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 (Manuel J. Mendez, J.), entered October 29, 2004. The order denied plaintiffs’ motion for summary judgment.

Order modified by granting plaintiff A.B. Medical Services PLLC partial summary judgment in the sum of $11,903.39, and plaintiff D.A.V. Chiropractic P.C. summary judgment in the sum of $134.80; as so modified, affirmed without costs. [*2]

Appeal as taken by plaintiff Lvov Acupuncture P.C. unanimously dismissed.

In this action to recover assigned first-party no-fault benefits, plaintiffs A.B. Medical Services PLLC and D.A.V. Chiropractic P.C. established their entitlement to summary judgment as to all their claims by proof that they submitted statutory claim forms, setting forth the fact and 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]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 2004]). We note that an absent index number on one of numerous documents submitted in support of an otherwise properly indexed motion was an inappropriate ground to deny the relief sought. While all papers submitted to a court must bear the action’s index number (see CPLR 2101 [c]; Uniform Civil Rules for the New York City Civil Court [22 NYCRR] § 208.5), such a defect is not jurisdictional, and is waived if the opposing party fails to object by returning the paper to the party serving it within two days of receipt “with a statement of particular objections” (CPLR 2101 [f]; Neveloff v Faxton Children’s Hosp. & Rehabilitation Ctr., 227 AD2d 457, 457 [1996]; Deygoo v Eastern Abstract Corp., 204 AD2d 596 [1994]). In any event, absent prejudice to a “substantial right of a party,” such defects should be disregarded (CPLR 2101 [f]; e.g. Gau v Kramer, 289 AD2d 804, 805 [2001]).

We also do not agree that the allegedly defective proof of assignments merited the motion’s outright denial. Defendant failed timely to seek verification of the assignments or even specifically to allege a deficiency in the assignments in its claim denial forms, and thereby “waive[d] . . . any defenses with respect [to them]” (Ocean Diagnostic Imaging P.C. v Travelers Prop. Cas. Corp., 7 Misc 3d 137[A], 2005 NY Slip Op 50790[U] [App Term, 2d & 11th Jud Dists]; see Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 [2005]; New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; Capio Med., P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 129[A], 2005 NY Slip Op 50526[U] [App Term, 2d & 11th Jud Dists]).

The court below also incorrectly determined that all claim denials were timely; in fact, they were untimely as to numerous claims, specifically, A.B. Medical Services PLLC’s claims with respect to assignor Micheline for $205.46, $182.37, $564.48, $218.35, $71.06, $230.10, and $604.24; with respect to assignor Garraud for $182.37, $586.66, $218.35, $120.00, $230.10, $604.24, $1,972.08, $1,999.12, $71.06, and $71.40; and with respect to assignor Guerrier for $182.37, $205.46, $506.64, $71.06, $230.10, $604.24, and $1,972.08. As to plaintiff D.A.V. Chiropractic P.C.’s claim for $134.80 for treatment rendered to Guerrier, defendant proved no claim denial
whatsoever. Absent a tolling of the statutory claim determination period or proof that defendant established a triable defense which survives the preclusive effect of an untimely denial, summary judgment should have been granted as to these claims.

As to all of A.B. Medical Services PLLC’s claims regarding assignor Micheline, aside from the claim for $250.88, defendant denied the claims, in part, because plaintiff’s assignor failed to attend a requested examination under oath. However, defendant produced no documentary proof that it mailed assignor a written examination request, nor did its affiant assert personal knowledge of actual mailing or of facts creating a presumption of same, nor was there [*3]any admission of receipt by plaintiff, its assignor, or assignor’s representative (Careplus Med. Supply Inc. v Travelers Home & Mar. Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50648[U] [App Term, 2d & 11th Jud Dists]). Additionally, defendant also offered no proof that the instant insurance policy contained an endorsement authorizing such a form of verification (id.). Thus, defendant failed to toll the claim determination periods by a proper verification request.

Insofar as defendant denied certain of the claims on the ground that plaintiff A.B. Medical Services PLLC is not formed and operated “in accordance with Article 15 of the [Business Corporation Law],” a defense sounding in fraud (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 320 [2005] [“State Farm’s complaint centers on fraud in the [*4]
corporate form rather than on the quality of care provided”]) which survives the preclusion sanction (id. at 320), defendant failed to assert a factual basis in its opposition papers sufficient to support a “founded belief” that A.B. Medical Services PLLC is ineligible to obtain no-fault benefits by reason of a fraudulent corporate filing (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). Given A.B. Medical Services PLLC’s unrebutted proof that it has a duly registered corporate presence in New York, defendant’s bare, conclusory assertion in opposition to the motion, that said plaintiff is not formed or operated in accordance with the Business Corporation Law, failed to establish a triable issue of material fact.

The remaining, conclusorily asserted defenses, that the billing is “inaccurate or misleading” and not in accordance with the fee schedules, that plaintiff failed to prove the employment status of the particular provider, and that the treatment “was not related to the accident,” all fail to survive the preclusive effect of an untimely denial, and in any event, as to the claims timely denied, they are without merit (id.; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 285 [1997]; Westchester Med. Ctr. v American Tr. Ins. Co., 17 AD3d 581, 582 [2005]; New York Hosp. Med. Ctr. of Queens v Country-wide Ins. Co., 295 AD2d 583, 586 [2002]; Rockaway Blvd. Med. P.C. [*5]
v Progressive Ins., 9 Misc 3d 52 [App Term, 2d & 11th Jud Dists 2005]; Struhl v Progressive Cas. Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op 50864[U] [App Term, 9th & 10th Jud Dists]; Triboro Chiropractic & Acupuncture v New York Cent. Mut. Fire Ins. Co., 6 Misc 3d 132[A], 2005 NY Slip Op 50110[U] [App Term, 2d & 11th Jud Dists]; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92, 94 [App Term, 2d & 11th Jud Dists 2004]; Abraham v Country-Wide Ins. Co., 3 Misc 3d 130[A], 2004 NY Slip Op 50388[U] [App Term, 2d & 11th Jud Dists]).

