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 (Mitchell J. Danziger, J.), dated April 28, 2009, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Mitchell J. Danziger, J.), dated April 28, 2009, reversed, with $10 costs, motion granted and complaint dismissed. The Clerk is directed to enter judgment accordingly.

In this action to recover assigned first-party no-fault benefits, defendant established prima facie that it mailed the notices of the independent medical examinations (IMEs) to the assignors and that the assignors failed to appear for the IMEs (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721 [2006]). In opposition, plaintiff failed to raise a triable issue regarding the reasonableness of the requests or the assignors’ failure to attend the IMEs (see Inwood Hill Med. v General Assurance Co., 10 Misc 3d 18, 20 [2005]). Thus, defendant was entitled to summary judgment dismissing the complaint based upon plaintiff’s failure to comply with a condition precedent to coverage (see id.).
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
I concur
Decision Date: July 21, 2010

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Carolyn E. Wade, J.), entered March 4, 2009. The order granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed without costs, plaintiff’s motion for summary judgment is denied and defendant’s cross motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant cross-moved for summary judgment, asserting the defenses of lack of medical necessity and that plaintiff sought to recover amounts in excess of the workers’ compensation fee schedule. Finding that plaintiff had established a prima facie case and that defendant had failed to establish that its denial of claim forms were timely mailed, the Civil Court granted plaintiff’s motion and denied defendant’s cross motion. This appeal ensued.

Contrary to the determination of the Civil Court, defendant demonstrated that the denial of claim forms at issue, which were annexed to its cross motion, were timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]).

In support of its cross motion, defendant annexed a copy of its denial of claim form which [*2]denied plaintiff’s claim for services rendered on April 6, 2006 on the ground of lack of medical necessity, as well as an affirmed peer review report which set forth a factual basis and medical rationale for the opinion that there was a lack of medical necessity for such services. As a result, defendant made a prima facie showing of its entitlement to summary judgment with respect to this claim form (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]). With respect to the branch of defendant’s cross motion seeking summary judgment dismissing so much of the complaint as sought to recover the unpaid portion of bills for services rendered on March 14, 2006, which claims were timely denied on the ground that the unpaid portion exceeded the amount permitted by the workers’ compensation fee schedule, we find that defendant made a prima facie showing of its entitlement to judgment thereon. As plaintiff failed to rebut defendant’s prima facie showings, and plaintiff’s remaining contentions are either raised for the first time on appeal or lack merit, the order is reversed, plaintiff’s motion for summary judgment is denied and defendant’s cross motion for summary judgment dismissing the complaint is granted.

Pesce, P.J., Golia and Rios, JJ., concur.
Decision Date: July 16, 2010

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Lila Gold, J.), entered November 21, 2008. The order granted defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground of lack of medical necessity. The Civil Court granted defendant’s motion, and the instant appeal ensued.

Plaintiff does not dispute that defendant established that it had timely denied the claim at issue on the ground of lack of medical necessity. In addition, in support of its motion for summary judgment, defendant submitted an affirmed peer review report setting forth a factual basis and medical rationale for the conclusion that there was a lack of medical necessity for the medical services at issue. Defendant’s showing that the services at issue were not medically necessary was unrebutted by plaintiff. Therefore, defendant’s motion for summary was properly granted (see e.g. Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., [*2]16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

In view of the foregoing, and as plaintiff’s remaining contentions lack merit, the order is affirmed.

Pesce, P.J., Weston and Golia, JJ., concur.
Decision Date: July 16, 2010

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Maureen A. Healy, J.), entered December 2, 2008. The order denied defendant’s motion to vacate a default judgment.

ORDERED that the order is affirmed without costs.

Plaintiff commenced this commercial claims action to recover assigned first-party no-fault benefits in the sum of $1,130.69. Defendant failed to appear or answer, and a default judgment was entered against defendant in 2004. In 2008, defendant moved to vacate the default judgment, arguing, inter alia, that the “small claims part” [sic] of the Civil Court of the City of New York does not have subject matter jurisdiction over actions brought by an assignee, and that its motion to vacate the default judgment should be granted pursuant to CPLR 317 or 5015. The Civil Court denied defendant’s motion on the ground that it was untimely. The instant appeal by defendant ensued.

For the reasons stated in Dr. Robert E. Stoessel, Psychologist, P.C. v Allstate Ins. Co. (___ Misc 3d ___, 2010 NY Slip Op ______ [Appeal No. 2009-576 Q C], decided herewith), the order is affirmed.

