District Court of Nassau County, Third District

1587/04

Alden Banniettis, Esq., attorney for plaintiff; Samuel K. Rubin, attorney for defendant.

Randy Sue Marber, J.

Plaintiff assignee moves for an order pursuant to CPLR 3212, awarding summary judgment in its favor. The defendant opposes the plaintiff’s motion.

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering evidence to demonstrate the absence of any material issues of fact. Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Alvarez v. Prospect Hospital, 68 NY2d 320 [NY 1986]; Winegard v. New York University Medical Center, 64 NY2d 851 [NY 1985]) and even in the absence of opposing papers. A motion for summary judgment shall be supported by an “affidavit by a person having personal knowledge of the facts”, shall recite all the material facts and it shall show that there is no defense to the cause of action or that the defenses have no merit (CPLR 3212[b]). If the moving party meets his burden, the burden then shifts to the non-moving party to allege such evidentiary facts that raise a genuine and material controversy as to the issue(s) before the Court. Where the opposing party fails to meet his burden and the Court finds no triable issues, the motion will be granted (Iandoli v. Lange, 35 AD2d 793 [NYAD 1st Dept 1970]). Where the Court determines that a triable issue of fact exists, denial of the motion is the proper course of action (Moskowitz v. Garlock, 23 AD2d 943 [NYAD3d Dept 1965]). [*2]

“A plaintiff establishes a prima facie case … by showing … that insurance coverage existed; that a facially valid claim was presented; and that the claim was not timely denied” (Vinings Spinal Diagnostic, P.C. v. Liberty Mut. Ins. Co., 186 Misc 2d 287, 291 [NY Dist Ct Nassau 2000]). Plaintiff’s proof upon its instant motion consists of an affirmation of counsel and an unverified complaint (both having no probative value as to the relevant facts the Court is searching). It is also supported by a short affidavit of “Ernest Horowitz MD”, who asserts that he is an officer of the plaintiff/assignee. In his affidavit, he declares that the “assertions in his counsel’s affirmation are true and correct”. He states that his knowledge of the facts comes from his “business records, maintained as a matter of practice, by [him], in [his] practice”. The Court does not accept the attempted incorporation by reference by affiant Horowitz (whose burden it is to prove relevant facts upon personal knowledge) of factual allegations contained in plaintiff’s counsel’s affirmation where counsel’s allegations are based upon counsel’s “interview of (unnamed) corporate affiants and defendant’s business records … “. Horowitz’s affidavit does not show upon first-hand knowledge the dates each of the plaintiff’s six purported claim forms were sent to or received by defendant. Although plaintiff’s application contains proofs of six mailings of something, Dr. Horowitz’s affidavit does not prove what was mailed and that same were mailed by him. Dr. Horowitz does not state that no payments have been made by the Defendant within thirty days of the submission of those bills … nor does he show that the defendant did not properly seek additional verification. The Court notes that the plaintiff has not demonstrated the untimeliness of the defendant’s denial. Although the affiant indicates that his file contains certain documents, the affirmation fails to make specific reference to any pertinent exhibits which it may have derived from his file. Dr. Horowitz appears to be a complete “stranger” to the treatment and claim submission in this matter.

Although not pertinent to the Court’s above determination, the Court notes that the lateness of a denial or the absence of a required denial does not prohibit the insurer from raising the defense of lack of coverage based upon the fact or founded belief that the alleged injury did not arise out of an insured incident; in this case an alleged fraud on the part of the assignor (Metro Medical Diagnostics, PC v. Eagle Insurance Co., 293 AD2d 751 [NYAD 2d Dept 751, 2002]; Valley Psychological PC v. Liberty Mutual Insurance Co., 195 Misc 2d 540 [City Ct, Albany 2002]). “The Court of Appeals did not intend the issue of fraud to escape the notice of the court simply because of a late denial” (Valley Psychological PC v. Liberty Mutual Insurance Co., supra at 542). Although there is no application presently before the Court to amend the answer, the unpled defense of fraud is available to a defendant in resisting plaintiff’s summary judgment motion (Rizzi v. Sussman, 9 AD2d 961 [NYAD 2d Dept 1959]).

In addition, the No-Fault Verification of Treatment furnished by plaintiff’s counsel to the Court differs from what was apparently sent to the defendant upon submission of the claim. Furthermore, any deficiencies in the moving papers cannot be remedied on reply as attempted herein. [*3]

Plaintiff’s instant motion seeking summary judgment in its favor is, in all respects, denied. Defendant is awarded costs on this motion.

Dated: ____________

ENTER:

____________________________________

Randy Sue Marber, District Court Judge

cc: Alden Banniettis, Esq.

Samuel K. Rubin, Esq.

Civil Court, Kings County

87097KCV2004

Eileen N. Nadelson, J.

This matter involves the disputed billing of $1,791.73 for MRIs which was denied by the arbitrator based upon the grounds of lack of documented medical necessity. Petitioner appealed the arbitrator’s award to a Master Arbitrator, alleging that the arbitrator’s decision was arbitrary, capricious, irrational and without a plausible basis in fact. Based on that argument, Petitioner asked the Master Arbitrator to vacate the award pursuant to CPLR section 7511(b)(1). The Master Arbitrator, however, affirmed the arbitrator’s award.

Petitioner, pursuant to CPLR 7511, now moves this court to vacate the decision of the Master Arbitrator as arbitrary and capricious.

In presenting its claim to the arbitrator, Petitioner evidenced that it submitted its claim, a valid assignment of first party benefits, and that Respondent insurer failed to pay or deny the claim within thirty days of receiving the claim. The arbitrator found that Respondent failed to [*2]pay or deny the claim in a timely manner; however, the arbitrator also found that the MRIs billed for were not medically necessary. Based on this finding, the arbitrator denied the claim, stating that Petitioner failed to meet its burden of proof with respect to the medical necessity of the MRIs. The Master Arbitrator, in affirming the award, found that the arbitrator’s conclusion was based on sufficient evidence to support the award.

