SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Eileen Nadelson, J.), entered September 16, 2005, deemed an appeal from a judgment of the same court entered May 16, 2006 (see CPLR 5501 [c]). The judgment, which awarded plaintiff the sum of $4,518.30, was entered pursuant to the order entered September 16, 2005 which, upon reargument, adhered to the prior determination granting plaintiff’s motion for summary judgment.

Judgment reversed without costs, order entered September 16, 2005 vacated and, upon reargument, plaintiff’s motion for summary judgment denied.

In this action by a health care provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was supported by an affirmation from plaintiff’s counsel and various documents annexed thereto. However, facts set forth in an attorney’s affirmation are of no probative value absent the attorney’s assertion of a basis for his or her personal knowledge of the facts (Zuckerman v City of New York, 49 NY2d 557 [1980]; Feratovic v Lun Wah, Inc., 284 AD2d 368 [2001]; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]). Plaintiff’s counsel did not lay a sufficient foundation to establish that what counsel represented to be plaintiff’s claim forms were admissible under the business records exception to the hearsay rule (see CPLR 4518; see also People v Kennedy, 68 NY2d 569 [*2][1986]; Trotti v Estate of Buchanan, 272 AD2d 660 [2000]; Dayanim v Unis, 171 AD2d 579 [1991]). To the extent defendant may have issued claim denial forms, said claim denials merely established that defendant received claim forms submitted by, or on behalf of plaintiff, but they did not concede the admissibility of the purported claim forms or the facts set forth therein. In light of plaintiff’s counsel’s apparent lack of personal knowledge, plaintiff failed to establish its prima facie entitlement to summary judgment through the submission of competent evidence (CPLR 3212 [b]; see CPLR 4518; People v Kennedy, 68 NY2d 569, supra; Zuckerman v City of New York, 49 NY2d 557, supra; Read v Ellenville Natl. Bank, 20 AD3d 408 [2005]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Stahl v Stralberg, 287 AD2d 613 [2001]).

We note that even if plaintiff had established a prima facie case, in the instant matter, defendant’s opposition to plaintiff’s motion for summary judgment amply demonstrated the existence of a triable issue of fact as to whether “the alleged injur[ies] do[] not arise out of an insured incident,” a defense which may be raised for the first time in opposition to plaintiff’s motion for summary judgment (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). As a result, upon reargument, the court should have denied plaintiff’s motion for summary judgment (see id.; Zuckerman v City of New York, 49 NY2d 557, supra).

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

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (Timothy J. Dufficy, J.), entered August 11, 2005. The order denied plaintiff’s motion for summary judgment with leave to renew upon the submission of proper papers.

Appeal held in abeyance and matter remanded to the court below to report whether the affidavit of plaintiff’s corporate officer included in plaintiff’s summary judgment motion papers as part of the record on appeal was the same affidavit as was submitted to the motion court. The Civil Court shall file its report with all convenient speed.

In an action to recover first-party no-fault benefits, a plaintiff establishes its prima facie entitlement to summary judgment by proof of the submission of a statutory claim form, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]).

In the instant case, plaintiff’s motion for summary judgment was supported by an affirmation of counsel and an affidavit of an officer of plaintiff provider, neither of which were sufficient to establish that the claim forms were submitted to defendant. However, plaintiff’s motion papers also contained copies of defendant’s denial of claim forms which acknowledge [*2]receipt of the claims on various specified dates. Such acknowledgment ordinarily cures any deficiencies in the motion papers with respect to the submission of the claim forms (see e.g. Careplus Med. Supply Inc. v State-Wide Ins. Co., 11 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2005]). Nevertheless, the court below based its decision denying plaintiff’s motion for summary judgment, in part, upon the fact that the affidavit of plaintiff’s officer was both “signed in blank” and undated. The record on appeal, however, indicates that the affidavit submitted with the motion papers was signed and sworn to on a particular date.

Because of this discrepancy, we are unable to make a determination as to whether the affidavit submitted to the court below on the motion is the same affidavit as the one subject to review on this appeal. Accordingly, the matter is remanded to the court below to report whether the affidavit contained in the record on appeal was the same affidavit as was considered by the motion court.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.
Decision Date: October 02, 2006

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Dolores L. Waltrous, J.), entered February 28, 2005. The order granted defendant’s motion to dismiss the complaint and denied plaintiff’s application to convert the action to a special proceeding to vacate the master arbitrator’s award.

