[*1]

Civil Court of the City of New York, Queens County, January 16, 2004

APPEARANCES OF COUNSEL

Israel & Israel, Great Neck, for plaintiff. Teresa Spina, Woodbury, for defendant.

{**2 Misc 3d at 907} OPINION OF THE COURT

Augustus C. Agate, J.

Plaintiff All Health Medical Care, P.C. brought suit to recover compensation under the No-Fault Law for medical services it provided to its assignor Eliyahu Malaev, an insured of defendant Government Employees Insurance Company. A trial was held {**2 Misc 3d at 908}before the court on October 31, 2003 and December 16, 2003. Plaintiff argued that it presented a timely and proper notice of claim which defendant failed to pay or deny. Defendant argued that it had no duty to pay or deny plaintiff’s claim because plaintiff failed to comply with defendant’s verification requests. For the foregoing reasons, the court finds in favor of plaintiff.

The facts adduced at trial were largely undisputed. Plaintiff submitted evidence of a prima facie case through defendant’s insurance adjuster, who admitted receipt of plaintiff’s claim on May 23, 2001. Defendant then issued a verification request on May 30, 2001 asking for specific information regarding the services provided. When plaintiff failed to respond to its initial verification request, defendant submitted a follow-up request for verification on June 29, 2001. On July 30, 2001, defendant sent a letter to plaintiff “closing” the matter, stating plaintiff failed to respond to defendant’s verification requests. However, on September 29, 2001, defendant received a response from plaintiff, including plaintiff’s sign-in sheets and acupuncture points. Defendant’s insurance adjuster testified that she found this response to be insufficient, as it did not provide plaintiff’s office notes, doctor’s re-exam narrative or information regarding acupuncture needles. Therefore, she inserted plaintiff’s response in the relevant file and took no further action. Upon receiving no denial or payment from defendant, plaintiff commenced this action.

The sole issue at trial was whether defendant had any duty to act after receiving plaintiff’s response to defendant’s verification requests. Defendant contends that it did not have to pay or deny plaintiff’s claim because plaintiff failed to comply with its timely verification requests. Defendant [*2]argues that it requested specific information regarding the acupuncture services plaintiff performed and that plaintiff’s response was late and insufficient. As plaintiff did not sufficiently comply with defendant’s verification request, defendant’s time to pay or deny plaintiff’s claim is not overdue and plaintiff is not entitled to compensation.

Plaintiff contends that defendant must pay its claim due to defendant’s failure to act after receiving plaintiff’s response. Plaintiff argues that it did provide a sufficient response to defendant’s verification request, and that it has no time frame under the no-fault regulations upon which to submit its response. Plaintiff further argues that while defendant did not have to issue a denial while the verification request was pending,{**2 Misc 3d at 909} once plaintiff submitted a response, defendant had a duty to either pay, deny or request further verification. Since defendant failed to act, it is precluded from presenting any defenses to plaintiff’s claim.

The court holds that defendant was derelict in failing to act upon receipt of plaintiff’s response to defendant’s verification request, and therefore plaintiff is entitled to payment. As long as plaintiff’s documentation is arguably responsive to defendant’s verification request, defendant must act within 30 days of receipt of plaintiff’s response, or will be precluded from presenting any noncoverage affirmative defenses. While the law is clear that defendant’s time to pay or deny is tolled pending receipt of some form of verification, once it has received verification, its time is no longer tolled and it has a duty to act. There is nothing in the no-fault regulations or case law that allows defendant to remain silent in the face of plaintiff’s response to its verification request. Defendant’s position defies the spirit and purpose of the No-Fault Law in promoting prompt resolution of matters. It is also inconsistent with the purpose behind verification requests in allowing defendant to investigate a claim and plaintiff the opportunity to fix any inadequacies in its claim. Further, since the no-fault regulations state that defendant should not issue a denial while a verification request is pending, defendant’s silence served to unfairly prejudice plaintiff by allowing the matter to remain in limbo because defendant found plaintiff’s good faith response insufficient. Defendant had numerous choices it could have made after receiving plaintiff’s response that would have preserved its right to challenge plaintiff’s claim. However, as defendant did nothing, its inaction constitutes a waiver of its defenses.

Under the no-fault regulations, an insurance company has 30 days from the date of receipt to either pay or deny a claim. (11 NYCRR 65.15 [g].) This time may be extended if the insurance company sends a verification request to the claimant within 10 days from the date of receipt of the claim. (11 NYCRR 65.15 [d] [1].) If the claimant does not respond to the insurance company’s request, the insurance company must send a follow-up request for verification to the claimant within 10 days of the claimant’s failure to respond. (11 NYCRR 65.15 [e] [2].) During this period, the insurance company’s time to pay or deny is tolled pending receipt of the requested information. Further, the insurance company shall not issue a denial until all requested verification is received. (11 NYCRR 65.15 [g] [1] [I].) Once the verification is {**2 Misc 3d at 910}received, then the insurance company has 30 days to pay or deny the claim. Failure to pay or deny a claim will result in preclusion of defendant’s affirmative defenses at trial. (See Presbyterian Hosp. v Maryland, 90 NY2d 274 [1997]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999].)

However, the regulations are silent as to what, if anything, the insurance company must do if it receives insufficient verification. The case law is also devoid of any obligation the insurance company has upon receipt of information it deems insufficient. Based upon the purpose of the No-[*3]Fault Law and controlling case law, though, it seems clear that the insurance company must affirmatively act once it receives a response to its verification requests.

The purpose of the no-fault statute is to ensure prompt payment of claims by accident victims. (Presbyterian v Maryland, 90 NY2d at 284; Dermatossian v New York City Tr. Auth., 67 NY2d 219 [1986]; Zydyk v New York City Tr. Auth., 151 AD2d 745 [2d Dept 1989].) In ensuring that legitimate accident victims receive swift compensation, the regulations are strictly construed and insurance companies have strict guidelines upon which they can act. (See Presbyterian Hosp. v Aetna Cas. & Sur. Co., 233 AD2d 431 [2d Dept 1996], lv denied 90 NY2d 802 [1997].) An important aspect of that is allowing insurance companies to conduct investigations in order to determine the veracity and propriety of submitted claims. This can be furthered by requests for verification, which provide insurance companies with the opportunity to investigate and pay legitimate claims expeditiously. However, so as not to undermine the goals of prompt payment, insurance companies must issue these verification requests in accordance with the strict time requirements of the no-fault regulations. Further, to allow claimants the opportunity to rectify any deficiencies in their claims, insurance companies shall not issue denials while verification requests are pending. (See Boro Med. & Psych Treatment Servs., P.C. v Country Wide Ins. Co., 2002 NY Slip Op 50538[U] [App Term, 2d & 11th Jud Dists 2002].) This rule prevents prejudice to claimants, who otherwise might have legitimate claims denied for minor defects, and ensures insurance companies receive all relevant information necessary to pay or deny a claim.

As it is incumbent upon plaintiff to comply with all proper verification requests made by defendant in order to receive payment, it is equally incumbent upon defendant to expedite the processing of the claim. There is no provision of the no-fault regulations {**2 Misc 3d at 911}or case law that allows an insurance company to remain silent in the face of a legitimate, albeit insufficient, verification response. It is inconsistent with the goals of the No-Fault Law in encouraging swift payment of claims to allow an insurance company to ignore a response to its verification request merely because it believes the response to be inadequate. In Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co. (262 AD2d 553 [2d Dept 1999]), the Appellate Division, Second Department, admonished a plaintiff who failed to respond to a defendant’s verification request because it deemed the request to be “unintelligible.” The Court found that whether or not the request was confusing, it was clearly a verification request that plaintiff could not ignore without placing itself in peril. (See id. at 555.)

The present scenario is analogous to the facts of Westchester County Med., in that defendant did nothing because it believed plaintiff’s response to be incomplete. Based upon the Court’s decision, neither party may ignore communications from the other without risking its chance to prevail in the matter. (See id.) In this case, regardless of whether plaintiff fully responded to defendant’s claim, it was clear that the information plaintiff provided was in response to defendant’s request, and therefore defendant could not sit idly by and ignore it. By doing so, defendant placed itself in jeopardy by waiving its defenses to plaintiff’s claim. (See Presbyterian v Maryland, 90 NY2d at 280; Dermatossian, 67 NY2d at 225.)

Allowing defendant to do nothing in the face of a response to its verification request is overly prejudicial to plaintiff. If defendant cannot issue a denial because its verification request is outstanding, and defendant does not have to act upon receiving information from plaintiff, then defendant could allow a claim to be delayed indefinitely, while plaintiff believes it properly [*4]responded to defendant’s request. (See Atlantis Med., P.C. v Liberty Mut. Ins. Co., 2002 NY Slip Op 40043[U] [Nassau Dist Ct 2002].) By allowing defendant to do nothing, the court would be assisting defendant in thwarting the very purpose of the No-Fault Law in ensuring swift resolution of claims. That purpose is clearly undermined by defendant’s failure to act on an otherwise legitimate claim. (See Metro Med. Diagnostics v Lumbermens Ins. Co., 189 Misc 2d 597, 598 [App Term 2001].) Further, it is overly prejudicial to claimants, who can only bring actions against insurance companies once there has been a determination that the claim is overdue. (See Westchester Med. Ctr. {**2 Misc 3d at 912}v Travelers Prop. & Cas. Ins. Co., 2001 NY Slip Op 50082[U] [Sup Ct, Nassau County 2001].) By allowing defendant to remain silent and not inform plaintiff of its reasons for failing to pay or deny a claim, the claim would be delayed indefinitely and no determination could ever be made if the claim was overdue. This might prevent plaintiff from commencing an action against defendant as premature, leaving the matter in limbo without any resolution. (See id.)

It is also unreasonable that defendant be rewarded for remaining silent and not having to act upon the receipt of information that plaintiff submitted in good faith in response to defendant’s request. It is important to note that in the cases where the courts have found the defendant’s time to pay or deny was tolled, it was because the plaintiff failed to respond in any manner to the defendant’s verification requests. (See New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 700 [2d Dept 2001]; Westchester County Med. v New York Cent. Mut., 262 AD2d at 554; Boro Med., 2002 NY Slip Op 50538[U].) In that circumstance, a plaintiff remaining silent and failing to act in the face of a proper verification request would be aware of the reason its claim had not been paid and a defendant would not need to take any further action. In the present matter, however, plaintiff attempted in good faith to respond to defendant’s verification request. While plaintiff’s response may have been months after receipt of the verification request, that delay only prejudiced plaintiff, who prolonged its time to be compensated for its claim. Defendant was not prejudiced by plaintiff’s failure to submit prompt verification responses, since defendant’s time was tolled during the period its request remained outstanding. (See id.) Therefore, it is unreasonable to allow defendant to ignore information plaintiff submitted in good faith without informing plaintiff of its deficiencies and allowing plaintiff an opportunity to submit the proper information. Defendant had a number of options that it could have pursued once it received plaintiff’s response rather than remaining silent. While an insurance company may not issue a denial of claim while its verification request remains outstanding, once it receives information from a claimant in response to its request, the ball is now in the insurance company’s court to act on the response. That action could be to pay the claim, deny the claim, or request further verification if it finds the provided response insufficient. The verification, however, does not remain outstanding simply because defendant only received some of the material {**2 Misc 3d at 913}it requested. Rather, an insufficient response requires action by the insurance company to either deny the claim for failure to provide all the requested information or, more appropriately in light of the goals of the No-Fault Law, to send a follow-up verification request, acknowledging the material received and further requesting the omitted material. (See Westchester County Med. v New York Cent. Mut., 262 AD2d at 554; Boro Med., 2002 NY Slip Op 50538[U].)