CPLR section 7511((b)(iii) provides that an arbitrator’s award may be vacated if it is found that the arbitrator exceeded his power or imperfectly executed it. In Petrofsky v. Allstate Insurance Company, 54 N.Y. 2d 207, 445 N.Y.S. 2d 77 (1981), the Court of Appeals held that the role of a master arbitrator in insurance cases is to assure that the arbitrator reached a decision in a rational manner, that the decision was not arbitrary and capricious, incorrect as a matter of law, or in excess of policy limits or in conflict with other designated no-fault arbitration proceedings. Therefore, the question to be decided by this court is whether the decision of the arbitrator, as confirmed by the Master Arbitrator, was arbitrary, capricious, or incorrect as a matter of law.

Historically, the courts held that the applicable test for review of no-fault arbitrations where error of law is in issue is essentially similar to that utilized for review of quasi-legislative determinations- whether any reasonable hypothesis can be found to support the questioned interpretation. Shand v. Aetna Insurance Company, 74 A.D. 2d 442, 428 N.Y.S. 2d 462 (2d Dept. 1980). Under this theory, a court, in reviewing an arbitrator’s award, should not set it aside for errors of law or fact unless the award is so irrational as to require vacatur. Hanover Insurance Company v. State Farm Mutual Insurance Co., 226 A.D. 2d 533, 641 N.Y.S. 2d 547 (2d Dept. 1996). Even as recently as 1997, the courts in this department upheld arbitrator’s decisions, even if the arbitrator misconstrued the law, provided that the arbitrator’s conclusion was neither irrational nor arbitrary and capricious so as to justify vacating the award. Gravenese v. Allstate Insurance Company, 245 A.D. 2d 507, 666 N.Y.S. 2d 710 (2d Dept. 1997). However, more recently the courts in the second department have taken a different approach when called upon to review arbitral decisions.

In Park Radiology, P.C. v Allstate Insurance Company, 2 Misc. 3d 621, 769 N.Y.S. 2d 870 (Richmond County 2003), a case involving the claim for first party no-fault benefits, the arbitrator, as in the instant case, found that the insurer failed to pay or deny the claim within the prescribed thirty day period. Nevertheless, the arbitrator found that the medical provider failed to establish a prima facie case that the tests performed were medically necessary and so denied the claim. In affirming the award, the master arbitrator cited the Petrofsky case as limiting his ability to vacate an award that is neither arbitrary nor capricious. However, the Civil Court vacated the master arbitrator’s decision and found for the medical provider, asserting that the arbitrator and master arbitrator misconstrued the law.

The law with respect to the burden of proof in first party no-fault claims was established by the court in Bonetti v. Integron National Insurance , 269 A.D. 2d 413, 703 N.Y.S. 2d 217 (2d Dept. 2000). The Bonetti court stated that, with limited exception, an insurer is precluded from [*3]denying a no-fault claim if it fails to timely deny it. Further, an insurer is precluded from challenging the adequacy of a claimant’s proof of medical necessity if it fails to timely deny the claim for no-fault benefits. Vinings Spinal Diagnostic, P.C. v Liberty Mutual Insurance Company, 186 Misc. 2d 287, 717 N.Y.S. 2d 466 (Nassau County 2000). This is true despite a contrary position taken by the New York Department of Insurance.

In an informal opinion letter entitled “No-Fault Burden of Proof,” January 11, 2000, the Department of Insurance indicated that, even if a claim is not timely denied, the claimant may still have to substantiate that the treatment for which reimbursement is sought was medically necessary. This approach has been taken by the arbitrators in no-fault arbitration, but has not been followed by the courts. Das/N.Y. Medical Rehab P.C. v. Allstate Insurance Company, 297 A.D. 2d 321, 746 N.Y.S. 2d 262 (2d Dept 2002).

This court finds that the overwhelming weight of judicial authority in this matter holds that an insurer is precluded from raising any defense, other than lack of coverage, when it fails to comply with the rule requiring it to deny a claim within thirty days of receipt of the claim. Insurance law section 5106(a); New York Medical Center of Queens v. Country-Wide Insurance Company, 295 A.D. 2d 583, 744 N.Y.S .2d 201 (2d Dept. 2002); New York & Presbyterian Hospital v. American Transit Insurance Company, 287 A.D. 2d 699, 733 N.Y.S. 2d 80 (2d Dept. 2001).

Consequently, the court concludes that petitioner met its burden of proof when it presented its claim and proof that Respondent failed to deny the claim within thirty days. Based on the decision in Park Radiology, P.C. , supra, the court holds that the arbitrator’s and Master Arbitrator’s award did not have a rational basis since it is contrary to the state of legal precedent.

The court vacates the decision of the Master Arbitrator and finds for Petitioner in the amount of $1,791.73, with statutory interest and fees as established iin section 5106(a) of the Insurance Law.

Dated: September 27, 2004

__________________________

EILEEN N. NADELSON, J.C.C.

[*1]

Civil Court of the City of New York, Kings County, September 24, 2004

APPEARANCES OF COUNSEL

Amos Weinberg for plaintiff. Melli, Guerin & Melli (Matthew J. Smith of counsel), for defendant.

OPINION OF THE COURT

Eileen N. Nadelson, J.

Plaintiff, a medical provider that is seeking first-party benefits pursuant to New York’s No-Fault Insurance Law, has moved for summary judgment based on defendant insurer’s failure to pay or deny plaintiff’s claim within the statutory 30-day period following submission of said claim.

