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 (Erica L. Prager, J.), entered January 26, 2005. The order granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment and to dismiss the complaint.

Order affirmed without costs.

Plaintiff commenced this action to recover first-party no-fault benefits for medical services it provided to the injured assignor. Plaintiff established a prima facie entitlement to summary judgment by proof that it submitted the statutory claim form, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). The burden, therefore, shifted to defendant to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

In the case at bar, the defendant failed to establish that the verification requests were timely mailed. Defendant neither submitted an affidavit from one with personal knowledge alleging that the verification requests were mailed to plaintiff (see e.g. Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613 [1996]), nor did defendant create a presumption of mailing by submission of an affidavit adequately describing the standard operating procedures it uses to ensure that its verification requests were mailed (see e.g. Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Ocean Diagnostic Imaging P.C. v General Assur. Co., 7 Misc 3d 127[A], 2005 NY Slip Op 50435[U] [App Term, 9th & 10th Jud Dists]). Absent proof of a tolling of the 30-day claim determination period (11 NYCRR 65.15 [*2][d], now 11 NYCRR 65-3.8), defendant is now precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), including any deficiency in the assignment (see New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; Presbyterian Hosp. in City of N.Y. v Aetna
Cas. & Sur. Co., 233 AD2d 433 [1996]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 6 Misc 3d 70 [App Term, 2d & 11th Jud Dists 2004]). Consequently, the motion court properly granted plaintiff’s motion for summary judgment and denied defendant’s cross motion.

Rudolph, P.J., Angiolillo and McCabe, JJ., concur.
Decision Date: February 03, 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 (Manuel J. Mendez, J.), entered November 15, 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.

Contrary to the determination of the court below, in this action to recover first-party no-fault benefits for medical services rendered to its assignors for injuries they sustained in accidents in February and May 2003, plaintiff established its prima facie entitlement to summary judgment 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]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [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]). Since defendant failed to seek verification of any of the assignments, and did not allege any deficiency in the assignments in its denial of claim forms, 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]; Presbyterian Hosp. in City of N.Y. v Aetna Cas. & [*2]Sur. Co., 233 AD2d 433 [1996]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 6 Misc 3d 70 [App Term, 2d & 11th Jud Dists 2004]).

Defendant failed to raise a triable issue of fact as to the $912 claim (see Alvarez v Prospect Hosp., 68 NY2d 320 [1986]). It is uncontroverted that defendant received plaintiff’s $912 claim in July 2003, for which it requested, in October 2003, additional verification in the form of an examination under oath. Since defendant failed to show how its October request was timely made (see 11 NYCRR 65-3.5 [b]), we find that said [*3]
request was untimely and the 30-day statutory period within which it had to pay or deny the claim was not tolled (see e.g. Struhl v Progressive Cas. Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op 50864 [App Term, 9th & 10th Jud Dists]). Assuming, arguendo, that the additional verification request was timely, defendant would have, nonetheless, failed to raise a triable issue of fact since it did not provide plaintiff with a follow-up request after the assignor did not appear for the scheduled examination (see 11 NYCRR 65-3.6 [b]). By not providing plaintiff with a follow-up request, defendant abandoned its verification request and may not, as a matter of law, use the failure of the plaintiff to provide said verification as a basis to deny the claim (see King’s Med. Supply v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450 [App Term, 2d & 11th Jud Dists]). Consequently, defendant is precluded from raising most defenses as to the $912 claim, and plaintiff is entitled to summary judgment thereon.

In support of its motion for summary judgment to recover its $2,670.40 claim for MRIs provided to its assignor, plaintiff submitted defendant’s timely denial of claim form which included an unsworn peer review report dated March 2003, asserting the lack of medical necessity for the MRIs based upon a review of a doctor’s report dated March 19, 2003. However, also in support of its motion, plaintiff submitted another report from the same doctor, dated February 26, 2003, which asserted in sufficient detail the [*4]
medical necessity for the MRIs. Since plaintiff’s moving papers asserted, in admissible form, the medical necessity of the MRIs, and defendant’s opposition papers failed to address plaintiff’s proof as set forth in the sworn February doctor’s report, defendant failed to raise any triable issue with respect to the lack of medical necessity. Consequently, plaintiff is entitled to summary judgment on its $2,670.40 claim.

In view of the foregoing, the matter is remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees thereon pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

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

Golia, J., concurs in a separate memorandum. [*5]
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : PESCE, P.J., GOLIA and BELEN, JJ.
OCEAN DIAGNOSTIC IMAGING P.C.
a/a/o Salena Harrell
Jose Batiz,

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 the cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.

I must also note an important precept of law that has been properly applied in this case but is all too often forgotten. Once a party affirmatively and properly establishes an issue of fact, it is incumbent upon the other side to oppose it either factually or on “legal’ grounds. Failure to do so will result in that particular issue being determined in favor of the proponent (Millennium Med. Instruments v NYC Trans. Auth., 10 Misc 3d 139[A], 2005 NY Slip Op 52205[U] [App Term, 2d & 11th Jud Dists]). It must be remembered that this precept must be applied equally to both sides.

In the case at bar, the plaintiff presented a medical report in its motion for summary judgment by a Dr. Raufov dated February 26, 2003. That document effectively rebutted the findings of the defendant’s peer review doctor who did not consider the February 26, 2003 report when making his findings that resulted in a denial of benefits form being served on the claimant.

