Civil Court of the City of New York, Kings County

32177/03

Eileen N. Nadelson, J.

On July 10, 2003, Plaintiffs submitted a Motion for Summary Judgment as providers of first party benefits under New York’s No-Fault Insurance Law. That motion was subsequently denied on November 18, 2003, because Plaintiffs failed to provide sufficient support for the requested judgment. Plaintiffs never moved to renew or reargue that decision.

On July 5, 2004, Plaintiffs submitted this instant Motion for Summary Judgment, requesting the same relief based on the same underlying claim. In the motion papers, Plaintiffs state that they are remaking the motion originally filed on July 10, 2003, based on new affidavits of the treating physicians.

The above-recited facts present to the court the issue as to whether a party may file a new [*2]Motion for Summary Judgment after an initial Motion for Summary Judgment for the same relief on the same claim was denied based on insufficient documentary support to grant that motion.

Generally, once a motion for summary judgment has been denied, subsequent motions seeking the same relief must be denied as res judicata. Smith v. Palmieri, 103 AD2d 739, 477 N.Y.S. 2d 206 (2d Dept. 1984). This may be true even if the original denial is based on a party’s failure to come forward with evidentiary facts, rather than on a full determination based on all relevant data. Johnson v. Unexcelled, Inc., 42 AD2d 529, 345 N.Y.S. 2d 1 (1st Dept. 1973). Consequently, the court must determine whether there is any legal basis for permitting Plaintiffs to remake a motion for summary judgment that has previously been denied for technical, rather than substantive, reasons.

Section 3212 of the CPLR establishes the rules for the proof necessary to support a motion for summary judgment. Secion 3212(b) states that

A motion for summary judgment shall be supported by affidavit, by a copy

of the pleadings and by other available proof, such as depositions and written

submissions.

Courts have held, and prudent practice demands, that if a movant, in preparation of a motion for summary judgment, cannot assemble sufficient proof to dispel all questions of material fact, the motion should simply not be submitted. Seefeldt v. Johnson, 13 AD3d 1203, 787 N.Y.S. 2d 594 (4th Dept. 2004). Further, courts may exercise their discretion in rejecting supporting papers that are untimely submitted. Moore v. Long Island College Hospital, 273 AD2d 365, 714 N.Y.S. 2d 683 (2d Dept. 2000).

However, if circumstances arise in which facts essential to justify or oppose a motion may exist but cannot be then stated, the court may order a continuance to permit affidavits to be obtained. CPLR sec. 3212(f). To grant such a continuance, it must be demonstrated by the party requesting such relief that further discovery may lead to the relevant evidence. Wyllie v. District Atty. of County of Kings, 2 AD3d 714, 770 N.Y.S. 2d 110 (2d Dept. 2003).

The courts also permit a party to move to renew or reargue a motion for summary judgment to correct the failure to include proof in evidentiary form in the original motion upon a showing of law office failure and absence of prejudice to the opposing side. Campbell v. Cloverleaf Transp., Inc., 5 AD3d 169, 773 N.Y.S. 2d 50 (1st Dept. 2004). To grant a motion to renew or reargue, the movant must proffer a sufficient excuse as to why a necessary affidavit was not included in the original papers. Brignol v. Warren Elevator Service Co., Inc., 240 AD2d 354, 657 N.Y.S. 2d 768 (2d Dept. 1997).

In the instant case, Plaintiffs never requested a continuance of their original motion, nor did they seek to renew or reargue the denial of that motion. Rather, Plaintiffs simply waited half a year and submitted a new motion that included the affidavits missing from the original papers. [*3]The affidavits now submitted are affidavits from the treating physicians who are the Plaintiffs in this action. No excuse is offered as to why the affidavits were not included with the first papers.

Courts have refused to permit a party to renew or reargue the denial of a motion for summary judgment based on more detailed affidavits than were originally submitted when such elaboration is not based on newly found information and no reasonable justification was given for not including the affidavits in the first instance. Stoklas v. Auto Solutions of Glenville, Inc., 9 AD3d 780, 780 N.Y.S. 2d 215 (3d Dept. 2004). When the inadvertence involved in not including necessary affidavits appears to be the lack of realization of the need for such affidavits rather than mere law office error, the courts refuse to permit a reargument of the denial of a summary judgment motion. Foitl v. G.A.F. Corporation, 64 NY2d 911, 488 N.Y.S. 2d 377 (1985).

It would fly in the face of judicial logic to permit a party to submit a new motion for summary judgment when that party would not be able to reargue the denial of an earlier motion seeking the same relief. Therefore, based on the foregoing, Plaintiffs’ Motion for Summary Judgment is denied as res judicata.

Dated: April 7, 2005

__________________________

EILEEN N. NADELSON, J.C.C.

Civil Court of the City of New York, Kings County

99251/03

Eileen N. Nadelson, J.

Plaintiff medical provider instituted this action for first party benefits pursuant to New York’s No-Fault Insurance Law. Defendant insurer denied Plaintiff’s claim for benefits, alleging that the treatments provided were not medically necessary. The matter was tried before a jury.

In preparing to instruct the jury, the court discovered that there is no Pattern Jury Instruction defining the term “medical necessity,” despite the fact that several decisions have been published attempting to define the term judicially, since it is not defined by the No-Fault statute itself.