Order affirmed without costs.

In this action to recover assigned first-party no-fault benefits for medical services provided by plaintiff, the court below granted defendant’s motion to dismiss the complaint. The court properly determined that plaintiff was not entitled to commence the instant action to adjudicate the dispute de novo, pursuant to Insurance Law § 5106 (c), since the master arbitrator’s award was less than $5,000. Contrary to plaintiff’s contention, Insurance Law § 5106 (c) is unambiguous and must be construed by a court so as to give effect to the plain and ordinary meaning of the words used, without limiting or extending its plain language (see Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98, 106-107 [1997]; McKinney’s Cons Laws of NY, Book 1, Statutes § 94). Insurance Law § 5106 (c) clearly indicates that the amount of the master arbitrator’s award must be at least $5,000 before an insurer or claimant may institute an [*2]action to adjudicate the dispute de novo. As the Court of Appeals noted in Matter of Greenberg (Ryder Truck Rental) (70 NY2d 573, 577 [1987]), “[t]he $5,000 award provision is simply a threshold to acquiring the de novo court adjudication.” Since the master arbitrator’s award herein was $2,024.50, the claimant may not commence an action to adjudicate the dispute de novo pursuant to Insurance Law 5106 (c).

In the event that the court disagreed with its trial de novo arguments, plaintiff made an application to convert the action, pursuant to CPLR 103 (c), to a special proceeding to vacate the master arbitrator’s award. It is well settled that “courts are empowered and indeed directed to convert a civil judicial proceeding not brought in the proper form into one which would be in proper form, rather than to grant a dismissal, making whatever order is necessary for its prosecution” (Matter of First Nat. City Bank v City of New York Finance Admin., 36 NY2d 87, 94 [1975]). We find, however, that conversion is inappropriate under the particular circumstances of this case (see Colonial Penn Ins. Co. v D’Aguilar, 151 AD2d 716 [1989]). The language of the complaint demonstrates that plaintiff elected to commence the instant action for a trial de novo on the erroneous ground that the master arbitrator’s award was $5,000 or more. Neither in the complaint nor in plaintiff’s moving papers in support of its motion does plaintiff assert any CPLR 7511 (b) or 11 NYCRR 65-4.10 ground for vacating the master arbitrator’s award. Accordingly, the court below properly denied plaintiff’s CPLR 103 (c) application.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.
Decision Date: October 02, 2006

[*1]

Civil Court of the City of New York, Richmond County, October 2, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossmanfass, Muhlstock & Neuwirth, Mineola, for plaintiff. Cambio, Votto, Cassata & Gullo, Staten Island, for defendant.

OPINION OF THE COURT

Peter P. Sweeney, J.

The issue presented in this action to recover assigned first-party no-fault benefits is how attorney’s fees should be calculated in an action that involves multiple assignors and the submission of multiple bills on different dates.

Factual Background:

The trial of this action was scheduled to begin on April 26, 2006. At that time, the parties entered into a written stipulation settling all aspects of the action except for the issue of attorney’s fees. Pursuant to the stipulation, defendant agreed to pay a specified portion of each of the 21 bills that were in dispute. The bills were submitted on behalf of three assignors and each bill was submitted on a different date.

Plaintiff maintains that, for each bill, he is entitled to an attorney’s fee in the amount of $60 or 20% of the amount of the bill, plus interest thereon, subject to a maximum of $850, whichever amount is greater. Defendant maintains that, for each assignor, plaintiff is entitled to an attorney’s fee in the amount of $60 or 20% of the aggregate amount of all the bills that were submitted on behalf of that assignor, plus interest thereon, subject to a maximum of $850.

For the following reasons, the court agrees with defendant.

Discussion:

The no-fault regulation that governs awards of attorney’s fees is 11 NYCRR 65-4.6. 11 NYCRR 65-4.6 (c) provides that “[e]xcept as provided in subdivisions (a) and (b) of this section,^[FN1] the minimum attorney’s fee payable pursuant to this Subpart shall be $60.” 11 NYCRR 65-4.6 (e) provides, in pertinent part, that

“[f]or all other disputes subject to arbitration, subject to the provisions of subdivisions (a) and (c) of this section, the attorney’s fee shall be limited as follows: 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850. . . .”