Weston, J.P., Rios and Steinhardt, JJ., concur.
Decision Date: July 16, 2010

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Maureen A. Healy, J.), entered December 2, 2008. The order denied defendant’s motion to vacate a default judgment.

ORDERED that the order is affirmed without costs.

Plaintiff commenced this commercial claims action to recover assigned first-party no-fault benefits in the sum of $880.52. Defendant failed to appear or answer, and a default judgment was entered against defendant in 2004. In 2008, defendant moved to vacate the default judgment, arguing, inter alia, that the “small claims part” [sic] of the Civil Court of the City of New York does not have subject matter jurisdiction over actions brought by an assignee, and that its motion should be granted pursuant to CPLR 317 or 5015. The Civil Court denied defendant’s motion on the ground that it was untimely. The instant appeal by defendant ensued.

Contrary to defendant’s contention, the instant action was properly commenced in the Commercial Claims Part of the Civil Court by plaintiff – – a professional corporation which had its principal office in the State of New York ^[FN1] (see CCA 1801-A [a]; 1809-A [a]; cf. East End [*2]Med., P.C. v Oxford Health Ins., Inc., 12 Misc 3d 135[A], 2006 NY Slip Op 51229[U] [App Term, 1st Dept 2006]).

Defendant’s contention that there was no proof that defendant had been served with the notice of claim also lacks merit. Pursuant to CCA 1803-A, the clerk of the court is to provide a defendant with notice of the claim “by ordinary first class mail and certified mail with return receipt requested . . . If, after the expiration of twenty-one
days, such ordinary first class mailing has not been returned as undeliverable, the party complained against shall be presumed to have received notice of such claim.”

The commercial claims index card herein indicates that defendant was properly served with notice of the claim. Defendant’s conclusory denial of service failed to rebut the presumption that defendant received notice of the claim, since the mail had not been returned as undeliverable prior to the expiration of 21 days (see CCA 1803-A). Consequently, it was incumbent upon defendant to demonstrate a reasonable excuse for its default as well as a meritorious defense to the action (see CPLR 5015 [a]; Euguene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]), which it failed to do. Consequently, the Civil Court did not improvidently exercise its discretion in denying defendant’s motion to vacate the default judgment. Accordingly, substantial justice was done between the parties (see CCA 1807-A) and, thus, the order is affirmed.

Weston, J.P., Rios and Steinhardt, JJ., concur.
Decision Date: July 16, 2010

Footnotes

Footnote 1: We note that both CCA 1801-A and 1809-A were added by the Legislature in 1987. In 1992, CCA 1801-A (a) was amended to replace the original words therein, i.e., that plaintiff have a “principal office in the city of New York” with the words “principal office in the state of New York”; however, CCA 1809-A (a) was not similarly amended. The corresponding sections in the UDCA and UCCA have always provided that the corporate plaintiff’s principal office be in the State of New York, and the Uniform Rules for the New York City Civil Courts (22 NYCRR) § 208.41-a (a) (1) likewise states that the principal office must be in the State of New York. Clearly, the failure to so amend CCA 1809-A (a) is an oversight.

[*1]

District Court of Nassau County, First District, July 15, 2010

APPEARANCES OF COUNSEL

Rivkin Radler LLP for defendant. Friedman, Harfenist, Kraut & Perlstein for plaintiff.

{**29 Misc 3d at 279} OPINION OF THE COURT

Fred J. Hirsh, J.

The defendant moves for summary judgment.

Background

This action raises the issue of whether an insurer can obtain documentary material relating to a potential Mallela defense in a demand for an examination under oath (EUO).

Staffa Pasqualino was injured in a motor vehicle accident on July 15, 2007. Richard Amato, D.C., Staffa’s treating chiropractor, referred Staffa for a lumbar and cervical MRI and 3-D renderings that were performed at Dynamic Medical Imaging, P.C. on August 24, 2007.

Staffa assigned his right to receive no-fault benefits for these tests to Dynamic.

Dynamic submitted its bills for these services to State Farm Mutual Automobile Insurance Company for payment. State Farm acknowledges receipt of the bill for the lumbar MRI and 3-D rendering on September 24, 2007 and receipt of the bill for the cervical MRI and 3-D rendering on September 26, 2007.