Defendant claimed that the information provided by plaintiff was incomplete and was insufficient to comply with defendant’s request. Rather than remaining silent, defendant could have requested further verification, submitted the information supplied for a peer review, or issued a [*5]denial based upon plaintiff’s failure to comply with verification requests.

Defendant could have issued a further request for verification, based upon the insufficiency of plaintiff’s response. It could have informed plaintiff that it still had not provided certain medical records defendant requested. It also could have asked for further clarification of the information plaintiff submitted which defendant’s insurance adjuster found incomplete. By submitting the additional verification request, defendant would have preserved its defenses and tolled its time to pay or deny plaintiff’s claim while the request remained outstanding. (See New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 700 [2d Dept 2001]; Westchester County Med. v New York Cent. Mut., 262 AD2d at 554; Boro Med., 2002 NY Slip Op 50538[U].)

Defendant could have presented plaintiff’s claim, including the response to its verification request, for a peer review. Since defendant’s insurance adjuster did not believe that the acupuncture report submitted by plaintiff was sufficient to comply with its request, defendant could have submitted the materials to a medical expert for review. That expert, with presumably more experience in the field of acupuncture than the insurance adjuster, could have informed defendant whether the information provided was responsive to defendant’s request, and made a determination whether the claim should be paid, denied, or if further verification was necessary.

Defendant also could have issued a denial, based upon plaintiff’s failure to comply with defendant’s verification requests. While the regulations prevent defendant from issuing a denial while a verification request remains outstanding, its request was no longer outstanding once it received plaintiff’s response.{**2 Misc 3d at 914} Since it is defendant’s position that plaintiff had numerous opportunities to comply with defendant’s verification request and failed to do so, defendant could have issued a timely denial for plaintiff’s failure to comply with verification requests without violating the no-fault regulations. Insurance companies often issue denials for other types of failure to comply with verification requests, such as when plaintiff assignors fail to appear at independent medical examinations or examinations under oath. (See Urban Med. Diagnostics, P.C. v Liberty Mut. Ins. Co., 2001 NY Slip Op 40655[U] [App Term 2001]; Millennium Med. Diagnostics, P.C. v Liberty Mut. Ins. Co., 2001 NY Slip Op 40654[U] [App Term 2001].)

As defendant took no steps to preserve its defenses to plaintiff’s claim, this court finds that defendant failed to comply with the No-Fault Law by failing to either pay or deny the claim within 30 days from the date of receipt of plaintiff’s response. Accordingly, judgment is awarded to plaintiff in the amount set forth in the complaint with statutory interest and fees.

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Mercure, J.P. Appeals from an order and an amended order of the Supreme Court (Kavanagh, J.), entered January 2, 2003 in Ulster County, upon a decision of the court in favor of plaintiff.

In September 1999, plaintiff was injured in an automobile accident while driving a car insured by defendant. Plaintiff suffered an injury to her right shoulder for which defendant paid no-fault benefits, including medical expenses, household help reimbursement and lost wages, through March 31, 2000. Thereafter, defendant denied further benefits, asserting that an independent medical examination demonstrated that plaintiff was no longer injured as a result of the accident.

Plaintiff then commenced this action seeking a declaration that defendant was obligated to continue paying benefits in an amount not to exceed $50,000. Based upon the parties’ submitted affidavits, Supreme Court determined that plaintiff was completely disabled from the date of the accident through December 2000 and was thereafter partially disabled. The court directed defendant to pay plaintiff $4,225 plus interest to cover expenses from the period of April 1, 2000 to September 16, 2000, plus lost wages. Defendant appeals, asserting that Supreme Court erred in concluding that plaintiff’s disability continued beyond March 2000. We disagree.

Inasmuch as Supreme Court’s decision was rendered after a nonjury trial, we ” ‘independently consider the probative weight of the evidence and the inferences to be drawn therefrom’ ” upon review (Glencoe Leather Corp. v Parillo, 285 AD2d 891, 891 [2001], quoting Jump v Jump, 268 AD2d 709, 710 [2000]). While we normally afford deference to a trial court’s determination regarding witness credibility, such deference is not warranted here because the determination was made upon submitted affidavits (see Bauer v Goodrich & Sherwood Assoc., 304 AD2d 957, 958 [2003]). Nevertheless, we agree with Supreme Court that plaintiff established a continuing disability beyond March 2000.

Plaintiff presented an affirmation from her treating physician, Andrew Dubin, indicating that he diagnosed her with “right upper extremity brachial plexopathy” which was caused by the automobile accident and exacerbated a preexisting condition, disabling her. Dubin stated in his affirmation and in prescription notes that plaintiff required on-going household assistance, initially could not work and, from December 8, 2000, was restricted to part-time employment. Dubin noted in an April 2000 letter that nerve studies confirmed his brachial plexopathy diagnosis. While notes from plaintiff’s surgeon, William Levine, indicated continuing improvements in her range of motion and eventual resolution of the brachial plexopathy, Levine also recommended that she stay out of work initially and then return on a graduated basis beginning in December 2000.

In opposition, defendant submitted an affidavit and report of physician Norman Heyman concluding, based on a March 2000 independent medical examination, that plaintiff was not disabled but had “voluntarily sacrificed function and range of motion for relief of pain and demonstration of decreased . . . motion.” Heyman opined that further treatment would not impact plaintiff’s condition and that there was no need for household help and other services or additional diagnostic tests. We note that this evidence is undercut by a subsequent October 2000 letter from Mary Godesky, a physician who examined plaintiff on behalf of Allstate Insurance Company, the insurance carrier in the personal injury action arising out of the accident. Godesky determined that plaintiff had sustained a contusion of the right shoulder in the accident, which aggravated a preexisting condition and continued to limit plaintiff’s range of motion. Godesky recommended continuing physical therapy. Given Godesky’s letter and the affirmation and notes of plaintiff’s doctors, we agree with Supreme Court that defendant improperly denied plaintiff benefits after March 2000.

We further conclude that Supreme Court correctly awarded plaintiff first-party benefits in the form of $25 per day plus interest for housekeeping expenses, as reasonable and necessary expenses, through September 16, 2000, or one year from the date of the accident (see Insurance Law § 5102 [a] [3]; § 5106 [a]). We agree with defendant, however, that Supreme Court erred in determining that plaintiff demonstrated that her income prior to the accident was $450 per week. In connection with her demand for payment from defendant, plaintiff submitted a verification of self-employment income form indicating that she spent $240 per week on substitute services (see 11 NYCRR 65.15 [g] [8]). Our review of the record reveals that of the other prescribed forms listed in the applicable regulation (see 11 NYCRR 65.15 [c] [3]), plaintiff submitted only an application for motor vehicle no-fault benefits in demanding loss of wages. On that form, plaintiff claimed that her average weekly earnings were $450. However, the verification of self-employment income form—in which plaintiff claimed $240 per week for substitute services—is the proper form for determining plaintiff’s loss (see 11 NYCRR 65.15 [g] [8]) and a claim for substitute services is primary in determining the loss of earnings benefit where an employee claims both substitute services and loss of earnings (see 11 NYCRR 65.15 [o] [2] [x] [b]). Although the verification of self-employment income form also includes a place for an applicant to set forth net loss of earnings in addition to the cost of substitute services, plaintiff failed to properly include on that form such a loss of earnings. Thus, the $240 figure listed on the verification of self-employment income form must be used in determining plaintiff’s loss.

Accordingly, we conclude that plaintiff is entitled to 80% of her $240 weekly salary from September 17, 1999 until December 8, 2000 and, thereafter, to 80% of half her weekly salary to reimburse her for the time she was required to work four-hour days, together with interest (see Insurance Law § 5102 [b] [1]; § 5106 [a]) and subject to the $50,000 statutory cap on all basic economic loss and three-year limitation on recovery of lost wages (see Insurance Law § 5102 [a]; Normile v Allstate Ins. Co., 87 AD2d 721, 722 [1982], affd on op below 60 NY2d 1003 [1983]). Because the record is unclear regarding whether plaintiff has already been reimbursed for any of her lost wages or other basic economic loss, we remit the matter for a recalculation of the amount of first-party benefits to which plaintiff is entitled and for a calculation of the amount of counsel fees due, up to the limit set forth in the applicable regulation (see 11 NYCRR 65.17 [b] [6]).

Spain, Carpinello, Mugglin and Lahtinen, JJ., concur. Ordered that the order and amended order are modified, on the law and the facts, without costs, by reversing so much thereof as calculated plaintiff’s entitlement to loss of wage benefits; matter remitted to the Supreme Court for further proceedings not inconsistent with this Court’s decision; and, as so modified, affirmed.

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In an action to recover no-fault medical payments under an insurance contract, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Burke, J.), dated January 3, 2003, as granted the defendant’s cross motion to vacate (1) an order of the same court dated May 14, 2002, granting the plaintiff’s motion for summary judgment upon the defendant’s failure to oppose the motion, and (2) a judgment of the same court entered June 21, 2002, upon the order.

Ordered that the order is reversed insofar as appealed from, on the law and as a matter of discretion, with costs, the cross motion is denied, and the order dated May 14, 2002, and the judgment entered June 21, 2002, are reinstated.

A party seeking to be relieved of its default must establish both a reasonable excuse and a meritorious defense (see CPLR 5015; Eretz Funding v Shalosh Assoc., 266 AD2d 184, 185 [1999]). In this case, the defendant was aware that the plaintiff obtained a default judgment against it and took no steps to vacate the default until the plaintiff moved to hold the defendant in contempt of court for failing to comply with an information subpoena designed to enforce the judgment. Such conduct constituted an intentional default, which was not excusable (see Eretz Funding v Shalosh Assoc., supra; Roussodimou v Zafiriadis, 238 AD2d 568, 568-569 [1997]). Therefore, the defendant’s motion to vacate its default should have been denied. Florio, J.P., Krausman, Luciano, Townes and Rivera, JJ., concur.

District Court Of Nassau County, First District,

INDEX NO. 32065/02

Joel K. Asarch, J.

The following named papers numbered 1 to 4 were submitted on this Notice of Motion on July 18, November 5, November 20 and November 24, 2003:

Notice of Motion and Affidavits Annexed 1-2

Order to Show Cause and Affidavits Annexed

Answering Affidavits 3

Reply Affidavits 4

Factual Background

The forty-eight (48) cases listed in the above caption have been joined for the purposes of the instant motion only. The plaintiffs (hereinafter “plaintiff” or “medical provider”) are all medical providers, being represented by the same law firm, and the defendant in all forty-eight (48) cases is Government Employees Insurance Company (hereinafter “GEICO” or “insurance carrier”) . In all of the actions, the plaintiff is seeking recovery of no-fault benefits from GEICO, due to medical services provided to the plaintiff’s assignors, for injuries allegedly resulting from various motor vehicle accidents.

The plaintiff moves, pursuant to CPLR 3103(a), for a protective order vacating GEICO’s notice to compel the examination before trial (hereinafter “EBT”) of the medical provider. The plaintiff claims that as a matter of law, the defendant is not entitled to an EBT of the plaintiff. In the alternative, the plaintiff requests that if the Court should deny the plaintiff’s motion for a protective order, then the Court order supervised discovery, pursuant to CPLR 3104. GEICO opposes the plaintiff’s motion and cross-moves for an order granting costs and sanctions.