On October 8, 2003, the New York State Insurance Department issued an opinion letter interpreting 11 NYCRR 65-4.6 (c) and (e) (Ops Gen Counsel NY Ins Dept No. 03-10-04 [2003]). The precise question addressed by the New York State Insurance Department in the opinion letter was:

“When an assignee No-Fault provider submits bills for health services rendered to an eligible injured person to that person’s insurer, and such bills are either denied or partially paid and the provider thereafter initiates a court action to contest the denials of the multiple bills which results in a payment award to the provider, is the provider entitled to a minimum attorney’s fee of $60 for each denied bill now required to be paid, or is the proper amount of attorney’s fees based upon the aggregate sum of all bills awarded reimbursement by the Court in the single action that was commenced?” (Emphasis added.)

The New York State Insurance Department answered the question as follows:

“The minimum amount of attorney’s fees awarded to an assignee health provider who has prevailed in a court action brought against a No-Fault insurer is based upon the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which had been submitted and denied. The minimum attorney fee amount of $60 is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action.” (Emphasis added.)

The Department of Insurance concluded that court-initiated actions to resolve payment disputes come within the purview of 11 NYCRR 65-4.6 (e) since such disputes are “subject to arbitration” in that the provider had the option to seek a resolution of the dispute by submitting it for no-fault arbitration in the first instance. It went on to reason:

“Section 65-4.6(e) makes it clear that the amount of attorney’s fees awarded will be based upon 20% of the total amount of first party benefits awarded. That total amount is derived from the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured.” (Emphasis added.)

Pursuant to section 65-4.6 (e), the total amount due the attorney will be derived by calculating 20% of the total claim which is resolved in favor of the applicant, which amount is totaled from the total amount of disputed bills which are submitted on behalf of the applicant. This total amount is subject to a cap of $850. Where 20% of the total claim awarded results in an amount less than $60, the attorney is entitled to the minimum $60 fee pursuant to section 65-4.6 (c). Since the 20% calculation is based upon benefits awarded from the total number of disputed bills [*3]in a court action commenced, an attorney would not be entitled to a $60 fee for each disputed bill which is resolved in favor of the applicant.

It is well settled that an administrative agency’s construction and interpretation of its own regulations is entitled to the greatest weight (Matter of Herzog v Joy, 74 AD2d 372, 375 [1st Dept 1980], affd 53 NY2d 821 [1981]; Matter of Tommy & Tina, Inc. v Department of Consumer Affairs of City of N.Y., 95 AD2d 724, 724 [1983], affd 62 NY2d 671 [1984]). If an administrative agency’s interpretation of one of its own regulations is neither irrational nor unreasonable nor counter to the clear wording of a statutory provision, it should be upheld (Matter of John Paterno, Inc. v Curiale, 88 NY2d 328, 333 [1996]; Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448 [1985]; see also, Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins. of State of N.Y., 72 NY2d 753, 761-762 [1988]).

11 NYCRR 65-4.6 was promulgated by the Department of Insurance, the administrative agency empowered to implement and interpret the No-Fault Law (see Ostrer v Schenck, 41 NY2d 782 [1977]; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 863 [2003]; Breen v Cunard Lines S. S. Co., 33 NY2d 508, 511 [1974]; Insurance Law § 301). In the court’s view, its interpretation of 11 NYCRR 65-4.6 was neither irrational, unreasonable nor counter to any statutory provision.^[FN2] Plaintiff’s suggestion that opinion letters issued by administrative agencies carry little weight is without merit (see, e.g. Matter of New York State Assn. of Life Underwriters v New York State Banking Dept., 190 AD2d 338, 342-343 [3d Dept 1993], affd 83 NY2d 353 [1994] [holding that deference had to be given to an opinion letter issued by the New York State Banking Department which interpreted Banking Law § 96 unless the interpretation was irrational or unreasonable]; see also Ocean Diagnostic Imaging P.C. v State Farm Mut. Auto. Ins. Co., 9 Misc 3d 73, 75 [App Term, 2d & 11th Jud Dists 2005]; S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists 2004]; Bronx Med. Servs., P.C. v Lumbermans Mut. Cas. Co., 2003 NY Slip Op 51022[U] [App Term, 1st Dept 2003]).^[FN3]