Inasmuch as the defendant failed to address this issue in its opposing papers, the majority was correct in holding that plaintiff’s prima facie showing of medical necessity went unrebutted and therefore was deemed proven. [*6]
Decision Date: February 03, 2006

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Respondent Republic Western Insurance Co. appeals from a judgment of the Civil Court, New York County (Geoffrey D. Wright, J.), entered October 27, 2003, in favor of petitioner and awarding it damages in the principal sum of $17,348.79.

PER CURIAM:

Judgment (Geoffrey D. Wright, J.), entered October 27, 2003, affirmed, without costs.

The petition to confirm the arbitration award was properly granted. By failing to apply for a stay of arbitration prior to arbitration, respondent Republic Western waived its present contention that the underlying subrogation claim is not arbitrable under Insurance Law § 5105(a) (Matter of Liberty Mut. Ins. Co. [Allstate Ins. Co.], 234 AD2d 901 [1996]). In any event, respondent’s submission did not conclusively establish that the U-Haul vehicle involved in the accident did not meet the weight requirements necessary to trigger the no-fault benefits authorized by the statute (see Victoria Ins. Co. v Utica Mut. Ins. Co., 8 AD3d 87 [2004]).
This constitutes the decision and order of the Court.
Decision Date: February 03, 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, Third District (Scott Fairgrieve, J.), entered February 28, 2005. The order granted plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff health care provider established a prima facie entitlement to summary judgment by proof that it submitted a 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; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U] [App Term, 9th & 10th Jud Dists]). The burden therefore shifted to defendant to show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

In the case at bar, the defendant failed to establish that the denial was timely mailed within the 30-day prescribed claim determination period. Defendant failed to submit any documentary proof or an affidavit from one with personal knowledge establishing that the denial was sent to plaintiff (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613 [1996]). Nor did defendant create a presumption of mailing by submission of an affidavit describing the standard operating procedures it uses to ensure that its denial was mailed (see e.g. Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Ocean Diagnostic [*2]Imaging P.C. v General Assur. Co., 7 Misc 3d 127[A], 2005 NY Slip Op 50435[U] [App Term, 9th & 10th Jud Dists]). Defendant is therefore precluded from raising the defense that the procedure was not medically necessary because defendant neither denied the claim within 30 days of receipt of the claim nor effectively extended the 30-day period (see
[*3]Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).
Consequently, the motion court properly granted plaintiff’s motion for summary
judgment.

Rudolph, P.J., Angiolillo and McCabe, JJ., concur.
Decision Date: February 02, 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 October 29, 2004. The order granted plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff health care provider established a prima facie entitlement to summary judgment by proof that it submitted a 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]). We find no merit to defendant’s contention that the failure of one of plaintiff’s assignors, Claire, to appear for an examination under oath (EUO) precludes summary judgment with respect to the claims submitted for treatment rendered to said assignor. The submissions of defendant’s claims representative and counsel failed to establish that they had personal knowledge that the letters requesting the EUO were mailed to Claire. Nor did said submissions create a presumption of mailing by setting forth the standard office practice or procedures used to ensure that such letters are properly addressed and mailed (see Amaze Med. Supply Inc. v State Farm Mut. Auto. Ins. Co., 8 Misc 3d 139[A], 2005 NY Slip Op 51315[U] [App Term, 2d & 11th Jud Dists]). Moreover, defendant failed to introduce evidence in admissible form establishing that the insurance policy it issued to its insured actually contained an endorsement entitling it to EUOs (see Careplus Med. Supply Inc. v Travelers Home & Mar. Ins. Co., 7 Misc 3d 133[A], [*2]2005 NY Slip Op 50648[U] [App Term, 2d & 11th Jud Dists]).

Although defendant issued an untimely denial of the claim relating to plaintiff’s other assignor, Charmant, defendant is not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). However, defendant failed to establish that it possessed a “founded belief that [Charmant’s] 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]). Indeed, although defendant annexed Charmant’s EUO testimony, defendant may not rely upon its bare representation as to what another passenger in the car, Phillipe, stated during said passenger’s EUO, in an attempt to demonstrate the existence of an issue of fact (see Ocean Diagnostic Imaging P.C. v Allstate Ins. Co., 6 Misc 3d 134[A], 2005 NY Slip Op 50189[U] [App Term, 9th & 10th Jud Dists]; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]).

In light of the foregoing, the order should be affirmed because plaintiff was entitled to summary judgment upon both claims.

Rios and Belen, JJ., concur.

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

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

I am in agreement with the majority that an untimely denial does not preclude a defendant from asserting the defense that the claimed collision was in furtherance of a scheme to defraud.

However, I disagree with the majority when they insist that the holding of the Court of Appeals in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]) requires that in order for a defendant to have a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (id. at 199), the defendant must submit sworn statements establishing those findings. I submit that the Court of Appeals only requires that the defendant provide a sworn affidavit (affirmation) which establishes that the affiant has a belief which is “founded” upon information obtained by a reasonable investigation. The actual source materials uncovered by that investigation such as interviews, documents, examination under oath transcripts, etc., need not be submitted and certainly not in a form that would constitute sworn testimony. That, in my opinion, is what is going to be required at trial.

Accordingly, I dissent and vote to reverse and deny plaintiff’s motion for summary judgment.
Decision Date: February 01, 2006

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court, Bronx County (Fernando Tapia, J.), entered May 24, 2005, which denied its motion for summary judgment dismissing the complaint.

