SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Arlene Bluth, J.), entered February 8, 2005. The order granted plaintiff’s motion for summary judgment in the principal sum of $1,644.74.

Order reversed without costs, plaintiff’s motion for summary judgment denied and, upon searching the record, defendant is awarded summary judgment and complaint dismissed.

In this action to recover first-party no-fault benefits for health care services rendered to its assignor, plaintiff moved for summary judgment. Where a billing provider seeks to recover no-fault benefits for services which were not rendered by it or its employees, but rather by a treating provider who is an independent contractor, it is not a “provider” of the medical services rendered within the meaning of 11 NYCRR 65-3.11 [a] and is therefore not entitled to recover “direct payment” of assigned no-fault benefits from the defendant insurer (see Craig Antell, D.O., P.C. v New York Cent. Mut. Fire Ins. Co., 11 Misc 3d 137[A], 2006 NY Slip Op 50521[U] [App Term, 1st Dept]; A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc 3d 36 [App Term, 2d & 11th Jud Dists 2005]; A.B. Med. Servs. PLLC v New York Cent. Mut. Fire Ins. Co., 8 Misc 3d 132[A], 2005 NY Slip Op 51111[U] [App Term, 2d & 11th Jud Dists.]).

In the case at bar, the plaintiff’s claim form states that the treating professional was an independent contractor. Under the circumstances, plaintiff’s motion for summary judgment should be denied and, upon searching the record, summary judgment should be awarded to defendant dismissing the action (see A.B. Med. Servs. PLLC v New York Cent. Mut. Fire Ins. Co., 8 Misc 3d 132, supra; see generally Dunham v Hilco Constr. Co., 89 NY2d 425, 429 [1996]; Murray v Murray, AD3d , 2006 NY Slip Op 02861).

Pesce, P.J., Weston Patterson and Rios, JJ., concur.
Decision Date: June 22, 2006

[*1]

Civil Court of the City of New York, Richmond County, June 22, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola, for plaintiff. Bruno Gerbino & Macchia, LLP, Melville, for defendant.

OPINION OF THE COURT

Peter P. Sweeney, J.

This action to recover first-party no-fault benefits presents a novel issue. After receiving each of the disputed claims, defendant made timely requests for additional verification thereby tolling the 30-day period in which it had to pay or deny the claims. When plaintiff did not provide the verification, defendant made an additional request for the verification 28 calendar days later. When plaintiff failed to provide the verification, defendant denied the claims citing plaintiff’s failure to provide the verification as its only defense. The issue presented is whether, under these circumstances, defendant’s denials of claim, all of which were issued more than 30 days after it received the claims, were timely. The court concludes that they were not.

Factual Background

This action involves three claims for first-party no-fault benefits totaling $5,698.45 for electrodiagnostic testing of plaintiff’s two assignors. The trial of the action was scheduled for April 19, 2006. At that time, the parties waived their right to a trial and agreed to submit the matter to the court for resolution based on stipulated facts. The parties stipulated that defendant received each of the claims on February 13, 2003; that on February 25, 2003, defendant requested additional verification of each claim, i.e.—a letter of medical necessity from the referring physician; that on March 25, 2003, defendant made a second request for the same verification; that the requested verification was never provided; and that on January 26, 2004, defendant denied each of the claims citing plaintiff’s failure to provide verification as its only defense. The claim forms, an assignment of benefits for each assignor, defendant’s first and second requests for verification and defendant’s denials of claim were all stipulated into evidence.

Defendant maintains that it properly denied the claims and that it is therefore entitled to judgment dismissing the action.

Plaintiff maintains that while defendant’s initial requests for additional verification were timely and tolled the 30-day period in which defendant had to pay or deny the claims, the toll was eviscerated when defendant failed to send out a follow-up request for the additional verification within the 10-day time period specified in 11 NYCRR 65-3.6 (b). Plaintiff correctly points out that defendant mailed out the second requests only 28 days after the first requests had been [*2]mailed. Plaintiff contends that pursuant to 11 NYCRR 65-3.6 (b), defendant was required to wait at least 30 calendar days before it re-requested the verification.

Discussion

It is well settled that an insurer is required to pay or deny a claim for no-fault benefits within 30 days after the claimant provides proof of the claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997]) and that its failure to do so will preclude it from raising most defenses to the claim (see Presbyterian Hosp. in City of N.Y., 90 NY2d at 282).

An insurer may extend the 30-day period in which it has to pay or deny a claim by making a request for additional verification of the claim “within 15 business days of receipt [of one] of the prescribed verification forms” (11 NYCRR 65-3.5 [b]; see also Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96 [2d Dept 2005]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584-585 [2d Dept 2002]; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 700 [2d Dept 2001]). If the verification is not provided 30 calendar days after the original request, “[a]t a minimum . . . the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested, either by telephone call, properly documented in the file, or by mail” (11 NYCRR 65-3.6 [b]).

In Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co. (233 AD2d 431, 432 [2d Dept 1996], lv denied 90 NY2d 802 [1997]), the Court addressed the consequences of an insurer’s failure to seek additional verification of a claim in compliance with the no-fault regulations then in effect. The defendant in that case timely requested that plaintiff provide a copy of the hospital record of its assignor as additional verification of the claim. When plaintiff did not provide the hospital record within 30 calendar days, defendant did not do any of the follow-up required by 11 NYCRR former 65.15 (e) (2), which, in relevant part, provided:

“At a minimum, if any requested verification has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was originally requested, either by a telephone call, properly documented in the file, or by mail.”

Although plaintiff ultimately provided the hospital record, defendant did not receive it until more than 30 days had elapsed since the claim was submitted. The hospital record indicated that plaintiff’s assignor was intoxicated at the time of accident and based on the record, defendant denied the claim asserting the intoxication of plaintiff’s assignor as a defense.

In affirming the judgment entered in plaintiff’s favor in the court below, the Appellate Division for the Second Department concluded that defendant was precluded from raising intoxication as a defense inasmuch as defendant denied the claim more than 30 days after its receipt. The Court based its decision on the principle that “[w]hen an insurance company fails to comply with its duty to act expeditiously in processing no-fault claims, it will be precluded from raising most defenses” (Presbyterian, 233 AD2d at 432 [citation omitted]). The Court reasoned that by failing to do the follow-up required by 11 NYCRR former 65.15 (e) (2), which it concluded had to be “strictly construed” (Presbyterian, 233 AD2d at 432), defendant did not act diligently in processing the claim (Presbyterian, 233 AD2d at 433 [citations omitted]).

The courts have consistently followed the holding in Presbyterian (see King’s Med. Supply v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450[U] [App Term, 2d & 11th Jud Dists]; Bronx Med. Servs., P.C. v Windsor Ins. Co., 2003 NY Slip Op 50885[U] [App [*3]Term,1st Dept]; Ocean Diagnostic Imaging P.C. v Allstate Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50140[U] [App Term, 2d & 11th Jud Dists]).