Plaintiff’s contention that the holdings in Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co. (207 AD2d 338, 339 [2d Dept 1994]) and Hempstead Gen. Hosp. v Insurance [*4]Co. of N. Am. (208 AD2d 501, 501-502 [2d Dept 1994]) are dispositive of the issues before the court is also without merit. At issue in Smithtown Gen. Hosp. and Hempstead Gen. Hosp. was the interplay between 11 NYCRR former 65.17 (b) (6) (iii) and 11 NYCRR former 65.17 (b) (6) (v), the predecessor no-fault regulations to 11 NYCRR 65-4.6 (c) and (e). 11 NYCRR 65.17 (b) (6) (iii) provided: “Except as provided in subparagraphs (i) and (ii) of this paragraph, the minimum attorney’s fee payable pursuant to this section shall be $60.” 11 NYCRR 65.17 (b) (6) (v) provided, in pertinent part, as follows: “For all other disputes subject to AAA and IDA arbitrations, subject to the provisions of subparagraphs (i) and (iii) of this paragraph, the attorney’s fee shall be limited as follows: 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850.”

In both Smithtown Gen. Hosp.^[FN4] and Hempstead Gen. Hosp.^[FN5] the Court interpreted 11 NYCRR 65.17 (b) (6) (iii) and (v) as requiring awards of attorney’s fees to be calculated on a “per claim” basis. Plaintiff contends that since the language of 11 NYCRR 65.17 (b) (6) (iii) and (v) is virtually identical to the language of 11 NYCRR 65-4.6 (c) and (e), the holdings in Smithtown Gen. Hosp. and Hempstead Gen. Hosp. are controlling. The court disagrees. The holdings in Smithtown Gen. Hosp. and Hempstead Gen. Hosp. have little bearing on the precise issue presented here, whether the court should defer to the Department of Insurance’s interpretation of 11 NYCRR 65-4.6. This issue was not before the Court in either Smithtown Gen. Hosp. or Hempstead Gen. Hosp. Indeed, at the time those cases were decided, the Department of Insurance had yet to interpret 11 NYCRR 65-4.6 or the predecessor regulations governing attorney’s fee awards.

Further, defendant correctly points out that the holding in Smithtown Gen. Hosp. is not at all inconsistent with the Department of Insurance’s interpretation of 11 NYCRR 65-4.6. [*5]While the Court in Smithtown Gen. Hosp. held that attorney’s fees should be calculated on a “per claim” basis, the complaint^[FN6] filed in Smithtown reflects that each of the 21 claims at issue in the action was submitted on behalf of a different assignor. The holding is therefore perfectly consistent with the Department of Insurance’s view, as stated in the opinion letter, that attorney’s fee awards should be based on “the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured” (Ops Gen Counsel NY Ins Dept No. 03-10-08 [emphasis added]).^[FN7]

For all of the above reasons, the court adopts the Department of Insurance’s interpretation of 11 NYCRR 65-4.6 and holds that for each assignor in the action, plaintiff is entitled to an attorney’s fee in the amount of $60 or 20% of the total amount of the first-party benefits awarded for services provided to that assignor, plus interest thereon, whichever amount is greater, subject to a maximum of $850.

Accordingly, it is hereby ordered that judgment be entered in plaintiff’s favor in accordance with the stipulation of settlement together with interest and attorney’s fees, as provided for under the No-Fault Law and the regulations promulgated thereunder, as well as costs and disbursements.

Footnotes

Footnote 1: Neither of these subdivisions apply in this case.

Footnote 2: The only statutory provision dealing with attorney’s fees under the No-Fault Law is Insurance Law § 5106 (a), which, in pertinent part, provides that “[i]f a valid claim [for first-party benefits] or portion was overdue, the claimant shall also be entitled to recover his attorney’s reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations.”

Footnote 3: In Ocean Diagnostic Imaging P.C., S & M Supply and Bronx Med. Servs., P.C., the various Appellate Terms held that the Department of Insurance’s interpretation of a regulation as articulated in an advisory “Circular Letter” is entitled to great deference. The court sees no reason why the Department of Insurance’s interpretation of a regulation as articulated in an opinion letter should be treated differently.