As for all claims regarding assignor Garraud, whether timely or untimely denied, the defenses and merits thereof are as previously stated. Additionally, the peer review report submitted in opposition to the motion, cited as a basis for the denial of plaintiff A.B. Medical Services PLLC’s claims for $1,972.08 and $1,999.12, failed to invoke the penalties of perjury (Lubrano v Papandreou, 262 AD2d 457, 457 [1999]; Tattegrain v New York City Trans. Auth., 2002 NY Slip Op 40296[U] [App Term, 2d & 11th Jud Dists]) and there is no reference to CPLR 2106 upon which it may be inferred that the affiant invoked the language of the statute (Jones v Schmitt, 7 Misc 3d 47, 48 [App Term, 2d & 11th Jud Dists 2005]), nor did defendant “offer[ ] an[ ] acceptable excuse as to why [it] failed to obtain a sworn, admissible report” (Lubrano v Papandreou, 262 [*6]
AD2d at 458; see also Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1068 [1979]; Allstate Ins. Co. v Keil, 268 AD2d 545 [2000]). In any event, defendant’s untimely denial of these claims precludes the defense asserted in the report. As to defendant’s alleged demands to conduct independent medical examinations (IMEs) of assignor Garraud, defendant offered no proof of mailing of any such demands nor did its affiant state sufficient facts upon which a presumption of mailing may be inferred (Careplus Med. Supply Inc. v Travelers Home & Mar. Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50648[U], supra). Thus, summary judgment should have been granted as to all claims for treatment rendered assignor Garraud.

As to the claims for treatment rendered Guerrier, aside from the above-noted claims which were untimely denied or for which no denial was proved, Guerrier admitted, via a letter from his counsel to defendant, that he failed to attend two properly scheduled independent medical examinations and two follow-up examinations. Unsatisfied IME requests made prior to a claim’s filing remove the presumption of medical necessity which attaches to the claim forms, and absent additional proof of medical necessity, a provider’s motion for summary judgment based solely on the proof of claims must be denied (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d & 11th Jud Dists 2004]). Upon assignor’s conceded failure to attend those examinations, there remains a triable issue of claimant’s assertion they were improperly sought, and whether plaintiff can offer a valid excuse for the nonattendance, and if not, whether the treatment for said claims was medically necessary (e.g. A.B. Med. Services PLLC v USAA Gen. Indem. Co., 9 Misc 3d 19 [App Term, 2d & 11th Jud Dists 2005]). Therefore, as to the claims for $1,972.08, $1,999.12, $699.68, $71.06 (submitted 2/24/03), $260.64, $71.06 (submitted 3/31/02), $71.40, $71.06 (submitted 4/28/04), and $62.72, for treatment rendered Guerrier, summary judgment was properly denied.

To summarize, partial summary judgment should have been granted to plaintiff A.B. Medical Services PLLC in the sum of $11,903.39, representing claims for treatment rendered assignor Micheline and Garraud, and, with respect to the claims of Guerrier, the claims for $182.37, $205.46, $506.64, $71.06, $230.10, $604.24, and $1,972.08, which were untimely denied. Summary judgment should also have been granted as to plaintiff D.A.V. Chiropractic P.C.’s claim for $134.80. The matter is remanded to the court below for a calculation of the statutory interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder as to all claims for which summary judgment is
granted, and for all further proceedings on plaintiff A.B. Medical Services PLLC’s remaining claims for treatment rendered assignor Guerrier.

Since none of plaintiff Lvov Acupuncture P.C.’s claims for treatment rendered its assignors was asserted in the motion below, it was not aggrieved by the court’s determination of the order from which it appeals, and said appeal is dismissed (see CPLR 5511; Praeger v Praeger, 162 AD2d 671 [1990]).

Pesce, P.J., and Belen, J., concur.

Golia, J., concurs in part and dissents in part in a separate memorandum.

SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT: PESCE, P.J., GOLIA and BELEN, JJ.
A.B. MEDICAL SERVICES PLLC
D.A.V. CHIROPRACTIC P.C.
LVOV ACUPUNCTURE P.C.
a/a/o RAYMOND MICHELINE, YVELYNE GARRAUD
and FLAVIE GUERRIER,
Appellants,

-against-

PRUDENTIAL PROPERTY & CASUALTY INSURANCE COMPANY,
Respondent.

Golia, J., concurs in part and dissents in part in the following memorandum.

I concur in the dismissal of the appeal taken by plaintiff Lvov Acupuncture P.C. and dissent as to the granting of partial summary judgment in favor of the remaining plaintiffs.

Contrary to the holding of the majority, I find that the claims were never “completed” and therefore the 30-day time period in which to pay or deny the claims has never commenced. The plaintiffs, in an attempt to establish a prima facie entitlement to judgment, acknowledged that the defendant sent timely requests for verification. Although plaintiffs asserted that they sent responses to those requests for verifications, plaintiffs failed to provide any proof of mailing the responses.

Accordingly, I find that the claims process has never been completed and therefore the time in which the defendant has to pay or deny has not started to run against the defendant.
Decision Date: March 27, 2006

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 (Peter Paul Sweeney, J.), entered August 1, 2005. The order granted defendant’s motion to compel responses to its bill of particulars and discovery demands, and denied plaintiff’s cross motion for summary judgment.

Order modified by denying defendant’s motion insofar as it sought to compel plaintiff to respond to its demand for a bill of particulars, with leave to defendant to serve an amended demand in accordance with the decision herein within 30 days of the date of the order entered hereon; as so modified, affirmed without costs.