PER CURIAM:
Order (Fernando Tapia, J.), entered May 24, 2005, reversed, with $10 costs, and defendant’s motion for summary judgment is granted. The Clerk is directed to enter judgment in favor of defendant dismissing the complaint.

Plaintiff seeks recovery of no-fault benefits allegedly due its assignor as a result of a 2001 automobile accident. Civil Court denied defendant’s unopposed summary judgment motion, finding the existence of an unspecified “triable issue of fact.” The record reveals that neither plaintiff nor its assignor submitted written notice of the accident to defendant within the requisite 90-day period (cf. Allcity Ins. Co. v Novas, 272 AD2d 116 [2000]), nor did they submit proof that they were unable to comply with such time limitation due to circumstances beyond their control (see Medical Society of State v. Serio, 100 NY2d 854, 868 [2003]). Accordingly, defendant’s motion for summary judgment should have been granted.

We note that the court disposed of the motion without providing any explanation or reason for its decision, a practice to be avoided (see Nadle v L.O. Realty Corp., 286 AD2d 130 [2001]).

This constitutes the decision and order of the court. [*2]
Decision Date: February 01, 2006

Supreme Court, Schoharie County

05-0427

FLINK SMITH, LLC

By: JEFFREY D. WAIT, ESQ., of counsel

for Plaintiff

CAPASSO & MASSARONI, LLP

By: JOHN R. SEEBOLD, ESQ., of counsel

for Defendant Wood

HANSON & FISHBEIN

By: MARK O, CHIECO, ESQ., of counsel

for Defendant Progressive

Dan Lamont, J.

In this action for a declaratory judgment, plaintiff New York Central Mutual Fire Insurance Company (“New York Central”) moves this Court for a judgment declaring that defendant Progressive Northeastern Insurance Company (“Progressive”) has an obligation to provide insurance coverage to defendant Charles Young (“Young”) in connection with underlying claims by defendant Amber M. Wood (“Wood”) for money damages for personal injuries allegedly caused to her by defendant Young’s motor vehicle. Defendant Progressive cross-moves this Court for a judgment declaring that Progressive has no obligation to provide insurance coverage to defendant Young based upon his “intentional act” which constitutes an exclusion from coverage under Young’s automobile insurance policy with Progressive. [*2]Defendant Wood does not oppose New York Central’s motion; however, she does oppose Progressive’s cross-motion. Defendant Young has not answered the Complaint or otherwise appeared in this action for a declaratory judgment.

BACKGROUND

New York Central previously brought a proceeding to stay the supplemental uninsured motorist (“SUM”) arbitration between New York Central and Wood (Index No.05-0182). By Interim Decision/Order dated June 30, 2005, this Court adjourned such proceeding to allow New York Central to commence this declaratory judgment action and to obtain personal jurisdiction over all of the necessary parties including Young. The following background facts are substantially taken from such Interim Decision/Order.

On May 29, 2004, respondent Wood was camping with friends in the Town of Berne, County of Albany. Wood was the sole occupant of a certain camping tent. At approximately 6:15 a.m., Young ran over the tent with his automobile and thereby caused serious physical injuries to Wood. Young’s automobile was insured by Progressive. Earlier in the evening, Young’s friend had been beaten up by someone, so Young drove over the tent to “set them straight”. According to Young’s statement recorded by New York Central, Young did not know and had never met Wood before the incident.

On August 19, 2004, in County Court, County of Albany, Young pled guilty to Attempted Assault in the First Degree in violation of Penal Law §§ 110/120.10(3) in return for an agreed upon determinate sentence of imprisonment of no more than 11 years. Assault in the First Degree under Penal Law § 120.10(3) is defined as follows: “A person is guilty of assault in the first degree when under circumstances evincing a depraved indifference to human life, he recklessly engages in conduct which creates a grave risk of death to another person, and thereby causes serious physical injury to another person.” (emphasis supplied) During his plea colloquy, Young stated that he did not know someone was in the tent that he drove over, but that he did know that 6:00 a.m. would be a normal time for someone to be in a camping tent.

On or about July 15, 2004, Progressive disclaimed insurance coverage for the accident based upon Young’s intentional act. Young’s insurance policy included the following language under exclusions from coverage: “6. Bodily injury or property damage caused by the intentional act of an insured person or at the direction of an insured person.”

On the date of the accident, Wood’s motor vehicle was insured by New York Central with uninsured/underinsured motorist coverage in the amount of $50,000. Based upon Progressive’s denial of insurance coverage for Young, Wood on or about March 15, 2005 requested arbitration pursuant to the uninsured/underinsured coverage portion of her policy with New York Central. The arbitration proceeding previously scheduled for May 12, 2005 has been temporarily stayed. New York Central has now brought the instant action for a declaratory judgment.