Footnote 4: In Smithtown, the Court stated:

“Concerning attorneys’ fees, once a court action has been commenced, 11 NYCRR 65.17 (b) (6) (v) grants an attorneys’ fee on no-fault insurance claims of 20% of the amount of first-party benefits awarded plus interest, with a ceiling of $850 per claim. Further, pursuant to 11 NYCRR 65.17 (b) (6) (iii), with certain exceptions not here applicable, there is a minimum fee of $60 on each such claim. Here, although the court awarded attorneys’ fees, it failed to follow the formula provided under 11 NYCRR 65.17 (b) (6) (v), incorrectly interpreted the $850 ceiling to apply to the entire action, rather than to each claim, and failed to set a minimum fee of $60 per claim. Accordingly, upon remittitur, the Supreme Court is directed to calculate the attorneys’ fee due in accordance with 11 NYCRR 65.17 (b) (6) (v), and (iii)” (207 AD2d at 339 [emphasis added]).

Footnote 5: In Hempstead General Hosp., the Court stated:

“Once an action to recover no-fault insurance benefits has been commenced, 11 NYCRR 65.17 (b) (6) (v) grants attorney’s fees of 20% of the amount of the first-party benefits awarded, plus interest, with a ceiling of $850 per claim. . . . Further, pursuant to 11 NYCRR 65.17 (b) (6) (iii), with certain exceptions not applicable to this case, there is a minimum fee of $60 per claim. Accordingly, upon remittitur, the Supreme Court is directed to calculate the attorney’s fees due in accordance with 11 NYCRR 65.17 (b) (6) (v) and (iii)” (208 AD2d at 501 [emphasis added]).

Footnote 6: Defendant provided the court with a copy of the complaint in support of its position.

Footnote 7: Whether the holding in Hempstead Gen. Hosp. conflicts with the Department of Insurance’s interpretation of 11 NYCRR 65-4.6 remains unclear.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from a decision of the Civil Court of the City of New York, Richmond County (Judith N. McMahon, J.), dated February 23, 2005, deemed (CPLR 5520 [c]) an appeal from a judgment of the same court entered August 12, 2005. The judgment, after a nonjury trial, awarded plaintiff the principal sum of $2,666.17, plus interest and attorney’s fees (see 8 Misc 3d 423 [2005]).

Judgment reversed without costs and judgment directed to be entered in favor of defendant dismissing the action.

Plaintiff commenced this action to recover first-party no-fault benefits for medical services rendered to its assignor, specifically three magnetic resonance imagings
(MRIs) of the brain, lumbosacral spine and cervical spine. At trial, after the parties stipulated to the admission of documents to establish plaintiff’s prima facie case, defendant’s expert medical witness, who had performed a peer review on defendant’s behalf, testified that the MRI services rendered to plaintiff’s assignor were not medically necessary. The trial court found that since plaintiff diagnostic center merely performed MRIs pursuant to the instructions of its assignor’s examining physician, and did not itself physically examine the patient, it could not, as a matter of law, be denied first-party no-fault benefits based upon a lack of medical necessity. Accordingly, the court awarded judgment to plaintiff and this appeal ensued.

A plaintiff provider’s “proof that it submitted completed claim forms setting forth the fact [*2]and the amount of the loss sustained, and that payment of no-fault benefits was overdue” (A.B. Med. Servs. PLLC v GEICO Cas. Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50650[U] [App Term, 2d & 11th Jud Dists]; see also Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]) establishes “a prima facie case of medical necessity on plaintiff’s motion for summary judgment. . . [thereby shifting the burden] to defendant who, if not precluded, may . . . establish the lack of medical necessity by submitting proof . . . that the health benefits provided were not medically necessary” (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 21-22 [App Term, 2d & 11th Jud Dists 2004]). Similarly, in the context of this trial, plaintiff’s submissions established a prima facie entitlement to judgment as a matter of law by proof of the submission of the claim forms. The burden then shifted to defendant to come forward with sufficient evidence to rebut the presumption of medical necessity which “attaches to plaintiff’s claim forms” (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d at 23). Where the defendant insurer presents sufficient evidence to establish a defense based on the lack of medical necessity, the burden shifts to the plaintiff which must then present its own evidence of medical necessity (see Prince, Richardson on Evidence §§ 3-104, 3-202 [Farrell 11th ed]).