In this action to recover assigned first-party no-fault benefits, defendant moved for an order compelling plaintiff to respond to its bill of particulars, its demand for records, and its request for an examination before trial or, in the alternative, striking plaintiff’s pleadings. Plaintiff cross-moved for summary judgment, which motion defendant opposed. Thereafter, the court below granted defendant’s motion, directing plaintiff to respond to the bill of particulars and to “produce a witness with knowledge of facts in the complaint.” The court denied plaintiff’s cross motion, finding that plaintiff “failed to prove its prima facie case no proof of mailing assignment of benefits.”

A review of the record indicates that plaintiff established its prima facie entitlement to [*2]summary judgment by proof of submission of its claim, setting forth the fact and amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). Plaintiff established submission of the claim by annexing defendant’s denial of claim form to its moving papers, which states that defendant received the claim (see A.B. Med. Servs. PLLC v New York Cent. Mut. Fire Ins. Co., 3 Misc 3d 136[A], 2004 NY Slip Op 50507[U] [App Term, 2d & 11th Jud Dists]). Contrary to the determination of the court below, plaintiff was not required to establish the proof of mailing of its assignment of benefits form as part of its prima facie case inasmuch as plaintiff established that it submitted a proper NF-3 claim form containing a verification of treatment by attending physician which states that an assignment of benefits form was attached (see 11 NYCRR 65-3.11 [b] [2]), and said form was annexed to plaintiff’s moving papers. Since defendant did not allege any deficiency in the assignment of claim form in its denial, it waived any defenses with respect thereto (see New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; New York Hosp. Med. Ctr. of Queens v AIU Ins. Co., 8 AD3d 456 [2004]). Defendant’s remaining contentions regarding plaintiff’s prima facie entitlement to summary judgment lack merit. The burden then shifted to defendant to show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

Defendant received plaintiff’s claim on March 8, 2004, which it timely denied on March 29, 2004, on the basis of a peer review finding a lack of medical necessity. Upon a review of the denial and affirmed peer review report annexed to defendant’s opposition papers, we find that they “fully and explicitly” set forth the reasons for the denial (see e.g. Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). Plaintiff’s remaining contentions regarding the denial lack merit. Consequently, defendant raised a triable issue of fact and the court below properly denied plaintiff’s cross motion for summary judgment.

Furthermore, plaintiff failed to establish that defendant’s discovery demands were irrelevant, privileged or confidential (see CPLR 3101, 3103). Defendant has demonstrated its entitlement to discovery since it timely denied the claim based on the lack of medical necessity and it is not precluded from asserting said defense.

With respect to defendant’s demand for a bill of particulars, we note that the purpose of a bill of particulars is to amplify the pleadings, limit the proof, and prevent surprise at trial; its purpose is not to furnish evidentiary material (see e.g. Napolitano v Polichetti, 23 AD3d 534 [2005]). The demand for a bill of particulars herein improperly contains numerous requests for evidentiary information. It is not the function of the court to prune or correct a palpably improper demand. Under the circumstances, defendant should be afforded the opportunity to serve an amended demand (see Fiorella v Fiorella, 132 AD2d 643 [1987]).

Pesce, P.J., Weston Patterson and Rios, JJ., concur.
Decision Date: March 27, 2006

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Eileen Nadelson, J.), entered March 15, 2005. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment.

Order, insofar as appealed from, affirmed without costs and, upon searching the record, defendant’s cross motion is granted dismissing the complaint.

In this action to recover first-party no-fault benefits for medical services provided to its assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted the claims, 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]). Accordingly, the burden shifted to defendant to show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

Defendant, in opposition to plaintiff’s motion and in support of its cross motion for summary judgment, contended that it was not obligated to pay or deny a claim until requested verification had been provided (see 11 NYCRR 65-3.8 [b] [3]), and that plaintiff and its assignor [*2]had failed to respond to its timely requests for verification in the form of an examination under oath. Inasmuch as plaintiff and its assignor did not respond to its verification requests, the period within which it was required to respond to plaintiff’s claims did not begin to run, and any claim for payment was premature (see Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2004]). Accordingly, plaintiff’s motion for summary judgment was properly denied.

While defendant did not cross-appeal from so much of the order as denied its cross motion, we note that an appellate court may search the record and grant summary judgment in favor of a party even in the absence of an appeal by that party with respect to a cause of action or issue that is the subject of the motion before the court (CPLR 3212 [b]; Dunham v Hilco Constr. Co., 89 NY2d 425 [1996]; Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106 [1984]; Urias v Orange County Agric. Socy., 7 AD3d 515 [2004]; Novoselov v Rizzo, 6 Misc 3d 132[A], 2005 NY Slip Op 50104[U] [App Term, 2d & 11th Jud Dists]).

In searching the record, and in view of our determination herein that plaintiff did not respond to defendant’s requests for verification, it is our opinion that defendant’s cross motion for summary judgment should be granted and the complaint dismissed (Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 19 AD3d 569 [2005]; Elite Chiropractic Servs., P.C. v Travelers Ins. Co., 9 Misc 3d 137[A], 2005 NY Slip Op 51735[U] [App Term, 1st Dept]).

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

Golia, J., concurs in a separate memorandum. [*3]
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT: PESCE, P.J., GOLIA and RIOS, JJ.
OCEAN DIAGNOSTIC IMAGING, P.C.
a/a/o Dennis Sandiford,

Appellant,

-against-
NATIONWIDE MUTUAL INSURANCE COMPANY,

Respondent.

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

While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I disagree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.
Decision Date: March 27, 2006

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 (Ellen M. Spodek, J.), entered January 3, 2005. The order, insofar as appealed from as limited by plaintiffs’ brief, denied plaintiffs’ motion for summary judgment.