THE LAW: INTENTIONAL ACT EXCLUSION

“Not every intentional act falls within the parameters of an insurance policy’s intentional acts exclusion since insurable accidental results may flow from intentional causes'” (Carmean v. Royal Indemnity Co., 302 AD2d 670, 671 [3rd Dept. 2003], citing Slayko v. Security Mutual Insurance Co., 98 NY2d 289, 293 [2002]). “[I]n deciding whether a loss is the result of an accident, it must be determined, from the point of view of the insured, whether the loss was unexpected, unusual or unforeseen” (Agoado Realty Corp. v. United Intl. Ins. Co., 95 NY2d 141,145 [2000]). “The critical question is whether the harm that resulted *** could have been other than harm intentionally [*3]caused’ within the meaning of the policy exclusion” (Allstate Ins. Co. v. Mugavero 79 NY2d 153, 159 [1992];see also, Peters v. State Farm Fire and Casualty Co., 306 AD2d 817 [4th Dept. 2003]; aff’d as modified 100 NY2d 634 [2003]). In other words, the issue presented herein is “whether there is any possible factual or legal basis upon which to find that the bodily injuries inflicted upon [Wood] were not expected or intended’ by [Young]” (Smith v. New York Central Mutual Ins. Co., 13 AD3d 686 [3rd Dept. 2004], quoting Pennsylvania Millers Mut. Ins. Co. v. Rigo, 256 AD2d 769, 770 [1998], quoting Home Mut. Ins. Co. v. Lapi, 192 AD2d 927, 928 [3rd Dept. 1993]).

The Appellate Division, Third Department in Progressive Northern Ins. Co. v. Rafferty, 17 AD3d 888 [3rd Dept. 2005], has recently stated the following:

“It is now well settled that there exists a narrow class of cases in which the intentional act exclusion applies regardless of the insured’s subjective intent’ (Slayko v Security Mut. Ins. Co., 98 NY2d 289, 293 [2002]). In such cases, the intentional act exclusion [applies] if the injury [is] inherent in the nature’ of the wrongful act’ (id. at 293, quoting Allstate Ins. Co. v Mugavero, 79 NY2d 153, 161 [1992]). An injury is held to be inherent in the nature’ of an act when the act is so exceptional that cause and effect cannot be separated; that to do the act is necessarily to do the harm which is its consequence; and that since unquestionably the act is intended, so also is the harm’ (Allstate Ins. Co. v Mugavero, supra at 160-161).

“In these type of cases, the theoretical possibility that the insured lacked the subjective intent to cause the harm’ (Pistolesi v Nationwide Mut. Ins. Co., 223 AD2d 94, 97 [1996], lv denied 88 NY2d 816 [1996]) does not preclude a finding that, for the purposes of the policy’s intentional act exclusion, such injuries are as a matter of law intentionally caused’ (Allstate Ins. Co. v Mugavero, supra at 161; see Pennsylvania Millers Mut. Ins. Co. v Rigo, 256 AD2d 769, 771 [1998]; Doyle v Allstate Ins. Co., 255 AD2d 795, 796-797 [1998]).” (at page 889)

DISCUSSION

An insurance company seeking to invoke a policy exclusion must “establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies to the particular case” (Continental Casualty Company v. Rapid-American Corp., 80 NY2d 640, 652 [1993]). Exclusionary language in an insurance policy must be strictly and narrowly interpreted, and when exclusionary language is ambiguous “it is the insurer’s burden to prove that the construction it advances is not only reasonable, but also that it is the only fair [one]” (Boggs v. Commercial Mutual Insurance Company, 220 AD2d 973, 974 [Third Dept. 1995]). In Pepper v. Allstate Insurance Company (20 AD3d 633 [3rd Dept. 2005]), the Appellate Division, Third Department recently stated: “[W]hen an insurance policy’s meaning is not clear or is subject to different reasonable interpretations, ambiguities must be resolved in the insured’s favor and against the insurer (see Little v. Blue Cross of W. NY, 72 AD2d 200, 203 [1980]; see also Boggs v. Commercial Mut. Ins. Co., 220 AD2d 973, 974 [1995]).” (at page 635)

Since Young has given a couple of statements indicating that he did not intend to injure Wood and that he did not know that anyone was in the tent while knowing that a camping tent is normally occupied at 6:15 in the morning this Court holds and determines that for Progressive’s intentional act policy exclusion to apply, Wood’s injuries must have been “inherent in the nature” [*4]of Young’s wrongful act (Slayko v. Security Mutual Ins. Co., supra, 293; Allstate Ins. Co. v. Mugavero, supra, 161).

In Slayko v. Security Mutual Ins. Co., supra, the Court of Appeals found that a person’s act of pointing a gun at another and pulling the trigger was not inherently harmful for the purpose of an intentional act exclusion because the undisputed facts established that the two parties were friends and that the shooter believed that the gun was not loaded. In this action for a declaratory judgment, the uncontested submissions establish that Young and Wood did not know each other; that they had never met before the incident; and that Young did not know that Wood was in the camping tent. However, Young’s conduct clearly rises to the level of depraved indifference reckless conduct i.e. driving into a tent at 6:15 in the morning when camping tents are normally occupied.

Under the current state of the law, an injury is “inherent in the nature” of an act when the act is so exceptional that “cause and effect cannot be separated; that to do the act is necessarily to do the harm which is its consequence; and that since unquestionably the act is intended, so also is the harm” (Progressive Northern Ins. Co. v. Rafferty, supra; quoting

Allstate Ins. Co. v. Mugavero, supra, 160-161). This Court holds and determines that running over a tent with an automobile does not necessarily cause harm to another person. The intentional act of running over a camping tent can be separated from the injury since the tent could have been unoccupied, or the automobile could have run over a portion of the tent without striking someone inside. Young clearly committed an act of depraved indifference recklessness, but he did not intend to injure Wood.