This case is not on all fours with Presbyterian or the other cases cited above. In all of those cases, when the plaintiff failed to provide the verification that had been requested, the defendant did not do any follow-up whatsoever. Here, defendant did follow up but not within the 10-day period specified in 11 NYCRR 65-3.6 (b). While defendant certainly acted more diligently in processing the claims than the defendant in Presbyterian or the other cases cited above, it did not strictly adhere to the dictates of 11 NYCRR 65-3.6 (b), nonetheless. The court must be guided by the principle that the no-fault regulations are in derogation of the common law and must be strictly construed (Presbyterian, 233 AD2d at 432; Presbyterian Hosp. in City of N.Y. v Atlanta Cas. Co., 210 AD2d 210, 211 [2d Dept 1994]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613, 614 [2d Dept 1996]).

The clear language of 11 NYCRR 65-3.6 (b) required defendant to follow up with the plaintiff for the verification at least once in the 10-day period specified therein. This defendant clearly did not do so. The court finds that when defendant failed to follow up as required by 11 NYCRR 65-3.6 (b), the toll occasioned by defendant’s initial requests for verification dissipated ab initio. Thus, it necessarily follows that defendant’s denials of claim, all of which were issued more than 30 days after defendant received the claims, were untimely as a matter of law. Defendant was precluded from raising most defenses, including the defense asserted in each of its denials.

Having established that it submitted the claims setting forth the fact and the amounts of the loss sustained and that payment of no-fault benefits was overdue, plaintiff is entitled to judgment in the amount sued for (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]).

Accordingly, it is hereby ordered and adjudged that judgment be entered in plaintiff’s favor in the amount of $5,698.45, together with interest and attorneys’ fees as provided for under the No-Fault Law and the regulations promulgated thereunder, as well as costs and disbursements.

[*1]

Civil Court of the City of New York, Kings County, June 21, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola, for plaintiff. Melli, Guerin & Wall, P.C., New York City, for defendant.

OPINION OF THE COURT

Arlene P. Bluth, J.

The above-captioned three cases were consolidated for trial before this court on June 5, [*2]2006. On that date, counsel for both parties stipulated to the facts set forth below, taking the joint position that what remained were issues of law. On June 12, 2006, counsel for both parties submitted briefs on the following issues: (1) May a physical therapist use a billing code found in the medicine fee schedule where such services do not appear in the physical medicine fee schedule? and (2) May a physical therapist bill for range of motion and muscle testing when an evaluation and management are billed for on the same day? After considering the parties’ stipulations and briefs, the court makes the following findings.

Findings of Fact

The three cases before this court on stipulated facts all involve claims for first-party no-fault benefits for physical therapy services rendered to plaintiff’s assignors. Defendant paid some claims and denied others, and plaintiff sued to recover the unpaid amounts. Except as noted, in all three cases the parties stipulated to plaintiff’s prima facie case and to defendant’s timely denial of the bills in question.

For the claims brought under index number 46885/05, the parties stipulated that as to the bills for assignor David Cardoza, plaintiff is entitled to judgment in the amount of $317.84 plus statutory interest, costs, and attorney’s fees. The balance of those bills, totaling $651.04, remains in dispute and were denied based on denial code 129: “This procedure is not listed in the NY state [sic] fee schedule for this provider specialty. If reported with an evaluation and management service, this procedure is inclusive.” As to the bills for assignor Ayodele Sunmola, the parties stipulated that plaintiff is entitled to judgment in the amount of $476.76 plus statutory interest, costs, and attorney’s fees. The balance of those bills, totaling $976.56, remains in dispute and were denied based on the same denial code, 129.

For the claims brought under index number 47943/05, the parties stipulated that as to the bills for assignor Avis Brown, plaintiff is entitled to judgment in the amount of $158.92, plus statutory interest, costs, and attorney’s fees. The balance of the charges, totaling $325.52 ($166.60 $158.92), were denied under denial code 129 and remain in dispute. As to the bills for assignor Tamara Reynolds, the parties stipulated that a partial payment of $45 was made, leaving a balance of $577.84. The latter charges were denied on the basis that range of motion and muscle testing cannot be billed separately from evaluation and management, and that portion of the bill remains in dispute. As to the bills for assignor Issa Vincent, the parties stipulated that plaintiff is entitled to judgment in the amount of $643.36 (portion of the bill for March 30, 2004 in the amount of $158.92 and the entire bill for April 21, 2004 for $484.44) plus statutory interest, costs and attorney’s fees. The balance of $325.52 was denied based upon denial code 129 and remains in dispute.

Finally, for the claims brought under index number 47945/05, the parties stipulated that as to the bills for assignor Orlando Simpson, plaintiff is entitled to judgment in the amount of $158.92, plus statutory interest, costs, and attorney’s fees. The balance of $325.52 was denied based upon denial code 129 and remains in dispute. As to the bill for assignor Pierre Durisile, defendant agreed to furnish plaintiff’s counsel with proof that the claimed amount of $495 was paid, and that plaintiff is entitled to judgment in full but will not collect on that bill if defendant produces a cancelled check within 45 days of the date of the stipulation. As to the bills for assignor Rhonda Moore, the parties stipulated that a partial payment of $83.32 was made, leaving [*3]a balance of $539.52. Defendant denied those charges on the basis that range of motion and muscle testing cannot be billed separately from evaluation and management, and that portion of the bill remains in dispute.

Conclusions of Law

The workers’ compensation fee schedules were adopted by the Superintendent of Insurance for use by those making and processing claims for no-fault benefits. These are contained in a volume entitled Official New York Workers’ Compensation Medical Fee Schedule. The medical fee schedule consists of seven sections: evaluation and management, anesthesia, surgery, radiology, pathology and laboratory, medicine, and physical medicine. In addition to the medical fee schedule, the book contains separate schedules appended for psychology, chiropractic, and podiatry. Each service or procedure has a CPT (current procedural terminology) code, and the codes in each section fall in consecutive numerical ranges. At the center of this dispute are the physical medicine and medicine sections of the medical fee schedule.

The workers’ compensation regulations state that the “medical fee schedule is applicable to medical, physical therapy and occupational therapy services . . . Sections containing rates for medicine, physical medicine, anesthesia, surgery, radiology, pathology and laboratory, and evaluation and management services are included.” (12 NYCRR 329.1.) In other words, the entire volume is open to use by various medical professionals (including, for example, physician assistants and nurse practitioners), as well as physical and occupational therapists. Physical therapists are not limited to any one section. The introduction to the medical fee schedule volume explains that “[t]he schedule is divided into sections for structural purposes only. Physicians are to use the sections that contain the procedures they perform, or the services they render.” (See Official New York Workers’ Compensation Medical Fee Schedule, Introduction and General Guidelines, at 1.) Clearly, the division of medical services into different sections is not to establish who can bill for a particular service but to organize those services in a logical format so that providers can easily locate the information they need.

With this in mind, the court turns to the merits of defendant’s denials. Since the parties stipulated to plaintiff’s prima facie case, it was defendant’s burden to come forward with “competent evidentiary proof” supporting its fee schedule defenses. (See Continental Med., P.C. v Travelers Indem. Co., 11 Misc 3d 145[A], 2006 NY Slip Op 50841[U] [App Term, 1st Dept 2006]; see also Jamil M. Abraham M.D. P.C. v Country-Wide Ins. Co., 3 Misc 3d 130[A], 2004 NY Slip Op 50388[U], *2 [App Term, 2d & 11th Jud Dists 2004]; Power Acupuncture P.C. v State Farm Mut. Auto. Ins. Co., 11 Misc 3d 1065[A], 2006 NY Slip Op 50393[U], *4-5 [Civ Ct, Kings County 2006].) This defendant has not done.