Order, insofar as appealed from, reversed without costs, plaintiffs’ 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 their assignor, plaintiff health care providers established a prima facie entitlement to summary judgment by proof that they 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]). Consequently, the burden shifted to defendant to raise a triable issue of fact. [*2]

Defendant argued that it properly denied the claims based on the failure of plaintiffs’ assignor to appear for examinations under oath (EUOs). The revised insurance regulations, effective on April 5, 2002, which are applicable herein, include EUOs in the Mandatory Personal Injury Protection Endorsement, providing that an eligible injured person submit to EUOs “as may reasonably be required” (11 NYCRR 65-1.1 [d]). However, in order to assert the defense of failure to appear for scheduled EUOs, the “insurer must include the revised prescribed endorsement with new or renewal policies issued on or after April 5, 2002, and the claim rules are to be governed by the policy endorsement in effect” (S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists]; see also Capio Med., P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 129[A], 2005 NY Slip Op 50526[U] [App Term, 2d & 11th Jud Dists]; Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56 [App Term, 2d & 11th Jud Dists 2004]). In the instant case, defendant’s submissions failed to establish in the first instance that the insurance policy contained an endorsement authorizing EUOs. Therefore, the failure of plaintiffs’ assignor to appear for EUOs cannot constitute grounds for denial of no-fault benefits (see Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56, supra; S&M Supply Inc. v Lancer Ins. Co., 4 Misc 3d 131[A], 2004 NY Slip Op 50695[U] [App Term, 9th & 10th Jud Dists]). An insurer’s defense that the collision was in furtherance of an insurance fraud scheme is not subject to the 30-day preclusion rule (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]), and is non-waivable. In support of its defense of fraud, defendant submitted the affirmation of its attorney who alleged that the matter was referred to the Special Investigative Unit because plaintiffs’ assignor was purportedly not in the insured vehicle at the time of the accident and was seen by the adverse driver arriving at the scene following the accident. However, the
defendant’s attorney lacked personal knowledge of the investigation and the circumstances giving rise to the investigation (see Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]). Moreover, the unsworn letter by the adverse driver, attached to the attorney’s affirmation, did not constitute competent proof in admissible form (Ultra Diagnostics Imaging v Liberty Mut. Ins. Co., 9 Misc 3d 97 [App Term, 9th & 10th Jud Dists 2005]; S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U], supra), and defendant failed to proffer an acceptable excuse for failure to tender such proof in admissible form (see Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1068 [1979]; Allstate Ins. Co. v Keil, 268 AD2d 545 [2000]). The affidavit of defendant’s claims representative merely set forth conclusory allegations of fraud. Thus, defendant’s submissions are insufficient to raise triable issues of fact pertaining to its defense of fraud. [*3]

Accordingly, plaintiffs’ 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 attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

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

Golia, J., dissents in a separate memorandum.

Golia, J., dissents and votes to affirm the order denying plaintiff’s motion for summary judgment.

I agree that the defendant failed to submit sufficient proof to establish that the demands for an examination under oath (EUO) of the assignor were properly mailed. However, I strongly disagree with the majority in requiring the defendant to produce a copy of the underlying contract to establish the existence of the endorsement requiring the “assignor” to submit to an EUO.

The regulations do not require such production and neither the plaintiff nor the assignor raised the issue by denying the existence of such endorsement. I do not believe this Court should create an additional burden for the defendant that is not required by the statute or the regulation and I would therefore adhere to my earlier dissent in A.B. Med. Servs. PLLC v Allstate Ins. Co. (No. 2004-830 K C [App Term 2d & 11th Jud Dists, July 7, 2005]).

My dissent in this case is, however, much more direct.

It is abundantly clear to me that defendant has presented a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). The belief is founded upon a detailed statement taken of the driver of the “offending” vehicle who stated that although he was involved in the accident and remained at the scene for 2 hours, he “did not observe any passengers inside the vehicle.”

Inasmuch as the underlying eligibility for this claim is predicated upon the assignor being a passenger in the insured vehicle, the statement by the other driver, if true, would establish that the alleged injuries do not arise out of this incident.

The only real issue concerning the sufficiency of this statement is the fact that it is unsworn and which my colleagues hold inadmissable as evidence. However, there is a long line of cases that stand for the proposition that even though a statement may be inadmissable and subject to objection, it may be used for the purpose of defeating a summary judgment motion (see Phillips v Kantor & Co., 31 NY2d 307 [1972]; Narvaez v NYRAC, 290 AD2d 400 [2003]).

This is especially true when the witness in question is presumably available to testify (Levbarg v City of New York, 282 AD2d 239 [2001]).
Decision Date: March 27, 2006

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 (Donald S. Kurtz, J.), entered January 18, 2005. The order granted plaintiffs’ motion for summary judgment.

Order reversed without costs and plaintiffs’ motion for summary judgment denied.

In an action to recover first-party no-fault benefits, a plaintiff provider establishes a prima facie entitlement to summary judgment by proof of submission of statutory claim forms, setting forth the fact and 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]). In the instant case, plaintiffs failed to establish that they submitted the claim forms to defendant. Plaintiffs’ proof, consisting of the affidavit of Samira Ovshayev, who described herself as a principal of Magnezit Medical Care, P.C., made no reference to said plaintiff’s standard office mailing practices or procedures, and the bare averment that the “required proof of claims [were submitted] in a timely manner” and that bills for the services rendered to the [*2]respective assignors were mailed to defendant on given dates did not establish that she had personal knowledge that the claim forms were timely mailed to defendant (see Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]; Hospital for Joint Diseases v Nationwide Mut. Ins. Co., 284 AD2d 374 [2001]). While an insurer defendant’s denial of claim forms, indicating the dates on which the claims were received, can be deemed adequate to establish that the plaintiff sent, and that the defendant received, the claims (see Careplus Med. Supply Inc. v State-Wide Ins. Co., ___ Misc 3d ___, 2005 NY Slip Op 25545 [App Term, 2d & 11th Jud Dists]; Ultra Diagnostics Imaging v Liberty Mut. Ins. Co., 9 Misc 3d 97 [App Term, 9th & 10th Jud Dists 2005]), in the instant case, there are discrepancies between the claim forms attached to the plaintiffs’ moving papers and the defendant’s denial of claim forms, which are not explained on the record. Accordingly, said denial of claim forms are inadequate to establish mailing of the claim forms. Since plaintiffs did not provide proof of proper mailing of the claim forms, the order of the court below should be reversed and plaintiffs’ motion for summary judgment denied.