In Elm Medical, P.C. aao Tamara Feit v. American Home Assurance Company, 2003 NY Slip Op. 51357U, 2003 NY Misc. Lexis 1337 (Kings County 2003), the court adopted the definition of “medical necessity” used by the New Jersey courts:

A necessary medical expense under the [No Fault] Act is one incurred for

a treatment, procedure, or service ordered by a qualified physician based on

the physician’s objectively reasonable belief that it will further the patient’s

diagnosis and treatment. The use of the treatment, procedure, or service

must be warranted by the circumstances and its medical value must be

verified by credible and reliable evidence.

This is the same definition that was originally used by an earlier court in Medical Experise, P.C.aao Irina Moukha v. Trumbull Insurance Company, 196 Misc 2d 389, 765 N.Y.S. 2d 171 (Queens County 2003).

More recently, based on pending legislation, a modification of the New Jersey definition was promulgated: [*2]

treatment or services which are appropriate, suitable, proper and conducive to

the end sought by the professional health services in consultation with the

patient. It means more than merely convenient or useful treatment or services,

but treatment or services that are reasonable in light of the patient’s injury,

subjective and objective evidence of the patient’s complaints of pain, and the

goals of evaluating and treating the patient.

Behavioral Diagnostics aao Maria Arevalo et al. v. Allstate Insurance Company, 3 Misc 3d 246, 776 N.Y.S. 2d 178 (Kings County 2004), citing Fifth Avenue Pain Control Center v. Allstate Ins. Co., 196 Misc 2d 801, 766 N.Y.S. 2d 748 (Queens County 2003).

Based on the published decisions of the courts, we believe that an appropriate jury instruction on the definition of “medical necessity” is:

For an expense to be considered medically necessary, the treatment, procedure, or

service ordered by a qualified physician must be based on an objectively reasonable

belief that it will assist in the patient’s diagnosis and treatment and cannot be reasonably dispensed with. Such treatment, procedure, or service must be

warranted by the circumstances as verified by a preponderance of credible and

reliable evidence, and must be reasonable in light of the subjective and objective evidence of the patient’s complaints.

Dated: April 7, 2005

__________________________

EILEEN N. NADELSON, J.C.C.

[*1]

Argued February 9, 2005; decided April 5, 2005

Rekemeyer v State Farm Mut. Auto. Ins. Co., 7 AD3d 955, modified.

{**4 NY3d at 472} OPINION OF THE COURT

G.B. Smith, J.

This is a declaratory judgment action in which plaintiff seeks a declaration that she is entitled to payment under the supplementary uninsured/underinsured motorists (SUM) [*2]provision of her insurance contract. The insurance carrier disclaimed on the ground that written notice of the SUM claim was not given as soon as practicable and that a copy of the summons and complaint in plaintiff’s legal action was not immediately given to it. On the facts of this case, we hold that the carrier must show prejudice before it may disclaim coverage due to plaintiff’s late notice of SUM claim.

On May 8, 1998, plaintiff, Cynthia Rekemeyer, was rear-ended while driving her car. Shortly after the accident occurred, Rekemeyer notified State Farm of the occurrence and made a claim for no-fault benefits. At the time of the accident, plaintiff had been unable to work for 18 years due to an existing back problem. Throughout 1998, plaintiff received medical care from a number of doctors for accident related injuries. In December 1998 and again in February 2000, at the request of State Farm, plaintiff was evaluated by a doctor of State Farm’s choice concerning accident related injuries.

On April 27, 1999, plaintiff filed suit against the driver of the other car, Sherwood Bouyea. By letter dated July 21, 1999, plaintiff notified State Farm of the lawsuit. In a bill of particulars {**4 NY3d at 473}dated July 1999, plaintiff alleged that she had suffered “severe and permanent injuries to her left arm and cervical spine.” In September 1999, plaintiff learned that Bouyea’s maximum liability coverage was $50,000. Plaintiff’s demand was for $1 million.

In October 1999, plaintiff underwent surgery on her back for injuries she alleges she sustained as a result of the car accident. On March 12, 2000, Bouyea’s attorney offered $45,000 to settle the claim. On March 31, 2000, plaintiff notified State Farm that she would pursue SUM coverage under her own policy. On April 10, 2000, Bouyea’s attorney made a settlement offer of $50,000. On April 25, 2000, State Farm disclaimed coverage based upon plaintiff’s failure to notify it of the SUM claim as soon as practicable and because of failure to notify it immediately of the lawsuit.

In October 2000, plaintiff brought this declaratory judgment action against State Farm. State Farm answered the complaint. It then filed a motion for summary judgment dismissing the complaint for failure to comply with the insurance contract provision requiring notice of the SUM claim as soon as practicable. On June 19, 2003, Supreme Court denied defendant’s motion to dismiss, and, citing Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso (93 NY2d 487 [1999]), granted plaintiff’s motion for a declaratory judgment for SUM coverage. Supreme Court stated:

“On the facts of this case, it cannot be concluded that plaintiff did not give notice of her SUM claim as soon as practicable as a matter of law. The slowly evolving nature of plaintiff’s injuries, her pre-existing injury and daily pain, [*3]intervening surgeries and the bona fide questions as to severity and causation of the new injury, along with the tortfeasor’s defenses on the issue of liability can reasonably be said to have prevented knowledge that the tortfeasor was underinsured until at or about such time as a settlement offer near or at the limit of his policy was tendered. It was at that point that plaintiff promptly notified defendant of her SUM claim. Thus, defendant’s motion must be denied and plaintiff’s cross motion will be granted.”