The court first addresses the denials that were based on the first sentence of denial code 129, to wit, “This procedure is not listed in the NY state fee schedule for this provider specialty.” On its face, this denial makes no sense: Unlike for chiropractors, podiatrists, and psychologists, there is no fee schedule specifically designated for physical therapists. Just because most of the services physical therapists provide are included in the physical medicine section does not make that section a physical therapy fee schedule.

Even if this court were to make the leap defendant does and assume that the physical medicine section is the equivalent of a physical therapist’s fee schedule, defendant has still failed [*4]to establish that its defense has any merit. Defendant argues that it was improper for plaintiff to use CPT codes contained in the medicine section of the fee schedule. This argument is based on the assumption that the medicine section is for use by physicians only. As explained above, however, the medical fee schedule—with all seven of its component sections—applies to a host of practitioners, including physical therapists. There is simply no bar to a physical therapist using a code from the medicine section where the services performed are found there instead of in the physical medicine section. That is precisely what happened here.

There are no CPT codes in the physical medicine section directly corresponding to the range of motion and muscle testing plaintiff performed. In contrast, there are CPT codes for those services in the medicine section. Specifically, code 95831 is for “[m]uscle testing, manual (separate procedure); extremity (excluding hand) or trunk, with report” (Official New York Workers’ Compensation Medical Fee Schedule at 299) while code 95851 is for “[r]ange of motion measurements and report (separate procedure); each extremity (excluding hand) or each trunk section (spine)” (at 299). Plaintiff opted to use those codes;^[FN1] defendant argues that plaintiff should have stayed within the physical medicine section and used one of two codes contained therein: code 97750 (“Physical performance test or measurement [e.g., musculoskeletal, functional capacity], with written report, each 15 minutes” [at 311]), or code 97799 (“Unlisted physical medicine/rehabilitation service or procedure,” with a relative value to be established “By Report” submitted by the provider [at 311]). Certainly, plaintiff could have used one of these codes. But since the exact services rendered by plaintiff appear in the medicine section, plaintiff chose to use those codes instead.

Defendant’s counsel has identified no law—and this court has found none—holding that a physical therapist cannot bill under the medicine section of the medical fee schedule. This court’s plain reading of the Official New York Workers’ Compensation Medical Fee Schedule and the relevant regulations lead it to conclude that a physical therapist is permitted to use CPT codes found in any section, including the medicine section. In Introna v Allstate Ins. Co. (890 F Supp 161, 165-166 [ED NY 1995], affd 99 F3d 402 [1995]), discussed by both parties herein, the court permitted the plaintiff, a chiropractor, to use codes outside of the chiropractic fee schedule—even though there exists a separate fee schedule designated exclusively for providers of chiropractic. The court need not go that far here, as physical therapists are included within the purview of the medical fee schedule which includes both the medicine and physical medicine sections. Therefore, physical therapists may use a code from the medicine [*5]section to bill for a service not specifically listed in the physical medicine section.

The court further notes that defendant’s defense that plaintiff’s use of codes was improper is belied by the fact that defendant paid for an office visit (Oct. 2, 2002) for assignor Tamara Reynolds which was billed under CPT code 99211—a code which does not appear in the physical medicine section but rather in the evaluation and management section.^[FN2] Defendant offered no explanation as to why it is willing sometimes to accept and pay a physical therapist using a code outside the physical medicine section and at other times objects to the code and rejects the bills.

The court now addresses the other charges in dispute, namely, the range of motion and muscle testing for which payment was denied on the basis that such testing cannot be billed separately from evaluation and management.^[FN3] Having carefully considered the parties’ briefs, the court determines that this defense raises an issue of fact rather than an issue of law, and defendant has not set forth any facts in admissible form to support its argument. Defendant’s counsel is not competent to opine on whether range of motion and muscle testing is generally included in an office evaluation by a physical therapist. Defendant opted not to commission a peer review and move thereupon for summary judgment, or to proceed to a live trial at which it could present witnesses and evidence. Instead, counsel proceeded only on briefs. In the absence of any testimony by a competent medical professional, this court cannot determine whether plaintiff’s charges were medically appropriate. Since it was defendant’s burden to make out its defense, the court finds that defendant has failed to carry its burden.

The court notes that even if defendant were correct that the defense turns on a question of law, defendant has not shown any basis in law to support its defense. While defendant points out that certain fees for chiropractic treatment are included in evaluation and management sessions under the chiropractic fee schedule, it identifies no such rule in the medical fee schedule which is at issue here.

For the foregoing reasons, the court finds that plaintiff is entitled to judgment for the disputed amounts. Accordingly, the court awards judgment as follows:

Under Index Number 46885/05:

a)

For assignor David Cardoza, $968.88 ($317.84 stipulated amount plus $651.04 awarded herein) plus statutory interest, costs, and attorney’s fees.

b)

For assignor Ayodele Sunmola, $1,453.32 ($476.76 stipulated amount plus $976.56 awarded herein) plus statutory interest, costs, and attorney’s fees.

Under Index Number 47943/05:

a)

For assignor Avis Brown, $484.44 ($158.92 stipulated amount plus $325.52 awarded herein) plus statutory interest, costs, and attorney’s fees.

b)

For assignor Tamara Reynolds, $577.84 plus statutory interest, costs, and attorney’s fees.

c)

For assignor Issa Vincent, $968.88 ($158.92 and $484.44 stipulated amounts plus $325.52 awarded herein) plus statutory interest, costs, and attorney’s fees.

Under Index Number 47945/05:

a)

For assignor Orlando Simpson, $484.44 ($158.92 stipulated amount plus $325.52 awarded herein) plus statutory interest, costs, and attorney’s fees.

b)

For assignor Pierre Durisile, $495 plus statutory interest, costs, and attorney’s fees.

c)

For assignor Rhonda Moore, $539.52 plus statutory interest, costs, and attorney’s fees.

Accordingly, plaintiff is awarded judgment against defendant in the amounts set forth above.

Footnotes

Footnote 1: Plaintiff did not, however, bill at the physician’s rates for its services. Rather, plaintiff asserts that it multiplied the “relative value” for the services as listed on the medicine fee schedule by the conversion factor for physical therapists. (See Introna v Allstate Ins. Co., 890 F Supp 161, 164 [ED NY 1995], affd 99 F3d 402 [1995] [“Conversion factors are provider- and procedure-specific; that is, they apply only to the category of health care provider and type of treatment for which they were established”].) Thus, the charges assessed by plaintiff were lower than what a physician would have charged for the same services. Clearly, plaintiff was not trying to obtain a windfall by billing under the medicine section; it was not billing as a doctor; it was just using the code. In any event, defendant does not object to the amounts charged, only to the codes used.

Footnote 2: In its brief, plaintiff contends that defendant also paid for an office visit under code 99211 for assignor Rhonda Moore. However, neither defendant’s denials nor the parties’ stipulated facts supports this contention.

Footnote 3: It appears that these denials are based upon the second sentence of code 129: “If reported with an evaluation and management service, this procedure is inclusive.”

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 (Valerie Brathwaite Nelson, J.), entered December 27, 2004. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint.