Defendant is opposing the motion for summary judgment by asserting that it is not subject to the provisions of 11 NYCRR 65-3.4 because plaintiff’s assignor, the person allegedly injured in the motor vehicle accident, failed to submit to several requests for an examination under oath (EUO), and that the loss is not a covered loss because the accident was staged, thereby rendering plaintiff’s assignor a noneligible party pursuant to New York’s No-Fault Regulation 68 (11 NYCRR part 65).

In reply to defendant’s opposition to this motion, plaintiff avers that the basis for denial [*2]stemming from its assignor’s failure to submit to EUOs is inapplicable because the statute authorizing such basis did not go into effect until after the incident in question. Further, plaintiff maintains that any accusation of fraud with respect to the claim made by defendant has been made against the other individuals involved in the incident but not against its assignor.

The basic facts are not in dispute. The insurance policy in question was issued by defendant on March 3, 2002. The alleged accident occurred on March 20, 2002. Plaintiff’s claim was received by defendant on May 16, 2002. After submission of the claim defendant requested an examination under oath of plaintiff’s assignor. Plaintiff’s assignor failed to appear and a second EUO was scheduled, which she also did not attend. On December 13, 2002, defendant issued its denial of benefits to plaintiff.

The regulation that forms the basis of this motion, Regulation 68-A, 11 NYCRR 65-1.1, was enacted in September of 2001. The regulation applies to all new and first renewal insurance policies effective on or after September 1, 2001. (11 NYCRR 65-1.1 [b] [1], [2].) The effective date of the regulation is April 5, 2002. The import of this regulation to the case at bar is that it is the operative legislative authority for an insurer to deny first-party benefits to medical providers whose assignors fail to attend EUOs.

Plaintiff’s argument rests on the fact that the effective date of the regulation is subsequent to the date of the alleged accident and injury, and therefore is inoperative to the instant action. In support of this contention, plaintiff relies on Bronx Med. Servs., P.C. v Lumbermans Mut. Cas. Co. (2003 NY Slip Op 51022[U], *3 [App Term, 1st Dept 2003]), which states that “[t]he revised regulations cannot be applied retroactively to cover plaintiff’s September 2000 no-fault claim.” However, the facts in this cited decision are clearly distinguishable from the case at bar.

In Bronx Med. Servs., the insurer was basing its denial on a provision of the issued insurance policy in question. The court stated that “[t]he no-fault protection created by statute and implementing regulations cannot be qualified by the inapplicable conditions and exclusions of the liability portion of the policy.” (At *3 [internal quotation marks omitted], quoting Utica Mut. Ins. Co. v Timms, 293 AD2d 669 [2002].) In other words, the statute would prevail over a contrary provision in a private contract of insurance. Because the regulation in question was not enacted until after the subject accident, the court found the plaintiff’s reasoning specious that the change in the regulation should give effect to its insurance policy provision. It was in the context of refuting this argument that the court correctly stated that the regulation could not be given retroactive effect.

This court notes that the accident and claim for benefits in the Bronx Med. Servs. case both occurred in the year 2000.

In the instant case, the regulation applies to the insurance policy issued by defendant in March of 2002. The only question to be decided by this court is whether the regulation applies to [*3]claims filed after its effective date relating to accidents occurring before its effective date.

Few decisions have been rendered on this issue, and none on this specific point. In Ocean Diagnostic Imaging P.C. v GEICO Ins. (3 Misc 3d 137[A], 2004 NY Slip Op 50511[U] [2d Dept 2004]), the court found that Regulation 68-A did not apply because it was not in effect on the date of the accident or of the claim, which was received on August 15, 2001. In King’s Med. Supply Inc. v Progressive Ins. (3 Misc 3d 126[A], 2004 NY Slip Op 50311[U], *2 [2d Dept 2004]), the court also found for the provider because “at the time plaintiff’s claims were filed, EUOs were not available as a form of verification.” (Emphasis added.) Finally, in A.B. Med. Servs. PLLC v Eagle Ins. Co. (3 Misc 3d 8, 10 [2d Dept 2003]), the court held that the subject regulation was inapplicable with respect to denying claims based on the provider’s assignor failing to attend EUOs because “at the time plaintiffs filed the instant claims there was no provision in the insurance regulations for such a procedure.” (Emphasis added.)

All of the above-cited decisions are clear on one point: Regulation 68-A does not apply retroactively to claims filed before its effective date. By contrast, the claim for benefits in the instant case was filed more than a month after the regulation came into effect, and the insurance policy upon which the claim is based is subject to the regulation because it was issued and effective after September 1, 2001. Therefore, the court holds that Regulation 68-A applies to claims filed after its effective date and, consequently, the court denies plaintiff’s motion for summary judgment.

Although now moot, the court also finds that defendant’s argument that plaintiff’s assignor is not a covered person because of alleged fraud to be without merit. Defendant asserts correctly that the preclusion rule (denying an insurer the ability to raise any defense to a claim not paid or denied within 30 days of receipt or 30 days after verification) does not apply to a defense based on a claim that the incident was not an accident but a deliberate event staged in furtherance of a scheme to defraud the insurer (A.B. Med. Servs. PLLC v Eagle Ins. Co., supra). However, defendant has failed to provide any evidence of fraud with respect to plaintiff’s assignor. All assertions of fraud are made against the other parties to the incident, and therefore are not relevant to the assignor in question.

Plaintiff’s motion for summary judgment is denied for the reasons stated above.

Civil Court of the City of New York, Kings County

80154/03

David M. Steiner, Esq. of Isreal, Isreal & Purdy of Great Neck, NY appeared for plaintiff; Jeanne M. Valentine, Esq. of Cluasen, Miller P.C. of New York, New York appeared for Defendant.

Ann Elizabeth O’Shea, J.