The legislature’s intent in enacting the no-fault law was to ensure that every automobile [*7]accident victim be compensated for substantially all of his or her basic economic loss (i.e., first party benefits ^[FN12]) promptly, without regard to fault and to significantly reduce the number of automobile personal injury cases litigated in the courts (see, Johnson v. Hartford Ins. Co., 100 Misc.2d 367, 418 N.Y.S.2d 1009 [Sup Ct Monroe County 1979]; Licari v. Elliot, 52 N.Y.2d 230 [1982]; Zlatnick v. GEICO, N.Y.L.J. 12/8/03, p. 21, col.1, 2003 WL 22849608, 2003 NY Slip Op. 23870 [Civil Court, Queens County], citing Medical Society of State of New York v. Serio, 100 N.Y.2d 853 (2003). Contrary to the legislature’s intent, however, in a large number of cases, prompt compensation is not occurring. Rather, medical providers, who have been assigned the injured victim’s right to first party benefits are resorting to litigation in New York courtrooms for recovery of first party benefits. In recent years, the Nassau County District Court, as well as many courts of limited jurisdiction in New York State, have become swamped with no-fault litigation for the recovery of first party benefits. Due to the recent influx of no-fault litigation, this Court has had to tackle numerous first impression, no-fault substantive and procedural issues. In fact, this Court has set up no-fault discovery conference calendars, to help ease the burden on the Court and to try to promote the intent of the legislature (i.e., prompt payment and/or resolution of no-fault claims).

The Court finds the legal issues presented in the parties’ respective motion papers to be as follows:

(1)Is an insurance carrier entitled to an EBT of a medical provider under the CPLR and the UDCA?

(2)Is an insurance carrier entitled to an EBT of a medical provider, as well as answers to [*8]interrogatories in a No-Fault Action?

(3)Is an insurance carrier entitled to an EBT of a medical provider, under the No-Fault Regulations, if it failed to request an oral Examination Under Oath under the New York Compilation of Codes, Rules and Regulations?

(4)Is the insurance carrier estopped from requesting an EBT of a medical provider because the insurance carrier failed to seek additional verification, under the New York Compilation of Codes, Rules and Regulations?

(5)Does the burden of proving “Medical Necessity” effect the insurance carrier’s right to an EBT of a medical provider?

(6)Do “Special Circumstances” exist, thereby permitting the plaintiff to produce a medical consultant, rather than the medical provider for the EBT?

(7) Is Court-supervised discovery necessary?

(8) Is the insurance carrier entitled to sanctions and costs?

II. LEGAL ISSUES AND ANALYSIS

A protective order is designed to guard against disclosure abuses. CPLR 3103(a) states, in relevant part, that:

” … The Court may at any time on its own initiative, or on motion of any party or of any person from whom discovery is sought, make a protective order denying, limiting, conditioning or regulating the use of any disclosure device. Such order shall be designed to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts.”

Thus, pursuant to the CPLR and UDCA, a protective order may be used, no matter what disclosure device is implicated. In the instant case, the disclosure device at issue is an EBT of a medical provider in a no-fault case. In addition, by its own terms, the statute allows a protective order to be moved for “at any time” (CPLR 3103[a]). When deciding whether to grant a protective order, the Court must balance the importance of the information sought against the degree of prejudice the disclosure device would impose (see, Cynthia B. v. New Rochelle Hospital Medical Center, 60 N.Y.2d 452 [1983]).

The Court can regulate discovery, pursuant to a protective order, by directing the time, order, place and questions to be asked in an EBT, or dictating the disclosure devices to be used or combination thereof, and even by defraying the costs of a party’s participation in the disclosure (see, [*9]Church E. Dwight Co. Inc. v. Uddo & Associates, Inc., 159 A.D.2d 275, 552 N.Y.S.2d 277 [1st Dept 1990]; Weeks Office Products, Inc. v. Chemical Bank, 178 A.D.2d 113, 577 N.Y.S.2d 10 [1st Dept 1991]).

Moreover, the Court has broad discretion in limiting or regulating the use of disclosure devices (see, Brignola v. Pe-Fei Lee, M.D. P.C., 192 A.D.2d 1008, 597 N.Y.S.2d 250 [3d Dept 1993]).

(1)Although Pursuant to the CPLR and UDCA an Insurance Carrier is Entitled to an EBT of a Medical Provider in No-Fault Cases, a Condition Precedent to Such EBT in Cases Involving the Issue of “Medical Necessity” is a Showing by the Insurance Carrier that it Issued a Timely Denial of the No-Fault Claim Based on the Ground of “Medical Necessity”.

The plaintiff claims that the defendant insurance carrier is not entitled to an EBT of the medical provider under the CPLR and the UDCA. The plaintiff’s counsel asserts that the defense counsel’s demand for an EBT of the medical provider is in violation of CPLR 3101(a) because the two prong test set forth in CPLR 3101(a) cannot be met. The plaintiff’s position is that an EBT of the medical provider is not material and necessary to the defense of no-fault actions. The plaintiff feels that the defendant is not seeking discovery, but rather the defendant’s true motive is simply to harass and overburden medical providers with useless and duplicative depositions and to interfere with a medical provider’s ability to run a medical practice. The plaintiff’s counsel supports its position by claiming that in every action commenced by the plaintiff’s law firm against the defendant, the defendant has routinely served a demand for an EBT, regardless of the type of claim, or the amount of the claim. In further support of its argument, plaintiff’s counsel states that the relatively simple issues existing in an action for no-fault benefits do not warrant an extensive and overly burdensome EBT of a medical provider. The plaintiff’s counsel also claims that the expenses in preparing for and appearing at a lengthy EBT far outweigh the potential award in most actions, which are of relatively small amounts. In essence, the plaintiff’s counsel asserts that the medical providers will never recover their fees, if required to attend useless depositions.

The insurance carrier claims that it is entitled to an EBT of the plaintiff under the CPLR and UDCA. The defendant’s counsel asserts that the insurance carrier is not trying to harass the plaintiff, but rather an EBT of the medical provider is an essential discovery device for gathering information, material and necessary to the defense of no-fault law suits. The insurance carrier’s counsel claims that, after a review of the carrier’s records, no medical provider represented by the plaintiff’s law firm has ever appeared for an EBT requested by the defendant’s firm, despite a claim by defense counsel that the plaintiff’s law firm has served approximately two thousand four hundred and thirty six (2,436) law suits upon the defendant in the year 2002. The defendant’s counsel suggests that the plaintiff simply has no intention of ever complying with the CPLR, by producing a medical provider for an EBT.

UDCA §1101(a) requires that the Nassau County District Court adopt all of the procedures [*10]set forth in the CPLR with regard to disclosure.

CPLR 3101 states, in pertinent part, that:

“(a) Generally. There shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by:

(1) a party, or the officer, director, member, agent or employee of a party;

(2) a person who possessed a cause of action or defense asserted in the action; …”

Accordingly, pursuant to CPLR 3101(a), in the Nassau County District Court there shall be “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof“. The words “material and necessary” should be interpreted liberally to “require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test to determine if the information sought is material and necessary is one of usefulness and reason” (see, Allen v. Crowell-Collier Publishing Co., 21 N.Y.2d 403, 406- 407 [1969]; see also U S Ice Cream Corp. v. Carvel Corp., 190 A.D.2d 788, 593 N.Y.S.2d 861 [2d Dept 1993]). The term “necessary” has been construed to mean “needful” rather than “indispensable” (see, Allen v. Crowell-Collier Publishing Co., 21 N.Y.2d 403, supra). “[I]f there is any possibility that the information was sought in good faith for possible use as evidence-in-chief or in rebuttal or for cross-examination, it should be considered ‘evidence material … in the prosecution or defense'” (In re Comstock’s Will, 21 A.D.2d 843, 844, 250 N.Y.S.2d 753, 755 [4th Dept 1964]). However, the Allen case makes clear that disclosure extends to all relevant information calculated to lead to relevant evidence, not just information that can be used as evidence in chief (see, CPLR 3101, Siegel, Practice Commentaries McKinney’s Cons. Laws of NY, Book 7B, CPLR c3101:7, at 18 citing West v. Aetna Casualty and Surety Co., 49 Misc.2d 28, 266 N.Y.S.2d 600 [1965] mod’d. 28 A.D.2d 745, 280 N.Y.S.2d 795 [3d Dept 1967]; see also Wiseman v. American Motor Sales, Corp., 103 A.D.2d 230, 479 N.Y.S.2d 528 [2d Dept 1984]). “If the data elicited is within the broad scope of CPLR 3101(a) as construed in the Allen case, the excursion should be called a ‘relevant inquiry’. That would leave [the term] ‘fishing expedition’ to describe the inquiry that goes beyond that extended compass … ” (Siegel, Practice Commentaries McKinney’s Cons. Laws of NY, Book 7B, CPLR c3101:8, at 18). Furthermore, matters relating to disclosure lie within the broad discretion of the trial court, as it is in the best position to determine what is material and necessary (see, Allen v. Crowell-Collier Publishing Co., supra; see also, Anderson v. Cornell University, 225 A.D.2d 946, 638 N.Y.S.2d 852 [3d Dept 1996]).

Applying the principles established in the Allen case to the issue of an insurance carrier’s right to an EBT of a medical provider in a no-fault case, the Court finds that provided certain conditions are met by an insurance carrier, the carrier is entitled to an EBT of a medical provider. The Court of Appeals has clearly held that, pursuant to the no-fault regulations, in a case in which no additional verification is timely sought, an insurance carrier must pay or deny a claim of no-fault [*11]benefits within thirty (30) days from the receipt of a claim or be precluded from interposing a defense to the denial of the claim, with limited exceptions (see, Presbyterian Hospital v. Maryland Casualty Co., 90 N.Y.2d 274 [1997]). In the case of a defense of “medical necessity”, the Courts have held a medical provider is precluded from raising a defense of “medical necessity” where the denial was not timely and that summary judgment in favor of the medical provider is appropriate in such situations, provided the plaintiff submits proper proof of the claim and the amount of the loss (see, Presbyterian Hospital v. Maryland Casualty Co., supra.; Rombom v. Interboro, 186 Misc.2d 847, 721 N.Y.S.2d 474 [NY Sup App Term 2000]). Thus, when the insurance carrier has failed to issue a timely denial, no further discovery, which includes an EBT of the medical provider, is permissible on any defense, except if the insurance carrier’s defense falls within limited exceptions. The limited exceptions set forth in the Presbyterian case are where untimely denials are of no consequence because the insurer is not required to pay the claim and where the claim is ultimately deemed invalid (see, Presbyterian v. Maryland, supra). Such situations include, inter alia, fraud and a lack of coverage defense based upon a belief that the alleged injury does not arise out of the insured accident (see, Central General Hospital v. Chubb Group of Insurance Companies, 90 N.Y.2d 195 [1997]; Mount Sinai Hospital v. Triboro Coach, Inc., 263 A.D.2d 11, 699 N.Y.S.2d 77 [2d Dept 1999]).