Order modified by providing that defendant’s cross motion for summary judgment is denied, plaintiff’s motion for summary judgment is granted to the extent of awarding it partial summary judgment in the sum of $2,133, and matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees thereon and for all further proceedings on the remaining portion of the claim; as so modified, affirmed without costs.

Plaintiff commenced this action to recover assigned first-party no-fault benefits for medical supplies furnished to its assignor. Plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint. By order entered December 27, 2004, the court below denied plaintiff’s motion and granted defendant’s cross motion for summary judgment dismissing the complaint.

In an action to recover first-party no-fault benefits for medical supplies furnished to its assignor, a provider establishes a prima facie entitlement to summary judgment by proof that it submitted the statutory claim forms, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). While the affidavit submitted by plaintiff is insufficient to establish the mailing of the appended claim [*2]forms to defendant, the deficiency in plaintiff’s moving papers concerning proof of its submission of the claims was cured by defendant’s denial of claim forms which adequately established that plaintiff sent, and that defendant received, the claim forms at issue (see Careplus Med. Supply Inc. v State-Wide Ins. Co., 11 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2005]; A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co., 7 Misc 3d 14 [App Term, 2d & 11th Jud Dists 2005]). Thus, plaintiff established a prima facie case entitling it to summary judgment. However, we find that since the prescription for plaintiff’s assignor did not mention a “TENS accessory kit,” for which plaintiff seeks $110 in its claim for the sum of $1,172, plaintiff failed to establish its prima facie entitlement to summary judgment therefor (see Adam’s Med. Supplies v Windsor Group Ins. Co., 3 Misc 3d 126[A], 2004 NY Slip Op 50310[U] [App Term, 2d & 11th Jud Dists]). The burden then shifted to defendant to establish a triable issue of fact with respect to the $1,071 claim and the $1,062 balance of its $1,172 claim (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

Defendant asserted that the aforementioned claims were timely denied based on a peer review which after it requested certain verification from plaintiff concluded that the supplies allegedly provided were not medically necessary. However, since defendant acknowledged in both denial of claim forms that it received final verification from plaintiff on July 18, 2003 and both denial of claim forms were dated August 26, 2003, defendant failed to timely deny plaintiff’s claim within the statutorily prescribed 30-day period (11 NYCRR 65-3.8 [c]). Accordingly, defendant’s untimely denials of the claims precluded defenses to the action, with exceptions not herein relevant, and warranted the granting of summary judgment in plaintiff’s favor (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

In view of the foregoing, defendant’s cross motion for summary judgment is denied, plaintiff’s motion for summary judgment is granted to the extent of awarding it partial summary judgment in the sum of $2,133, and matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees thereon pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder and for all further proceedings on the remaining portion of the claim.

Rios and Belen, JJ., concur.

Golia, J.P., concurs in a separate memorandum.

Golia, J.P., concurs with the result only, in the following memorandum:

I am constrained to agree with the ultimate disposition in the decision reached by the majority. I, however, wish to note that I do not agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views. [*3]
Decision Date: June 15, 2006

Nassau District Court

28583/04

Randy Sue Marber, J.

Plaintiff moves for an order pursuant to CPLR §3212 awarding the plaintiff summary judgment for $7,567.55, the amount demanded in the complaint, on the grounds that defendant failed to pay or deny its claims within thirty days, and that defendant is precluded from offering any evidence at time of trial in accordance with an April 21, 2005 stipulation. Defendant opposes the motion and cross-moves for summary judgment on the ground that plaintiff failed to rebut defendant’s proof that services were not medically necessary, plaintiff’s failure to cooperate and where the services rendered constitute concurrent care, which cross-motion plaintiff opposes. Defendant also raises the issue of fraud.

Plaintiffs’ assignor, Dian Pringle, allegedly was involved in a motor vehicle accident on March 8, 2004. On multiple dates from March 9, 2004 through July 30, 2004 plaintiff rendered acupuncture “health services” to its assignor in the total amount of $7,567.55. All of said claims were timely submitted and defendant has acknowledged receipt of same. By certified letters dated March 26, 2003[sic] and April 26, 2004, defendant requested that Ahmed Erfan Halima, M.D. as owner of plaintiff, submit to an examination under oath with regard to the submitted claims. An Examination Under Oath of Dr. Ahmed Halima was eventually conducted on July 23, 2004. Plaintiff’s claims were subsequently all denied on September 16, 2004 for the stated reasons:

Your records and testimony indicate that you consistently provide (a) physical therapy and chiropractic services to patients who are receiving services for the [*2]same conditions during the same periods at the same location, without regard to the medical necessity of the services; and (b) diagnostic tests such as electrodiagnostic tests, range of motion test and Current Perception Threshold tests that are of no diagnostic value and/or are not medically necessary. Therefore, your claims are denied for two reasons. First you have materially misrepresented that your services were rendered because they were medically necessary, when in fact they were not. Second your services constitute concurrent care, and you have failed to establish which specialty is most relevant to any patient’s diagnosis.

While concurrent care is not permitted under the Workers Compensation Law, contrary to defendant’s contention listed in its Denial of Claim form, case law has considered it under the No-Fault Law (see, Universal Acupuncture Pain Servs PC v. Lumbermens Mut. Cas. Co., 195 Misc 2d 352, 195 Misc 2d 352, 758 NYS2d 795 [Civ Ct Queens County].

The Court has reviewed defendant’s forty-two (42) Denial of Claim forms, all dated September 14, 2004 containing the above reason for denial, and ascertain that each form contains March 26, 2004 as the “date final verification requested” and July 23, 2004 as the “date final verification received”. It does not appear that defendant renewed its request for an EUO as “additional verification” on receipt of each of the 42 claims from plaintiff. Further, to be timely, the Denial of Claim form had to have been issued within 30 days of the holding of the EUO. As stated by the Appellate Term, 9th and 10th Districts in the case of S&M Supply Inc. v. State Farm, 4 Misc 3d 130A, 791 NYS2d 873,

EUOs are also subject to the same 30-day scheduling period required of independent medical examinations (11 NYCRR 65-3.5[d]), and to virtually identical scheduling and reimbursement conditions imposed on medical examinations (11 NYCRR 65-3.5[e]). Similarly, where an EUO, as a medical examination, has been requested as verification, it is deemed to have been received by the insurer on the day the examination was performed (11 NYCRR 65-3.8[a][1]).

Therefore, defendant’s denials of plaintiff’s claims on September 14, 2004, 53 days after the EUO was conducted on July 23, 2004, were not timely. By its failure to timely issue its Denial of Claim forms, defendant is precluded from proving lack of medical necessity of the services, as well as concurrent care, the reasons given in its Denials.

Plaintiff instituted the within lawsuit by service of a summons and complaint upon defendant on November 17, 2004. Defendant interposed its Answer on December 16, 2004. Plaintiff annexed to its moving papers, an affidavit of service by mail which states that on January 31, 2005, plaintiff served defendant with its Demand for a Verified Bill of Particulars as to the Affirmative Defenses, plaintiff’s Demand for Experts and Notice for Discovery and Inspection.