In the instant case, after plaintiff established its prima facie case, defendant’s expert, Dr. McDonald, presented unrebutted testimony to the effect that the MRIs for which the plaintiff sought payment were medically unnecessary. While the court below was free to assess and reject her uncontradicted expert opinion (see Vasquez v Jacobowitz, 284 AD2d 326 [2001]; Mechanick v Conradi, 139 AD2d 857, 859 [1988]; 58A NY Jur 2d, Evidence and Witnesses § 676), the court never indicated that it was deciding the case based upon an evaluation of Dr. McDonald’s testimony, but instead came to the conclusion that a diagnostic center, which performs MRIs at the request of an independent treating or examining physician, but which does not itself perform a physical examination upon a patient-assignor, may not, as a matter of law, be denied first-party no-fault benefits by an insurer which asserts a defense of lack of medical necessity. We disagree with the conclusion of the trial court.

Under the Comprehensive Motor Vehicle Insurance Reparations Act (Insurance Law art 51), more commonly known as the No-Fault Law, “first party benefits” are available to reimburse persons for “basic economic loss” resulting from injuries “arising out of the use or operation of a motor vehicle” (Insurance Law § 5102 [b]). Insurance Law § 5102 (a) (1) defines “basic economic loss” as including, inter alia, “[a]ll necessary expenses incurred for: (i) medical, hospital . . ., surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services” and “(iv) any other professional health services.” The Mandatory Personal Injury Protection Endorsement (11 NYCRR 65-1.1 [d]) defines “medical expenses” as consisting of “necessary expenses” for the services which are enumerated in the statute. Nowhere in the statutory or regulatory scheme is there any suggestion that services rendered by diagnostic centers or, for that matter, medical equipment suppliers, laboratories, or radiological facilities, all of which rely upon prescriptions or referrals from treating or examining medical providers, be exempt from the requirement that said services be “medically necessary.” While it may be argued that a diagnostic center is in no position to establish the medical necessity of a prescribed MRI, it is well settled that the assignee stands in no better position than its assignor, and has no more right or claim than the assignor (see Matter of International Ribbon Mills [Arjan Ribbons], [*3]36 NY2d 121 [1975]). If a claim is not assigned, and is submitted to the insurer directly by the eligible injured person, the insurer may assert a defense of lack of medical necessity which, if established, will shift the burden to the eligible injured person to provide his or her own evidence of medical necessity. If the defense may be asserted against the eligible injured person, it follows that it may be asserted against the provider as well. Moreover, “[t]o permit medical providers to receive reimbursement even when the insurer has proven that the service provided was not medically necessary would encourage fraud, rather than combat it . . . . In fact, the construction urged by plaintiff would require insurers to pay for MRIs of the entire spine when the insured suffered a broken toe, or for full body scans for broken arms” (Precision Diagnostic Imaging, P.C. v Travelers Ins. Co., 8 Misc 3d 435, 439 [2005]).

In the exercise of our power to make new findings of fact (see CPLR 5501 [c]; see generally 5712 [c] [2]), based upon our review of the record, we find that after plaintiff made out its prima facie case, defendant’s expert’s testimony regarding the lack of medical necessity was sufficient to demonstrate a lack of medical necessity and, therefore, to shift the burden back to plaintiff to show that the MRIs were, in fact, medically necessary. Plaintiff, in response, failed to submit any evidence, such as the testimony of the referring physician or of its own medical expert, to establish that the services rendered to its assignor were medically necessary. Accordingly, plaintiff was not entitled to judgment in its favor. The judgment, therefore, should be reversed, and judgment should be entered in favor of defendant dismissing the action.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.
Decision Date: September 29, 2006

Suffolk Dist Ct

HUC 406-04

C. Stephen Hackeling, J.

This is an action for first-party benefits (recovery of unpaid health services bill, statutory interest and statutory attorneys’ fees) brought pursuant to No-Fault Insurance Law by a health services provider who rendered medical services to a patient in exchange for an assignment of the patient’s right to collect No-Fault benefits. The Plaintiff moves for summary judgment on the first two causes of action contained in the original complaint. For the purposes of clarification, the Court notes that causes of action 3 through 6, contained in the original complaint, were severed from this action and discontinued without prejudice by a written stipulation of the parties which was so-ordered by the Court on May 16, 2006. Pursuant to said stipulation and order, the four severed causes of action were intended to have been deleted from the caption (which has been effectuated). Accordingly, this Amended Order pertains only to the assignor noted in the caption above, and amends the prior decision of this Court, dated September 7, 2006, which inadvertently included the name of an unrelated entity, (Citywide Acupuncture Services, PLLC) within the Memorandum portion of said decision. Defendant opposes the Plaintiff’s motion.