On May 20, 2004, Appellate Division reversed and determined:

“[P]laintiff knew or reasonably should have known that {**4 NY3d at 474}Bouyea’s insurance was insufficient to provide full compensation for her injuries and yet she inexplicably waited six months before providing notice to defendant of her intent to make a claim for supplemental coverage. We find such notice to have been untimely and, thus, Supreme Court erred in granting her cross motion for summary judgment.” (7 AD3d 955, 957 [2004].)

On September 21, 2004, this Court granted plaintiff leave to appeal.

Initially, plaintiff argues that she submitted her notice of SUM claim to State Farm as soon as practicable and did not breach the insurance contract. We have held that in the SUM context, the phrase “as soon as practicable” means that “the insured must give notice with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured” (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d at 495). The requirement that the insured give notice as soon as practicable “contemplates elasticity and a case-by-case inquiry as to whether the timeliness of the notice was reasonable, taking all of the circumstances into account” (see id. at 494; see also Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 19 [1979]).

We agree with the Appellate Division that plaintiff did not submit her notice of SUM claim as soon as practicable. Although plaintiff had disabling injuries prior to the accident that may have interfered with her assessment of the extent of new injuries, she stated in her bill [*4]of particulars in the underlying personal injury action—drafted eight months before plaintiff notified defendant of her claim for SUM coverage—that she had suffered serious and permanent injuries as a result of the accident. The record thus belies any claim that she was unaware that her injuries were serious. Moreover, Bouyea informed plaintiff in September 1999 that he was insured for only $50,000. Accordingly, the Appellate Division appropriately concluded that plaintiff’s notice of her SUM claim in March 2000—approximately six months later—was untimely.

Plaintiff also urges this Court to relax its application of the no-prejudice rule in SUM cases where the carrier has been timely put on notice of the accident. This argument is persuasive. The rule in New York has been for years that an insured’s failure to provide timely notice of an accident relieves the carrier of its obligation to perform regardless of whether it can demonstrate {**4 NY3d at 475}prejudice (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 442-443 [1972]). This rule is known as the no-prejudice rule. Although this rule has sometimes been characterized as the “traditional rule,” it is actually a limited exception to two established contract principles: “(1) that ordinarily one seeking to escape the obligation to perform under a contract must demonstrate a material breach or prejudice; and (2) that a contractual duty [requiring strict compliance] ordinarily will not be construed as a condition precedent absent clear language showing that the parties intended to make it a condition” (Unigard Sec. Ins. Co. v North Riv. Ins. Co., 79 NY2d 576, 581 [1992] [citations omitted]). The idea behind strict compliance with the notice provision in an insurance contract was to protect the carrier against fraud or collusion (see id.).

More recently in Matter of Brandon (Nationwide Mut. Ins. Co.), this Court held that a SUM carrier that received timely notice of a claim must show prejudice before disclaiming SUM benefits based on late notice of a legal action (see 97 NY2d 491, 494-495, 498 [2002]). In the SUM context, the Brandon court was unwilling to extend the no-prejudice exception in regard to late notice of a legal suit because “unlike most notices of claim—which must be submitted promptly after the accident, while an insurer’s investigation has the greatest potential to curb fraud—notices of legal action become due at a moment that cannot be fixed relative to any other key event, such as the injury, the discovery of the tortfeasor’s insurance limits or the resolution of the underlying tort claim.” (Id. at 498.)

There are important public policy issues that continue to arise both in federal and state courts which warrant a review of the no-prejudice exception, particularly when the insured has given timely notice of occurrence or claim (see Mark A. Varrichio & Assoc. v Chicago Ins. Co., 312 F3d 544, 548-550 [2002] [certified question to New York Court of Appeals of whether timely notice of occurrence required the insurer to show prejudice before disclaiming for late notice of lawsuit; question withdrawn because parties settled]). This case presents us with an opportunity [*5]to reexamine the applicability of the no-prejudice rule in the SUM context.

The facts of the current case, while different from Brandon, also warrant a showing of prejudice by the carrier. Here, plaintiff gave timely notice of the accident and made a claim for no-fault benefits soon thereafter. That notice was sufficient to promote the valid policy objective of curbing fraud or collusion. Moreover,{**4 NY3d at 476} the record indicates that State Farm undertook an investigation of the accident. It also required plaintiff to undergo medical exams in December 1998 and February 2000. Under these circumstances, application of a rule that contravenes general contract principles is not justified. Absent a showing of prejudice, State Farm should not be entitled to a windfall (Brandon, 97 NY2d at 496 n 3, citing Clementi v Nationwide Mut. Fire Ins. Co., 16 P3d 223, 230 [Colo 2001]). Additionally, State Farm should bear the burden of establishing prejudice “because it has the relevant information about its own claims-handling procedures and because the alternative approach would saddle the policyholder with the task of proving a negative” (id. at 498; see also Unigard, 79 NY2d at 584 [placing the burden of showing prejudice on the reinsurer]). Thus, we hold that where an insured previously gives timely notice of the accident, the carrier must establish that it is prejudiced by a late notice of SUM claim before it may properly disclaim coverage.