Plaintiff asserts that on April 21, 2005, the parties entered into a stipulation, which was [*3]not “so ordered” wherein it was agreed that defendant would respond to plaintiff’s written interrogatories and Demand for Discovery and Inspection within 60 days of the date of the stipulation, and in the event of defendant’s failure to respond to plaintiff’s demands, Judgment will be entered against defendant upon the filing of an affidavit of non-compliance. The stipulation likewise states: “Furthermore, plaintiff agrees to fully respond to defendant’s discovery demands or same‘ will be precluded.”(emphasis added) Defendant failed to so respond within said 60 days and plaintiff brought the within motion. Copies of plaintiff’s Demands are annexed to its moving papers. No affidavit of service of, or copy of purported written interrogatories is annexed. Said affidavit of service also includes that it served plaintiff’s Response to Defendant’s Demand for Bill of Particulars, Response to Notice for Discovery & Inspection, Response to Demand for Expert Discovery and Response to Demand for Proof of Filing, Index Number. Copies of said Responses are not included. Defendant, however, has raised no objection with regard to its receipt of same.

As stated by the Court of Appeals in In re Petition of New York L.& W.R.R. Co., 98 NY 447, 453 (1885), which case is still cited today:

Parties by their stipulations may in many ways make the law for any legal proceeding to which they are parties, which not only binds them, but which the courts are bound to enforce. They may stipulate away statutory, and even constitutional rights. They may stipulate for shorter limitations of time for bringing actions for the breach of contracts than are prescribed by the statutes, such limitations being frequently found in insurance policies. They may stipulate that the decision of a court shall be final, and thus waive the right of appeal; and all such stipulations not unreasonable, not against good morals, or sound public policy, have been and will be enforced.

(See also, Morse v. Morse Dry Dock & Repair Co., 249 AD 764, 291 NYS 995 [2nd Dept 1936]; Tepper v. Tannenbaum, 83 AD2d 541, 441 NYS2d 470 [1st Dept 1981]; Celtic Medical P.C. v. Liberty Mutual Insurance Co. 11 Misc 3d 1092[A], 2006 NY Slip Op 50825U, [Nassau Dist Ct, 2006]).

The stipulation in this case is not an unreasonable one. Nothing contained therein contravenes good morals or sound public policy. Accordingly, that portion of plaintiff’s motion seeking an order precluding defendant from offering any evidence is granted only with regard to information demanded in its discovery notices not previously provided by defendant, or already in plaintiff’s possession.

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering evidence to demonstrate the absence of any material issues of fact. Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]; Winegrad v. New York University Medical Center, 64 NY2d 851 [1985]) and even in the absence of opposing papers. A motion for summary judgment shall be supported by an “affidavit [*4]by a person having personal knowledge of the facts”, shall recite all the material facts and it shall show that there is no defense to the cause of action or that the defenses have no merit (CPLR §3212[b]). Once the moving party meets his burden, the burden then shifts to the non-moving party to allege such evidentiary facts that raise a genuine and material controversy as to the issue(s) before the Court. Where the opposing party fails to meet his burden and the Court finds no triable issues, the motion will be granted (Iandoli v. Lange, 35 AD2d 793 [1st Dept 1970]). Where the Court determines that a triable issue of fact exists, denial of the motion is the proper course of action (Moskowitz v. Garlock, 23 AD2d 943 [3d Dept 1965])

Plaintiff bases its lawsuit on the ground that it timely submitted its claim forms to defendant which neither paid nor denied them within thirty days in accordance with the Rules and Regulations governing the payment of no-fault benefits (see Insurance Law §5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742, 774 NYS2d 564 [2004]; A.B. Med. Servs. PLLC v. Lumbermens Mut. Cas. Co., 4 Misc 3d 86, 781 NYS2d 818 [App Term, 2d & 11th Jud Dists 2004]; Amaze Med. Supply v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). The Court finds that plaintiff has established its prima facie case.

In addition to the reasons for denial set forth in its Denial of Claim forms as indicated above, in its opposition papers, defendant raises for the first time that the proof of claim forms submitted by plaintiff are improper. Having failed to include this reason in a timely denial of the claim, however, defendant is precluded from raising this defense (see Presbyterian Hosp. in City of NY v. Maryland Cas. Co., 90 NY2d 274, 282, 683 NE2d 1, 660 NYS2d 536 [1997]).

Lastly, defendant also raises questions as to whether plaintiff is fraudulently incorporated in violation of Business Corporation Law §1507 and whether the actual profits from the practice are channeled to the non-physician management company to which it pays a set fee of $40,000 to $43,000 a month. Defendant bases its fraud defense upon the unsigned but duly certified deposition of the plaintiff’s owner, Dr. Ahmed Halima. An unsigned but certified deposition transcript of a party can be used by the opposing party as an admission in support of a summary judgment motion (Newell Co. v Rice, 236 AD2d 843, 844, lv denied 90 NY2d 807). Dr. Halima testified that the management company provides two administrative support persons as well as a receptionist, a technician and two billing persons; it owns the EMG and NCV testing machine as well as CPT testing equipment. The management company is also on the lease for the premises. His testimony indicates that he does not know who prepares the bills or what form is used for billing, and that he knew little about what is actually being performed at his facility. It is well settled that despite an untimely denial, an insurer is not precluded from raising the issue of coverage such as a breach of a condition precedent of the terms of the insurance contract (Presbyterian Hosp. in the City of New York v. Maryland Cas. Co., 90 NY2d 274, 683 NE2d 1, 660 NYS2d 536. [*5]

In addition, the Court notes that proper licensing of a medical provider is a condition precedent to payment (Valley Physical Med. and Rehab v. NY Central Mutual Ins., 193 Misc 2d 675, 753 NYS2d 289 (App. Term 2nd Dept 2002). The Court of Appeals has ruled that under New York State’s No-Fault Insurance Laws, insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises (State Farm Automobile Ins. Co. v. Robert Mallela, 4 NY3d 313, 827 NE2d 758, 794 NYS2d 700). The Mallela III Court followed the Superintendent of Insurance’s promulgation prohibiting the reimbursement of benefits on behalf of unlicensed or fraudulently licensed providers (11 NYCRR 65-3.16[a][12]) (effective April 4, 2002). Accordingly, Mallela III ruled that medical providers fraudulently incorporated are therefore not entitled to reimbursement. While defendant has failed to provide sufficient proof of fraudulent incorporation to award it summary judgment, the question of the fraudulent incorporation raises questions of fact which would preclude summary judgment to the plaintiff.

Accordingly, both plaintiff’s motion and defendant’s cross-motion for summary judgment are denied and that portion of plaintiff’s motion seeking an order precluding defendant from offering any evidence is granted only with regard to information demanded in its discovery notices not previously provided by defendant, or already in plaintiff’s possession.

So Ordered:

DISTRICT COURT JUDGE

Dated:June 13, 2006

CC: Belesi & Conroy, P.C.

Melli, Guerin & Wall, P.C.

Decided on June 13, 2006

SUPREME COURT OF THE STATE OF NEW YORK

Joseph Henig, P.C., Bellmore, N.Y. (Mark Green of counsel), for
appellants.
McDonnell & Adels, P.C., Garden City, N.Y. (Martha S.
Henley of counsel), for respondent.

In an action to recover no-fault medical payments, the plaintiffs appeal from so much of an order of the Supreme Court, Nassau County (McCarty III, J.), dated February 18, 2005, as denied that branch of their motion which was for summary judgment on the second cause of action, granted that branch of the defendant’s cross motion which was for summary judgment dismissing the third cause of action, and, upon granting that branch of their motion which was for summary judgment on the fourth cause of action, awarded interest only until the date of the determination and provided that the fourth cause of action “shall not bear interest until entry of the judgment disposing of the action.”