In Progressive Northern Ins. Co. v. Rafferty, supra, an intentional acts exclusion applied because an individual stepped on the accelerator of his vehicle and injured a person standing two feet in front of him with whom he had been arguing. In Smith v. New York Central Mut. Ins. Co., 13 AD3d 686 [3rd Dept. 2004], the intentional act exclusion applied despite a plea to a crime involving criminal negligence where an individual pursued another individual and struck him in the head with a bat. The facts of the instant action wherein Young did not even know Wood or intend to cause any injury to Wood are clearly distinguishable from these cases.

Accordingly, this Court hereby declares that Progressive’s intentional act exclusion does not apply and that Progressive must defend and provide insurance coverage for Young. For similar reasons, the incident should be and the same is hereby considered an “accident” under the definitions of Young’s insurance policy. This Court holds and determines that a hearing is not necessary to make this determination.

For public policy reasons, this Court does not necessarily embrace the concept of providing liability insurance coverage on behalf of an individual who has clearly committed a criminal act of depraved indifference recklessness. However, the criminal law does establish a clear difference between intentional conduct and depraved indifference reckless conduct although equal in blameworthiness. In fact, “intentional” and “depraved indifference recklessness” are inconsistent culpable mental states because guilt of one necessarily negates guilt of the other (see, CPL § 330.30(5); see also, People v. Payne, 3 NY3d 266 [2005]). Also, Young was clearly intoxicated at the time of the incident, and voluntary intoxication may be a defense to intentional conduct (see, PL § 15.25) but is not a defense to reckless conduct (see, PL § 15.03(3)). This Court should not expand Progressive’s policy exclusions to exclude depraved indifference reckless criminal acts, unless the policy expressly excludes such criminal acts. To do so would be to deny Wood, who was not intentionally injured by Young, the benefit of recovery under both Young’s liability automobile [*5]insurance coverage, and Young’s no-fault automobile insurance coverage.

This Court holds and determines that New York Central’s action for a declaratory judgment declaring that Progressive has an obligation to defend and provide insurance coverage to defendant Young should be and the same is hereby granted with $100.00 costs. This Court further holds and determines that Progressive’s cross motion for a judgment declaring that Progressive has no obligation to defend or provide coverage to defendant Young should be and the same is hereby denied without costs.

This Memorandum shall constitute both the Decision and Order of the Court. All papers, including this DECISION/ORDER, are being returned to the plaintiff’s attorney. The signing of this DECISION/ORDER shall not constitute entry or filing under CPLR § 2220. Legal counsel are not relieved from the applicable provisions of that section respecting filing, entry and notice of entry.

IT IS ADJUDGED and declared that defendant Progressive must defend and provide liability insurance coverage to defendant Young, and must also provide no-fault insurance coverage for Wood.

Dated: Schoharie, New York

January 27, 2006

ENTER

_______________________________________

DAN LAMONT, Acting J.S.C.

cc: Jeffrey D. Wait, Esq.

John R. Seebold, Esq.

Mark O. Chieco, Esq.

Charles Young

Papers considered:

1) Plaintiff’s Notice of Motion dated October 5, 2005.

2) Affidavit of Jeffrey D. Wait, Esq. sworn to October 5, 2005, with exhibits.

3) Plaintiff’s Memorandum of Law dated October 5, 2005.

4) John R. Seebold, Esq.’s letter dated October 6, 2005.

5) Defendant Progressive’s Notice of Cross Motion dated October 25, 2005.

6) Affidavit of Mark O. Chieco, Esq. sworn to October 27, 2005, with exhibit.

7) Affidavit of Gerald Hmura sworn to October 26, 2005, with exhibit.

8) John R. Seebold, Esq.’s letter dated November 10, 2005.

—[*1]

Cardona, P.J. Appeal from an order of the Supreme Court (Connor, J.), entered October 15, 2004 in Columbia County, which granted petitioner’s application pursuant to Workers’ Compensation Law § 29 (5) for judicial approval, nunc pro tunc, of a personal injury settlement.

In January 1996, petitioner sustained injuries in a motor vehicle accident while working for her employer. Petitioner received workers’ compensation benefits from her employer’s insurance carrier, respondent CNA Insurance Companies (hereinafter respondent), as well as first-party benefits pursuant to the no-fault provisions of the Insurance Law. Thereafter, petitioner commenced a third-party negligence action against the driver of the other motor vehicle, which she settled for $32,500. However, petitioner failed to obtain consent of the settlement from respondent, as required pursuant to Workers’ Compensation Law § 29 (5). Petitioner thereafter commenced this proceeding seeking, among other things, judicial approval, nunc pro tunc, of the third-party settlement. Supreme Court approved the settlement, however, this Court reversed on the basis that the supporting documentation was insufficient and we remitted the matter for further proceedings (306 AD2d 677, 678-679 [2003]). Following [*2]petitioner’s submission of additional documentation, petitioner again sought judicial approval of the third-party settlement, which Supreme Court granted, prompting this appeal.

Supreme Court reviewed all the relevant factors in exercising its discretionary authority to grant petitioner’s request. Notably, petitioner submitted evidence which suggested that it would have been difficult to prove that she had suffered a serious injury as a result of the accident. Furthermore, it is apparent that respondent suffered no prejudice from petitioner’s delay in seeking approval (see Neblett v Davis, 260 AD2d 559, 560 [1999]). We note that an application for a nunc pro tunc order approving a third-party settlement must normally be made within three months of the settlement date (see Workers’ Compensation Law § 29 [5]). Under all the circumstances herein, we, however, do not conclude that Supreme Court abused its broad discretion in approving this settlement (see Severino v Liberty Mut. Ins. Co., 238 AD2d 837, 838 [1997]; Borrowman v Insurance Co. of N. Am., 198 AD2d 891 [1993]).