On a motion for summary judgment the test to be applied is whether or not triable issues of fact exist or whether on the proof submitted the Court may grant judgment to a party as a matter of law (Andre v. Pomeroy, 35 NY2d 361; CPLR 3212(b)). It has been held that “the remedy of summary judgment is a drastic one, which should not be granted where there is any doubt as to the existence of a triable issue…or where the issue is even [*2]arguable.” (Gibson v. American Export Isbrandtsen Lines, 125 AD2d 65,74 [citations omitted]; see Andre v. Pomeroy, supra). It is the opinion of this Court that there exists triable issues of fact that preclude the granting of summary judgment in the instant case.

Under the No-Fault Law, an insurance carrier is required to either pay or deny a claim for benefits within 30 days from its receipt of the claim (see, 11 NYCRR §65.15[g][3]). “Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of the loss sustained” (Insurance Law §5106[a]). Therefore, for the Defendant to properly deny a claim, it must generate its denial and mail it to the Plaintiff within 30 days. A fraud defense, however, may be asserted beyond the requisite 30 day denial period where fraud, if proven, would establish there was no coverage at all for the claim. If the fraud defense does not go to the issue of coverage (eg., medically excessive treatment, fraudulent billing), it must be asserted in a timely denial to avoid preclusion.

Here, the Defendant’s denial of claim form clearly indicates that the Defendant received the Plaintiff’s claim on March 7, 2003 and did not deny the Plaintiff’s claim until April 22, 2003, by stating that “New York No-Fault PSYCHOLOGICAL benefits are denied based upon the physical examination by LAURENCE ABELOVE, PhD on 4/3/03 advising that your injury is not causally related to motor vehicle accident of 12/15/02.” Thus, the Defendant failed to deny the Plaintiff’ s claim within the requisite 30 day period from the receipt of claim. Further, the Defendant provides documentary evidence that on March 25, 2003, more than ten (10) business days after it received the Plaintiff’s bill, it advised the Plaintiff that there would be a “delay” in processing the payment of the bill pending an independent medical examination of Plaintiff’s assignor. The time in which an insurer has to pay or deny a claim is extended only upon a proper request for verification pursuant to 11 NYCRR §65.3.5(a). Since the Defendant did not serve its verification request within ten (10) business days after receipt of the Plaintiff’s completed application for No-Fault benefits, the 30 day payment or denial period was not tolled. Consequently, the Defendant is precluded from raising the defense of lack of medical necessity.

The Defendant, however, in its opposition papers also raises the defenses of fraudulent billing practices by the Plaintiff, and the Plaintiff being a fraudulently licensed medical facility. The Defendant has submitted the affidavit of an investigator with its Special Investigations Unit, Dawn Madalone, dated August 23, [*3]2005, who undertook an investigation of the billing practices, and the licensing/ownership of the Plaintiff herein. With regard to the defense of fraudulent or excessive billing practices, where the fraud does not go to the issue of coverage, it must be asserted in a timely denial to avoid preclusion (see, Central General Hospital v. Chubb Group of Ins. Cos., 90 NY2d 195; Careplus Medical Supply Inc. v. State Farm Mutual Auto Ins. Co., 5 Misc 3d 1014A, 2004 Misc LEXIS 454). A scheme to bill for unnecessary or excessive medical treatment must be asserted in a timely denial (see, Melbourne Medical PC v. Utica Mutual Ins. Co., 4 Misc 3d 92 [App. Term, 2nd & 11th Jud. Dists., 2004]). Since the Defendant failed to timely deny the Plaintiff’s claim on the basis of fraudulent billing, the defense is precluded.