ORDERED that the order is modified, on the law, by (1) deleting the provision thereof denying that branch of the plaintiffs’ motion which was for summary judgment on the second cause of action and substituting therefor a provision granting that branch of the motion, and (2) deleting the provisions thereof which, upon granting that branch of the plaintiffs’ motion which was for summary judgment on the fourth cause of action, awarded interest only until the date of the Supreme Court’s determination, and provided that the fourth cause of action shall not bear interest until entry of the judgment disposing of the action, and substituting therefor a provision awarding interest on the fourth cause of action for the period commencing 30 days after each claim was [*2]presented to the defendant until the date the claim was paid; as so modified, the order is affirmed insofar as appealed from, with costs to the plaintiffs, and the matter is remitted to the Supreme Court, Nassau County, for further proceedings in accordance herewith.

Pursuant to Insurance Law § 5106(a) and 11 NYCRR 65-3.5, insurers are required either to pay or deny a claim for no-fault automobile insurance benefits within 30 days from the date the applicant supplies proof of claim (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278). Failure to comply with the 30-day limit results in the claim becoming overdue, which could result in the waiver of the insurer’s defenses (id.). The one exception to this rule is if the insurer requests medical verification (see Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co., 233 AD2d 431, 432).

The Supreme Court properly granted that branch of the defendant’s motion which was for summary judgment dismissing the third cause of action. The defendant established its prima facie entitlement to judgment as a matter of law on the third cause of action by submitting an affidavit of one of its claims representatives, which demonstrated that the defendant requested medical verification of the plaintiffs’ claim within 30 days of receiving notice of the claim, and that it never received such verification. The plaintiffs failed to raise a triable issue of fact in opposition (see Zuckerman v City of New York, 49 NY2d 557, 562).

However, the Supreme Court erred in denying that branch of the plaintiffs’ motion which was for summary judgment on the second cause of action. The plaintiffs established their prima facie entitlement to judgment as a matter of law on the second cause of action by submitting a hospital bill with a signed certified mail receipt and by submitting the affidavit of a third-party biller, who testified that he billed the defendant for the subject medical treatment, and that “[t]he defendant failed to either pay the entire claim or to issue a Denial of Claim Form.”

In opposition, the defendant produced a denial of claim form dated within 30 days from their receipt of the plaintiff’s claim. However, the defendant failed to supply any evidence that this form had been timely transmitted to the plaintiff, and therefore failed to raise a triable issue of fact (see Zuckerman v City of New York, supra).

The Supreme Court further erred in awarding interest on the fourth cause of action only until the date of the determination, instead of the date the claim was paid. An insurer, such as the defendant, that is held liable for failure to pay no-fault insurance benefits is required to pay interest at the rate of 2% per month on the claim for “the period commencing 30 days after the claim was presented to the defendant for payment until the date the claim was or is paid” (Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501; see Insurance Law § 5106[a]). Accordingly, the matter is remitted to the Supreme Court, Nassau County, for calculation of the interest accrued on the second and fourth causes of action for the period commencing 30 days after each claim was presented to the defendant until the date the claim was paid, and for the entry of an appropriate judgment.
ADAMS, J.P., SANTUCCI, LUNN and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

[*1]

Argued April 27, 2006; decided June 13, 2006

Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 20 AD3d 538, reversed.

APPEARANCES OF COUNSEL

Mitchell Dranow, Mineola, for appellants.

Cullen and Dykman LLP, Brooklyn (Joseph Miller, Jeffrey C. Fegan and Jean-Pierre van Lent of counsel), for respondent.

{**7 NY3d at 773} OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and the petition to stay arbitration dismissed.

Jorge Aguirre and Rosa and Amanda Alzate were allegedly injured on August 4, 2002 while sitting in a car owned by F.A. Rodriguez, which was parked on Northern Boulevard in [*2]Queens, New York. Their injuries occurred when another car was struck and pushed into the rear bumper of the Rodriguez vehicle by a car operated by an unidentified hit-and-run driver.

New York Central Mutual Fire Insurance Company had issued an automobile insurance policy to Rodriguez, which included Supplementary Uninsured/Underinsured Motorists (SUM) coverage with bodily injury limits of $25,000 per person and $50,000 per accident. The policy’s SUM endorsement set forth several conditions, including the following:

“Notice and Proof of Claim. As soon as practicable, the insured or other person making claim shall give us written notice of claim under this SUM coverage.

“As soon as practicable after our written request, the insured or other person making claim shall give us written proof of claim, under oath if required, including full particulars of the nature and extent of injuries, treatment, and other details we need to determine the SUM amount payable.

“The insured and every other person making claim hereunder shall, as may reasonably be required, submit to examinations under oath by any person we name and subscribe the same. Proof of claim shall be made upon forms we furnish unless we fail to furnish such forms within 15 days after receiving notice of claim” (emphasis added).

On August 15, 2002, an attorney representing Aguirre and the Alzates sent a letter to the attention of New York Central Mutual’s “No-Fault Department” to make a claim under Rodriguez’s policy’s SUM provisions. He enclosed claimants’ completed and subscribed New York State applications for no-fault insurance benefits. On September 3, 2002, the insurer sent a letter acknowledging the three claims. This{**7 NY3d at 774} letter directed the attorney’s attention to and quoted the above-described “Notice and Proof of Claim” condition, and advised him as follows:

“New York Central Mutual is currently investigating the facts and circumstances of the [claimed] loss. We require the immediate completion and return of the enclosed Notice of Intention to Make Claim forms.

“Your failure to cooperate will jeopardize any rights which you may have under this policy for us to make Supplementary Uninsured Motorists payments” (emphasis added).[*3]

Claimants never filled out and returned the proof-of-claim forms, which asked for information about the accident and claimants’ injuries. In May 2003, however, they served a request for uninsured motorist arbitration on New York Central Mutual, which responded on June 19, 2003 with a proceeding in Supreme Court to stay arbitration. Supreme Court granted the insurer’s petition because of claimants’ failure to return the completed forms, concluding that this [*4]was a “condition precedent under the policy” for which timely disclaimer was not required. The Appellate Division affirmed on the same basis, and we granted leave to appeal. We now reverse.

As an initial matter, the policy’s requirement to fill out and return a proof-of-claim form is an exclusion or a condition of coverage, as the insurer concedes. This case is not analogous to Zappone v Home Ins. Co. (55 NY2d 131 [1982]), where there was no coverage under the contract of insurance. Accordingly, the outcome of this appeal turns on whether New York Central Mutual disclaimed liability or denied coverage “as soon as reasonably possible” within the meaning of Insurance Law § 3420 (d).