State Farm sent a letter to Dynamic and Steven Brownstein, M.D. dated October 8, 2007 demanding Dr. Brownstein appear for an EUO at the office of Rivkin Radler LLP, 926 RexCorp Plaza, Uniondale, New York on October 30, 2007 at 10:00 a.m.

The letter advised Dr. Brownstein that if the date, time or place for the EUO were inconvenient, he should contact State Farm to reschedule the EUO at a time, place and/or date that was reasonably convenient for Dr. Brownstein. The letter further advised Dr. Brownstein State Farm would reimburse Dr. Brownstein for any income lost and travel expenses incurred as a result of his appearance for the EUO.

The mailing log produced by State Farm indicates the letter was mailed to Dynamic and Dr. Brownstein by certified mail, return receipt requested, at three different addresses. The first address, P.O. Box 87, Springfield, New Jersey 07081-0087, is the billing address for Dynamic. The second address, 73-36 Grand Avenue, Maspeth, New [*2]York 11378, is the address of the Dynamic facility at which the MRIs were performed. The papers{**29 Misc 3d at 280} do not establish why the letter was sent to the third address, 8 Linda Lane, Springfield, New Jersey 07081.^[FN1]

The EUO letter requested Dr. Brownstein to produce seven days prior to the EUO the following information:

“(i) documents evidencing ownership of the P.C., at the time of the treatment for which you seek payment, by one or more licenced professionals, including but not limited to a copy of the certificate of incorporation for the P.C., receipts for filing, stock certificates, and the stock ledger for the P.C.

“(ii) documents relating to the income and expenses of the P.C., including but not limited to tax returns and general ledgers of the P.C. for the past twelve months.

“(iii) a list of the individuals who provided and/or supervised the health care services for which you seek payment, identification of the type of professional license each individual holds, and documents (i.e, W-2, 1099, etc.) identifying the relationship between the individual and the P.C. (e.g. whether the individual is an employee or independent contractor and how that individual is compensated).

“(iv) a list of days of the week and hours that any owner of the P.C. provides or supervises services for the P.C. during the period for which payment is sought for services rendered.

“(v) all documents, including all schedules, attachments or addenda, relating to the relationship between the P.C., and/or any entity [or] individual that leases equipment or space to or from the P.C., or provides management, consulting, administrative or billing services to the P.C. and any payments made to any person or entity that rendered such services to the P.C.

“(vi) complete, sign and return the enclosed NF-3 form.”^[FN2]

The letter advises Dynamic and Dr. Brownstein if they have previously provided this information and/or documentation, it need not be provided for this EUO.{**29 Misc 3d at 281}

The letter advises Dynamic and Dr. Brownstein State Farm will not pay the bills until [*3]the requested documentation has been provided and either Dr. Brownstein or an appropriate representative from Dynamic has appeared for the EUO. The letter then stated failure to provide the requested documentation and/or failure to appear for the EUO will result in State Farm disclaiming coverage for treatment provided to the claimant.

Neither Dr. Brownstein nor any other representative of Dynamic appeared for the EUO scheduled for October 30, 2007. The requested documentation was not provided.

State Farm sent a letter dated November 7, 2007 as a second request for an EUO to Dynamic and Dr. Brownstein. This letter referenced the October 30, 2007 EUO and Dr. Brownstein and Dynamic’s failure to attend. The letter advised Dynamic and Dr. Brownstein they were being given one last chance to appear for an EUO. The letter scheduled the EUO for November 19, 2007 at the offices of Rivkin Radler LLP. The letter requested Dynamic and/or Dr. Brownstein to call in advance to confirm attendance. The letter again advised Dynamic and Dr. Brownstein that if the date, time and place was inconvenient to call and reschedule the EUO for a date, time and/or place that was more convenient. The letter advised that State Farm would reimburse the person who appeared at the EUO for lost earnings and travel expenses. It also requested the production of the same documents demanded in the October 8, 2007 letter. Finally, the letter advised Dynamic and Dr. Brownstein appearance at the EUO was a condition of coverage and failure to appear will result in the denial of all claims submitted on behalf of Staffa.

The November 7, 2007 letter was addressed to Dr. Brownstein and Dynamic at the same addresses as the October 8, 2007. The mail log produced by State Farm indicates these letters were mailed on November 8, 2007.

Neither Dr. Brownstein nor a representative of Dynamic appeared for the EUO scheduled for November 19, 2007.