Upon the foregoing cited papers, the decision and order on defendant’s motion to vacate a default judgment and to dismiss the complaint, is as follows:

Plaintiffs Aurora Chiropractic PC, Dragon Acupuncture PLLC, Latortue Medical Services, PC and S & B Neurocare, PC, instituted this action to recover first-party, no-fault benefits for medical services rendered to their assignor, Kathleen Marsh, who was injured in an automobile accident on February 16, 2001. Plaintiffs provided medical services to Ms. Marsh between March 14, 2001, and February 8, 2002. Each of the plaintiffs made several claims for payment. Upon the purported failure of defendant to pay or deny the claims within thirty days, plaintiffs instituted this action.

The summons and complaint were served on defendant on June 25, 2003. An extension of time to file an answer was requested and granted, giving counsel until August 15, 2003, to answer the complaint. On defendant’s failure to answer, a clerk’s judgment was entered, without any judicial intervention, in the amount of $31,287.65.

Defendant now seeks an order opening the default and setting aside the judgment entered [*2]against it. Defendant also seeks an order dismissing the complaint on the grounds that after August 31, 2001, it had no further obligation to pay No Fault benefits. Plaintiff submitted papers in opposition. Oral argument was heard on May 19, 2004, subsequent to which the matter was submitted for decision.

As a general rule, a default judgment will be vacated and a late answer will be permitted when a defendant can show that there was some reasonable excuse for its delay in answering and there is some merit to its defense (see Spencer v. Sanko Holding USA, 247 AD2d 532 [2d Dept 1998]). A defendant is not required to establish its defense as a matter of law; it need only set forth sufficient facts to make out a prima facie showing of a meritorious defense (see Quis v. Bolden, 298 A.D.2d 375 (2d Dept 2002).

In support of its claim to have a reasonable excuse for its delay in answering, defendant states that it intended to file an answer to the complaint, but ultimately could not do so without an index number, which plaintiff failed to provide. Although defendant allegedly attempted independently to ascertain the index number, by sending its law clerk on September 25, 2003, directly to the Court, its law clerk allegedly was told that there was no index number assigned to the matter. When defendant’s law clerk subsequently sought the information directly from plaintiff’s counsel by telephone, he purportedly was informed that plaintiff’s counsel was “not aware of” the index number, a telephone conversation which plaintiff’s counsel denies ever occurred. No claim is made that any further attempts to serve or file its answer were made. Because it was plaintiffs’ duty to provide defendant with an index number, defendant asks the court to excuse defendant from having taken no further action between the date on which it made inquiry of the Civil Court, and the date on which the default judgment was entered.

Despite defendant’s failure to follow up on the case during the five months which passed between the date it first sought an index number incident to filing an answer, and the date the default judgment was entered, it seems evident that there was no intention on the part of defendant to default in answering. Viewed in light of the strong public policy of this State which favors the resolution of cases on the merits (see Scagnelli v. Pavone, 178 AD2d 590 [2d Dept 1991]), and considering the fact that defendant moved promptly to open the default (see A.B. Med. Servs. Pllc v. Americar & Truck Rental Inc.., 2003 NY Slip Op 51394U [App. Term. 2003]), defendant’s excuse is deemed adequate.

Defendant advances as its “meritorious defense” a claim that the treatment rendered by plaintiffs was not medically necessary. Lack of medical necessity is a defense to an action to recover no-fault benefits, which an insurer may assert pursuant to a timely denial, based on a medical examination or a sufficiently detailed peer review report (see Amaze Med. Supply, Inc. v. Eagle Ins. Co., 2004 NY Slip Op 50279U, 1 [App. Term 2d Dept 2004]). In this case, defendant’s claim of a lack of medical necessity is supported by the results of five independent medical examinations conducted by Dr. Weiss, an orthopedist, Dr. Weksler a clinical psychologist and certified pain specialist, Dr. Zlatnick, a neurologist, Dr. Orenstein, a chiropractor, and Dr. Iozzio, an acupuncturist. In their reports, the last dated August 21, 2001, each concludes that Ms. Marsh is fully recovered, and has no further need for medical treatment, establishing its defense.

Defendant contends that the timeliness of its denial is not in issue as it issued a blanket denial of all “future benefits” directly to Ms. Marsh, in advance of the submission of any of plaintiffs’ [*3]claims, bringing it outside of the preclusion rules set forth in Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997]. In support of this contention, defendant appends as an exhibit to its motion papers, five undated denial of claim [NF-10] forms. Each references a particular independent medical examination report and states that “future benefits are being denied” based on the specified report. Although no proof of mailing was adduced, defendant contends that the NF-10 forms, and the medical reports, were mailed to Ms. Marsh on August 31, 2001.

No-fault regulations provide that “if the insurer has information which clearly demonstrates that the applicant is no longer disabled, the insurer may discontinue the payment of benefits by forwarding to the applicant a prescribed denial of claim form” (11 NYCRR 65.15[g][2][ii]). However, that section does not absolve defendant of its responsibilities under the No-Fault law and regulations to individually consider and timely pay or deny each subsequent claim made for benefits under the No-Fault law. As was observed by the court in Atlantis Medical, P.C. v. Liberty Mutual Insurance Co., 2002 NY Slip Op 40043U, 2002 NY Misc LEXIS 202 [Dist. Ct. Nassau Co.], when the provider of medical services submits a claim as assignee of an insured, neither the statute nor the regulations contemplate the insurer simply “sitting mute and failing to act upon the claim, silently and secretly relying upon an earlier denial issued directly to the insured.” To the contrary, both the statute and the regulations contemplate the insurer responding directly to the claim within the statutorily prescribed time frame, failing which it will be precluded, pursuant to Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], from interposing such defenses as a lack of medical necessity.