Crew III, Spain, Mugglin and Lahtinen, JJ., concur. Ordered that the order is affirmed, with costs.

[*1]

Supreme Court, New York County, January 25, 2006

APPEARANCES OF COUNSEL

Cadwalader, Wickersham & Taft, LLP, New York City (William J. Natbony of counsel), and Stern & Montana, LLP, New York City (Robert A. Stern of counsel), for plaintiffs. Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C., New York City (Richard C. Tarlowe and Edward Spiro of counsel), for Herbert Rabiner, M.D. and others, defendants. Warner & Partners, P.C., New York City (Kenneth E. Warner of counsel), for Jay Katz and others, defendants. Alexander Herman, Brooklyn, for Vladimir Shtrakhman, defendant.

OPINION OF THE COURT

Karla Moskowitz, J.

Plaintiffs move for an order: (1) pursuant to CPLR 3025 (b) and 1003, granting them leave to serve a second amended complaint to add the insurers Government Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity Company and GEICO Casualty Company (collectively GEICO) as plaintiffs, deeming the second amended complaint served upon defendants and directing defendants to answer the second amended complaint; (2) pursuant to CPLR 2221 (e), granting plaintiffs’ motion to renew the court’s March 15, 2004 decision and order (prior decision I) because of a change in law that affects that ruling; and (3) clarifying the court’s December 22, 2004 decision and order (prior decision II) to confirm the reinstatement of plaintiffs’ seventh cause of action (denominated seventh claim for relief) for unjust enrichment.

Plaintiffs are insurance companies that participate in New York’s no-fault automobile insurance program. Plaintiffs claim they owe nothing to defendants because of defendants’ violation of various statutes pertaining to the organization of medical corporations and because of defendants’ fraudulent billing. Plaintiffs seek to recover from defendants payments that [*2]plaintiffs made to them, pursuant to the no-fault insurance program, for medical services that defendants rendered to persons covered under automobile insurance policies that plaintiffs issued. Plaintiffs also seek a declaratory judgment that they have no obligation to pay defendants for claims defendants have submitted, but plaintiffs have not yet paid.

Among the defendants are the”PC defendants,” each of which purport to be a New York medical professional corporation providing diagnostic testing and other patient services. The certificates of incorporation of the PC defendants each state that the owner is defendant Dr. Herbert Rabiner, a New York State licensed physician, but the real owner and principal shareholder is a layperson—defendant Jay Katz.

Plaintiffs allege that, in violation of section 1507 of the Business Corporation Law, Rabiner has sold or lent the use of his name and medical license to Katz to form medical corporations in Rabiner’s name so that Katz could own or control medical practices, profit from them, bill no-fault insurers for medical services and, in so doing, facilitate fraudulent billing practices. Allegedly, once Rabiner fraudulently formed the PC defendants with Katz, he did not have the type of involvement in those entities that a real owner would.

Plaintiffs also allege that the PC defendants regularly submitted no-fault claims to plaintiffs, falsely representing that the PC defendants were valid medical professional corporations. Plaintiffs allege further that they paid substantial amounts of money to the PC defendants based upon their justifiable reliance that the PC defendants comported with applicable statutes and administrative regulations governing the provision of health services. In addition, defendants’ fraudulent conduct encompassed improper multiple billings and the provision of improper, unwarranted or medically unreliable testing.

In prior decision I, I granted motion sequence number 002 and dismissed the complaint against defendants Parkway Magnetic Resonance Imaging, Inc., Metroscan Resonance Imaging, Inc., Katz and Vladimir Shtrakhman. In that same decision I also granted motion sequence number 003 and dismissed the first, second and seventh causes of action, and dismissed the complaint as against Rabiner. I declined to dismiss the eighth cause of action seeking a declaration that plaintiffs have no obligation to pay pending claims, claims they previously denied or any future no-fault claims.

In prior decision II, I granted leave to amend the complaint regarding the billing fraud component of the first cause of action. As amended, the complaint contained sufficient particularity regarding the allegations of billing fraud, including the performance of unnecessary services, as part of an alleged scheme among the PC defendants and other nonparty entities.

The change in law that is the subject of this motion results from State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005] [Mallela III]). That action began with State Farm Mut. Auto. Ins. Co. v Mallela (175 F Supp 2d 401 [ED NY 2001, Sifton, J.] [Mallela I]) that involved similar claims to those presented here. In Mallela I, Judge Sifton concluded that the insurer plaintiff could not recover damages for fraud and misrepresentation, because it had no right of action to enforce the relevant provisions of the Business Corporation Law and because the alleged violations did not relieve the insurer of the obligation to reimburse the insureds or the insureds’ assignees. Judge Sifton found that the Business Corporation Law did not explicitly create a private right of action and that plaintiff did not belong to the class of legislatively intended beneficiaries, so that a right of action would be clearly in furtherance of the legislative [*3]purpose (Mallela I, 175 F Supp 2d at 416). Judge Sifton granted plaintiff leave to amend its complaint to state valid claims describing actionable frauds, but subsequently dismissed the amended complaint with prejudice (State Farm Mut. Auto. Ins. Co. v Mallela, 2002 WL 31946762, 2002 US Dist LEXIS 25187 [ED NY, Nov. 21, 2002]). I followed the reasoning of Judge Sifton in Mallela I when I dismissed plaintiffs’ claims for fraud and unjust enrichment in prior decision I.