An “insurer’s failure to provide notice as soon as is reasonably possible precludes effective disclaimer, even [where] the policyholder’s own notice of the incident to its insurer is untimely” (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 67 [2003]). The “timeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage” (id. at 68-69 [internal quotation marks omitted]). When “the basis for denying coverage was or should have been readily apparent before the onset of the delay [of disclaimer],” the insurer’s explanation is insufficient as a matter of law (id. at 69).{**7 NY3d at 775}

In Jetco, we held that an insurer’s unexcused 48-day delay in notifying an insured of denial of coverage was unreasonable as a matter of law. Here, the delay was significantly longer. New York Central Mutual sent claimants a letter on September 3, 2002, directing their “immediate completion and return” of the notice-of-claim forms. The word “immediate” denotes New York Central Mutual’s expectation of receipt of the completed forms right away, or without substantial loss or interval of time after they were sent. Thus, the insurer became aware of its basis for denying coverage—that claimants had not completed and returned properly filled-out proof-of-claim forms—at a point in time significantly before June 19, 2003, when it petitioned to stay arbitration. That completed forms were never returned or that the letter did not set a precise deadline for their return does not extend the insurer’s time to disclaim or deny coverage, or excuse its delay in doing so.^[FN*] [*5]

R.S. Smith, J. (dissenting). Claimants were required under the policy to send a notice to the insurance company “[a]s soon as practicable.” The Court today holds, in substance, that this requirement was nullified because the insurance company did not, as soon as possible after as soon as practicable, send claimants a notice that they had failed to send a notice. The Catch-22 quality of this holding is [*6]too much for me, and I dissent.

Insurance Law § 3420 (d) requires an insurance company to give written notice of a disclaimer of coverage “as soon as is reasonably possible.” I would hold that, where the disclaimer is based on a claimant’s failure to submit a document in timely fashion, and there is no fixed deadline for the claimant’s submission, the time to disclaim does not start running at least until the belated submission arrives. To hold otherwise, it seems to me, places an unreasonable and unnecessary burden on the insurance company.

New York Central Mutual acted reasonably here. It demanded, as was its right, a proof of claim (or “Notice of Intention to {**7 NY3d at 776}Make Claim”) form, and then waited to see when and if claimants sent the form in. New York Central Mutual no doubt assumed, quite appropriately, that until the form arrived it was in no position to judge whether the claimants had submitted the form “as soon as practicable.” The insurance company could also reasonably assume that, if it never received the form, it could forget about the claim.

The form was never submitted. This was not an insignificant oversight; a proof of claim form enables an insurance company to investigate a claim and to decide whether it is legitimate or not. To permit claimants who have never submitted proof of their claim to recover is to open the door to claims that are spurious or fraudulent. Under today’s holding, however, insurance companies cannot use the failure to submit proof of claim as a defense unless they [*7]themselves do what the claimant is supposed to do—send a notice before too much time has gone by. I do not think it makes sense to impose this requirement on insurance companies, and I do not think the statute requires it.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt and Graffeo concur in memorandum; Judge R.S. Smith dissents in an opinion in which Judge Read concurs.

Order reversed, etc.

Footnotes

Footnote *: The dissent complains that there is a Catch-22 quality to the majority’s position. But there is also a certain circularity to the insurer’s argument that it could not disclaim as soon as reasonably possible until after it received the filled out proof-of-claim forms because it could not evaluate whether claimants had timely provided the facts until the forms were reviewed and still does not know if the facts claimants might have provided would have been timely or not, because claimants never returned the forms. The simple answer to this conundrum, of course, is for the insurer to set a deadline for return of a proof-of-claim form. And, of course, if the insurer suspects fraud in this case, it can still fight the claim in the arbitration on this basis.

[*1]

Civil Court of the City of New York, Richmond County, June 9, 2006

APPEARANCES OF COUNSEL

Sanders, Grossman, Fass & Muhlstock P.C., Mineola, for plaintiff. Bruno, Gerbino & Soriano LLP, Melville, for defendant.

OPINION OF THE COURT

Peter P. Sweeney, J.

In this action to recover assigned first-party no-fault benefits, the issue presented is whether the testimony of the peer expert called by defendant at trial to establish its defense of lack of medical necessity should have been precluded on the ground that he did not prepare the peer review reports upon which defendant relied in denying the claims. The court holds that since the peer review expert, whose identity had been disclosed to plaintiff prior to trial, was limited to testifying to the facts and opinions contained in the peer review reports defendant relied upon in denying the claims, there was no basis to preclude his testimony.

Facts

Plaintiff SK Medical Services, P.C. commenced this action to recover first-party no-fault benefits for medical services provided to three assignors, Mamia Kashia, Zaza Kacharava and Malkhaz Gvaladze. All three assignors were allegedly injured on December 27, 2002, in the same motor vehicle accident. Each assignor appeared at plaintiff’s facility on January 21, 2003 for a “neurodiagnostic consultation” by Dr. Larisa Tsaur. On the same day, Dr. Tsaur performed essentially identical electrodiagnostic testing on each assignor. The tests included nerve conduction velocity studies and electromyography studies.

Plaintiff submitted four bills to defendant, one in the amount of $3,673.07 for services provided to Mamia Kashia, another in the same amount for services provided to Zaza Kacharava and two bills totaling $3,976.66 for services provided to Malkhaz Gvaladze. Along with each bill, plaintiff submitted a copy of the neurodiagnostic consultation report of Dr. Tsaur.

Upon receipt of the bills, defendant retained Dr. Joseph C. Cole to do a peer review for each submission. Dr. Cole prepared three peer review reports, one for each assignor, and recommended that defendant pay only for the neurodiagnostic consultations. He concluded that the extensive electrodiagnostic testing of plaintiff’s assignors, performed less than a month following the accident, was not medically necessary in light of Dr. Tsaur’s clinical findings.

In accordance with Dr. Cole’s recommendations, defendant paid plaintiff for the [*2]neurodiagnostic consultations and denied the remainder of the bills asserting lack of medical necessity as a defense. Each of defendant’s denials included a copy of the peer review report upon which it was based.

The trial of this action took place on March 2, 2006. At the outset of the trial, the parties stipulated that defendant received the NF-3 claim forms (the bills), which included Dr. Tsaur’s neurodiagnostic consultation reports, and that defendant timely denied the claims on the ground of lack of medical necessity based on Dr. Cole’s peer review reports. The NF-3 claim forms, the neurodiagnostic consultation reports and each of defendant’s denials, which included Dr. Cole’s peer review reports, were stipulated into evidence.

At the time of trial, Dr. Cole was not available to testify. To establish its defense of lack of medical necessity, defendant called Peter Gastaldi, D.C. Plaintiff objected and moved to preclude him from testifying. Plaintiff’s counsel maintained that since defendant’s denials of claim were based on Dr. Cole’s peer reviews, defendant was limited to calling Dr. Cole to establish lack of medical necessity. Plaintiff’s counsel further maintained that since defendant never exchanged a copy of Dr. Gastaldi’s peer review report or properly responded to plaintiff’s demand for expert disclosure, Dr. Gastaldi should be precluded from testifying.

Plaintiff’s demand for expert information required defendant to provide

“(a) the name and address of each and every person [defendant] expect[ed] to call as an expert witness at the time of trial of this action; (b) the subject matter on which each expert is expected to testify; (c) the substance of the facts and opinions on which each expert is to testify; (d) the qualifications of each expert; and (e) a summary of the grounds for each expert’s opinion.”

In response, defendant provided Dr. Gastaldi’s name and address but the only information provided as to the particulars of his expected testimony was that he would “be relied upon at trial to provide testimony as to the findings of a lack of medical necessity as set forth in the denial.”