Nor will a belated denial of plaintiffs’ No Fault claims be “deemed” timely on the basis of its earlier blanket disclaimer of responsibility which predated plaintiffs’ provision of services (see A&S Medical, P.C. v. Allstate Insurance Co., 196 Misc2d 322, 323 [App. Term. 1st Dept 2003], app. granted, NY App Div 2004 LEXIS 9836 [1st Dept July 5, 2004]). Thus, the additional NF- 10 forms included in defendant’s motion papers, dated January 16, 2002, responding to two claims made by plaintiff Aurora Chiropractic for $48.90 and $439.27, one claim made by plaintiff Latortue Medical Services for $812.89, and two claims made by plaintiff Dragon Acupuncture, for $1,275 and $1105, are not rendered “timely” by the mere addition of “benefits terminated on 8/31/01” as a part of the reason given for denial of the claims.

Nor do any of the January 10, 2003, NF-10 forms, standing on their own, evidence a timely denial of these five claims. For one thing, none of the NF-10 forms was sent to plaintiffs, as required by 11 NYCRR § 65.15(g)(3)(i)(“the applicant or the authorized representative”). They were all sent to plaintiffs’ assignor. Further, the forms are incomplete, lacking among other things the date on which the specified claims were received, absent which the timeliness of the response cannot be determined. Finally, defendant does not list a lack of medical necessity as the reason for its denial of plaintiffs’ claims. Having failed to do so, defendant is precluded pursuant to Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], from advancing lack of medical necessity as a defense to any part of this action.

As defendant is precluded, in the absence of a timely denial, from advancing lack of medical necessity as a defense, defendant’s motion to vacate the default and set aside the judgment is denied.

This constitutes the decision and order of this Court. [*4]

Date:September 23, 2004_____________________________

Ann Elizabeth O’Shea, J.C.C.

[*1]

Civil Court of the City of New York, Kings County, September 23, 2004

APPEARANCES OF COUNSEL

Baker, Barshay & Neuwirth, P.C. (Robert J. Baker of counsel), for plaintiff. Meiselman, Denlea, Packman, Carton & Eberz, P.C. (Stephen L. Bauley of counsel), for defendant.

OPINION OF THE COURT

Eileen N. Nadelson, J.

This motion and cross motion for summary judgment raises a question of first impression under the regulations enacted pursuant to New York’s No-Fault Insurance Law.

Plaintiff sued defendant insurer to recover for first-party benefits under New York’s No-Fault Law. In support of its claim, plaintiff submitted proof of claim to defendant, including its proof of mailing. Plaintiff alleges that defendant failed to pay or deny its claim within 30 days as required by the No-Fault Law, nor has defendant requested additional verification. Under such circumstances, plaintiff asserts that defendant is precluded from raising a defense to its claim. (Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997].) Therefore, plaintiff moved this court for summary judgment pursuant to CPLR 3211.

In opposition to plaintiff’s motion, defendant raised several issues, all of which have been dealt with during oral argument, leaving only one issue to be decided by the court. [*2]Defendant maintains that it does not have to pay the claim because plaintiff is not currently registered with the New York State Department of Education. This argument forms the basis of defendant’s cross motion for summary judgment. Plaintiff’s counsel has represented that plaintiff, although not currently registered, was registered at the time the services that form the basis of this claim were provided.

Therefore, the issue to be determined by the court is: Whether a health care provider who is registered with the New York State Department of Education at the time services are provided may recover the value of those services under New York’s No-Fault Insurance Law if the provider is no longer registered at the time payment for those services is sought?

11 NYCRR 65-3.16 (a) (12) states:

“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 necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.”

To date, this section of the regulation has not been subject to judicial scrutiny.

The words of the statute would appear to be clear on its face: licensed to “perform such service.” However, without any other direct interpretation of this regulation, the court must look to other circumstances in which the judiciary has determined similar issues.

Section 691.10 (b) of title 22 of the Official Compilation of Codes, Rules and Regulations of the State of New York, dealing with the conduct of attorneys, states that “[a] disbarred, suspended or resigned attorney may be compensated . . . for legal services rendered and disbursements incurred by him prior to the effective date of the disbarment or suspension order or of his resignation.”

The rationale behind this regulation is that the services were provided by the attorney when he or she was licensed, and therefore the attorney is entitled to appropriate compensation for the work the attorney legally performed. (See generally, Casey v Ruffino, 306 AD2d 304 [2d Dept 2003]; Lee v Hayt, Percy & Mermelstein, 4 Misc 3d 1012[A], 2004 NY Slip Op 50853[U] [2004].)

Further, under general principles of contract law, it is well settled that contracts made by private parties must necessarily be construed in the light of the applicable law at the time of their execution. (10 NY Jur 2d, Contracts § 204, at 112; see City of Troy Unit of Rensselaer County Ch. of Civ. Serv. Empls. Assn. v City of Troy, 36 AD2d 145 [3d Dept 1971].) Generally, therefore, the validity of a contract will depend upon the law as it existed at [*3]the time it was made. (Goldfarb v Goldfarb, 86 AD2d 459 [2d Dept 1982].) The only exception to this rule occurs if there is a variation in the law that is made due to changes in public policy. Otherwise, the contract will be interpreted according to the law in effect at the time of its execution. (Bloomfield v Bloomfield, 97 NY2d 188 [2001].)

The court does not find any legislative intent that indicates it is against public policy to reimburse a medical provider for services rendered that were lawfully performed, regardless of the subsequent status of the medical provider.

Based on the foregoing, the court holds that a medical provider may be reimbursed for services rendered while he or she was registered and licensed to perform such services under section 65-3.16 (a) (12) of 11 NYCRR, even if the provider subsequently becomes unregistered.

