these provisions are to be applied. As Judge Bernice Daun Siegal noted therein, recent case law has been wrestling with the interpretation and interrelationship of these provisions, with differing results. (See East Acupuncture, P.C. v Allstate Ins. Co., 8 Misc 3d 849 [Civ Ct, Kings County 2005]; Tsai Chao v Country-Wide Ins. Co., 11 Misc 3d 1090[A], 2006 NY Slip Op 50794[U] [Nassau Dist Ct 2006].) This court will attempt to grapple with these issues as well.

As is relevant herein, 11 NYCRR 65-3.9 (a) unequivocally provides, “(a) All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month.” As applicable, 11 NYCRR 65-3.8 provides, “(a) (1) No-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim . . . (c) Within 30 [*4]calendar days after proof of claim is received, the insurer shall either pay or deny the claim in whole or in part.” Reading these two subdivisions together, it has been held that a claim is “overdue” when the carrier has failed to either pay or properly deny the claim within 30 days of its receipt. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2d Dept 2004]; New York Craniofacial Care, P.C. v Allstate Ins. Co., 11 Misc 3d 1071[A], 2006 NY Slip Op 50500[U] [Civ Ct, Kings County 2006].) It is worth noting, at this point, the distinction between a claim which is properly denied, as opposed to one which is simply denied.

The aforesaid sections are internally consistent and unequivocal in their statement that interest begins to run if the payment of a claim is “overdue,” to wit: neither paid nor properly denied within 30 days, on the 30th day after the claim is submitted. The section which is causing all of the problems is 11 NYCRR 65-3.9 (c), which provides, in pertinent part:

“(c) If an applicant does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken.” On a cursory reading, this section appears to be at odds with the preceding sections.

Judge Milagros A. Matos, in East Acupuncture, P.C. v Allstate Ins. Co., P.C. (supra), resolves this apparent conflict by noting that 11 NYCRR 65.15 (h) (3), now section 65-3.9 (c), makes specific reference to “an applicant” whereas 11 NYCRR 65.15 (h) (1), now section 65-3.9 (a), makes specific reference to interest payable to “an applicant or assignee.” Applying “a basic principle of statutory construction that a court will not by implication read into a clause of a rule or statute a limitation for which . . . no sound reason [can be found] (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 458 [1980] [internal quotation marks omitted]),” and deferring to the “special competence and expertise [of the Superintendent of Insurance] with respect to the insurance industry” (8 Misc 3d at 853), Judge Matos held that 11 NYCRR 65.15 (h) (3) (section 65-3.9 [c]) does not apply to provider/assignees, but only to “applicants.”

As pointed out by Judge Anthony W. Paradiso in Tsai Chao v Country-Wide Ins. Co. (supra), and recently reiterated by the Appellate Division, Second Department, in Long Is. Radiology v Allstate Ins. Co. (36 AD3d 763 [2007]), however, an assignee has no greater rights than its assignor and “stands in the shoes” of its assignor. (Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489, 489 [2d Dept 2001]; Dilon Med. Supply Corp. v Travelers Ins. Co., 7 Misc 3d 927 [Civ Ct, Kings [*5]County 2005].) As such, the assignee must be held to the same obligations and restrictions as its assignor, the “applicant.”

The above notwithstanding, this court must nevertheless respectfully disagree with Judge Paradiso’s application of these apparently conflicting regulations. The court in Chao held that the restrictions of section 65-3.9 (c) apply to all claimants because to rule otherwise “encourages delayed suits and thrusts an unjustified financial burden on insurance companies who are forced to pay years worth of punitive interest payments that are eventually reflected in higher insurance premiums.” (11 Misc 3d 1090[A], 2006 NY Slip Op 50794[U], *3 [2006] [citation omitted].) This latter argument, however, is directly contradicted by 11 NYCRR 65-3.9 (f), which explicitly provides, “An insurer may not include in its ratemaking calculations any interest paid on an overdue claim.” Moreover, the interpretation of these regulations applied in Chao overlooks appellate authority which holds that interest accrues on all “overdue” payments, those not made within 30 days after a proper demand, without regard to when suit is commenced. (Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co., 207 AD2d 338 [2d Dept 1994]; Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501 [2d Dept 1994]; New York & Presbyt. Hosp. v Allstate Ins. Co., 30 AD3d 492 [2d Dept 2006]; St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641 [2d Dept 1995].)