The insurance carrier appealed Mallela I to the United States Court of Appeals for the Second Circuit that concluded that the action involved important, determinative and unsettled questions of state law that were likely to recur and important public policy implications (State Farm Mut. Auto. Ins. Co. v Mallela, 372 F3d 500 [2d Cir 2004] [Mallela II]). Thus, in Mallela II, the Second Circuit deemed it appropriate to certify the following question to the New York Court of Appeals:

“Is a medical corporation that was fraudulently incorporated under N.Y. Business Corporation Law §§ 1507, 1508, and N.Y. Education Law § 6507 (4) (c) entitled to be reimbursed by insurers, under New York Insurance Law §§ 5101 et seq. and its implementing regulations, for medical services rendered by licensed medical practitioners?” (Id. at 509.)

In answering the certified question, in Mallela III, the Court of Appeals concluded that these medical corporations could not receive reimbursement, reasoning that Insurance Law § 5101 et seq. requires no-fault carriers to reimburse patients (or their medical provider assignees) for “basic economic loss,” but that in promulgating 11 NYCRR 65-3.16 (a) (12)^[FN*] (eff Apr. 4, 2002), the Superintendent of Insurance excluded from the meaning of “basic economic loss” payments made to unlicensed or fraudulently licensed providers. This renders these entities “not eligible” for reimbursement (4 NY3d at 320). Moreover, the Court of Appeals upheld the Superintendent’s interpretation as not irrational or unreasonable in deference to his special competence and expertise regarding the insurance industry and not counter to the clear wording of the statutory provision (id. at 321). The Court of Appeals held that “on the strength of this regulation, carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law” (id.).

The Court of Appeals also held that, as a matter of law, the insurance carriers could not sue for fraud or unjust enrichment (as opposed to a requirement to reimburse) for any payments that the insurance carriers had already made prior to the regulation’s effective date of April 4, 2002. However, because State Farm’s complaint did not clearly indicate when it had paid defendants, the Court declined to determine whether State Farm had alleged sufficient facts to support its causes of action for fraud or unjust enrichment (id. at 322).

With this background, I now turn to the motion at issue.

I am granting the motion to amend the complaint that seeks to add GEICO as a plaintiff [*4]for the reasons set forth on the record at oral argument on the motion held on December 15, 2005.

I grant the motion for renewal upon the intervening clarification of the law (CPLR 2221 [e] [2]; Roundabout Theatre Co. v Tishman Realty & Constr. Co., 302 AD2d 272 [1st Dept 2003]). As a result of Mallela III, I reinstate plaintiffs’ claims for fraud and unjust enrichment to the extent that plaintiffs made the payments to defendants on or after the regulation’s effective date (Apr. 4, 2002).

Plaintiffs suggest that, in either subsequent separate briefing or through summary judgment motions, the parties should address the issue of whether the fraud and unjust enrichment claims based solely on corporate structure apply to payments made prior to April 4, 2002. I do not find additional briefing or summary judgment motions warranted.

Although I did not dismiss the eighth cause of action for declaratory relief, the parties raised the issue during oral argument concerning whether Mallela III meant that plaintiffs need not reimburse defendants for claims that accrued prior to April 4, 2002 that plaintiffs have not yet paid. (See transcript of oral argument, Dec. 15, 2005, at 30-34.) Although defendants have offered repeatedly to brief this issue, the clarity of the decision of the Court of Appeals in Mallela III renders further briefing unnecessary.

As discussed above, in Malella III, the Court of Appeals held that: (1) the insurance companies could withhold payment for medical services that fraudulently incorporated enterprises provided and to which patients have assigned their claims; (2) the insurance companies could bring actions for fraud and unjust enrichment to recover payments made on or after the regulation’s effective date of April 4, 2002, by implication; and (3) no cause of action for fraud or unjust enrichment would lie for any payments that the insurance carriers made prior to the regulation’s effective date of April 4, 2002. Mallela III left open, however, the issue of whether the insurers could withhold payment (as opposed to recover payments already made) for unpaid claims that accrued prior to April 4, 2002).

Several Civil Court decisions have recently addressed this issue. In Metroscan Imaging P.C. v GEICO Ins. Co. (8 Misc 3d 829 [Civ Ct, Queens County 2005, Siegal, J.]), the court held that insurers could withhold payment for unpaid claims accruing prior to April 4, 2002 because the Court of Appeals held that the “Superintendent’s regulation allowing carriers to withhold reimbursement from fraudulently licensed medical corporations governs this case” (id. at 834, quoting Mallela III at 321; accord Multiquest, PLLC v Allstate Ins. Co., 9 Misc 3d 1031 [Civ Ct, Queens County 2005, Butler, J.] [intent of Mallela III is that regulation is to be applied to claims prior to April 4, 2002]; A.T. Med., P.C. v State Farm Mut. Ins. Co., 10 Misc 3d 568 [Civ Ct, Queens County 2005, Culley, J.] [retroactive application is appropriate where regulatory intent is to remedy widespread abuse and fraud]).