Weston Patterson, J.P., and Belen, JJ., concur.

Golia, J., concurs in a separate memorandum.

MAGNEZIT MEDICAL CARE, P.C.
a/a/o BEATA OCHMAN, EDWIN ROBLES,
GREGOR SHVARTSMAN and
THE LAW OFFICE OF MOSHE D. FULD, P.C.,

Respondents,

-against-

NEW YORK CENTRAL MUTUAL FIRE INS. CO.,
Appellant.

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

While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I disagree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.
Decision Date: March 27, 2006

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiff from so much of an order of the Civil Court of the City of New York, Kings County (Eileen Nadelson, J.), entered January 12, 2005. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment.

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

In this action to recover assigned first-party no-fault benefits, plaintiff established its prima facie entitlement to summary judgment by showing that it submitted a completed proof of claim, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; 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 burden then shifted to defendant to show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

Defendant cross-moved for summary judgment. Its claims representative stated in an affidavit that the bill was received on May 1, 2002 and denied on June 4, 2002. Since the [*2]defendant did not deny the claim within the 30-day prescribed period, it is precluded from raising most defenses (see Central Gen. Hosp. v Chubb Group Ins. Cos., 90 NY2d 195 [1997]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), including its defense that the bill was not received within 180 days of service as required under the regulations in effect at the time (11 NYCRR 65.11 [m] [3]; cf. Ocean Diagnositc Imaging P.C. v GMAC Ins., 7 Misc 3d 138[A], 2005 NY Slip Op 50865 [App Term, 2d & 11th Jud Dists]). [*3]

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

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

Golia, J., concurs in a separate memorandum. [*4]
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : PESCE, P.J., WESTON PATTERSON and GOLIA, JJ.
RADIOLOGY TODAY P.C.
A/A/O JOSE PEREZ,

Appellant,

-against-
ALLSTATE INSURANCE COMPANY,

Respondent.

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

While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I disagree 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.

It should be noted that between the submission by the plaintiff and the defendant there are no less than three (3) NF-10 denial forms attributable to the defendant, and not one of them is clearly referable to the NF-3 claim form submitted. [*5]

Although all three appear to address the same two MRI “treatment” of September 24, 2001 and October 11, 2001, they each indicate different dates of billing; different dates of receipt; and different names for the provider. What is even more disconcerting is that the affirmation of defendant’s counsel sets forth that these denials were issued more than 30 days from receipt of the claim. I note that in one instance, it was sent merely one day “late” and that the 30th day was a Sunday. Therefore, under the normal rules of statutory interpretation, it was, in fact, a timely response. Why the defendant failed to point that out is a mystery. I am also mystified as to why the defendant would be unable to easily meet the 30 day deadline given that the ground for denial is that the claim was not filed within the 180 day time period allotted to the claimant.

I am also at a loss to understand why defendants persist in their failure to clearly and unequivocally meet even the simplest of burdens placed upon them by regulations and the courts. These would include proof of mailing, timely and specific denials, timely requests for verifications, and objections to assignments, timely follow-up requests for independent medical examinations, etc.
Decision Date: March 27, 2006

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 (Howard G. Lane, J.), entered October 12, 2004. The order denied defendants’ motion to dismiss the complaint pursuant to CPLR 3211 (a) (5).

Order affirmed without costs.

In this action, plaintiff insurance carrier seeks to recoup first-party no-fault basic economic loss payments from defendants, allegedly non-covered persons, that it made to its insured following an accident involving a vehicle driven and owned by defendants. Although the suit was brought outside the three-year statute of limitations for personal injuries, plaintiff claimed entitlement to the two-year toll on the running of the statute of limitations provided by Insurance Law § 5104 (b).

The court below properly denied defendants’ motion to dismiss the action. Defendants moved to dismiss solely on the theory that the three-year statute of limitations had run, and raised the issue of plaintiff’s insureds’ prior lawsuit in Bronx County (in which plaintiff herein allegedly could have asserted a lien upon the proceeds pursuant to Insurance Law § 5104 [b]).

Although the statute does not specify against which types of compensation such a lien may be asserted, it is well established in case law that a lien representing basic economic loss benefits paid to an insured can be asserted only against an economic damages award to an insured in a personal injury action, and not against a pain and suffering award (see e.g. Aetna [*2]Cas. & Sur. Co. v Jackowe, 96 AD2d 37, 42 [1983]; Safeco Insurance Co. of America v Jamaica Water Supply Co., 83 AD2d 427 [1981]). The alleged lack of any economic damages claim in the complaint in the Bronx action annexed to defendants’ reply papers was the rationale for the denial of the motion to dismiss.

The motion to dismiss the present action was properly denied because defendants presented insufficient evidence to establish that the present action was excluded from the ambit of Insurance Law § 5104 (b). Defendants presented a copy of a complaint and an index number, which is not evidence sufficient to establish, at this early stage, that plaintiff’s insureds could have or did recover, whether by jury award or settlement, amounts properly attributable to basic economic loss (see e.g. Aetna Cas. & Sur. Co. v S. Siskind & Sons, 209 AD2d 215 [1994]), or that plaintiff could have asserted a lien in the prior action and would therefore be barred from commencing the present action by the three-year personal injury statute of limitations. The foregoing determination is without prejudice to defendants again raising the claim that the
instant action was barred by the statute of limitations upon a sufficient showing,
through documentary evidence, that the plaintiff’s subrogors had instituted a prior
action against them which had the effect of taking the instant action outside of
the tolling provisions set forth in Insurance Law § 5104 (b).