Our analysis today is in line with other jurisdictions which require that carriers show prejudice before untimely notice of a SUM claim is held to be a material breach in the contract warranting disclaimer (see Clementi v Nationwide Mut. Fire Ins. Co., 16 P3d 223, supra; State Auto. Mut. Ins. Co. v Youler, 183 W Va 556, 396 SE2d 737 [1990]; Ouellette v Maine Bonding & Cas. Co., 495 A2d 1232 [Me 1985]; State Farm Mut. Auto. Ins. Co. v Burgess, 474 So 2d 634 [Ala 1985]; Pennsylvania Gen. Ins. Co. v Becton, 475 A2d 1032 [RI 1984]; Rampy v State Farm Mut. Auto. Ins. Co., 278 So 2d 428, 435 [Miss 1973]; see also Alcazar v Hayes, 982 SW2d 845, 854 [Tenn 1998] [where an insured has failed to provide timely notice of a claim, there is a rebuttable presumption that the carrier has been prejudiced]).

Accordingly, the order of the Appellate Division should be modified, without costs, by denying defendant’s motion for summary judgment and remitting to the trial court for the carrier to have an opportunity to demonstrate prejudice, and, as so modified, affirmed.

Judges Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur; Chief Judge Kaye taking no part.

Order modified, etc. [*6]

Supreme Court, New York County

10312-04

Weiss, Wexler & Wornow (Cory I. Zimmerman of counsel) for petitioners. Wenig & Wenig (Joseph Szalyga of counsel) for respondent.

James A. Yates, J.

On October 26, 2001, Wayne Wells, an employee of the URS Corporation (URS), was involved in an automobile accident on his way home from work. As a result of the accident, Wells sustained serious injuries and filed a workers’ compensation claim and a no-fault claim for payment of medical bills and lost wages. He also filed a claim for disability benefits with First UNUM Life Insurance Company (First UNUM) and a personal injury action.

Farmers New Century Insurance Company (Farmers) is the no-fault automobile insurance carrier for Mr. Wells. URS was insured by National Union Fire Insurance Company (National) for Workers’ Compensation insurance liability. American International Group Claim Services, Inc., (AIG) handles workers’ compensation claims that URS employees bring under the National policy. AIG denied Mr. Wells workers’ compensation benefits on the ground that he was not injured during the course of his employment. As a result of National’s denial of coverage and pursuant to its insurance policy with the insured, Farmers alleges it paid first-party benefits to Mr. Wells. 11 NYCRR 65.15 [q] [3] [I]. First UNUM , URS and claimant’s major medical insurer also paid monies to Mr. Wells. Since other insurers paid benefits to the claimant, AIG [*2]allegedly alerted the Workers’ Compensation Board of this fact and requested that the Board determine the amounts due as reimbursement from AIG.

On June 10, 2002, the Workers’ Compensation Board issued a decision finding that claimant’s injuries were work-related, entitling him to an award. See Pet. Aff., Ex. C, Workers’ Compensation Board Decision, dated June 14, 2002. On that date, AIG withdrew its objections to claimant’s claim. By application dated January 7, 2004, respondent commenced arbitration proceedings against petitioner at Arbitration Forums, Inc. Farmers claimed it paid no-fault benefits to Mr. Wells from the date of the accident until June 10, 2002 in the amount of $ 55, 460.45, and now was seeking reimbursement from petitioner through arbitration.

After receiving notice of the intent to arbitrate, petitioner commenced this Article 75 proceeding for a stay of arbitration, arguing it could not be obligated to participate in the arbitration. First, petitioner argued that the Workers’ Compensation Board is vested with primary jurisdiction as to the applicability of workers’ compensation or no-fault insurance coverage in work-related motor vehicle accidents. O’ Rourke v Long, 41 NY2d 219, 228 [1976]. Petitioner then contended that the matter was already pending before the Workers’ Compensation Board, that respondent was included and involved in that action and that the only proper forum for determining the amounts, if any, which AIG was responsible to repay to respondent was the Board. In the alternative, petitioner argued that if the court allowed the arbitration to proceed, then the court should add the claimant as an additional respondent in the arbitration proceeding, so that the arbitrator would be able to make an award, if any, against the proper party, the claimant himself. Respondent opposed the petition, arguing that there was no basis for a stay. To avoid inconsistent decisions on the matter, a temporary stay of the arbitration was granted by this Court pending a decision by the Board on the issue of lien priority among the disability carrier, employer, and the no-fault carrier.