Neither Dynamic nor Dr. Brownstein submitted papers in which they denied receipt of either the October 8, 2007 or November 7, 2007 letters. Nothing has been produced that would indicate the letters have been returned by the United States Postal Service as undeliverable as addressed.

State Farm issued a denial dated December 12, 2007 denying payment for the lumbar and cervical MRIs and the 3-D renderings. The basis for the denial was the failure to appear for an EUO and failure to comply with 11 NYCRR 65-3.16 (a) (12).

{**29 Misc 3d at 282}Dynamic commenced this action on January 24, 2008 seeking to recover the amount due for the MRIs and 3-D renderings. Issue has been joined.

Discussion

A no-fault insurance carrier may request an eligible injured person or that person’s assignee to submit to an examination under oath as may reasonably be required. (11 NYCRR 65-1.1.) The examination under oath shall be conducted at a place and time reasonably convenient for the applicant. (11 NYCRR 65-3.5 [e].) A request for an examination under oath “must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination.” (11 NYCRR 65-3.5 [e].)

Appearance at a properly demanded EUO is a condition precedent to an insurance carrier’s liability to pay no-fault benefits. (Five Boro Psychological Servs., P.C. v Progressive Northeastern Ins. Co., 27 Misc 3d 141[A], 2010 NY Slip Op 50991[U] [App Term, 2d, 11th and 13th Jud Dists 2010].)

No-fault is a statutory/regulatory system. (See Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854 [2003].) No-fault is in derogation of the common law. (East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202 [2d Dept 2009].) The rights of an insurer are limited to those expressly provided for by the statute and regulations. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997], rearg denied 90 NY2d 937 [1997].) The regulations provide for an examination under oath. The term “examination under oath” is not defined by the no-fault regulations. Words used in regulations that are not specifically defined in the regulations are to be given their ordinary meaning. (Matter of Oefelein v Town of Thompson Planning Bd., 9 AD3d 556 [3d Dept 2004]; Matter of Parker v Kelly, 140 AD2d 993 [4th Dept 1988]; McCarter v Beckwith, 247 App Div 289 [2d Dept 1936]; McKinney’s Cons Laws of NY, Book 1, Statutes § 76.) Examination is defined as the questioning of a witness by an attorney. (See Law.Com Law Dictionary.) Examination can also be defined as a formal interrogation. (Webster’s Unabridged Dictionary 673 [2d ed 1998].) Therefore, the term “examination under oath” as used in the no-fault regulations means the insurer can request the injured party or the assignee of the injured party to appear and give oral testimony after having been sworn or under affirmation.

The regulations do not provide an insurer with the right to obtain written documentation other than such documentation{**29 Misc 3d at 283} as may be demanded as verification. In addition to appearing for an examination under oath, the assignee can be compelled to execute a written proof of claim under oath and provide other pertinent information as may assist the insurer in determining the amount due and payable. (11 NYCRR 65-1.1.) The regulations do not give the insurer the right to ask an assignee to produce documents relating to the corporate structure or finances of a medical provider. (11 NYCRR 65-3.5 [a].) Upon receipt of the completed verification form, the insurer can request additional verification. (11 NYCRR 65-3.5 [b].) The regulations only permit the insurer to obtain written information to verify the claim. (11 NYCRR 65-3.5 [c]; see generally V.M.V. Mgt. Co., Inc. v Peerless Ins., 15 AD3d 647 [2d Dept 2005].) Nothing in the no-fault regulations permits an insurer to request an assignee to produce corporate organizational and financial documents a week in advance of an EUO.

An examination under oath permits the insurer to question the injured party or its assignee regarding the claim. While an examination under oath has been treated by the courts as a condition precedent to coverage, the no-fault regulations treat the examination under oath as a form of verification. Thus, where a carrier properly demands an examination under oath, “the verification is deemed to have been received by the insurer on the day the examination was performed.” (11 NYCRR 65-3.8 [a] [1].) The insurer has 30 days from the day the EUO is conducted to pay or deny the claim. (Id.)

The purpose for demanding verification is to extend or toll the carriers time to pay or deny the claim so the carrier can obtain information regarding the claim. (Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2d Dept 2007]; 11 NYCRR 65-3.5 [c]; 11 NYCRR 65-3.8 [a] [1].) The extension of time in which to pay or deny the claim is extremely important in circumstances in which [*4]the insurer is seeking information regarding a defense the insurer would be precluded from raising if the defense is not stated in a timely served denial. (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Lincoln Gen. Ins. Co. v Alev Med. Supply Inc., 25 Misc 3d 1019 [Nassau Dist Ct 2009].)