Golia, J.P., Rios and Belen, JJ., concur.
Decision Date: March 27, 2006

[*1]

Supreme Court, Appellate Term, Second Department, April 6, 2006

APPEARANCES OF COUNSEL

Teresa M. Spina, Woodbury (Emilio A. Cacace of counsel), for appellant. Amos Weinberg, Great Neck, for respondent.

{**12 Misc 3d at 31} OPINION OF THE COURT

Memorandum.

Order modified by providing that plaintiff’s motion for summary judgment is granted to the extent of awarding plaintiff partial summary judgment in the sum of $3,971.20 and matter remanded to the court below for the calculation of statutory interest and assessment of attorney’s fees thereon and for all further proceedings on the remaining claim; as so modified, affirmed without costs.

In this action to recover first-party no-fault benefits, plaintiff A.B. Medical Services PLLC established a prima facie entitlement to partial summary judgment in the sum of $3,971.20, by proof that it submitted claims, 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 2003]). While the court below awarded plaintiff summary judgment in the sum of $4,061.96, in his affirmation in support of plaintiff’s motion, David Safir, plaintiff’s “practice and medical billing manager,” specifically requested summary judgment in the sum of $3,971.20. Plaintiff has failed to make out a prima facie entitlement to a claim for the additional sum of $90.76. [*2]

It is uncontroverted on the record that defendant timely denied A.B. Medical’s claims in the respective sums of $1,972.08 and $1,999.12. However, a timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory or vague (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [App Term, 2d & 11th Jud Dists 2004]; see also Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2004]). The claims were essentially denied for failure to establish medical necessity. Although defendant was not required to attach to its denial of claim forms the peer reviews upon which the denials were purportedly based (see 11 NYCRR 65-3.8 [b] [4]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 7 Misc 3d 132[A], 2005 NY Slip Op 50605[U] [App Term, 2d & 11th Jud Dists 2005]), defendant’s denial of claim forms fail to set forth with sufficient particularity the factual basis and medical rationale for its denial based on lack of medical necessity, and it is therefore precluded from asserting said defense (see Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [2004], supra). Moreover,{**12 Misc 3d at 32} the peer reviews submitted by defendant in opposition to plaintiff’s motion were unsworn, and therefore in inadmissible form (see A.B. Med. Servs. PLLC v Motor Veh. Acc. Indem. Corp., 6 Misc 3d 131[A], 2005 NY Slip Op 50088[U] [App Term, 2d & 11th Jud Dists 2005]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 2004]). In any event, even assuming said reports’ admissibility and that they set forth a sufficient factual basis and medical rationale for denial of the claims, they cannot remedy the factual insufficiency of defendant’s denials (see Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2004], supra).

Golia, J., dissents and votes to reverse the order and deny plaintiff’s motion for summary judgment. As set forth in the majority opinion, it is “uncontroverted on the record that defendant timely denied A.B. Medical’s claims in the respective sums of $1,972.08 and $1,999.12” (at 31). The majority also acknowledges that the regulations do not require defendants to attach a copy of the peer review report to an NF-10 denial of claim form. Nevertheless, my colleagues assert that the denial of claim form failed to state, with the requisite specificity, the reasons the claims were being denied.

What they fail to recognize is that the specific reason for the denial was the “negative” peer review report (see 11 NYCRR 65-3.8 [b] [4]). That is all the specificity that is required under that regulation which states: “If the specific reason for a denial of a no-fault claim . . . is a . . . peer review report . . .” (id.; emphasis added).

To follow the reasoning of the majority would be to require a nonphysician claims examiner to interpret a physician’s peer review report, and then list, with specificity, the medical reasons for the claim’s denial. It seems a tad incongruous for the regulations to permit the NF-10 denial of claim form to be sent without attaching the doctor’s peer review report and then to require a “lay” person to interpret that report and state with “specificity” the doctor’s reasons for finding the treatment medically unnecessary.

In the case at bar, the claimant submits an affidavit stating that it requested a copy of that report but never received same. The defendant submits an affidavit by a person in charge of the file stating that no such request is present in the file. For the purpose of the issues before this court, it doesn’t matter if the request was sent, if the mail was lost, or if the defendant’s affidavit is inaccurate, inasmuch as the regulations do not provide{**12 Misc 3d at 33} for any draconian remedy for defendant’s failure to provide the report in a timely manner. The claim denials were mailed on the 20th and 27th of January 2003, and the request for the peer review was not mailed until July 18, 2003. The underlying action was “commenced” two months later, on September 17, 2003. Apparently, the claimant waited six months to request the reports but waited less than two months to decide to bring this action.

Finally, a question arises as to whether the failure of the defendant to submit a “sworn” copy of the peer review report, in opposition to a claimant’s motion for summary judgment, mandates that the motion be granted. I do not find such a failure to be fatal when opposing a motion for summary judgment, for the reasons stated in my dissent in Ocean Diagnostic Imaging, P.C. v Lancer Ins. Co. (6 Misc 3d 62 [App Term, 2d & 11th Jud Dists 2004]).

Pesce, P.J., and Rios, J., concur; Golia, J., dissents in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, March 27, 2006

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants.

{**12 Misc 3d at 9} OPINION OF THE COURT

Memorandum.

Order, insofar as appealed from, affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to their assignors, plaintiffs moved for partial summary judgment in the sum of $5,460.79. On appeal, plaintiffs have limited their claim to the sum of $5,427.09. Plaintiffs established a prima facie entitlement to summary judgment by proof that they submitted the claims, 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 2003]).