On July 29, 2004, a Workers’ Compensation Board hearing was held before Judge Jonathan Frost. Petitioner alleges that respondent failed to submit a brief to the Board explaining the reasons Farmers believed it was entitled to reimbursement. Following the hearing at which Farmers was allowed to participate, a decision was issued on November 19, 2004, finding that no-fault benefits were not reimbursable, as a matter of law, under the Workers’ Compensation statute. See Letter from Joseph W. Szalyga, Respondent’s Counsel, to the Court, dated November 23, 2004; Workers’ Compensation Board Decision, dated November 19, 2004. The Board determined that the disability carrier was liable for paying benefits pending the outcome of the compensation litigation. Because the disability carrier was legally obligated to pay benefits during the period in question and the employer was not obligated to continue wage payments to claimant during the same period, the Board held that the disability carrier’s lien had priority over the employer’s lien. Therefore, the disability carrier was to be reimbursed in full for the period of time in which benefits were paid. After the disability carrier’s lien was satisfied, the employer could be reimbursed for “the difference between the proper compensation rate payable to claimant during that period and the amount reimbursed to the disability carrier.” id. [*3]

Judge Frost also held that the compensation carrier was not entitled to a lien under Workers’ Compensation Law section 29 on the amount of monies claimant received under his employer’s underinsurance coverage. He reasoned that the lien and offset provisions of section 29 could only be applied against recoveries from third-party tortfeasors who were responsible for Wells’ injuries. Furthermore, he found “irrelevant that the underinsured policy claimant received these proceeds from was the employer’s because the employer was not the person whose negligence or wrong caused the claimant’s injuries.” id. citing Shutter v Philips Display Components Co., 90 NY2d 703 [1997]. The case was to continue on the issue of proper awards consistent with the decision.

Respondent argues that the dispute is subject to mandatory arbitration pursuant to Workers Compensation Law 29 (1-a) and the loss transfer provisions of Insurance Law section 5105. Petitioner argues that if respondent made any erroneous payments to claimant, AIG’s remedy is to seek reimbursement of these monies directly from claimant or his medical providers. As well, petitioner contends that if respondent is entitled to reimbursement of any sum of money, it is not entitled to the amount claimed.

By definition, uninsured motorist coverage compensates for “noneconomic” loss and economic loss in excess of basic economic loss, and shall not duplicate any element of basic economic loss. Insurance Law § 3420 [f] [1]. Workers’ compensation benefits by definition are limited to reimbursement for basic economic loss. Workers’ Compensation Law § 10 et seq.

As part of the No-Fault Law, the Legislature enacted section 674 (now section 5105) adopting a new procedure that authorizes first-party benefits with a resulting equitable adjustment between insurers without the need for the formalities applicable to litigation of claims. Matter of City of Syracuse v Utica Mut. Ins. Co., 61 NY2d 691 [1984]. Section 5102 [g] of the Insurance Law defines an insurer as:

“[T] he insurance company or self-insurer, as the case may be, which provides the financial security required by article six or eight of the vehicle and traffic law.”

Insurance Law section 5105 and 11 NYCRR section 65. 10 of the Regulations of the Superintendent of Insurance provide for mandatory arbitration of certain priority of payment or joint coverage situations. That statute reads, in part, as:

“Settlement between insurers. (a) Any insurer liable for the payment of first party benefits to or on behalf of a covered person and any compensation provider paying benefits in lieu of first party benefits which another insurer would otherwise be obligated to pay pursuant to subsection (a) of section five thousand one hundred three of this article or section five thousand two hundred twenty one of this chapter has the right to recover the amount paid from the insurer of any other covered person to the extent that such other covered person to the extent that such other covered person would have been liable, but for the provisions of this article, to pay damages in an action at law. In any case, the right to recover exists only if at least one of the motor vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds unloaded or is a motor vehicle used principally for the transportation of persons or [*4]property for hire.

* * *

(b) The sole remedy of any insurer or compensation provider to recover on a claim arising pursuant to subsection (a) hereof, shall be the submission of the controversy to mandatory arbitration pursuant to procedures promulgated or approved by the superintendent. Such procedures shall also be utilized to resolve all disputes arising between insurers concerning their responsibility for the payment of first party benefits. ”

Insurance Law section 5105 is inapplicable in this matter. The mandatory arbitration provisions are concerned with a party’s status as an insurer or compensation provider. See Pacific Ins. Co. v State Farm Mut. Auto Ins. Co., 150 AD2d 455 [2d Dept 1989]; see also Shutter v Philips Display Components Co., 90 NY2d 703 [1997] . While the statutory scheme requires mandatory arbitration to resolve all disputes arising between insurers concerning their responsibility for the payment of first-party benefits or between compensation providers, the courts have held that a workers’ compensation carrier is not bound to arbitrate a claim by a no-fault insurer for money it was obligated to pay during the time that the workers’ compensation carrier was contesting the claim.

In American Mut. Ins. Co. v Merchants Ins. Group (123 Misc 2d 331 [Sup Ct Onondaga County 1984] ), the court determined that although a good case could be made for including a no-fault insurer’s action to recover from a workers’ compensation carrier within the mandatory arbitration provision of section 674 of the Insurance Law (now section 5105), the statute did not encompass this kind of controversy. “The failure of the Legislature to include a particular situation was an excellent indication that its exclusion was intended.” id. at 332 citing McKinney’s Cons Laws of NY, Book 1, Statutes, § 74. In such cases, the court was not at liberty to supply an omitted provision. id. This matter is not factually distinguishable from American Mut. Ins. Co. v Merchants Ins. Group. That being the case, Farmers does not possess an arbitrable claim against AIG and the demand that arbitration be ordered is denied.