If an insurance carrier has made a timely denial, based upon “medical necessity”, then its objective in seeking an EBT of the medical provider is not a means of harassing the medical provider, but rather the insurance carrier is trying to obtain relevant information on its defense of “medical necessity”. Certainly in cases where an insurance carrier timely denied the no-fault claim based upon the ground of “medical necessity”, the carrier is entitled to explore why the medical provider or treating physician determined the treatment to be necessary. However, if an insurance carrier seeks an EBT of a medical provider to inquire about the “medical necessity” of the treatment provided to the plaintiff’ s assignor when the insurance carrier has failed to timely deny the medical provider’s claim, then the motive for such request is questionable. The Court must also add, although not raised in the plaintiff’s papers, even if an insurance carrier has timely denied the medical provider’s claim based on “medical necessity”, a carrier’s motive for taking an EBT of a medical provider who performs scientific or objective testing of its assignor, due to a determination of “medical necessity” by the assignor’s treating physician, must also be questioned.

Furthermore, the Court rejects the plaintiff’s contention that the issues concerning “medical necessity” for treatment in no-fault cases are simple, thereby obviating the need for an EBT of the medical provider (see, Albatros Medical PC v. GEICO, 196 Misc.2d 656, 766 N.Y.S.2d 309 [NY City Civil Ct 2003]). In Albatros, the Court held that a medical provider is required to submit to an EBT in a no-fault case.

Lastly, any argument by the plaintiff that an EBT of a medical provider in some cases outweighs the potential award is unpersuasive. The Insurance Law allows a medical provider to arbitrate its no-fault claim and take advantage of the simplified procedures involved in arbitration (see, Ins. Law §5106[b]; 11 NYCRR 65.17). Thus, the plaintiff had a less inconvenient and less expensive forum in which to resolve its dispute. The plaintiff did not opt to arbitrate its claim. [*12]Rather, the plaintiff elected to proceed by way of litigation in the Nassau County District Court and thus it must comply with the discovery procedures set forth in the CPLR and the UDCA (see, UDCA §1101[a]; CPLR 3101; see also, Albatros Medical P.C. v. GEICO, supra. [“Plaintiff having elected to proceed by way of litigation in the courts, must comply with CPLR Article 31. In rejecting the expeditious and economical option of arbitration, plaintiff cannot now seek to use the rules of arbitration in the courts.”].

Accordingly, this Court holds that, provided certain conditions are met by an insurance carrier, a carrier is entitled to an EBT of a medical provider pursuant to the UDCA and the CPLR. A condition precedent to such EBT in cases involving the issue of “medical necessity” is a showing by the insurance carrier, that it issued a timely denial of the no-fault claim, based on the ground of “medical necessity”. In contrast, an insurance carrier is entitled to an EBT on a fraud ground and/or a lack of coverage ground, whether or not a timely denial was issued.

In view of the foregoing, the plaintiff’s motion for a protective order vacating the defendant’s notice of an EBT of the medical provider shall be granted on any case in which there was not a timely denial based upon “medical necessity”, unless the insurance carrier, in good faith can set forth a defense of fraud or lack of coverage.

Within thirty (30) days of the date of this decision, on all forty-eight (48) cases, the defendant shall provide this Court with a showing of a timely denial, based on “medical necessity” or submit an affirmation setting forth in good faith a need for the EBT, based upon a defense of fraud or lack of coverage. Such EBTs shall be scheduled within thirty (30) days of such showing. As it has in the past, this Court will entertain the option of holding such EBTs at the medical provider’s offices so as to reduce the inconvenience to such provider.

Notwithstanding the foregoing, in those cases where a disclosure stipulation has been entered into between the parties providing for the examination under oath of the plaintiff (to wit: in index numbers 15828/01; 15846/01; 24320/02; 32041/02; 32047/02; 32058/02; 32059/02; 32067/02; 32077/02; 32087/02; 32097/02 and 32115/02), the Court will not disturb the parties’ agreement. Such agreed upon deposition shall proceed and be held within forty five days (45) from the date of service of a copy of this decision and Order upon the plaintiff’s counsel.

(2)An Insurance Carrier in a No-Fault Action May Serve Interrogatories and Conduct an EBT of a Medical Provider, Provided Said Disclosure Devices are Not Repetitive.

The plaintiff claims that the insurance carrier’s request for an EBT is merely duplicative of the interrogatories already requested and the plaintiff’s answers to the interrogatories provide the insurance carrier with all the information that it requires for the defense of the instant claim. The insurance carrier claims that the interrogatories are mainly directed to the issues of the plaintiff’s licensing and billing particulars. The insurance carrier further claims that while documents are attached to the plaintiff’s interrogatories, a number of these documents are useless without an EBT [*13]of the medical provider who prepared the documents.

CPLR 3130 makes interrogatories and depositions mutually exclusive without leave of Court if interrogatories are served, in actions for damages for (1) injury to property, (2) personal injury or (3) wrongful death based solely on a cause of action for negligence. No such statutory restriction applies in a no-fault case. However, the Courts will not tolerate unwarranted repetitive uses of disclosure devices, such as multiple depositions or interrogatories (see, Blittner v. Berg and Dorf, 138 A.D.2d 439, 525 N.Y.S.2d 858 [2d Dept 1988]). Moreover, although the CPLR generally permits a party to utilize interrogatories and depositions, a party should complete one discovery device before conducting another one (see, Zlatnick v. GEICO, supra. and the cases cited therein — “Only when the first chosen discovery device does not satisfactorily yield information can a party utilize the other discovery device,” Id.). Thus, an insurance carrier should not be entitled to serve interrogatories and an EBT notice in a “knee-jerk” reaction to every no-fault lawsuit without demonstrating why responses to written interrogatories were somehow lacking.

In the instant cases, it is not clear whether the EBT demand and the interrogatories were served upon the plaintiff at the same time. The plaintiff apparently has answered all of the interrogatories. The defendant’s interrogatories consisted of twenty-four (24) questions. The interrogatories demanded answers and required documents to be attached. Contrary to the defendant’s contentions, questions four (4) through nine (9) are not merely licensing and billing questions. These questions request, inter alia, what diagnostic tests were performed and any notes and reports taken concerning the medical treatment.

Although questions four (4) through nine (9) are directed at the medical treatment of the plaintiff’s assignor and may indeed be duplicative of questions asked of a medical provider at an EBT, said EBT would certainly encompass additional questions on the issue of “medical necessity”and on the medical treatment provided to the plaintiff’s assignor. Thus, this Court does not find the deposition of the medical provider to be merely repetitive of the interrogatories. Furthermore, in these cases, the defendant’s counsel asserts that an EBT of the medical provider is necessary to explain the documents (i.e., notes and records) attached to the plaintiff’s interrogatories. Thus, in the cases before this Court, unlike the Zlatnick case, the insurance carrier has articulated the problem with the plaintiff’s responses to the defendant’s interrogatories and demonstrated the need for an EBT.

Accordingly, the plaintiff’s motion for a protective order, vacating the defendant’s notice for an EBT on the grounds of a repetitive use of a disclosure device is denied. However, repetition of questions may, in an appropriate circumstance, result in sanctions for frivolous conduct.

(3/4)An Insurance Carrier Involved in Civil Litigation for the Recovery Of No-Fault Benefits is Not Precluded From Requesting an EBT of a Medical Provider Because the Insurance Carrier Failed to Request an Examination Under Oath or Additional Verification as Permitted Under the New York Compilation of Codes Rules and Regulations. [*14]

The plaintiff asserts that an insurance carrier waives its right to an EBT of the medical provider under the New York Compilation of Codes, Rules and Regulations [hereinafter “NYCRR”], when an insurance carrier fails to request an examination under oath (hereinafter “EUO”) of a medical provider within thirty (30) days of receipt of the plaintiff’s no-fault claim. The plaintiff further claims that the defendant is trying to frustrate the purpose of the no-fault law by treating the plaintiff as an adversary in violation of the NYCRR. Moreover, the plaintiff claims that the insurance carrier waives its right to an EBT because it was required to request any additional verification from the plaintiff, including documentation concerning “medical necessity”, within ten (10) business days (for documentation) or thirty (30) calendar days (for an examination) of receipt of the claim by the insurance company. The defendant’s position is that the plaintiff’s arguments are frivolous with simply no basis in law.

Prior to April 5, 2002, the NYCRR did not require an injured person or assignee to attend an “EUO’ (see, 11 NYCRR former 65.12; Medical Soc. of State of NY, Inc. v. Levin, 185 Misc.2d 536, 712 N.Y.S.2d 745 aff’d. 280 A.D.2d 309, 723 N.Y.S.2d 133 [1st Dept 2001]). The current regulations, 11 NYCRR 65-1.1, effective April 5, 2002, do require a claimant to submit to an “EUO” “as may reasonably be required”. This Court is not certain what regulation was in effect at the time of all of these claims. Regardless, however, of what regulation was in effect, any argument that an insurance carrier’s failure to request an “EUO”or to seek additional verification under the NYCRR, thereby precludes an insurance carrier from requesting an EBT of a medical provider in a no-fault litigation, is without merit (see, Albatros Medical P.C. v. GEICO, supra). The new regulations cannot be used for any claim retroactively to require an EUO (see, Bronx Medical Services P.C. ex rel. Rivera v. Lumbermans Mutual Cas. Co., 2003 WL 21402045, 2003 Slip Opinion 51022(u) [Appellate Term, June 2003]). Moreover, under the new regulation, there is no discovery prohibition if litigation is chosen by a medical provider to recover no-fault benefits. Once again, the Court must state that the plaintiff elected to proceed by way of litigation in the Nassau County District Court and thus, it must comply with the discovery procedures set forth in the CPLR and the UDCA (see, UDCA §1101[a]; CPLR 3101; see also Albatros Medical P.C. v. GEICO, supra).

Accordingly, the portion of the plaintiff’s motion for a protective order, vacating the defendant’s notice of EBT, based upon the grounds that the insurance carrier failed to request an EUO or additional verification as permitted under the NYCRR is denied, as without merit.

(5)The Burden of Proving “Medical Necessity” Does Not Affect the Defendant’ s Right to Request an EBT of A Medical Provider.

The plaintiff claims that it does not have to prove “medical necessity” and that “medical necessity” is an affirmative defense to be proved by the defendant. The plaintiff further claims that no “medical necessity” questioning should be allowed until the defendant is compelled to produce a rebuttal witness who can authoritatively testify as to a lack of “medical necessity”. The defendant claims that the issue of “medical necessity” is an issue in the case, regardless of who bears the burden. [*15]

The Appellate Term has held that the burden of establishing whether a medical test performed by a medical provider on the injured party was a “medical necessity” is on the medical provider (see, Shtarkman Neurologist, P.C. as assignee of Marian Copeitiro v. Allstate Insurance Company, 2002 WL 32001277, 2002 Slip Op. 505684 [Appellate Term, 9th and 10th Jud Dists 2002]). Notwithstanding the above, a party may obtain disclosure regardless of which party has the burden of proof as to the issues sought to be disclosed (see, CPLR 3101; see also, Baxter v. Orans, 63 A.D.2d 875, 405 N.Y.S.2d 470 [1st Dept 1978]).

Accordingly, the portion of the plaintiff’s motion for a protective order for vacatur of the defendant’s notice of EBT, upon the ground that the defendant has the burden of proving “medical necessity”, is hereby denied without merit.

(6)“Special Circumstances” Do Not Exist Permitting the Plaintiff to Produce a Non-Party Medical Consultant Rather Than the Medical Provider at the EBT.