This court believes there is a third interpretation to be given to these regulations, as proffered by the plaintiff herein and as alluded to by Judge Siegal in Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. (supra), which meets the stated objectives of the statutory no-fault scheme, encouraging prompt resolution of and compensation for losses incurred by accident victims (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]), without rewarding a dilatory assignee with a windfall of interest or rewarding a dilatory insurance company which has failed to pay or properly deny a claim, by delaying the accrual of interest.

As the court pointed out in Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. (14 Misc 3d at 676, supra), “the patently clear and unambiguous language in section 65-3.9 (c) referring to ‘the receipt of a denial of claim form’ [is] a key element in determining the date of accrual thereunder.” Significantly, the defendant therein never issued a denial; and, based thereon, Judge Siegal found the defendant’s argument that interest does not accrue until the commencement of arbitration or suit to be “totally without merit” (id.). The same must be said of denials, such as the one herein, which, although timely served, are patently invalid on their face. Distinguished from such denials, however, are denials which are timely and properly stated, e.g., a denial in proper form, based on the alleged lack of medical necessity, which sets forth a factual basis sufficient to establish, prima facie, the absence of medical necessity. (See Amaze Med. Supply Inc. v Allstate Ins. Co., 12 Misc 3d 142[A], 2006 NY Slip Op 51412[U] [App Term, 2d & 11th Jud Dists 2006] [proper denial [*6]defeated provider’s motion for summary judgment and defendant permitted to proceed with defense]; compare, Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004] [defendant failed to set forth factual basis for alleged lack of medical necessity precluding the defendant from asserting such defense and mandating summary judgment for the plaintiff].)

Based upon all of the foregoing, it is the holding of this court that, in accordance with the unambiguous language of 11 NYCRR 65-3.9 (a) and 65-3.8 (a) and (c), interest on overdue payments, those where there is less than full payment and no valid denial issued within 30 days of receipt of the claim, shall run from 30 days after receipt of the claim. (Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co., supra; Hempstead Gen. Hosp. v Insurance Co. of N. Am., supra; New York & Presbyt. Hosp. v Allstate Ins. Co., supra; St. Clare’s Hosp. v Allstate Ins. Co., supra.) In all other cases, where the carrier has issued a proper and timely denial establishing a prima facie defense to the claim, interest shall run from the institution of arbitration or suit, if no such action is taken within 30 days after the plaintiff’s receipt of the denial of claim, in accordance with 11 NYCRR 65-3.9 (c). In making this distinction, the court notes that subdivision (a) makes specific reference to “[a]ll overdue” payments, whereas subdivision (c) specifically omits such language.

The court believes that this dichotomy is not only mandated by the clear and specific language of the regulations, but is consistent with and promotes the underlying purpose of the no-fault scheme to eschew treating claimants as adversaries and to provide for prompt payment or disclaimer of first-party benefits to injured individuals. (Dermatossian v New York City Tr. Auth., 67 NY2d 219 [1986]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., supra.) Claimants should not expect, and the regulations do not allow, that they will be rewarded with a windfall of accumulating interest, in the face of a timely and valid denial, by delaying the prosecution of their claims. By the same token, insurance companies should not be heard to complain that interest will accumulate against them where they have failed, and continue to fail, to pay or properly deny a claim. In this way, the regulatory scheme is designed to provide incentive to both sides to administer and prosecute claims in a timely fashion.

Finally, the defendant’s argument that the total attorney’s fee herein should be no more than $850 is mooted by the fact that the plaintiff concedes that under any method of calculation the fee herein will not exceed $850.

Accordingly, the plaintiff’s motion for summary judgment is granted; and the plaintiff is entitled to the entry of a judgment in the principle sum of $1,791.73, plus interest at the rate of 2% per month compounded from April 9, 2004 and counsel fees in the sum of 20% of the principle award plus the interest thereon, but no more than $850. [*7]

All other matters not decided herein are hereby denied.