However, this rationale does not apply to a Mallela defense since a Mallela defense is nonprecludable. (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005].)

While Mallela has been called a fraudulent incorporation defense, the rationale underlying Mallela is that only an appropriately{**29 Misc 3d at 284} licensed professional may be the owner of a professional corporation (Business Corporation Law § 1507), a professional limited liability company (Limited Liability Company Law § 1207) or a professional limited liability partnership (Partnership Law § 121-1500 [q]) and only licensed professionals can obtain payment of no-fault benefits. (11 NYCRR 65-3.16 [a] [12].) The Mallela defense permits an insurer to look behind a facially proper business structure to determine if persons not duly licensed to practice the profession are the actual owners of the medical provider. (Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno, Gerbino & Soriano, LLP, 26 Misc 3d 448 [Civ Ct, Richmond County 2009].) If the provider is not owned by a licensed professional or if the provider is controlled by a nonprofessional, then the provider may not obtain payment of no-fault benefits. (State Farm Mut. Auto. Ins. Co. v Mallela, supra.)

If a carrier believes the provider/assignee is subject to a Mallela defense, the proper way to assert it is as an affirmative defense in its answer. (New York First Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 25 Misc 3d 134[A], 2009 NY Slip Op 52217[U] [App Term, 2d, 11th & 13th Jud Dists 2009].)

The document demand contained in State Farm’s EUO letters to Dynamic and Dr. Brownstein are essentially a demand for pre-action discovery regarding a Mallela defense. CPLR 3102 (c) permits pre-action discovery only by court order and only to aid in bringing an action. Some of the documentation requested in the EUO letters State Farm might not be able to obtain even if it had been requested in a duly served notice for discovery and inspection.^[FN3]

The oft-stated purpose of the No-Fault Law is to insure prompt payment for medical services rendered to persons injured in motor vehicle accidents. (Fair Price Med. Supply Corp. v Travelers Indem. Co., supra; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]; Presbyterian{**29 Misc 3d at 285} Hosp. in City of N.Y. v Maryland Cas. Co., supra.) Permitting an insurer to obtain what would be [*5]tantamount to full discovery regarding a Mallela defense as part of an EUO would defeat that purpose and is beyond the scope of the No-Fault Law and regulations relating to an EUO.

Permitting an insurer to demand what has been demanded by State Farm in this action for an EUO is fraught with the potential for abuse. (See Unitrin Advantage Ins. Co. v Carothers, 17 Misc 3d 1121[A], 2007 NY Slip Op 52100[U] [Sup Ct, NY County 2007]; Gegerson v State Farm Ins. Co., 27 Misc 3d 1207[A], 2010 NY Slip Op 50604[U] [Nassau Dist Ct 2010].) An insurer should not be able to defeat no-fault claims by making an onerous and improper document demand relating to an EUO.

If an insurer has a reasonable basis for believing a medical provider cannot obtain payment of no-fault benefits because the provider is “fraudulently incorporated,” then it should assert the defense in its answer and litigate the issue on the merits in the action brought by the provider for no-fault benefits. The insurer should move to consolidate all of the actions brought by the provider and have the issue of whether the provider is subject to a Mallela defense determined in one action. (See Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno, Gerbino & Soriano, LLP, supra.) Alternatively, an insurer can commence a declaratory judgment action seeking a judgment declaring the provider ineligible to receive no-fault payments. (See State Farm Mut. Auto. Ins. Co. v Mallela, supra.)

While State Farm may have reason to believe Dynamic is not eligible to receive no-fault benefits for Mallela reasons, State Farm cannot use a palpably improper EUO demand not subject to court review as a basis for obtaining summary judgment. (See Westchester Med. Ctr. v Progressive Cas. Ins. Co., 51 AD3d 1012 [2d Dept 2008].)

Since the EUO demand was improper, defendant’s motion for summary judgment is denied.^[FN4]

Footnotes

Footnote 1: A check of this address on Google maps indicates Linda Lane is a cul-de-sac in a residential neighborhood.

Footnote 2: It does not appear that an NF-3 form has any applicability to this action. An NF-3 is the New York Motor Vehicle No-Fault Insurance Law Verification of Hospital Treatment form. (11 NYCRR part 65, subpart 65-4, Appendix 13.)