As well, an insurer can present a claim to recover basic economic loss from the insurer of another covered person, if (a) one of the motor vehicles involved in the accident weighs more than 6, 5000 lbs. unloaded; or (b) is a motor vehicle used for the transportation of persons or property for hire. Under those circumstances, arbitration is mandatory. There was no evidence presented that the vehicles involved in the accident met this condition precedent to arbitration.

The Court, by this decision, does not mean to imply that respondent is not entitled to reimbursement. The decision is limited merely to a finding that the parties have not agreed to arbitration and Insurance Law section 5105 does not impose arbitration upon them.

Accordingly, petitioner’s application to permanently stay the arbitration between the parties is granted and respondent’s cross- motion to dismiss the application is denied.

This constitutes the Decision and Order of the Court.

[*5]Dated: March 31, 2005

New York, New York

_______________________________

JAMES A. YATES, J.S.C.

Civil Court of the City of New York, Kings County

108436/04

Ellen M. Spodek, J.

Upon the foregoing papers, petitioner T.S. Medical P.C. moves for an order, pursuant to Article 75 of the CPLR, vacating a No-Fault Master Arbitration Award.

After petitioner was denied no-fault benefits, it filed a request for arbitration. The arbitration award that was rendered on March 23, 2004 denied petitioner’s claim. Petitioner then requested a review of the arbitration award by a Master Arbitrator. The case was reviewed and the Master Arbitrator upheld the lower arbitration award. This decision was rendered on or around July 22, 2004. This petition is filed less than ninety (90) days since receipt of the Master Arbitrator Award.

The Second Department holds “[w]hen a party to a controversy is compelled by statute to submit to arbitration—and thereby loses the right of initial resort to a judicial forum—the right to review the resulting arbitration award cannot in turn be overly limited in scope, without involving a due process issue. Thus the Court of Appeals has interpreted CPLR article 75 as requiring broader review when compulsory arbitration is in issue than when the matter has a consensual origin.” (Shand v Aetna Ins. Co., 74AD2d 442, 446 (2d Dept 1980); citing Furstenberg v Aetna Casualty & Surety Co., 49 NY2d 757 [1980]; Mounty St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 [*2]NY2d 493 [1970]; Caso v Cofey, 41 NY2d 153, 155 [1976]; 1 NY Jur 2d, Administrative Law §190). In the case at bar, petitioner chose to go to arbitration. Arbitration was only mandatory for the defendant thus a narrow review is required. Further, a master arbitrator’s award may be vacated if it is arbitrary and capricious, irrational or without a plausible basis. (Steinauer v. N.Y Central Mutual Fire Insurance Company, 707, N.Y.S.2d 706).

In it’s report, the arbitrator states that “Respondent’s denial for treatment in October 2001 is late and for those subsequent treatments the denial is improperly based on a nurse’s audit.” However, he concludes that the applicant had to prove medical necessity in it’s prima facie case. This position was upheld by the Master Arbitrator. It is well established that the burden is on the insurer to prove the lack of medical necessity and not on the insured to prove medical necessity in establishing their prima facie case. (Amaze Medical Supply Inc. v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U][App Term, 2d and 11th Jud Dists]; Damadian MRI In Elmhust, P.C. v Liberty Mutual Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U], [App Term, 9th and 10th Jud Dists]; see also A.B. Medical Services PLLC v Lumbermens Mutual Casualty Co., 4 Misc 3d 86, 87 [App Term, 2d and 11th Jud. Dists].)

The courts have consistently held that it is proper to “vacate the determinations of a master arbitrator who denied a petitioner payment for overdue no-fault benefits because it did not have rational basis.” (In the Matter of Pradip Das/N.Y. Medical Rehab P.C. v Allstate Insurance Company, 297 AD2d 321 (2nd Dept. 2002)). Clearly, in order for the decision of the Master Arbitrator to be rational it would have to comport with the established principles of law. The insurance regulations clearly enumerate the methods of review available to the Master Arbitrator including the ability to overturn an award that was “incorrect as a matter of law. “NYCRR 65.17 (a)(4). In this action, the Master Arbitrator had the power to correctly apply the law, but chose not to.

Accordingly, this Court grants the petitioner’s motion and finds that the Master Arbitrator’s award should be vacated.

The foregoing constitutes the decision and order of this court.

E N T E R,

Dated: March 31, 2005__________________

Hon. Ellen M. Spodek

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiffs from so much of an order of the Civil Court, Kings County (A. Fisher Rubin, J.), entered on November 20, 2003, as denied the motion for summary judgment by plaintiff Daniel Kim’s Acupuncture P.C.

Order, insofar as appealed from by plaintiff Daniel Kim’s Acupuncture P.C., unanimously reversed without costs, motion by plaintiff Daniel Kim’s Acupuncture P.C. for summary judgment granted and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees. [*2]

Appeal by plaintiffs A.B. Medical Services PLLC, D.A.V. Chiropractic P.C. and Square Synagogue Transportation Inc. unanimously dismissed.