—[*1] McDonnell & Adels, P.C., Garden City, N.Y. (Martha S. Henley of counsel), for appellant.

Joseph Henig, P.C., Bellmore, N.Y., for respondent.

In an action to recover no-fault medical payments under contracts of insurance, the defendant appeals from a judgment of the Supreme Court, Nassau County, entered March 29, 2006, which, upon an order of the same court (Brennan, J.) dated March 13, 2006, granting the motion of the plaintiff Mount Sinai Hospital, as assignee of Salvatore Gigante, for summary judgment on the third cause of action, is in favor of that plaintiff and against it in the principal sum of $30,092.49. The defendant’s notice of appeal from the order is deemed to be a notice of appeal from the judgment.

Ordered that the judgment is affirmed, with costs.

In support of its motion for summary judgment on the third cause of action, the plaintiff Mount Sinai Hospital, as assignee of Salvatore Gigante (hereinafter Mount Sinai), demonstrated its prima facie entitlement to judgment as a matter of law by submitting, inter alia, the requisite billing forms, a certified mail receipt, a signed return receipt card which referenced the patient and forms, and an affidavit of its third-party biller (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 34 AD3d 532 [2006]; New York & Presbyt. Hosp. v Allstate Ins. Co., 30 AD3d 492 [2006]). This evidence demonstrated that the defendant received the no-fault billing and failed to respond within the requisite 30-day period (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.5). The defendant failed to raise a triable issue of fact in opposition to the motion. Accordingly, the Supreme Court properly [*2]granted the motion of Mount Sinai for summary judgment on the third cause of action.

The defendant’s remaining contention is improperly raised for the first time on appeal (see Rotundo v S & C Magnetic Resonance Imaging, 255 AD2d 573 [1998]) and, in any event, is without merit (see General Construction Law § 46; William Iselin & Co. v Fireman’s Fund Ins. Co., 117 AD2d 86, 90 [1986], mod 69 NY2d 908 [1987]). Mastro, J.P., Goldstein, Lifson and Carni, JJ., concur.

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 (Eileen Nadelson, J.), entered December 19, 2005. The order denied defendant’s motion to vacate the notice of trial and certificate of readiness.

Order reversed without costs and defendant’s motion to vacate the notice of trial and certificate of readiness granted.

In this action to recover assigned first-party no-fault benefits, defendant served plaintiff with a notice to take the deposition of plaintiff, as well as others. After plaintiff filed a notice of trial and certificate of readiness, defendant moved to vacate the notice of trial and certificate of readiness, asserting that, contrary to plaintiff’s representation, discovery was not complete. Although plaintiff did not oppose defendant’s motion, the
court below denied defendant’s motion, noting that the type of discovery sought by defendant was not within “the purview of plaintiff.”

Defendant’s motion to vacate the notice of trial and certificate of readiness should have been granted. It is undisputed that there is an outstanding request for discovery. A motion to vacate a notice of trial should be granted where, as in the instant matter, it is based upon a certificate of readiness which contains the erroneous statement that discovery was completed or waived (see Savino v Lewittes, 160 AD2d 176 [1990]; Hillside Neurology Care P.C. v Travelers Ins. Co., 11 Misc 3d 127[A], 2006 NY Slip Op 50234[U] [App Term, 1st Dept]).

Pesce, P.J., Weston Patterson and Golia, JJ., concur. [*2]
Decision Date: February 16, 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 (Eileen Nadelson, J.), entered December 6, 2005. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint.

Order modified by denying defendant’s cross motion for summary judgment; as so modified, affirmed without costs.

In this action 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. Defendant cross-moved for summary judgment based upon the failure of plaintiff’s assignor to appear for two independent medical examinations (IMEs). Defendant also argued that the affidavit of plaintiff’s corporate officer was insufficient to establish plaintiff’s prima facie case because, among other things, it did not set forth evidence in admissible form. The court denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment and plaintiff appeals therefrom.

Inasmuch as 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., ___ Misc 3d ___, 2006 NY Slip Op 26483 [App Term, 2d & 11th Jud Dists]). Consequently, plaintiff’s motion for [*2]summary judgment was properly denied.