Plaintiff’s motion for summary judgment is granted. Defendant’s cross motion for summary judgment is denied.

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 (H. Miller, J.), entered on August 18, 2003, 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 a calculation of statutory interest and an assessment of attorney’s fees.

Plaintiff health care provider made out a prima facie showing of entitlement to recover no-fault benefits for services rendered to its assignors by submission of proof
that it had mailed the statutory claim forms, that defendant had received them, and that defendant did not pay or deny the claims within the 30-day statutory period (see Insurance Law § 5106 [a]; New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; Nyack Hosp. v State Farm Mut. Auto Ins. Co., 8 AD3d 250 [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]).

Despite its untimely denial of benefits, defendant is not precluded from asserting the [*2]defense that the alleged injuries do not arise out of a covered accident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 201 [1997]). However, the affidavit of defendant’s attorney who had no personal knowledge of the facts, and who sets forth bare and conclusory allegations of fraud, constituted a submission in opposition to plaintiff’s motion which was insufficient to raise a triable issue of fact. Under these circumstances, the defendant’s submissions in opposition to plaintiff’s motion were insufficient to raise an issue of fact as to whether defendant’s denial of benefits was “premised on the fact or founded belief that the alleged injur[ies] do[ ] not arise out of an insured incident” (id. at 199).

Accordingly, plaintiff’s motion for summary judgment is granted, and the matter is remanded for the calculation of statutory interest and attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.
Decision Date: September 20, 2004

[*1]

Civil Court of the City of New York, Queens County, September 20, 2004

APPEARANCES OF COUNSEL

Serpe, Andree & Kaufman, Huntington (Jonathan H. Kaufman of counsel), for petitioner. Samuel K. Rubin, Bethpage (Barbara Ann Anzelmo of counsel), for Eagle Insurance Company, respondent. Wade, Clarke, Mulcahy, New York City (Nicole Y. Brown of counsel), for Arbitration Forums, Inc., respondent.

OPINION OF THE COURT

Bernice D. Siegal, J.

Motion by petitioner to vacate an arbitration award on the grounds that Arbitration Forums, Inc. has not only misapplied the statute of limitations three times but has flouted an order of this court, and for the imposition of sanctions against respondent Arbitration Forums, Inc. for such contumacious and frivolous behavior is granted to the extent of vacating said arbitration award, remanding the matter for a new hearing before yet another arbitrator and setting the matter of sanctions against Arbitration Forums, Inc. and Eagle Insurance Company down for a hearing on September 27, 2004 at 9:30 a.m. in Part 39 of this court with memoranda of law to be served upon opposing counsel and filed with the court on or before September 20, 2004. The court, sua sponte, extends the matter of the imposition of sanctions to also apply against Eagle Insurance Company as, in light of the law of the case and clear decisional law to the contrary, Eagle opposed the petition to vacate and cross-moved to confirm the erroneous award. The court recognizes that in opposition to the petition, Arbitration Forums, Inc. has indicated that it will vacate the award and reopen the arbitration. Relief for petitioner, however, remains contingent. Should such vacatur indeed occur prior to the entry of this judgment, it is understood that the portion of the within motion respecting the vacating of the award would be moot. However, the issues of whether this court has the authority to impose sanctions upon Arbitration Forums, Inc. and, if so, does Arbitration Forums’ action warrant such punishment, would be nonetheless ripe for review and require a reasoned response. Additionally, respondent’s cross motion to confirm on the grounds that the misapplication of the statute of limitations is not sufficient grounds to vacate an arbitrator’s decision is unavailing and is denied in all respects.

Petitioner, the assignee of an individual allegedly injured in a motor vehicle accident by the respondent’s insured, initially sought reimbursement pursuant to 11 NYCRR 65.10 through compulsory arbitration required for PIP loss transfer. In its initial decision dated October 13, 1998, Arbitration Forums held that the petitioner failed to prove liability [*2]in that it commenced the arbitration more than three years from the date of loss. Petitioner argued that the correct statute of limitations should have been three years from the date of first payment. The award was eventually vacated by the Appellate Term, by order dated October 20, 2000, holding that the imposition by the arbitrator of the wrong statute of limitations was arbitrary and capricious and remanded the matter for a new hearing before another arbitrator. The matter was set down for a new hearing, whereupon it was dismissed by the arbitrator on May 15, 2001 upon the same grounds. The court again vacated the arbitration award as the award was “based on an erroneous application of the statue [sic] of limitations” on or about September 10, 2001. The matter was once again submitted for arbitration and once again, on July 15, 2003, the arbitration award was granted in favor of respondent on the grounds that “no fault statue [sic] based on 3 yrs from date of loss not date of 1st payment.”

Scope of Review

The scope of review of compulsory arbitration decisions has long been held to be clearly beyond the restrictions engrafted in CPLR 7511. In 1980, the Second Department held that “[t]he test thus applicable for review of no-fault arbitrations where error of law is in issue is . . . whether any reasonable hypothesis can be found to support the questioned interpretation.” (Matter of Shand [Aetna Ins. Co.], 74 AD2d 442, 454 [2d Dept 1980].) The Court of Appeals further refined the test and held that where arbitration is mandatory, an award “must have evidentiary support and cannot be arbitrary and capricious” (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). Thus, the stricter standard imposed upon review of compulsory arbitration applies to the case at bar as the petitioner herein sought reimbursement of no-fault payments pursuant to Insurance Law § 5105 and New York State Insurance Regulations (11 NYCRR) § 65.10, entitled “Mandatory arbitration procedures for insurers, self-insurers and compensation providers under section 5105 of the Insurance Law.” Therefore, there is no question that the underlying arbitration was compulsory, derived from statute and not voluntary. Thus, the question of law is whether the imposition of a three-year statute of limitations from the date of the accident was arbitrary and capricious.