Defendant’s counsel represented that Dr. Gastaldi never prepared a peer review report and that he would testify to the same facts and opinions as set forth in Dr. Cole’s reports. Defendant therefore maintained that plaintiff had no legitimate argument that it would be prejudiced if Dr. Gastaldi were allowed to testify.

The court reserved decision on the motion and permitted Dr. Gastaldi to testify. The court precluded him, however, from testifying to facts or opinions that were not set forth in Dr. Cole’s reports. The court agreed to strike his testimony if plaintiff’s motion were granted.

Discussion

After careful consideration, the court finds that there was no legitimate basis to preclude Dr. Gastaldi from testifying. Each of defendant’s denials of claim, which asserted lack of medical necessity as a defense, was timely issued (Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]), contained the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664 [2d Dept 2004]), and, with the inclusion of the peer review report upon which it was based, “promptly apprise[d] the claimant[s] with a high degree of specificity of the ground . . . on which [it was] predicated” (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]; see also, Nyack Hosp., 11 AD3d at 664 [2d Dept 2004]; Keith v Liberty Mut. Fire Ins. Co., 118 AD2d 151, 153 [2d Dept 1986]). Defendant therefore preserved its right to defend the claims at trial on the [*3]ground of lack of medical necessity for the reasons stated in Dr. Cole’s peer review reports.

While it is true that an insurer may not, after repudiating liability, assert new grounds for its refusal to pay a claim (Han-Ki Lee v American Tr. Ins. Co., 304 AD2d 713, 714 [2003]; Lentini Bros. Moving & Stor. Co. v New York Prop. Ins. Underwriting Assn., 53 NY2d 835, 836 [1981]) and must “stand or fall upon the defense upon which it based its refusal to pay” (Beckley v Otsego County Farmers Coop. Fire Ins. Co., 3 AD2d 190, 194 [1957]; see also, King v State Farm Mut. Auto. Ins. Co., 218 AD2d 863, 865 [1995]), permitting Dr. Gastaldi to testify did not violate these principles since Dr. Gastaldi was not permitted to assert any new ground justifying defendant’s refusal to pay the claims. Contrary to plaintiff’s contention, there is no requirement in the no-fault regulations, or under common law, requiring an insurer to exchange a copy of the report of a peer review expert it intends to call at trial. Although 11 NYCRR 65-3.8 (b) (4) requires an insurer upon written demand to provide an applicant, the applicant’s attorney or the applicant’s treating physician with a copy of a peer review report upon which its denial is based, nothing contained in this regulation, nor in any other regulation promulgated under the No-Fault Law, suggests that an insurer is limited to calling the peer expert whose report was exchanged as its expert witness at trial. No plausible argument has been put forth why this court should impose such a limitation. If an insurer wishes to elicit expert testimony at trial to establish the factual basis of a properly asserted defense, it must simply comply with the rules pertaining to expert disclosure.

In this case, contrary to plaintiff’s assertion, defendant sufficiently complied with plaintiff’s demand for expert disclosure. In its response, defendant identified Dr. Gastaldi as a potential expert and indicated that he would “be relied upon at trial to provide testimony as to the findings of a lack of medical necessity as set forth in the denial[s].” As stated above, each of defendant’s denials included the report of Dr. Cole upon which it was based, and Dr. Gastaldi was limited to testifying to the facts and opinions contained therein. Accordingly, defendant’s expert disclosure sufficiently set forth “the substance of the facts and opinions on which” the expert was expected to testify (CPLR 3101 [d] [1] [i]; see, Barrowman v Niagara Mohawk Power Corp., 252 AD2d 946, 946-947 [1998], lv denied 92 NY2d 817 [1998]) and “demonstrable prejudice or surprise” to the plaintiff had not been shown (Rook v 60 Key Ctr., 239 AD2d 926, 927 [1997]).

For all of the above reasons, plaintiff’s motion to preclude is denied.

The court finds Dr. Gastaldi to be a credible witness. His testimony did not go beyond the facts and opinions contained in Dr. Cole’s reports. He gave persuasive testimony that the extensive testing performed on each of plaintiff’s assignors on January 21, 2003 was not medically necessary in light of Dr. Tsaur’s clinical findings. The court credits his testimony in all respects. No witnesses were called by the plaintiff to rebut his testimony. The court therefore finds that defendant established by a preponderance of the credible evidence that the testing at issue was not medically necessary.

Accordingly, it is hereby ordered that judgment be entered in favor of the defendant dismissing the complaint.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, Third District (Sharon Commissiong, J.), entered June 17, 2005. The order denied plaintiff’s motion for summary judgment and awarded defendant $50 in costs.

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

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff provider moved for summary judgment. The court below found that plaintiff demonstrated its entitlement to judgment as a matter of law but denied the motion on the ground that defendant raised triable issues of fact. The instant appeal by plaintiff ensued.

Upon a review of the record, we find that defendant failed to establish that it timely denied plaintiff’s claims based on the assignor’s failure to attend independent medical examinations, since it did not show that the statutory time period within which it had to pay or deny the claims was tolled by timely verification and follow-up requests. The affidavit by defendant’s claims representative did not demonstrate that defendant mailed verification requests. The affiant did not assert personal knowledge of actual mailing or of facts creating a presumption of same (see A.B. Med. Servs. PLLC v Prudential Prop & Cas Ins. Co., 11 Misc 3d 137[A], 2006 NY Slip Op 50504 [App Term, 2d & 11th Jud Dists]; Modern Psychiatric Servs. P.C. v Progressive Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50143[U] [App Term, 9th & 10th Jud Dists]). Since defendant’s denial was untimely, it is precluded from interposing the defenses raised in this case (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Accordingly, plaintiff’s motion for summary judgment is granted and the matter is remanded to the court below for the calculation of statutory interest and an assessment of [*2]attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Rudolph, P.J., Angiolillo and Lippman, JJ., concur.
Decision Date: June 8, 2006

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, First District (Scott Fairgrieve, J.), dated September 30, 2004. The order denied plaintiff’s motion for summary judgment.

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

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, defendant timely denied the claims on the ground of lack of medical necessity. A timely denial alone, however, does not avoid preclusion where said denial is factually insufficient, conclusory or vague, and an insurer seeking to deny benefits based on lack of medical necessity must set forth with sufficient particularity the factual basis and medical rationale underlying that determination (see A. B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 10 Misc 3d 128[A], 2005 NY Slip Op 51902[U] [App Term, 2d & 11th Jud Dists]; Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004]). In the instant case, the conclusions of the peer review upon which the denial was based were not supported by a sufficient factual foundation and medical rationale to warrant rejection of the claims and, accordingly, were insufficient to support a defense of lack of medical necessity (see Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004]; see also A.B. Med. Servs. PLLC v American Mfrs. Mut. Ins. Co., 6 Misc 3d 133[A], 2005 NY Slip Op 50114[U] [App Term, 2d & 11th Jud Dists]; cf. Amaze Med. Supply Inc. v [*2]Travelers Prop. Cas. Corp., 7 Misc 3d 128[A], 2005 NY Slip Op 50452[U] [App Term, 2d & 11th Jud Dists]). Under the circumstances, defendant has failed to raise a triable issue of fact.

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

Rudolph, P.J., Tanenbaum and Lippman, JJ., concur.
Decision Date: June 8, 2006