In this action, inter alia, to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff Daniel Kim’s Acupuncture P.C. established a prima facie entitlement to summary judgment by proof that it submitted the claims, 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 peer review report included by defendant in its opposition papers does not warrant denial of plaintiff’s motion for summary judgment, since said report was unsworn, and was therefore not in admissible form (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 2004]; A.B. Med. Servs. v N.Y. Cent. Mut. Fire Ins. Co., 3 Misc 3d 136[A], 2004 NY Slip Op 50507[U] [App Term, 2d & 11th Jud Dists]; cf. CPLR 2106). In view of the foregoing determination, we need not address the parties’ remaining contentions.

Accordingly, summary judgment is granted in favor of plaintiff Daniel Kim’s Acupuncture P.C., 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.

Inasmuch as no issue is raised by the remaining appellants, the appeal with respect to them is dismissed (see Praeger v Praeger, 162 AD2d 671 [1990]).
Decision Date: March 31, 2005

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal by plaintiff from an order of the District Court, Nassau County (S. Jaeger, J.), entered February 17, 2004, which denied its motion for summary judgment.

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

In this action to recover assigned first-party no-fault benefits for medical supplies furnished its assignors, plaintiff established prima facie entitlement to summary judgment by proof that it submitted claim forms setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (Insurance Law § 5106 [a]; 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]). Defendant’s failure to pay or deny the Tsvetkov claim within the prescribed 30-day period (11 NYCRR 65.15 [g] [3], now 11 NYCRR 65-3.8 [c]) precludes defendant from interposing defenses to that claim with exceptions herein inapplicable (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]) and summary judgment should have been granted as to said claim.

Defendant denied the remaining claims on the sole ground that plaintiff failed to produce [*2]the “initial narrative report[s] from the preparing physician” pursuant to a timely initial verification request (11 NYCRR 65.15 [d] [1], now 11 NYCRR 65-3.5 [a]). However, while an insurer need not pay or deny a claim until all requested verification is received (11 NYCRR 65.15 [g] [2] [iii], now 11 NYCRR 65-3.8 [b] [3]), the insurance regulations also impose on the insurer, when an initial verification request is not honored within 30 days, the duty to follow up with a second request within 10 days (now 15 days) (11 NYCRR 65.15 [d] [2], now 11 NYCRR 65-3.5 [b]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584-585 [2002]). Any attempt by the insurer to deny the claim prior to exhausting the verification protocols is premature and of no effect (New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004]; King’s Med. Supply v New York Cent. Mut. Fire Ins. Co., 5 Misc 3d 136[A], 2004 NY Slip Op 51550[U] [App Term, 2d & 11th Jud Dists]). Since the tolling of the 30-day claim determination period, which occurred upon defendant’s initial verification request (11 NYCRR 65.15 [d] [1], [2], now 11 NYCRR 65-3.5 [a], [b]), lapsed in the absence of a timely follow-up request, defendant must be deemed to have failed to pay or deny the claims within the statutory time, precluding the defense based
on the failure to produce requested verification, as well as the additional defenses interposed for the first time in opposition to the summary judgment motion (Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2004]).

Accordingly, plaintiff’s motion for summary judgment is granted, and the matter remanded to the court below for a calculation of statutory interest and an assessment of
attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.
Decision Date: March 31, 2005

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, Kings County (J. Battaglia, J.), entered December 3, 2003, as denied its motion for summary judgment.

Order unanimously modified by providing that plaintiff’s motion is granted to the extent of awarding partial summary judgment in favor of plaintiff in the principal sum of $660 and matter remanded to the court below for the calculation of statutory interest and an 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 assigned first-party no-fault benefits, plaintiff provider established its entitlement to summary judgment prima facie by proof that it submitted statutory claim forms, setting forth the fact and the amount of the loss sustained ($660 and $895), 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]). Defendant issued timely requests for verification in the form of independent medical examinations (IMEs) (11 NYCRR 65.15 [c] [1], now 11 NYCRR 65-3.5 [a]). Upon assignor’s failure to appear for the first scheduled IME, defendant issued a claim denial form for the $660 claim, citing as the ground for denial, the eligible injured person’s failure to attend the IME. While this denial was timely under the 30-day claim determination rule (11 NYCRR 65.15 [g] [1] [i], now 11 NYCRR 65-3.8 [a] [*2][1]), the sole ground set forth therein, the failure to appear for a post-claim IME, under the circumstances presented, lacked merit as a matter of law. Having requested IMEs post-claim IMEs, defendant was obligated to “follow up” its initial verification request with a second IME request within 10 days of the date on which the party to be examined failed to respond (see 11 NYCRR 65.15 [d] [3], now 11 NYCRR 65-3.5 [c]; 11 NYCRR 65.15 [e] [2], now 15 days per 11 NYCRR 65-3.5 [b]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584-585 [2002]). By failing to “follow up,” defendant abandoned its request for verification and therefore may not, as a matter of law, use the failure to provide verification, here an IME, as a basis to deny the claim (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004]; see Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2004]). Thus, the denial form was ‘ineffective to avoid preclusion” (Amaze Med. Supply v Eagle Ins. Co., 3 Misc 3d at 44; see Nyack Hosp. v State Farm Mut. Auto Ins. Co., 11 AD3d at 664) as to all defenses to the $660 claim with exceptions here inapplicable, and summary judgment should have been granted thereon (see S & M Supply v Allstate Ins. Co., 2003 NY Slip Op 51191[U] [App Term, 2d & 11th Jud Dists]).