Statute of Limitations

CPLR 214 imposes a three-year statute of limitations and, specifically, CPLR 214 (2) imposes a three-year statute on liabilities imposed by statute.

The Court of Appeals noted almost one decade ago that in determining the applicability of CPLR 214 (2):

“[T]he pertinent inquiry is whether the statute creates a liability ‘for wrongs not recognized in the common or decisional law,’ and which would not exist but for the statute (State of New York v Cortelle Corp., 38 NY2d 83, 86; see, Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 175; State of New York v Stewart’s Ice Cream Co., 64 NY2d 83, 88; Murphy v American Home Prods. Corp., 58 NY2d 293, 307; Siegel, NY Prac § 35, at 41 [2d ed]).” (Hartnett v New York City Tr. Auth., 86 NY2d 438, 444 [1995].)

Recently, the Fourth Department specifically held that in a loss transfer claim, which is [*3]statutorily created, the statute of limitations is governed by CPLR 214 (2) and “accrues on the date of payment of no-fault benefits to the claimant, because by then ‘all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain the relief in court.’ ” (Matter of Liberty Mut. Ins. Co. [Hanover Ins. Co.], 307 AD2d 40, 42 [4th Dept 2003] [citations omitted].) This is true in spite of the recent pronouncement of the Court of Appeals wherein it found that plaintiff insurer seeking reimbursement from the tortfeasor was foiled by a three-year statute of limitations from the date of the accident as “it involves a traditional equitable subrogation, not a liability created by statute” (Allstate Ins. Co. v Stein, 1 NY3d 416, 422 [2004]).

Respondent Eagle’s reliance on Allstate v Stein is therefore misplaced. The case at bar is not one that involves “traditional equitable subrogation,” rather it involves loss transfer plucked from New York State’s No-Fault Law, between two insurers. As the rights and relationships between the parties were created by statute and did not exist in the common law, the statute of limitations found in CPLR 214 (2) must be applied.

Further, the issue of which statute of limitations to impose for mandatory no-fault arbitrations is not new to the appellate courts in this department or to these respondents. The Appellate Term has consistently held in both published and unpublished decisions during 2003 that the statute of limitations of three years from the date of payment is applicable in mandatory loss transfer arbitrations between carriers and failure to apply the correct statute of limitations is arbitrary and capricious. (State Farm Mut. Auto. Ins. Co. v Eagle Ins. Co., 6 Misc 3d 27 [App Term, 2d & 11th Jud Dists 2003]; Allcity Ins. Co. v Eagle Ins. Co., 1 Misc 3d 41 [App Term, 2d & 11th Jud Dists 2003]; Allcity Ins. Co. v GEICO, 2003 NY Slip Op 50898[U] [App Term, 2d & 11th Jud Dists 2003].)

Moreover, as Allstate v Stein (supra) is not dispositive, the Appellate Term has spoken on this very dispute between these very parties, no appeal has been taken and, thus, its decision entered on October 20, 2000, wherein it held that the misapplication of the statute of limitations was arbitrary and capricious, remains the law of the case (see People v Evans, 94 NY2d 499 [2000]; Rubenfeld v Gambino, 289 AD2d 319 [2d Dept 2001]; Kowalski Enters. v Sem Intl., 278 AD2d 371 [2d Dept 2000]; Shroid Constr. v Dattoma, 250 AD2d 590 [2d Dept 1998]).

Accordingly, the motion by petitioner to vacate the arbitration award is granted with costs, but the demand for sanctions is set down for a hearing on September 27, 2004, including but not limited to evidence of attorney’s fees expended on petitioner’s behalf for the various arbitrations and petitions to vacate after the Appellate Term decision, with memoranda of law respecting the imposition of sanctions on both Arbitration Forums, Inc. and respondent Eagle Insurance and its attorneys, including whether this court has the authority to impose sanctions in this matter and the basis therefor to be served and filed with [*4]the court prior to September 20, 2004. Respondent’s cross motion is denied in all respects.

[*1]

Supreme Court, Appellate Term, Second Department, September 20, 2004

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellant. Eric H. West, Long Island City, for respondent.

{**5 Misc 3d at 56} OPINION OF THE COURT

Memorandum.

Order unanimously affirmed without costs.

Plaintiff commenced this action to recover first-party no-fault benefits for medical supplies provided to its assignor. Thereafter, plaintiff moved for summary judgment in the amount of $980, which motion was denied by order entered September 10, 2003.

Contrary to the determination of the court below, plaintiff’s billing manager did not have to allege in his supporting affidavit that he had personal knowledge that the equipment was furnished to plaintiff’s assignor. Said affidavit set forth the billing manager’s duties so as to support the conclusion that the attached exhibits were sufficiently accurate and trustworthy to merit their admission into evidence pursuant to the business record exception to the hearsay rule (see CPLR 4518 [a]; People v Kennedy, 68 NY2d 569 [1986]), and said exhibits established that the supplies were furnished to the assignor.

A review of the record indicates that plaintiff established its prima facie entitlement to summary judgment by showing that it submitted a properly completed claim form to defendant for $980 (see 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], [*2]2003 NY Slip Op {**5 Misc 3d at 57}51700[U] [App Term, 9th & 10th Jud Dists 2003]). It is uncontroverted that defendant had until July 17, 2003 to pay or deny plaintiff’s claim. The plaintiff’s billing manager asserted that the defendant’s denial was untimely and he submitted a photocopy of an envelope, postmarked August 29, 2003, which allegedly contained the denial form. Defendant, however, submitted the affidavit of its claims adjuster who attested to the routine procedure and practice of her office, in the regular course of its business, which indicates that the denial had been duly addressed and mailed to plaintiff on July 17, 2003. In view of the foregoing, we find that the court below properly determined that a triable issue of fact existed (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Accordingly, plaintiff’s motion for summary judgment was properly denied.