The plaintiff claims that where “special circumstances” exist, the examining party may be permitted to designate the individual to appear at an EBT. The plaintiff’s argument to support “special circumstances” is based upon an assumption by the plaintiff that the defendant’s response to the plaintiff’s EBT notice would be to produce a “claims representative”, rather than the individual(s) who actually performed the independent medical exam (hereinafter “IME”) or peer review. The plaintiff further claims that if the plaintiff must produce the medical provider for an EBT, then the defendant must produce the individual(s) who actually performed the IME or peer review at an EBT of the defendant. The defendant’s position is that the plaintiff fails to show “special circumstances” that would allow for the deposition of a non-party medical consultant. It should be noted that CPLR 3101(a)(4) is relevant to the examination of a non-party witness.

The Court is not certain whether, in the instant cases, EBTs have been requested of the insurance carrier, and/or whether the insurance carrier has objected to said EBTs. The Court is aware that in many of these cases, disclosure stipulations have been entered into providing for depositions of physicians, claims examiners and others with knowledge of the facts. As to these stipulations which have been “so ordered” by the Court, the Court will uphold the agreements. In those cases where no stipulations have been entered into, the issue of whom the insurance carrier must produce at an EBT must await a ripe issue and proper motion. The issue before this Court, on this motion, is whom may be produced at an EBT of the medical provider.

Absent compelling circumstances a party is entitled to produce the testifying witness of its choice ( see, Fernandez v. St. John’s Episcopal Hospital, South Shore Division, 70 A.D.2d 627, 416 N.Y.S.2d 638 [2d Dept 1979]). When additional persons are sought to be deposed, the examining party must carry the burden of demonstrating that the person previously deposed possessed insufficient knowledge or was otherwise inadequate (see, Fernandez v. St. John’s Episcopal Hospital, South Shore Division, supra). Thus, pursuant to the case law, the medical provider may produce the testifying witness of its choice. However, this witness must have adequate knowledge [*16]of the treatment and testing of the medical provider’s assignor. In the case of an individual medical provider, the only individual with sufficient knowledge to be deposed regarding the treatment of the assignor would be the actual medical care provider. In the case of a corporate entity, any one of the treating physicians may be produced.

In these cases, after a deposition of the plaintiff has been conducted, and in those rare cases where the defendant believes the individual produced by the corporate medical entity was insufficient, the defendant may submit an affidavit on notice to the Court requesting an additional EBT. If the facts warrant, the Court will require the plaintiff to pay for the cost of the additional EBT.

In view of the foregoing, the plaintiff’s motion requesting that a non-party medical consultant appear at the EBT for the medical provider, is denied.

(7)Court Supervised Discovery is Not Warranted in this Case.

The plaintiff requests Court ordered discovery pursuant to CPLR 3104, but sets forth no legal argument for the need for said request. The insurance carrier asserts that supervised discovery is not necessary in the instant case and would only unduly burden the Court.

CPLR 3104(a) states, in relevant part, that:

“Upon the motion of any party or witness on notice to all parties or on its own initiative without notice, the court in which an action is pending may by one of its judges or a referee supervise all or part of any disclosure procedure.”

The supervisory power, given to the Court by CPLR 3104(a) should be exercised sparingly and only when there is a “special circumstance” (see, DiGiovanni v. Pepsico, Inc., 120 A.D.2d 413, 502 N.Y.S.2d 23 [1st Dept 1986]). The Court does not find court-ordered supervision to be warranted at this time as “special circumstances” have not been shown, nor has the plaintiff even demonstrated that supervised discovery would be helpful.

(8)The Defendant is Not Entitled to Sanctions and Costs.

The defense attorney claims that sanctions are necessary under 22 NYCRR 130-1.1 because the plaintiff has engaged in frivolous conduct. The plaintiff opposes the defendant’s request for sanctions and claims that it has the procedural right under the CPLR and UDCA to challenge the propriety of the defendant’s EBT demands.

22 NYCRR 130-1.1(a) provides, in pertinent part, that: [*17]

The court, in its discretion, may award to any party or attorney in any civil action or proceeding before the court, except where prohibited by law, costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney’s fees, resulting from frivolous conduct as defined in this Part. In addition to or in lieu of awarding costs, the court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart.

22 NYCRR 130-1.1(c) defines conduct as frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

Frivolous conduct shall include the making of a frivolous motion for costs or sanctions under this section. In determining whether the conduct undertaken was frivolous, the Court shall consider, among other issues, (1) the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and (2) whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel or the party.

The Court does not find the plaintiff’s motion for a protective order to be frivolous, as the plaintiff’s arguments are not completely without merit, undertaken to delay or assert material factual statements that are false. Sanctions are simply not warranted in this case.

Accordingly, the defendant’s request for sanctions pursuant to 22 NYCRR 130-1.1 is hereby denied.

This constitutes the decision and order of this Court.

E N T E R:

DISTRICT COURT JUDGE

Dated:December 26, 2003

CC:Baker & Barshay, LLP [*18]

Law Offices of Teresa M. Spina

Caption endnotes:

Decision Date: December 26, 2003

Footnotes

Footnote 1: By order dated September 18, 2003, summary judgment was granted in favor of plaintiff and the defendant on the third and fourth causes of action

Footnote 2: Action discontinued by stipulation

Footnote 3: By order dated October 2, 2003, summary judgment was granted in favor of plaintiff defendant on the third through sixth and ninth and tenth causes of action

Footnote 4: By order dated September 18, 2003, summary judgment was granted in favor of the plaintiff the defendant

Footnote 5: By order dated September 22, 2003, summary judgment was granted in favor of plaintiff on the first and second causes of action, and in favor of defendant dismissing the third and fourth causes of action

Footnote 6: By order dated November 6, 2003, summary judgment was granted in favor of plaintiff the defendant on the first and second causes of action

Footnote 7: Action discontinued all assignors except Nohemy Marquez

Footnote 8: Action discontinued by letter

Footnote 9: Dismissed by Order dated December 3, 2003

Footnote 10: By order dated October 3, 2003, summary judgment was granted in favor of plaintiff defendant on the first, second, seventh and eighth causes of action

Footnote 11: By order dated September 29, 2003, summary judgment was granted in favor of plaintiff defendant on first and second causes of action

Footnote 12: “Party Benefits” are basically a reimbursement to a person for “basic economic loss” on account of personal injury arising out of the use or operation of a motor vehicle, less certain deductions prescribed by statue (Insurance Law § 5102[b]).

“First party benefits” means payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less:

(1) Twenty percent of lost earnings computed pursuant to paragraph two of subsection (a) of this section

(2) Amounts recovered or recoverable on account of such injury under state or federal laws providing social security disability benefits, or workers’ compensation benefits, or disability benefits under article nine of the workers’ compensation law, or medicare benefits, other than lifetime reserve days and provided further that the medicare benefits utilized herein do not result in a reduction of such person’s medicare benefits for a subsequent illness or injury.

(3) Amounts deductible under the” applicable insurance policy ” (Insurance Law § 5102[b]).

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, Suffolk County (P. Barton, J.), entered March 22, 2002, denying its motion to compel responses to its discovery demands and granting plaintiffs cross motion for summary judgment in the principal sum of $1,571.80.

Order unanimously affirmed without costs and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees.

In this action to recover first-party no-fault medical benefits for treatment rendered to its assignor, plaintiff cross-moved for summary judgment. For the reasons set forth in Damadian MRI in Elmhurst. P.C. v Liberty Mut. Ins. Co. (No. 2002-999 S C, [decided herewith]), plaintiffs proof of its claim as submitted to defendant sufficed to establish its prima facie case in summary judgment. Inasmuch as defendant, failed to timely deny plaintiffs no-fault claim within 30 days of receipt (Insurance Law § 5106 [a]; 11 NYCRR 65-3.8[c]), it is precluded from raising the defense of lack of medical necessity (see Central Gen. Hosp. v Chubb Group of Ins. Cos. as., 90 NY2d 195, 199 [1997]).

Accordingly, plaintiffs cross motion was properly granted and the matter is remanded to the court below for a calculation of the statutory interest and an assessment of attorney’s fees due on $1,571.80 (Insurance Law § 5106 [a]; 11 NYCRR 65-3.9 [a]; 65-3.10 [a]; see St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641 [1995].
Decision Date: December 24, 2003

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiff from an order of the Civil Court, Kings County (A. Schack, J.), entered October 7, 2002, denying its motion for summary judgment. Order unanimously modified by providing that plaintiffs motion for summary judgment is granted to the extent of awarding it partial summary judgment in the sum of $1,695, and matter remanded to the court below for calculation of statutory interest and an assessment of attorney’s fees, and for all further proceedings on the remaining portion of the claim in accordance with the decision herein; as so modified, affirmed without costs.

In this action to recover $1,895 in first-party no-fault benefits, for medical supplies furnished to its assignor, plaintiff moved for summary judgment. The motion papers establish that after plaintiff submitted its proof of claim, i.e., the completed statutory forms (11 NYCRR 65-3.3 [d]; 65-3.5 [a]), defendant denied the claim on the ground that the prescribed medical equipment was medically unnecessary. Defendant did not seek verification of the “proof of the fact and amount of loss sustained” (Insurance Law § 5106 [a]; see 11 NYCRR 65-3.5 [a]) and its denial based on lack of medical necessity, although timely (11 NYCRR 65-3.8 [c]), was Conclusory, unsupported by a peer review or any other proof, such as an independent medical examination, setting forth a sufficiently detailed factual basis and medical rationale for the claim’s rejection (e.g. Choicenet Chiropractic P.C. v Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d & 11th Jud Dists]). Thus, having failed to issue a proper denial of benefits, fully and explicitly supporting its claim that the prescribed equipment was medically unnecessary, and having failed to set forth any other basis for denial of the claim within 30 days of the claims’ receipt, the denial is deemed ineffective and, accordingly, defendant is precluded, with certain [*2]exceptions not relevant here, from interposing a defense (11 NYCRR 65-3.8 [b] [4]; Central Gen. Hosp. v Chubb Group of Ins. Co., 90 NY2d 195, 199 [1997]; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 701 [2001]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [1999]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613, 614 [1996]; Liberty Queens Med. P.C. v Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d & 11th Jud Dists]).

In opposition to plaintiffs motion for summary judgment, defendant challenged the equipment’s medical necessity via a physician’s affirmation, dated nine months after the claim’s denial, based on an examination of the insured’s treatment file. In addition, defendant argued that because no-fault compensation is available only for medically necessary health benefits (e.g. Insurance Law § 5102 [a] [1]), on summary judgment, plaintiff must establish medical necessity by proof in admissible form even if defendant is precluded from controverting said proof. Plaintiff contends that its properly completed claim form establishes its prima facie case for the recovery of no-fault benefits in summary judgment, and we agree.