However, several other Civil Court decisions have arrived at a contrary conclusion (see Multiquest, PLLC v Allstate Ins. Co., 10 Misc 3d 877 [Civ Ct, Queens County 2005, Esposito, J.]; Multiquest, P.L.L.C. v Allstate Ins. Co., 10 Misc 3d 1061[A], 2005 NY Slip Op 52069[U] [Civ Ct, Queens County 2005, Kerrigan, J.]; Multiquest, P.L.L.C. v Allstate Ins. Co., 10 Misc 3d 1061[A], 2005 NY Slip Op 52071[U] [Civ Ct, Queens County 2005, Markey, J.]; Multiquest PLLC v Allstate Ins. Co., 10 Misc 3d 1069[A], 2005 NY Slip Op 52209[U] [Civ Ct, Queens County 2005, Pineda-Kirwan, J.]).

This second group of cases holds that insurers cannot withhold payment for unpaid claims [*5]accruing prior to April 4, 2002 because the law disfavors retroactivity. These cases also interpret Mallela III as indirectly answering the retroactivity question by holding that the insurers could not assert a cause of action for unjust enrichment and fraud for claims that matured before the effective date of the regulation.

I agree with the former group of decisions. As Judge Siegal noted in Metroscan (8 Misc 3d 829, 834), Mallela I involved claims that had matured prior to the effective date of the regulation. Hence, the Court of Appeals, in Mallella III, necessarily incorporated claims for reimbursement that matured prior to the effective date of the regulation. Also, a retroactive application is appropriate here because the regulation at issue merely clarified existing law. Further, this holding comports with the policy choice the Court of Appeals made in Mallela III of protecting insurers from fraud as outweighing speedy resolution of claims.

In addition, just because the Court of Appeals precluded the insurers from recouping payments they already made for claims that matured prior to the effective date of the regulation does not mean that the Court of Appeals precluded the insurers from denying reimbursement for unpaid claims whenever those claims occurred. This interpretation comports with the language of the regulation that applies to all unpaid claims regardless of the effective date. The regulation does not address the situation where insurers had paid an illegal entity before April 4, 2002.

Finally, the request for an order clarifying prior decision II, to confirm the reinstatement of plaintiffs’ seventh cause of action for unjust enrichment, is granted. Previously, I dismissed the unjust enrichment claim because, as stated in prior decision I, plaintiffs paid compensation for medical services that licensed practitioners rendered to covered persons under the no-fault laws and because there were insufficient allegations that defendants had been unjustly enriched by receiving compensation for medical services rendered without regard to medical necessity and in excess of those dictated by the patients’ conditions. As stated in prior decision II, however, I found that the amended complaint contained sufficient particularity in its allegations of billing fraud, including the performance of unnecessary services, as part of an alleged scheme among the PC defendants and other nonparty entities. Hence, the unjust enrichment claim contained in the seventh cause of action is viable.

Accordingly, it is ordered that the motion is granted as follows: (1) plaintiffs are granted leave to serve a second amended complaint, and the second amended complaint is deemed served upon defendants, and defendants are directed to answer the second amended complaint within 20 days after service of a copy of this order with notice of entry; (2) plaintiffs’ motion to renew the court’s March 15, 2004 decision and order is granted, and, upon renewal, plaintiffs’ claims of fraud and unjust enrichment based upon a lack of standing to obtain no-fault benefits are reinstated to the extent that plaintiffs made payments to defendants on or after April 4, 2002; and (3) the court’s December 22, 2004 decision and order is clarified to confirm the reinstatement of plaintiffs’ seventh cause of action for unjust enrichment.

Footnotes

Footnote *: The pertinent text of 11 NYCRR 65-3.16 (a) (12) reads as follows: “A provider of health care services is not eligible for reimbursement under section 5102 (a) (1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement . . . .”

—[*1]

In an action to recover no-fault medical payments under an insurance contract, the defendant appeals from an order of the Supreme Court, Nassau County (O’Connell, J.), entered April 20, 2005, which granted that branch of the plaintiffs’ motion which was for summary judgment on the first cause of action, asserted on behalf of the plaintiff Mount Sinai Hospital, as assignee of Trinidad Goforth, and, in effect, denied that branch of its cross motion which was for summary judgment dismissing the first cause of action.

Ordered that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion which was for summary judgment on the first cause of action and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, with costs to the appellant.

In support of that branch of the plaintiffs’ motion which was for summary judgment on the first cause of action, asserted on behalf of the plaintiff Mount Sinai Hospital, as assignee of Trinidad Goforth (hereinafter Mount Sinai), sufficient evidentiary proof was submitted to establish, prima facie, that the defendant, Allstate Insurance Company (hereinafter Allstate), did not pay or deny Mount Sinai’s claim for no-fault medical payments within 30 days as required by 11 NYCRR 65-3.8 (c). However, the evidence submitted by Allstate in opposition to the motion and in support of [*2]that branch of its cross motion which was for summary judgment dismissing the first cause of action, while insufficient to establish its prima facie entitlement to judgment as a matter of law, was sufficient to raise a triable issue of fact as to whether Mount Sinai complied with a demand for verification in accordance with the mandates of 11 NYCRR former 65.15 (g) (1) (i) and (2) (iii). Until it is established when the 30-day period within which Allstate was required to respond began to run, any claim for payment was premature (see 11 NYCRR former 65.15 [g] [1] [i]; [2] [iii]; Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2004]; St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338, 340 [2002]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]; see also Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]).

Accordingly, the Supreme Court correctly denied that branch of the cross motion which was for summary judgment dismissing the first cause of action, but should not have granted that branch of the motion which was for summary judgment on the first cause of action. Cozier, J.P., Santucci, Spolzino and Skelos, JJ., concur.