McCabe, P.J., Covello and Tanenbaum, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 9th and 10th JUDICIAL DISTRICTS

Appeal by plaintiff from so much of an order of the District Court, Nassau County (H. Miller, J.), entered August 18, 2003, as denied its motion for summary judgment.

Order insofar as appealed from unanimously affirmed with $10 costs.
Plaintiff commenced this action to recover $2,637.07 in first-party no-fault benefits for medical services it rendered to its assignor pursuant to Insurance Law §
5101 et seq. Thereafter, plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint. Both motions were denied by order entered August 18, 2003.

Contrary to the determination of the court below, the affidavit of plaintiff’s billing manager need not have stated that he had personal knowledge that the services were rendered to the assignor. Said affidavit need only have established his duties as the billing manager sufficient to support the inference that the attached exhibits were sufficiently accurate and trustworthy to merit their admission into evidence pursuant to the business record exception of the hearsay rule (see CPLR 4518 [a]; People v Kennedy, 68 NY2d 569 [1986]). The affidavit herein was clearly adequate and laid a proper foundation for the court to consider the exhibits attached thereto pursuant to CPLR 4518 (a), and said exhibits established that the services were rendered to the assignor.

A review of the record indicates that plaintiff established its prima facie entitlement [*2]to summary judgment by showing that it submitted a properly completed proof of claim and the amount of the loss (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v Eagle Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51701 [U] [App Term, 2d & 11th Jud Dists]). Defendant, however, failed to deny the claim within the statutory 30-day claim determination period (11 NYCRR 65.15 [g] [3]), and its requests for examinations under oath did not toll the 30-day period inasmuch as the insurance regulation in effect at the time plaintiff submitted its claim did not contain a provision requiring a claimant to appear for an examination under oath (see A.B. Med. Servs. PLLC v Eagle Ins. Co., 3 Misc 3d 8 [2004]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 2003 NY Slip Op 51392 [U] [App Term, 2d & 11th Jud Dists]). Consequently, defendant is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). We note that the cases of Han-Ki Lee v American Transit Ins. Co. (304 AD2d 713 [2003]) and Galante v State Farm Ins. Co. (249 AD2d 506 [1998]) are distinguishable on their facts.

An untimely denial, however, did not preclude defendant from asserting the defense that the collision was a staged event in furtherance of an insurance fraud scheme (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). The investigator’s affidavit set forth sufficient facts to demonstrate that defendant
possessed a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]).
As a result, because defendant demonstrated the existence of a triable issue of fact as to whether there was a lack of coverage (see id.), plaintiff’s motion for summary
judgment was properly denied (see Ocean Diagnostic Imaging, P.C. v State Farm Mut. Auto. Ins. Co., (No. 2003-1289 NC, decided herewith and A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., (No. 2003-799 NC, decided herewith).
Decision Date: September 17, 2004

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 9th and 10th JUDICIAL DISTRICTS

Appeal by defendant from an order of the District Court, Nassau County (A. Cooper, Sr., J.), dated March 5, 2003, denying its cross motion for summary judgment and granting plaintiff’s motion for summary judgment.

Order unanimously modified by providing that plaintiffs’ motion for summary judgment is denied; as so modified, affirmed without costs.

In this action to recover assigned first-party no-fault benefits, plaintiffs’ affidavit in support of their motion for summary judgment set forth only that the affiant is a “practice and billing manager” and an “officer” of “plaintiff” notwithstanding that there are three named plaintiffs each asserting independent standing as an insured’s assignee. As we cannot assume that the affiant acted on behalf of one particular plaintiff or on behalf of all of the plaintiffs (A.B. Med. Servs. v Allstate Ins. Co., NYLJ, Mar. 18, 2004 [App Term, 9th & 10th Jud Dists]), such an affidavit is “insufficient to establish that plaintiffs provided defendant with properly completed claim forms” (id.). We further note that as to D.A.V. Chiropractic P.C., the record before us contains no assignment of benefits form on plaintiff’s behalf, an additional reason for the motion’s denial as to this plaintiff. Accordingly, plaintiff’s motion for summary judgment [*2]should have been denied upon plaintiffs’ failure to make out a prima facie case.

With respect to defendant’s cross motion for summary judgment, upon the papers presented, defendant failed to establish its entitlement to judgment dismissing the action as a matter of law. Defendant’s claim that the assignors failed to cooperate with its requests to examine them under oath is without merit because when plaintiffs filed their claims, there was no provision in the insurance regulations for such a procedure (compare 11 NYCRR 65.15 [d] [3]; 65.2 [a], with 11 NYCRR 65-1.1 [d]; 65-3.5 [e], eff. April 5, 2002; e.g. King’s Med. Supply Inc v Progressive Ins., 3 Misc 3d 126 [A], 2004 NY Slip Op 501312 [U] [App Term, 2d & 11th Jud Dists]). Defendant’s argument that its policy provisions require an insured’s cooperation with an examination under oath is likewise misplaced in that the mandatory no-fault endorsement “cannot be qualified by . . . conditions . . . of the liability portions of the policy” (Utica Mut. Ins. Co. v Timms, 293 AD2d 669, 670 [2002]).

However, for the reasons set forth in Ocean Diagnostic Imaging P.C. v State Farm Mut. Auto. Ins. Co. (No. 2003-1289 N C decided herewith), involving the same assignors and the same traffic incident, we find defendant’s claim, that the underlying traffic incident was staged pursuant to a scheme to defraud, to be supported by sufficient factual allegations in admissible form to require a trial thereon, albeit insufficiently established to warrant accelerated judgment in defendant’s favor.
Decision Date: September 17, 2004