With regard to defendant’s cross motion for summary judgment, which was premised upon the alleged failure of plaintiff’s assignor to appear for two IMEs, plaintiff contends that defendant was not entitled to summary judgment because defendant’s cross motion did not present sufficient evidence in admissible form. Since defendant did not present an affidavit from someone with personal knowledge establishing that plaintiff’s assignor failed to appear for the IMEs, defendant did not make a prima facie showing of its entitlement to judgment as a matter of law (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., ___ AD3d ___, 2006 NY Slip Op 09604 [2d Dept, Dec. 19, 2006]). Accordingly, defendant’s cross motion for summary judgment should have been denied.

Weston Patterson, J.P., Rios and Belen, JJ., concur.
Decision Date: February 16, 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 November 22, 2005. The order granted defendant’s motion to the extent of compelling plaintiff to produce plaintiff’s assignor’s treating physician, Dmitry Nesen, M.D., for a deposition.

Order modified by providing that defendant’s motion to compel plaintiff to appear for a deposition is granted to the extent of requiring plaintiff to produce a witness with knowledge of the dates, if any, commencing January 1, 2001 to the present, during which Dmitry Nesen, M.D. was an employee of plaintiff, for a deposition within 60 days
after service of a copy of the order entered hereon; as so modified, affirmed without costs.

In this action to recover assigned first-party no-fault benefits, defendant moved for an order, inter alia, compelling plaintiff to submit to depositions on the ground that there was an issue as to whether Dmitry Nesen, M.D., the physician who allegedly treated plaintiff’s assignor, was an employee of plaintiff or an independent contractor at the time the treatment was rendered (see generally A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc 3d 36 [App Term, 2d & 11th Jud Dists 2005]). The court granted defendant’s motion to the extent of requiring plaintiff to produce Dr. Nesen for a deposition and this appeal ensued.

Inasmuch as it is unclear whether Dr. Nesen was employed by plaintiff when defendant sought such relief, the court erred in compelling plaintiff to produce Dr. Nesen for a deposition (see CPLR 3106 [b]; Doomes v Best Tr. Corp., 303 AD2d 322 [2003]; Schneider v Melmarkets Inc., 289 AD2d 470 [2001]; Zappolo v Putnam Hosp. Center, 117 AD2d 597 [1986]). However, since defendant’s motion sought to compel plaintiff to appear for a deposition regarding Dr. Nesen’s employment status when he
treated plaintiff’s assignor, defendant’s motion should have been granted to the extent of requiring plaintiff to produce a witness with such knowledge for deposition upon oral examination (see Kryzhanovskaya v City of New York, 31 AD3d 717 [2006]).

We note that while the court below relied upon Matter of Haas v Costigan (14 AD2d 809 [1961]), said case does not entitle defendant, at this juncture, to an order compelling plaintiff to produce Dr. Nesen for a deposition since it is both factually and legally distinguishable.
Pesce, P.J., Weston Patterson and Golia, JJ., concur.
Decision Date: February 14, 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 (Robin S. Garson, J.), entered on November 16, 2005. The order denied defendant’s motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, for summary judgment.

Order reversed without costs and defendant’s motion to dismiss the complaint granted.

In this action, plaintiff seeks to recover first-party no-fault benefits for health care services rendered to its assignors. In a prior cross motion, defendant sought to dismiss the complaint for plaintiff’s failure to comply with discovery or, in the alternative, to compel discovery. In support thereof, defendant’s attorney noted that plaintiff’s principal had failed to provide discovery with respect to her ownership, operation and control of plaintiff (see generally State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90 [App Term, 2d & 11th Jud Dists 2006]). By order dated December 28, 2004, plaintiff was directed to respond to written interrogatories and to produce an appropriate representative for a deposition.

In the instant motion, defendant seeks to dismiss the complaint pursuant to CPLR 3126 for plaintiff’s continued failure to provide certain discovery, or, in the alternative, for summary judgment. In defendant’s moving papers, it is asserted that plaintiff’s principal failed to respond to any questions regarding the ownership, operation or control of plaintiff. Said motion was unopposed. The court below denied the motion.