In opposition to plaintiffs’ motion, defendant argued that the claims were properly and timely denied on the ground of lack of medical necessity based on peer review reports. For the reasons set forth herein, this defense is unavailing to defendant. We note initially that the record [*2]does not contain denial of claim forms submitted by A.B. Medical Services PLLC in the respective{**12 Misc 3d at 10} sums of $71.40, $218.35 and $71.06. Having failed to pay or deny these claims within the 30-day statutory period (11 NYCRR 65-3.8 [c]), defendant is precluded from raising most defenses with respect to said claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

It is uncontroverted on the record that the remaining claims were timely denied. However, a “timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004]; see also Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2004]). The claims by A.B. Medical in the sum of $1,144.65 ($182.37, $71.06 and $891.22) were denied for lack of medical necessity based on an annexed peer review which failed to state the factual basis and medical rationale for the recommended denial of said claims. A.B. Medical’s claim for $1,573.24 was denied on the ground of lack of medical necessity based on a peer review report which disallowed reimbursement of no-fault benefits due to the lack of sufficient information, including prior medical examinations, which the record indicates were available. In the absence of a showing by defendant that it attempted to procure these reports through verification requests for the purpose of conducting the peer review, defendant is precluded from asserting the defense of lack of medical necessity as to this claim (see 11 NYCRR 65-3.5 [b]; 65-3.6 [b]; 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 2005]; Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004]).

The remaining claims were denied for failure to establish medical necessity based on “peer review[s].” Although defendant was not required to attach to its denial of claim forms the peer reviews upon which the denials were purportedly based (see 11 NYCRR 65-3.8 [b] [4]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 7 Misc 3d 132[A], 2005 NY Slip Op 50605[U] [App Term, 2d & 11th Jud Dists 2005]), the defendant’s denial of claim forms fail to set forth with sufficient particularity the factual basis and medical rationale for its denials based on lack of medical necessity, and it is therefore precluded from asserting said defense (see Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [2004], supra).{**12 Misc 3d at 11}

In opposition to plaintiffs’ motion, defendant also asserted the defense that plaintiffs’ assignor was involved in a fraudulent scheme to procure the subject insurance policy in order to pay reduced insurance premiums, and that, consequently, plaintiffs providers were not eligible to recover assigned no-fault benefits. Vehicle and Traffic Law § 313 provides in pertinent part: “(1) (a) No contract of insurance . . . shall be terminated by cancellation by the insurer until . . . after mailing to the named insured . . . a notice of termination by regular mail . . . .” Vehicle and Traffic Law § 313 “supplants an insurance carrier’s common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively” (Matter of Liberty Mut. Ins. Co. v McClellan, 127 AD2d 767, 769 [1987]; see also Matter of Cruz v New Millennium Constr. & Restoration Corp., 17 AD3d 19 [2005]; Matter of Metlife Auto & Home v [*3]Agudelo, 8 AD3d 571 [2004]; Matter of Integon Ins. Co. v Goldson, 300 AD2d 396 [2002]; Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293 [2000]). The statute “places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured’s negligence” (Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d at 298). There has been no allegation that defendant effectively cancelled the subject insurance policy pursuant to section 313.

However, case law has made clear that whereas the policy may not be retroactively cancelled, thereby protecting “innocent third parties who may be injured due to the insured’s negligence” (id. at 298), in “an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured’s misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured” (id. at 298-299). The issue presented here is whether, assuming the insurance policy was fraudulently procured, plaintiff health care provider is an “innocent” third party which case law protects and, thus, as assignee of the insured who allegedly perpetrated the fraud, acquires greater rights than had by the assignor. We hold that only innocent third parties who are injured are protected (id. at 298), and not a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured’s no-fault benefits. Contrary to plaintiffs’ contention, the defense of fraudulent procurement of an insurance{**12 Misc 3d at 12} policy, which is nonwaivable and hence exempt from the 30-day preclusion rule, may be asserted as against plaintiffs providers in this action seeking to recover assigned no-fault benefits (cf. Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 751-752 [2002]). Upon our review of the record, we find that defendant’s submissions in support of its defense were sufficient to raise issues of fact as to whether the insurance policy was fraudulently procured. Therefore, plaintiffs’ motion for partial summary judgment was properly denied. To the extent that Ocean Diagnostic Imaging P.C. v Commerce Ins. Co. (7 Misc 3d 133[A], 2005 NY Slip Op 50642[U] [App Term, 2d & 11th Jud Dists 2005]) may be inconsistent with the determination herein, the dicta set forth therein should not be followed (see Ocean Diagnostic Imaging, P.C. v Nationwide Mut. Ins. Co., 11 Misc 3d 135[A], 2006 NY Slip Op 50477[U] [2006]).

Golia, J. (concurring with the result only, in the following memorandum): While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I disagree 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.

Pesce, P.J., and Rios, J., concur; Golia, J., concurs in a separate memorandum.

Suffolk Dist Ct

HUC 2181-05

Appearances:

Fazio, Rynsky & Associate

Attorneys for Plaintiff

175 Eileen Way

Syossett, New Yor 11791

Stern & Montana, LLP

Attorneys for Defendant

Trinity Centre

115 Broadway

New York, New York 10006

C. Stephen Hackeling, J.

The plaintiff, Preferred Medical Imaging, P.C. (via Court documents No.1 & 4) moves this Court for a two pronged Order, directing the Court Clerk to seal its records and enjoining, for privacy reasons, the defendant and its counsel from disclosing any documents or information it may obtain via disclosure directives arising out of this action. The defendant, Liberty Mutual Insurance Co. (via Court documents 2 and 3) vigorously opposes the requested relief, asserting amongst other reasons, the First and Sixth Amendments of the United States Constitution, requiring public and press access to Court proceedings. For the following reasons the movant is granted a modified temporary sealing order and is denied any further relief.