With respect to the $895 claim, which defendant concededly never paid or denied, defendant asserted plaintiff’s failure to respond to two verification request letters, dated January 18, 2000 (3 days after the claim’s receipt) and February 19, 2000 which, if timely mailed, would constitute a defense to the action on the claim as an insurer need not pay or deny a claim until all requested verification is received (see 11 NYCRR 65.15 [g] [2] [iii], now 11 NYCRR 65-3.8 [b] [3]). In our view, defendant’s proof of mailing sufficed to raise a triable issue of the timeliness of mailing. Thus, summary judgment was properly denied as to the claim for $895.

Accordingly, as to the claim for $660, 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, and as to the remaining claim, the matter is remanded for all further proceedings thereon.
Decision Date: March 31, 2005

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiffs, as limited by their brief, from so much of an order of the Civil Court, Kings County (E. Prus, J.), entered April 27, 2004, as denied their motion for partial summary judgment without prejudice to renew upon submission of proper papers.

Order unanimously affirmed without costs.

In an action to recover first-party no-fault benefits for medical services rendered to an assignor, the plaintiff establishes a prima facie entitlement to summary judgment by offering proof that it submitted claims which set 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]). By failing to append the necessary claim forms to their motion papers, plaintiffs did not establish their prima facie case, and the court below appropriately denied their motion for partial summary judgment with leave to renew upon submission of proper papers.
Decision Date: March 31, 2005

District Court, Nassau County

14015/04

Sondra K. Pardes, J.

The defendant’s motion and the plaintiff’s cross motion for summary judgment pursuant to CPLR 3212 are decided as follows.

FACTS OF THE CASE

This is an action for recovery of No-Fault Insurance benefits for medical services provided to the assignor in connection with an automobile accident that occurred on September 20, 2003. It is uncontroverted that the plaintiff medical provider provided medical services to the assignor and submitted bills for same, along with an assignment of benefits form dated October 25, 2003, to the defendant. The bills and Assignment of Benefits (“AOB”)form were received by the defendant on November 17, 2003. By letter dated November 19, 2003 the defendant requested that the plaintiff submit an AOB form signed by the plaintiff. The plaintiff forwarded a second AOB, (also dated October 25, 2003), which was received by the defendant on January 8, 2003. The defendant has not [*2]paid or denied the claim.

The defendant now moves for summary judgment on the grounds that the plaintiff failed to obtain a properly executed assignment of benefits pursuant to 11 NYCRR 65-3.11(b)(I). The defendant maintains that its requests for additional verification remains outstanding and therefore its time to pay or deny the claim has not run and this action must be dismissed as premature.

The plaintiff cross moves for summary judgment on the grounds that the AOB form received by the defendant on January 8, 2003 satisfied the request for additional verification and the defendant’s time to pay or deny the claim ended thirty days after that date.

No-Fault Insurance regulations 11 NYCRR 65-3.11(b)(2) provide, in pertinent part, that in order for a health care provider to receive direct payment from an insurer, it must submit “a properly executed assignment on: (i) the prescribed verification of treatment by the attending physician or other provider of service form (N.Y.S. form NF-3), or (ii) the prescribed verification of hospital treatment form (N.Y.S. form NF-4), or the prescribed hospital facility form (N.Y.S. form NF-5), or (iii) the prescribed no-fault Assignment of Benefits form (N.Y.S. form NF-AOB) contained in Appendix 13, infra, or an equivalent form containing nonsubstantive enhancements, but no changes may be made to the assignment language itself…”.

The attorney for the defendant argues that in the instant case the defendant elected to utilize the NF-AOB form. That AOB form, which was received by the defendant on January 18, 2003, contains a line for “Signature of Provider”. The following hand printed statement appears above that line: “- on behalf of Amy Beth Goldman, M”. There is no “signature” on that line. In addition, there is no identification of the individual who allegedly signed “on behalf of” Amy Beth Goldman. Although counsel for the defendant argues “there is no requirement” that a NF-AOB form contain a signature by the provider, the form the plaintiff elected to utilize clearly requires a “Signature of Provider”. The plain language of the No-Fault Insurance regulations requires that the provider submit a “properly executed assignment” on whatever form it chooses to submit.

It is well established that the No-Fault law is in derogation of the common law and must therefore be “strictly construed” (Presbyterian Hosp. In the City of NY v. Atlanta Casualty Co., 210 Ad2d 210, 211 [2nd Dept., 1994]). Based on the above, the court finds that the plaintiff failed to submit a properly executed AOB and therefore it has failed to comply with the defendant’s request for additional verification pursuant to 11 NYCRR 65.15(g)(I). Consequently, this court finds that the defendant’s time to pay or deny the [*3]claim has not begun to run.

Accordingly, based on the above, the plaintiff’s cross motion for summary judgment is denied and the defendant’s motion for summary judgment is granted; and it is

Ordered that the plaintiff’s complaint is dismissed.

So Ordered:

________________________

DISTRICT COURT JUDGE

Dated: March 29, 2005

CC:Friedman, Harfenist, Langer & Kraut

Freiberg & Peck, LLP