In Lexington Acupuncture, P.C. v State Farm Ins. Co. (12 Misc 3d 90, supra), this court held that the defendant insurance company could properly seek discovery of information regarding whether plaintiff was fraudulently incorporated. Plaintiff failed to fully comply with [*2]the December 28, 2004 order. Moreover, plaintiff failed to oppose the
instant motion. In view of the foregoing, defendant’s motion to dismiss the complaint pursuant to CPLR 3126 should have been granted.

Pesce, P.J., Weston Patterson and Golia, JJ., concur.
Decision Date: February 14, 2007

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Suffolk County, Third District (C. Steven Hackeling, J.), dated October 13, 2005. The order denied defendant’s motion for summary judgment.

Order affirmed without costs.

In this action to recover first-party no-fault benefits for health care services rendered by plaintiff to its assignor, defendant insurer moved for summary judgment dismissing the complaint on the ground that plaintiff’s assignor had failed to appear for independent medical examinations (IMEs) which had been scheduled prior to defendant’s receipt of the claim forms. In support of the motion, it submitted, inter alia,
copies of plaintiff’s three proofs of claim, copies of its claim denial forms, an affidavit of its no-fault claims examiner (which was sufficient to establish both defendant’s receipt of the claims and the mailing of the claim denials) and an affidavit of an employee of Alternative Consulting and Examinations, the company which scheduled the IMEs (which was sufficient to establish mailing of the IME scheduling letters to the assignor). The court denied defendant’s motion for summary judgment, finding that there was a triable issue of fact as to medical necessity, and this appeal ensued.

In Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co. (___ AD3d ___, 2006 NY Slip Op 09604 [2d Dept, Dec. 19, 2006]), the Appellate Division, Second Department, held that when an insurer moves for summary judgment to dismiss an action based upon an assignor’s failure to appear for IMEs which were requested prior to the submission of the claim forms, it must “establish, prima facie, that it mailed the notices of the IMEs . . . and that . . . [plaintiff’s assignor] failed to appear for the IMEs.” In that case, the insurer failed to meet its burden of proof in admissible form because it submitted no evidence from anyone with personal [*2]knowledge of the mailings or of the nonappearances. While defendant herein established proper mailing of the IME
requests, it did not submit evidence in admissible form from anyone with personal knowledge of the nonappearances. Since defendant failed to meet its burden, its motion for summary judgment was properly denied.

Rudolph, P.J., McCabe and Lippman, JJ., concur.
Decision Date: February 14, 2007

—[*1] Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP, New York, N.Y. (Roy J. Karlin of counsel), for appellant.

Shestack & Young, LLP, New York, N.Y. (Jamie B. Levy of counsel), for respondent.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals from a judgment of the Supreme Court, Queens County (Rios, J.), entered July 20, 2006, which denied the petition and dismissed the proceeding.

Ordered that the judgment is reversed, on the law, with costs, and the petition to permanently stay arbitration is granted.

The respondent’s failure to file a sworn statement with the petitioner after the alleged hit-and-run accident in accordance with the condition precedent of the supplemental uninsured motorist endorsement of his insurance policy, vitiated coverage (see Matter of Empire Ins. Co. v Dorsainvil, 5 AD3d 480, 481 [2004]; Matter of Legion Ins. Co. v Estevez, 281 AD2d 420 [2001]; Matter of Aetna Life & Cas. v Ocasio, 232 AD2d 409 [1996]; Matter of State Farm Ins. Co. v Velasquez, 211 AD2d 636, 637 [1995]). Contrary to the respondent’s contentions, the policy language which mirrors the prescribed endorsement of 11 NYCRR 60-2.3 (f) is not ambiguous. Moreover, the fact that the petitioner received some notice of the accident by way of an application for no-fault benefits did not negate the breach of the policy requirement (see Matter of Allstate Ins. Co. v Estate of Aziz, 17 AD3d 460, 461 [2005]; Matter of American Home Assur. Co. v Joseph, 213 AD2d 633 [1995]). Schmidt, J.P., Crane, Fisher and Dickerson, JJ., concur.