Application for File Sealing and Gag Order

The Undisputed Relevant Facts

The plaintiff brought this action as a medical service provider, seeking to recover the assigned “No Fault” automobile insurance benefits assigned to it by Bevolin Lewis and Edwin Lewis. Plaintiff is an authorized medical service provider who allegedly [*2]rendered approximately $5,000.00 of MRI image services to Mr. Lewis,

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and his son between October 7 and October 11, 2004, pursuant to a physician’s referral. The plaintiff timely took assignments of claims and billed for the services. The defendant timely denied plaintiff’s claim, precipitating the instant action. On or about January 5, 2005 the Court signed an order compelling the plaintiff to disclose assorted documentary business management agreements and tax returns of the plaintiff and its alleged principal Dr. Robert Schepp for the years 2002-2003. Many of the documents sought had previously been disclosed in an affidavit or Dr. Schepp, filed in a pending unrelated Nassau County Supreme Court action.

Disputed Issues

The defendant has interposed a myriad of defenses in its answer. Its counsel has argued that its strongest position is that the plaintiff’s business practices constitute a systematic and persistent violation of the New York State No-Fault Laws as codified in Sec. §5101. It is alleged that the claims generated are the result of an illegal financial relationship in violation of Sec. 238 of the Public Health Law and Article 15 of the Business Corporation Law. It is the defendant’s position that plaintiff is in fact not an authorized medical service provider as it is not constituted by, or supervised by, a physician. It is asserted that the plaintiff is one of many providers who seek to abuse the “no fault” insurance system by simply purchasing a physician’s letterhead for the purpose of allowing non physician laymen to set up and run corporate medical service provider corporations. In this instance the crux of this discovery dispute involves the production of tax returns for Dr.Robert Schepp and for affiliated corporations which also employ Dr. Schepp. The defendant asserts that these returns will establish that Dr.Schepp receives “frontman only” compensation which bears no relationship to his alleged corporate ownership interest. The plaintiff denies this contention and asserts that without the requested relief Dr. Schepp’s privacy rights will be violated and that these documents will be circulated to other insurance carriers and their attorneys.

Discussion

The Court is not naive to the import of the underlying discovery struggle concerning this application. This Court administers approximately 10,000 no-fault actions annually which often contain multiple unrelated plaintiff providers and unrelated defendant insurers in the same complaint. At the call of each no-fault calendar, dozens of insurance companies and their counsel discuss joint legal strategies amongst themselves. During proceedings they have often argued to the Court the insurance industry’s assertion that the no-fault system is plagued with systematic fraud and abuse. On several [*3]occasions the Court has observed insurance company expert testimony which evidences the collective efforts of the insurance industry to mutually share fraudulent “No Fault” claim information in a common data base.

-2-

Sealing the Record

The Court notes that much of the material plaintiff wishes to seal is already publicly available in that it evidently has been produced in a pending Nassau County Supreme Court action titled AIU Inc. Co.v. Deajess Medical Imaging, PC. At least one decision has been published to date concerning this action. (see, 2/10/2006 NYLJ p. 22, col. 1, et seq.).

The legal standard and/or predicate statute for the requested relief is not stated in the plaintiff’s papers. However the law is clear that “Except where otherwise provided by statute or rule, a Court shall not enter an order in any action or proceeding sealing the Court records, whether in whole or in part, except upon a finding

of good cause, which shall specify the grounds thereof”. 22 NYCRR §216.1 (a). As stated by the Appellate Court in Danco Laboratories, Ltd., v. Chemical Works of Gedeon Richter, Ltd. 274 AD2d 1 (1st Dept. 2000);

We start by taking note of the broad constitutional proposition, arising from the First and Sixth Amendments, as applied to the States by the Fourteenth Amendment, that the public, as well as the press, is generally entitled to have access to Court proceedings. Since the right is of constitutional dimension, any order denying access must be narrowly tailored to serve compelling objectives… However, the right of access is not absolute. Moreover, access may still be respected in keeping with constitutional requirements while sensitive information is restricted in keeping with “the State’s legitimate concern for the well-being” of an individual (Globe Newspaper corp. v. Superior Court, [457 US 596], at 609.)

Clearly, the function of this Court is to apply a balancing test and fashion an Order which serves to protect both Dr. Schepp’s privacy interests and to faciliate the public’s right to observe the Court’s proceedings. Absent compelling evidence of fully articulated immediate prejudice, an unconditional sealing order is unwarranted. No prejudice is indicated for the bulk of the information disclosed to date as many of the documents are already in the public domain, i.e. the Nassau Supreme Court. In the present matter, the Court finds that good cause to seal exists only as to the possibility of identity theft and perhaps patient information. It has been the practice of this Court to redact this type of information from its decisions which are to be published on-line. Therefore, to this limited extent, the plaintiff’s [*4]motion is granted. It is Ordered that the file will be sealed for a 14

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day period during which time the movant shall review the Court file and submit ( on 5 days notice ) a copy of a proposed redacted file which is consistent with this decision to redact only identification numbers and patient infromation. The Clerk shall be permitted to exhibit the movant’s redacted file for public viewing after the 14 days sealing period.

Enjoining Defendant from Information Disclosure

The real objective of the plaintiff’s application is to obtain an Order of this Court which prohibits the defendant and its attorneys from disclosing any documents or the information obtained in

this action to any other party. While not expressly labeled; this clearly is a request for a permanent injunction. The Suffolk County District Court, as constituted by the Uniform District Court Act, has limited equitable powers. Sec.§209 of the UDCA expressly provides “(b) Injunction or Restraining Order. No injunction or restraining order shall issue out of or by this Court unless…” The statute provides for only four allowable injunction instances which involve criminal zoning, waste, chattel recovery, and money judgment enforcement proceedings. No predicate basis has been plead or otherwise articulated which allows the Court to consider an Article 63 New York CPLR injunction application. Accordingly, the injunction component of this application is denied.

_____________________________

J.D.C.

Decision to be published____yes____no.

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