In furtherance of the legislative mandate “to encourage prompt payment of claims, to discourage investigation by insurers and to penalize delays” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225 [1986]), the Insurance Department regulations provide that the “written notice [of claim] required by section 65-2.4. . . shall be deemed to be satisfied by the insurer’s receipt of a completed prescribed application for motor vehicle no-fault benefits” (11 NYCRR 65-3.3 [d]), that is, the approved claim forms or their functional equivalent (11 NYCRR 65-3.5 [g]). Because such submissions suffice to place the burden on the insurer to timely interpose its objections, with the requisite supporting allegations where necessary, or be precluded thereafter from asserting those objections or defenses, including the claim that the health benefits were medically unnecessary, the clear implication is that a properly completed claim form, which suffices on its face to establish the “particulars of the nature and extent of the injuries and [health benefits] received and contemplated” (11 NYCRR 65-1.1), and the “proof of the fact and amount of loss sustained” (Insurance Law § 5106 [a]), is all that is necessary at the claim stage to establish the health benefits’ medical necessity (Insurance Law § 5102 [a] [1]; see Dermatossian v New York City Tr. Auth., 67 NY2d at 224 [“to receive payment (a claimant) need only file a ‘proof of claim’ (which) the insurers are obliged to honor. . . promptly or suffer the statutory penalties”]).

While under the facts presented we are only called upon to decide whether a proper proof of claim establishes a prima facie case on a provider’s motion for summary judgment where the insurer is precluded from raising the defense of lack of medical necessity, courts have declined to distinguish a proper proof of claim under the insurance regulations from the quantum of proof necessary to prevail on a motion for summary judgment in an ensuing action on the claim whether or not the defendant was precluded (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d at 614; Interboro Gen. Hosp. v Allcity Ins. Co., 149 AD2d 569, 570 [1989]; see S & M Supply Inc. v Geico Ins., NYLJ, July 17, 2003 [App Term, 2d & 11th Jud Dists] [“(P)laintiff establishes its prima facie entitlement to summary judgment. . . by showing that it submitted a complete proof of claim”]; Choicenet Chiropractic P.C. v Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d & 11th Jud Dists] [“Plaintiff established a prima facie case (for summary judgment) by the submission of statutory forms for proof of claim and the amount of the loss.”]; Liberty Queens Med. P.C. v Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d & 11th Jud Dists] [same]; Park Health Ctr. v Prudential Prop. & Cas. Ins. Co., NYLJ, Dec. [*3]14, 2001 [App Term, 2d & 11th Jud Dists] [same]; Sehgal v Royal Ins. Co. of Am., NYLJ, Apr. 15, 1999 [App Term, 9th & 10th Jud Dists]; accord Vinings Spinal Diagnostic, P.C. v Liberty Mut. Ins. Co., 186 Misc 2d 287, 291 [Dist Ct, Nassau County 2000]). Indeed, to hold otherwise would undermine the clear legislative mandate to facilitate the prompt and efficient resolution of first-party no-fault claims, many of which involve small sums for medical supplies, by imposing on the provider the unwarranted burden to obtain the necessary affidavits or other proof extrinsic to the forms to establish medical necessity. Thus, we reaffirm our holding that a provider’s proof of a properly-completed claim makes out a prima facie case upon its motion for summary judgment (e.g. Choicenet Chiropractic P.C. v Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d & 11th Jud Dists]; Liberty Queens Med. P.C. v Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d & 11th Jud Dists]; Park Health Ctr. v Prudential Prop. & Cas. Ins. Co., NYLJ, Dec. 14, 2001 [App Term, 2d & 11th Jud Dists]) thereby shifting the burden to the insurer who, if not precluded, may rebut the inference by proof in admissible form establishing that the health benefits were not medically necessary (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). If not refuted by the no-fault benefits claimant, such proof may entitle the insurer to summary judgment.

An examination of the record on appeal in a recent Appellate Division, Second Department case, St. Luke’s Roosevelt v American Transit Ins. Co., AD2d (2d Dept, Nov. 17, 2003), reveals that the plaintiff therein relied exclusively on proof of its properly-submitted claim forms to establish its case for summary judgment. In its papers in opposition to the motion and on appeal from the order granting the provider’s motion for summary judgment, the insurer contended, as in the instant case, that a claimant must prove that the medical services were “necessary” whether or not the insurer’s default at the claim stage precluded the defense: “[e]ven if the claims were not properly denied . . . [t]he Plaintiff must still prove a prima facie case that the hospital services were necessary.” On appeal, plaintiffs cited Dermatossian v New York City Tr. Auth. (67 NY2d 219) and Liberty Queens Med. P.C. v Liberty Mut. Ins. Co. (NYLJ, Nov. 4, 2002 [App Term, 2d & 11th Jud Dists]) for the proposition that the submission of the statutory forms setting forth the fact and amount of the loss establishes a prima facie case of entitlement to summary judgment. The Appellate Division affirmed the lower court’s order and held that “plaintiffs made a prima facie showing of entitlement to judgment as a matter law” (St. Luke’s-Roosevelt Hosp. v American Tr. Ins. Co., — AD2d — [2d Dept, Nov. 17, 2003]; cf. Wagner v Baird, 208 AD2d 1087, 1088 [3d Dept 1994]).

Where, as here, the insurer is precluded from raising the defense of lack of medical necessity, the logic of the result reached in St. Luke’s-Roosevelt Hosp. v American Tr. Ins. Co. (AD2d [2d Dept, Nov. 17, 2003]) is even more compelling. A contrary rule would require a claimant to prove the health benefits’ medical necessity by evidence additional to the proof necessary to establish a proper claim, even when the insurer has waived the defense, thereby rewarding an insurer’s dilatory response to the claim in the first instance by imposing a greater burden of proof after the action is commenced than was necessary at the claim stage to require that the insurer act on the claim or be precluded from most defenses. Moreover, the situation may be analogized to an account stated where, upon the insurer’s failure timely and properly to deny the bill as embodied in the claim form, the insurer is presumed to have acquiesced to its correctness, thereby rendering the insurer liable thereon. Thus, when an action is commenced, the prima facie case is the unchallenged claim form. Indeed, the Court of Appeals has expressed its impatience with insurers “who sit on their many procedural rights and requirements and then [*4]belatedly deny claims they should have acted upon earlier” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d at 285).

In light of the foregoing, the plaintiff would normally be entitled to the granting of its motion for summary judgment in its entirety. However, in addition to its claim forms, plaintiffs proof in support of its motion for summary judgment contained documents that had not accompanied the claim form, which revealed that the prescribed medical equipment did not include two items, a TENS belt ($78) and a TENS kit ($122), listed in the invoices of supplies delivered. While the waiver rules generally preclude defenses based on defects in the proof of claim if not timely asserted, plaintiff, having interjected an issue of fact which, if true, amounts to a complete defense to a portion of the claim, should be estopped from invoking waiver to avoid a defense that the cost of unprescribed medical equipment is not a recoverable no-fault benefit. There is no proof that defendant knew or should have known of the discrepancy, and absent an explanation therefor, the non-prescribed equipment cannot be justified as a loss sustained.

Accordingly, the matter is remanded to the court below for a calculation of the statutory interest and an assessment of attorney’s fees due on $1,695, the portion of the claim for which summary judgment is granted (Insurance Law § 5106 [a]; 11 NYCRR 65-3.9 [a]; 65-3.10 [a]; see St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641 [1995]), and for all further proceedings on the remainder of the claim.
Decision Date: December 24, 2003

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, Suffolk County (P. Barton, J.), entered on June 11, 2002, which granted plaintiffs motion for summary judgment in the principal sum of $879.73.

Order unanimously affirmed without costs.

In this action to recover $879.73 in first-party no-fault benefits, for medical services provided to its assignor, plaintiff moved for summary judgment. The motion papers establish that after plaintiff submitted its proof of claim, i.e., the completed statutory forms (11 NYCRR 65-3.3 [d]; 65-3.5 [a]), defendant failed to pay or deny the claim within 30 days of receipt of the requested verification (11 NYCRR 65-3.8 [a] [1]) and failed otherwise to set forth any other basis for denial of the claim within 30 days of receipt (Insurance Law § 5106; 11 NYCRR 65-3.8 [c]). Consequently, defendant is precluded, with certain exceptions not relevant here, from interposing a defense [11 NYCRR 65-3.8 [b] [4]; Central Gen. Hosp. v Chubb Group of Ins. Co., 90 NY2d 195, 199 [1997]; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 701 [2001]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [1999]).

In opposition to the motion for summary judgment, defendant challenged the treatment’s medical necessity, arguing that because no-fault compensation is available only for medically necessary treatment (e.g. Insurance Law § 5102 [a] [1]), on summary judgment, plaintiff must prove the treatment’s medical necessity by proof in admissible form even if defendant is precluded from controverting said proof. Plaintiff contends that its properly completed claim form establishes its prima facie case for the recovery of no-fault benefits in summary judgment, and we agree.

In furtherance of the legislative mandate “to encourage prompt payment of claims, to [*2]discourage investigation by insurers and to penalize delays” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225 [1986]), the Insurance Department regulations provide that the “written notice [of claim] required by section 65-2.4. . . shall be deemed to be satisfied by the insurer’s receipt of a completed prescribed application for motor vehicle no-fault benefits” (11 NYCRR 65-3.3 [d]), that is, the approved claim forms or their functional equivalent (11 NYCRR 65-3.5 [g]). Because such submissions suffice to place the burden on the insurer to timely interpose its objections, with the requisite supporting allegations where necessary, or be precluded thereafter from asserting those objections or defenses, including the claim that the treatment was medically unnecessary, the clear implication is that a properly completed claim form, which suffices on its face to establish the “particulars of the nature and extent of the injuries and treatment received and contemplated” (11 NYCRR 65-1.1), and the “proof of the fact and amount of loss sustained” (Insurance Law § 5106 [a]), is all that is necessary at the claim stage to establish the treatment’s medical necessity (Insurance Law § 5102 [a] [1]; see Dermatossian v New York City Tr. Auth., 67 NY2d at 224 [“to receive payment (a claimant) need only file a ‘proof of claim’ (which ) the insurers are obliged to honor. . . promptly or suffer the statutory penalties”]).

While under the facts presented we are only called upon to decide whether a proper proof of claim establishes a prima facie case on a provider’s motion for summary judgment where the insurer is precluded from raising the defense of lack of medical necessity, courts have declined to distinguish a proper proof of claim under the insurance regulations from the quantum of proof necessary to prevail on a motion for summary judgment in an ensuing action on the claim whether or not the defendant was precluded (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613, 614 [1996]; Interboro Gen. Hosp. v Allcity Ins. Co., 149 AD2d 569, 570 [1989]; see S & M Supply Inc. v Geico Ins., NYLJ, July 17, 2003 [App Term, 2d & 11th Jud Dists] [“(P)laintiff establishes its prima facie entitlement to summary judgment. . . by showing that it submitted a complete proof of claim”]; Choicenet Chiropractic P.C. v Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d & 11th Jud Dists] [“Plaintiff established a prima facie case (for summary judgment) by the submission of statutory forms for proof of claim and the amount of the loss.”]; Liberty Queens Med. P.C. v Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d & 11th Jud Dists] [same]; Park Health Ctr. v Prudential Prop. & Cas. Ins. Co., NYLJ, Dec. 14, 2001 [App Term, 2d & 11th Jud Dists] [same]; Sehgal v Royal Ins. Co. of Am., NYLJ, Apr. 15, 1999 [App Term, 9th & 10th Jud Dists]; accord Vinings Spinal Diagnostic, P.C. v Liberty Mut. Ins. Co., 186 Misc 2d 287, 291 [Dist Ct, Nassau County 2000]). Indeed, to hold otherwise would undermine the clear legislative mandate to facilitate the prompt and efficient resolution of first-party no-fault claims, many of which involve small sums for medical supplies, by imposing on the provider the unwarranted burden to obtain the necessary affidavits or other proof extrinsic to the forms to establish medical necessity. Thus, we reaffirm our holding that a provider’s proof of a properly-completed claim makes out a prima facie case upon its motion for summary judgment (Sehgal v Royal Ins. Co. of Am., NYLJ, Apr. 15, 1999 [App Term, 9th & 10th Jud Dists]) thereby shifting the burden to the insurer who, if not precluded, may rebut the inference by proof in admissible form establishing that the health benefits were not medically necessary (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). If not refuted by the no-fault benefits claimant, such proof may entitle the insurer to summary judgment.