Footnote 3: The EUO demand requests Dynamic produce its corporate tax returns. Disclosure of tax returns is disfavored since income tax returns contain confidential and private information. (Walter Karl, Inc. v Wood, 161 AD2d 704 [2d Dept 1990]; Briton v Knott Hotels Corp., 111 AD2d 62 [2d Dept 1985].) The party seeking to obtain production of income tax returns must make a strong showing of necessity and an inability to obtain the information contained in the income tax return from any other source. (Abbene v Griffin, 208 AD2d 483 [2d Dept 1994].) A party will not be required to produce tax returns if the information may be obtained from any other source. (Samide v Roman Catholic Diocese of Brooklyn, 5 AD3d 463 [2d Dept 2004].)

Footnote 4: The court notes defendant has alleged a Mallela defense in its answer. Nothing in this decision should be interpreted to prevent the defendant from asserting or proving a Mallela defense or obtaining proper discovery from Dynamic in regard to this defense.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered December 4, 2008. The order granted defendant’s motion to vacate a judgment and the underlying order granting plaintiff’s motion for summary judgment on default and, upon such vacatur, restored plaintiff’s motion to the calendar.

ORDERED that the order is affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment, and the motion was granted on default. A judgment was subsequently entered pursuant to the order. Days later, defendant moved to vacate the default judgment and the underlying order. The Civil Court granted defendant’s motion and, upon vacatur, restored plaintiff’s summary judgment motion to the calendar. The instant appeal by plaintiff ensued.

In order to vacate the judgment and underlying order pursuant to CPLR 5015 (a) (1), defendant was required to establish both a reasonable excuse for its default and a meritorious defense to the action (see e.g. Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]). The affirmations submitted by defendant in support of its motion to vacate sufficed to establish a reasonable excuse for its failure to oppose plaintiff’s motion for summary judgment.

Defendant also established an arguably meritorious defense to the action as its showing that plaintiff’s assignor was acting as an employee at the time of the accident was sufficient to require that the issue of whether workers’ compensation benefits are available be resolved in the first instance by the Workers’ Compensation Board (see O’Rourke v Long, 41 NY2d 219, 225 [1976]; see also Westchester Med. Ctr. v American Tr. Ins. Co., 60 AD3d 848 [2009]; Infinity Health Prods., Ltd. v New York City Tr. Auth., 21 Misc 3d 136[A], 2008 NY Slip Op 52218[U] [App Term, 2d & 11th Jud Dists 2008]; Response Equip., Inc. v American Tr. Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op 51176[U] [App Term, 2d & 11th Jud Dist 2007]). In addition, contrary to plaintiff’s contention, defendant’s motion was timely (see CPLR 5015 [a] [1]).

Accordingly, the order is affirmed. [*2]

Steinhardt, J.P., Pesce and Rios, JJ., concur.
Decision Date: July 07, 2010

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Margaret A. Pui Yee Chan, J.), entered September 22, 2008. The order granted defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed without costs and defendant’s motion for summary judgment dismissing the complaint is denied.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that the equipment provided was not medically necessary. The Civil Court granted defendant’s motion, and the instant appeal ensued.

The affidavit of an employee of Kemper Independence Insurance Company, submitted by defendant, failed to provide allegations concerning defendant’s standard
office practices and procedures designed to ensure that items are properly addressed and mailed so as to establish that defendant had timely mailed its denial of claim form (see Top Choice Med., P.C. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 133[A], 2009 NY Slip Op 50230[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; see also New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Align for Health Chiropractic, P.C. v New York Cent. Mut. Fire Ins. Co., 20 Misc 3d 144[A], 2008 NY Slip Op 51862[U] [App Term, 2d & 11th Jud Dists 2008]). As a result, defendant failed to demonstrate that its defense of lack of medical necessity was not precluded (see e.g. Delta Diagnostic Radiology, P.C. v Republic W. Ins. Co., 15 Misc 3d 33 [App Term, 2d & 11th Jud Dists 2007]). Accordingly, the order granting defendant’s motion for summary judgment is reversed and defendant’s motion is denied.

In light of our determination, we do not reach plaintiff’s other contentions.

Steinhardt, J.P., Pesce and Rios, JJ., concur. [*2]
Decision Date: July 07, 2010