An examination of the record on appeal in a recent Appellate Division, Second Department case, St. Luke’s Roosevelt v American Transit Ins. Co., AD2d (2d Dept, Nov. 17, 2003), reveals that the plaintiff therein relied exclusively on proof of its properly-submitted claim [*3]forms to establish its case for summary judgment. In its papers in opposition to the motion and on appeal from the order granting the provider’s motion for summary judgment, the insurer contended, as in the instant case, that a claimant must prove that the medical services were “necessary” whether or not the insurer was precluded from asserting the defense: “[e]ven if the claims were not properly denied. . . [t]he Plaintiff must still prove a prima facie case that the hospital services were necessary.” On appeal, plaintiffs cited Dermatossian v New York City Tr. Auth. (67 NY2d 219) and Liberty Queens Med. P.C. v Liberty Mut. Ins. Co. (NYLJ, Nov. 4, 2002 [App Term, 2d & 11th Jud Dists]) for the proposition that the submission of the statutory forms setting forth the fact and amount of the loss establishes a prima facie case of entitlement to summary judgment. The Appellate Division affirmed the lower court’s order and held that “plaintiffs made a prima facie showing of entitlement to judgment as a matter law” (St. Luke’s-Roosevelt Hosp. v American Tr. Ins. Co., — AD2d — [2d Dept, Nov. 17, 2003]; cf. Wagner v Baird, 208 AD2d 1087, 1088 [3d Dept 1994]).

Where, as here, the insurer is precluded from raising the defense of lack of medical necessity, the logic of the result reached in St. Luke’s-Roosevelt Hosp. v American Tr. Ins. Co. (— AD2d — [2d Dept, Nov. 17, 2003]) is even more compelling. A contrary rule would require a claimant to prove the health benefits’ medical necessity by evidence additional to the proof necessary to establish a proper claim, even when the insurer has waived the defense, thereby rewarding an insurer’s dilatory response to the claim in the first instance by imposing a greater burden of proof after the action is commenced than was necessary at the claim stage to require that the insurer act on the claim or be precluded from most defenses. Moreover, the situation may be analogized to an account stated where, upon the insurer’s failure timely and properly to deny the bill as embodied in the claim form, the insurer is presumed to have acquiesced to its correctness, thereby rendering the insurer liable thereon. Thus, when an action is commenced, the prima facie case is the unchallenged claim form. Indeed, the Court of Appeals has expressed its impatience with insurers “who sit on their many procedural rights and requirements and then belatedly deny claims they should have acted upon earlier” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d at 285).

In light of the foregoing, plaintiff has established its entitlement to summary judgment as a matter of law. Accordingly, plaintiff’s motion is granted and the matter is remanded to the court below for a calculation of the statutory interest and an assessment of attorney’s fees due on $879.73 (Insurance Law § 5106 [a]; 11 NYCRR 65-3.9 [a]; 65-3.10 [a]; see St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641 [1995]).
Decision Date: December 24, 2003

[*1]

Supreme Court, Appellate Term, Second Department, December 24, 2003

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants. Samuel K. Rubin, Bethpage (Lawrence R. Miles of counsel), for respondent.

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

Memorandum.

Order unanimously modified by providing that plaintiffs’ motion for summary judgment is granted to the extent of awarding it partial summary judgment in the sum of $10,635.26, and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees, and for all further proceedings on the remaining portion of the claim in accordance with the decision therein; as so modified, affirmed without costs.

Plaintiffs commenced this action to recover $10,805.26 in assigned first-party no-fault benefits, plus interest and attorney’s fees, pursuant to Insurance Law § 5101 for medical services rendered to their assignor for injuries she sustained in a motor vehicle accident. Thereafter, plaintiffs moved for summary judgment. Defendant opposed the motion which was denied by order of the court below entered September 26, 2002.

A review of the record indicates that with the exception of one of two $170 claims filed on behalf of Daniel Kim’s Acupuncture P.C., plaintiffs established their entitlement to summary judgment for the recovery of no-fault benefits prima facie by proof that they submitted to defendant the completed claim form (Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2003 NY Slip Op 51700[U] [decided herewith]; Sehgal v Royal Ins. Co. of Am., NYLJ, Apr. 15, 1999, at 31, col 4 [App Term, 9th & 10th Jud Dists]; accord S & M Supply v GEICO Ins., 2003 NY Slip Op 51192[U] [App Term, 2d & 11th Jud Dists]; Choicenet Chiropractic v Allstate Ins. Co., 2003 NY Slip Op 50672[U] [App Term, 2d & 11th Jud Dists]; see Dermatossian v New York City Tr. Auth., 67 NY2d [*2]219, 225 [1986]). The burden then shifted to defendant to demonstrate a triable issue whether plaintiffs are entitled to all or any portion of the benefits sought (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

While we agree that the preclusion rule 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 (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 201 [1997]; Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 752 [2002]), defendant’s sole proof of the matter, in the form of an affidavit of its investigator, failed to raise a triable issue of fraud. Here, the report, which was unsworn, alleged, essentially, only that the “uncooperative”{**3 Misc 3d at 10} insured (but not the assignor) had been involved in prior accidents alleged to be “suspicious,” and as to the assignor, recommended merely that the payment of benefits be deferred pending further investigation. Such unsubstantiated hypotheses and suppositions are insufficient to raise a triable issue of the assignor’s fraud, and partial summary judgment should have been granted as to the properly proven claims (see Penny v Pembrook Mgt., 280 AD2d 590, 591 [2001]). However, the court properly denied summary judgment as to one claim for $170, proof of which was omitted from the motion papers.

We note, finally, that while plaintiff concededly failed to respond to defendant’s several requests for verification in the form of an examination of the assignor under oath, not only did defendant fail to prove that the requests were timely (11 NYCRR 65-3.5 [a]), but such requests would not have tolled the 30-day claim determination period because at the time plaintiffs filed the instant claims there was no provision in the insurance regulations for such a procedure (compare 11 NYCRR 65.12 [d], with 11 NYCRR 65-3.5 [e] [eff Apr. 5, 2002]; A.B. Med. Servs. v Lumbermens Mut. Cas. Co., 2003 NY Slip Op 51392[U] [App Term, 2d & 11th Jud Dists]; Bronx Med. Servs. v Lumbermans Mut. Cas. Co., 2003 NY Slip Op 51022[U] [App Term, 1st Dept]).

Accordingly, the matter is remanded to the court below for a calculation of the statutory interest and an assessment of attorney’s fees due on $10,635.26, the portion of the claims for which summary judgment is granted (Insurance Law § 5106 [a]; 11 NYCRR 65-3.9 [a]; 65-3.10 [a]; see St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641 [1995]) and for all further proceedings on the remaining claim.

Doyle, P.J., Winick and Skelos, JJ., concur.

[*1]

Civil Court of the City of New York, Queens County, December 23, 2003

APPEARANCES OF COUNSEL

Teresa M. Spina, Woodbury (Marina O’Leary of counsel), for defendant. Glinkenhouse, Floumanhaft & Queen, Cedarhurst (Philip S. Floumanhaft of counsel), for plaintiff.

{**3 Misc 3d at 181} OPINION OF THE COURT

Charles J. Markey, J.

The legal issue of first impression raised by this case is whether a plaintiff-assignee medical equipment supplier can recover no-fault first-party benefits where the prescription for such supplies was written by a chiropractor, and not a physician.{**3 Misc 3d at 182}

On May 16, 1999, Velez was injured in an automobile accident.^[FN1] The next day, Velez consulted with Kenneth Pieratti, Doctor of Chiropractic, of Monument Chiropractic, P.C. Dr. Pieratti prescribed a thermophore (heat treatment to alleviate pain and spasms), a lumbar support (to alleviate pain and prevent compression on nerve roots), a cervical pillow (for proper positioning), a massager (for mechanical massage), a transcutaneous electro-nerve stimulator (TENS) unit (to prevent the transmission of pain nerve impulses), ordered with four leads for larger area stimulation, conductive garment (needed for TENS delivery for larger area stimulation), solid seat insert (for better positioning of the lumbar area), and an ice cap or collar (to alleviate swelling). The chiropractor completed a[*2]“Physician Statement of Medical Necessity” and signed a separate “Letter of Medical Necessity.”

Defendant GEICO General Insurance Company moves for summary judgment to dismiss the complaint, arguing that plaintiff-assignee ABC Medical Management, Inc. cannot maintain this action to recover no-fault first-party benefits for various items of equipment it furnished to its assignor Narmy Velez, since the prescription for such supplies was written by a chiropractor, and not a physician.

First, as an initial matter, although defense counsel states that she has attached copies of the pleadings, a review of the pertinent exhibit shows that only the answer is attached. CPLR 3212 (b) states that a copy of the pleadings must be attached as a prerequisite to a proper summary judgment motion. The cases in each department of the Appellate Division state that the failure to attach all the pleadings is sufficient grounds for denying the summary judgment motion, permitting leave to renew it (see, Welton v Drobnicki, 298 AD2d 757 [3d Dept 2002]; Gallagher v TDS Telecom, 280 AD2d 991 [4th Dept 2001]; A & L Scientific Corp. v Latmore, 265 AD2d 355 [2d Dept 1999]; Deer Park Assoc. v Robbins Store, 243 AD2d 443 [2d Dept 1997]; Krasner v Transcontinental Equities, 64 AD2d 551 [1st Dept 1978]; accord Noetzell v Park Ave. Hall Hous. Dev. Fund Corp., 271 AD2d 231, 232 [1st Dept 2000]).

Although the foregoing authorities would be sufficient to deny GEICO’s motion, this court would be obliged to grant leave to renew {**3 Misc 3d at 183}which would only further congest the huge daily Special Term calendars, clogged by motions involving no-fault first-party benefits (see discussion in Zlatnick v GEICO, 2 Misc 3d 347 [Civ Ct, Queens County 2003]; Universal Acupuncture Pain Servs. v Lumbermens Mut. Cas. Co., 195 Misc 2d 352 [Civ Ct, Queens County 2003]). Rather than burden a colleague judge, for the sake of judicial economy, the court will address the heart of the defendant’s motion.

The substance of GEICO’s summary judgment motion is the defense contention that Education Law § 6551 prohibits a chiropractor from prescribing the aforementioned medical supplies and equipment. Education Law § 6551 (3), in pertinent part, states: “A license to practice chiropractic shall not permit the holder thereof . . . to prescribe, administer, dispense or use in his practice drugs or medicines . . . or to utilize electrical devices except those devices approved by the board as being appropriate to the practice of chiropractic.”

First, for purposes of this motion, the court will assume arguendo that section 6551 can be used by insurers to defeat recovery in a no-fault case—although the legal issue is not entirely free of doubt, has not been raised by counsel, and is not decided herein (see, State Farm Mut. Auto. Ins. Co. v Mallela, 2002 WL 31946762, *4, 2002 US Dist LEXIS 25187, *16-18 [ED NY 2002, Sifton, J.] [rejecting insurer’s view that a provision of New York’s Business Corporation Law intended to create a right to deny payment of no-fault benefit fees]; Matter of Pugliese v Hamburg, 223 AD2d 383 [1st Dept 1996]).

In King’s Med. Supply v Travelers Prop. Cas. Corp. (194 Misc 2d 667 [Civ Ct, Kings County 2003]), a thoughtful and seminal opinion discussing the prima facie burden of a medical supplier seeking to recover no-fault first-party benefits, the equipment at [*3]issue was virtually identical to that litigated herein. In King’s Med., the insurer simply contested the cost of a cervical pillow, lumbosacral support, thermophore, lumbar cushion, a 4-lead TENS, a cold pack, whirlpool, TENS unit, and a TENS belt (id. at 667-670). The court there observed: “[T]here is nothing unique about this equipment” (id. at 672).

This court’s independent legal research discloses that GEICO’s argument has been advanced by insurers and rejected, in principal part, by courts of other jurisdictions. In Haezebrouck v State Farm Mut. Auto. Ins. Co. (216 Ga App 809, 455 SE2d 842 [1995]), the appellate court reversed, in part, the lower court and held that a chiropractor could properly prescribe a TENS unit, {**3 Misc 3d at 184}a Lossing back and neck traction unit, a cervical collar, a cervical pillow, and knee support (216 Ga App at 810, 455 SE2d at 844). The court there noted that a statutory change permitted chiropractors to utilize hot and cold packs (id.; see also, SAIF Corp. v Ross, 191 Or App 212, 216, 82 P3d 1035, 1036 [2003] [approving chiropractor’s use of modalities of ice and warm compress]).

In Hofmann v Auto Club Ins. Assn. (211 Mich App 55, 535 NW2d 529 [1995], lv denied 452 Mich 870, 552 NW2d 170 [1996], reconsideration denied 452 Mich 870, 554 NW2d 313 [1996]), the court held that chiropractors were authorized to utilize cervical collars (to support and immobilize the spine), cervical pillows (to rehabilitate ligaments and musculature of the cervical spine), lumbar belts (to relieve the strain on the lumbar muscles and spine), and lumbar supports (to restore the normal curvature of the lumbar spine) (211 Mich App at 76-79, 535 NW2d at 541-542). The court in Hofmann, however, held that heat and cold were not included within the scope of chiropractic practice.

Cases in New York suggest that chiropractors may utilize thermophore and heat or cold therapy (see, Introna v Allstate Ins. Co., 850 F Supp 161, 165 [ED NY 1993] [“application of hot/cold packs . . . are neither ‘unusual’ nor ‘unique’ chiropractic services”]; see, e.g., Jimenez v Supermarket Serv. Corp., 2002 WL 662135, 2002 US Dist LEXIS 7029 [SD NY 2002]; Stanton v Hexam Gardens Constr. Co., 144 AD2d 132, 133 [3d Dept 1988]; see also, Everett v State Farm Indem. Co., 358 NJ Super 400, 402, 818 A2d 372, 373 [2002] [per curiam] [chiropractor may properly prescribe and recover “for a thermophore electric pad, commonly referred to as a heating pad, to relieve” strains and sprains], affd substantially on op below 175 NJ 567, 818 A2d 319 [2003] [per curiam] [5-2 decision]; see generally, King’s Med. Supply v Travelers Prop. Cas. Corp., 194 Misc 2d at 668, 672 [although not stating who prescribed the thermophore and other supplies, such equipment was not unique]).

This court holds that a chiropractor may prescribe TENS units, thermophore devices, cervical collars, cervical pillows, lumbar supports, massagers, ice packs, and similar supplies and equipment and that they do not constitute “drugs or medicines” within the meaning of the Education Law.

Further buttressing this court’s conclusion, although not cited by the parties, is the language of 11 NYCRR part 68, Appendix 17-C, part E (b) (1), stating: “For medical equipment and supplies (e.g., TENS units, soft cervical collars) provided by a physician{**3 Misc 3d at 185} or medical equipment supplier, the maximum permissible charge is 150 percent of the documented cost of the equipment to the provider.”

First, the above section provides essentially a fee schedule for equipment given by a physician or a medical equipment supplier. The plaintiff here, ABC, is a medical equipment supplier, and it provided the supplies to its assignor Velez. Dr. Pieratti, the chiropractor, did not furnish the supplies, and it is not the chiropractor who is seeking recovery for the supplies. Nothing in the foregoing regulation prohibits a chiropractor from prescribing the aforementioned supplies, to be dispensed by either a physician or a medical equipment supplier.

More important, the above-quoted provision of part E specifically lists “TENS units [and] soft cervical collars” as typical examples, denoted by the “e.g.” reference, of medical equipment and supplies.

This court has examined the cases cited by GEICO, and other cases, prohibiting chiropractors from performing electrotherapy (e.g., State v Wilson, 11 Wash App 916, 917, 528 P2d 279, 280 [1974], review denied 84 Wash 2d 1015, 528 P2d 279 [1974]; State v Boston, 226 Iowa 429, 278 NW 291 [1938]). These cases on electrotherapy are inapposite to the prescription of the unremarkable medical equipment prescribed herein. This court, at any rate, also notes that, under the terms of Education Law § 6551 (3), quoted above, New York permits chiropractors to utilize certain electrical devices that may be approved by the State Board for Chiropractors, and the 4-lead TENS unit at issue here is permissible.

The Insurance Law regulations specifically incorporate the fee schedules of the Workers’ Compensation Law (11 NYCRR 65.15 [o] [1]). The court has also reviewed, although not cited by either party, the Official New York Workers’ Compensation Chiropractic Fee Schedule (fee schedule), effective April 1, 2000 (see, 12 NYCRR 348.2 [a] [that provision of the Labor Law regulations specifically incorporates by reference the fee schedule]; 12 NYCRR 348.1, 348.2). The fee schedule specifically permits New York chiropractors to bill for electromyographic recordings, needle electromyography (EMG) tests, nerve conduction, and a host of other services.^[FN2]

Pertaining to medical equipment and supplies, the fee schedule, in its “General Ground Rules,” states:{**3 Misc 3d at 186}

“3. materials supplied by a chiropractor

“Supplies and materials provided by the chiropractor over and above those usually included with the office visit or other services rendered may be charged for separately. List drugs, trays, supplies [*4]and materials provided. Payment shall not exceed the invoice cost of the item(s), applicable taxes and any shipping and handling costs associated with delivery from the supplier of the item to the chiropractor’s office. There should be no additional ‘handling’ costs added to the total cost of the item. Bill using procedure code 99070.”

Since the fee schedule does not permit chiropractors to bill for a medical supply beyond the invoice cost, chiropractors apparently have little motivation to provide directly to the patient the needed equipment. Instead, the simple act of writing a prescription for the device by the chiropractor is more time-efficient for the chiropractor and more profitable for a medical supplier, under the aforementioned Insurance Law regulations that permit a charge of “150 percent of the documented cost of the equipment to the provider” (11 NYCRR part 68, Appendix 17-C, part E [b] [1]).

In moving for summary judgment, GEICO counsel used the following caption, which appeared in boldface type and underlined in its motion papers: “plaintiff has failed to prove medical need.” Despite the caption, suggesting that a discussion of its medical necessity defense would follow, GEICO did not develop the defense of medical necessity, did not include the peer review report cited in its answer, and restricted its argument to Dr. Pieratti’s alleged violation of Education Law § 6551 (3).

The cases are clear that in moving for summary judgment on the grounds of medical necessity, the burden is on the insurer to make a prima facie case by including the peer review report. Failure {**3 Misc 3d at 187}to include it warrants denial of the summary judgment motion (see, S & M Supply v Allstate Ins. Co., 2003 NY Slip Op 51191[U] [App Term, 2d Dept 2003] [peer review report would have been proper vehicle to assert and maintain defense of lack of medical necessity]; L.I. First Aid Med. Supply v Progressive Cas. Ins. Co., 196 Misc 2d 258 [Civ Ct, Queens County 2003]; S & M Supply v New York Cent. Mut. Fire Ins. Co., 193 Misc 2d 282, 284 [Civ Ct, Kings County 2002]). In the present case, it was plaintiff’s counsel, in opposition to the motion, who produced the peer review report. This court, accordingly, will discuss the alleged defense.

Louis Filardi, also a doctor of chiropractic and author of the peer review report, challenges Dr. Pieratti for prescribing all of the aforementioned medical equipment and supplies only one day after the accident. Citing Clinical Practice Guidelines No.14, published by the United States Department of Health and Human Services, Dr. Filardi states that 80%-90% of all individuals who complain of soft tissue injury have a resolution of their complaints in one month of the accident. He, therefore, expresses his astonishment for the necessity of prescribing “all of these durable medical goods” within 24 hours after the accident.

In the present case, the prescription, regardless of when it was written, may have been justified in light of the patient’s overall condition, not clearly disclosed on this record. The trier of fact ought to determine these contested issues. Accordingly, the defendant’s motion for summary judgment is, in all respects, denied.

Footnotes

Footnote 1: The peer review report submitted by GEICO maintains that the accident occurred on May 16, 1999. However, twice in Dr. Pieratti’s “Letter of Medical Necessity” the date of the accident is said to be April 16, 1999. Upon request by this court for confirmation, plaintiff’s counsel sent a fax disclosing that the accident was, indeed, on May 16, 1999.

Footnote 2: Under New York law, chiropractors may recover no-fault first-party benefits for conducting EMGs (see, Introna v Allstate Ins. Co., 890 F Supp 161, 165 [ED NY 1995]; Stephens v Allstate Ins. Co., 185 AD2d 338 [2d Dept 1992]; Studin v Allstate Ins. Co., 152 Misc 2d 221, 223-224 [Dist Ct, Suffolk County 1991] [chiropractors can recover for performing EMGs, citing Education Law § 6551 (3) and 8 NYCRR 73.3]; 12 Couch on Insurance 3d § 171:68 [1998] [chiropractor entitled to compensation for conducting surface EMGs]; see also, Posillico v Freeman, NYLJ, June 18, 1996, at 33, col 6 [Yonkers City Ct, Westchester County] [insurer did not contest chiropractor’s claim for electrical stimulation]; but cf. Downey v Barnhart, 294 F Supp 2d 495, 498, n 3 [SD NY 2003] [chiropractor was not an acceptable source for providing a medical interpretation of the EMG]; Machac v Anderson, 261 AD2d 811, 813 [3d Dept 1999] [chiropractor not licensed to interpret X rays]).

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS

Appeal by State Farm Mutual Automobile Insurance Company from an order of the Civil Court, Queens County (Agate, J.), entered January 31, 2003, denying its petition to vacate the arbitrator’s awards.

Order unanimously affirmed without costs.

Upon a review of the record, we find that, with regard to the compulsory arbitration of its no-fault claim, State Farm Mutual Automobile Insurance Company (State Farm) has failed to establish that the arbitrator’s award was not based on the evidence and was arbitrary and capricious (see Matter of Motor Vehicle Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214 [19961). In regard to its uninsured motorist claim, State Farm also has not established that the arbitrator “exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made” (CPLR 7511 [b] [1] [iii]). Consequently, State Farm’s petition to vacate the awards was properly denied. Furthermore, inasmuch as Travelers Insurance Company has not cross-appealed with respect to its cross petition to confirm the awards, this court will not address said issue on appeal.

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