Nevertheless, the Defendant does raise the defense and supply an affidavit of merits that the Plaintiff is allegedly a fraudulently licensed provider, and/or fraudulently incorporated. The defense that the Plaintiff, a provider of health care services, is not eligible for reimbursement of No-Fault benefits (see, State Farm Mutual Auto Ins. Co. V. Mallela, 4 NY3d 313) is not subject to preclusion (see, AB Medical Services, PLLC v. Prudential Prop. & Casualty Ins. Co., 11 Misc 3d 137[A], 2006 NY Slip Op. 50504[u][App. Term, 2nd & 11th Jud. Dists.]). The Court is satisfied that to the extent that the Defendant did not timely deny the Plaintiff’s claim, the Defendant herein is not precluded from raising the Plaintiff’s allegedly fraudulent corporate licensure and ownership structure as a defense. A provider of health care services is not eligible for reimbursement of No-Fault benefits unless it meets state and local licensing requirements. (See, State Farm Mutual Auto. Ins. Co. v. Mallela, supra; First Help Acupuncture PC v. State Farm Ins. Co., 2006 NY Slip Op. 51043[U], 2006 NY Misc LEXIS 1356 [App. Term, 2nd & 11th Jud. Dists., 2006]). Pursuant to 11 NYCRR §65-3.16(a)(12), “[a] provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such services in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.” Further, the Education Law provides that only persons licensed are permitted to practice psychology pursuant to Education Law §7601, and Business Corporation Law §1504(a). Moreover, in Mallela, the Court of Appeals upheld 11 NYCRR §65-3.16(a)(12) and stated that “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law”.

In the matter sub judice, the Court has reviewed the [*4]pleadings, the affidavits and the documentary evidence submitted. Based upon such a review, the Court is of the opinion that even though the Plaintiff has satisfied its burden of demonstrating a prima facie case by submission of the statutory forms setting forth “the fact and amount of loss sustained” (Damadian MRI in Elmhurst, PC v. Liberty Mutual Insurance Co., 2 Misc 3d 128[A], 2003 NY Slip Op. 51700[U][App. Term, 9th & 10th Jud. Dists.]), the Defendant has met its burden by showing the existence of a triable issue of fact by submitting documentary and testimonial evidence that the Plaintiff is “owned by lay persons and not by licensed professionals as is required under New York State Law.” The Defendant contends that:

New York State Department of Insurance regulations provide that to be compensated under no-fault, professional health services must be provided by a licensed provider within the scope of his or her license. 11 NYCRR §65.15(o)(1)(vi)& NYCRR §65-3.16(6).

In order to be eligible to receive no-fault benefits, an assignee provider such as Plaintiff must adhere to all applicable New York statutes which grant the authority to provide health services in New York State.

Because of the fraud it facilitated, Plaintiff stands in violation of Article 15 of New York’s Business Corporation Law and are [sic] thus is [sic] not eligible to submit payments for or receive assigned no-fault benefits.

Clearly, payments to unlicensed or fraudulently licensed providers are excluded from the meaning of “basic economic loss” (Ins. Law §5102[a][1]) as interpreted by the Superintendent of Insurance (see, State Farm Mutual Auto. Ins. Co. V. Mallela, supra). The defense that a provider, like the Plaintiff, is fraudulently licensed and ineligible for reimbursement of No-Fault benefits is non-waivable, and not subject to preclusion (see, First Help Acupuncture PC v. State Farm Ins. Co., supra). A denial based on improper licensing or improper incorporation of the provider is not precluded by untimeliness (see, Multiquest PLLC a/a/o Cleckley v. Allstate Ins. Co., 9 Misc 3d 1031; Multiquest PLLC a/a/o Manzo v. Allstate Ins. Co., 10 Misc 3d 1061[A], 2005 NY Slip Op. 52069[U], 2005 NY Misc LEXIS 2836).

Whether or not contained in a timely denial of claim, a denial of claim based on the fact that the Plaintiff is not eligible for reimbursement of No-Fault benefits due to the fact that the health services provided were not provided by licensed professionals, and that the Plaintiff may be fraudulently owned [*5]and operated does not preclude an insurer from raising such a defense in opposition to a Plaintiff’s motion for summary judgment. Because the Defendant has demonstrated the existence of a triable issue of fact, the Plaintiff’s motion for summary judgment is denied. Further, this summary judgment motion is premature in the Court’s opinion since discovery seeking corporate information to determine whether the owners and employees of this provider corporation are properly licensed and incorporated is clearly germane to the question of whether the Plaintiff is eligible for reimbursement (see, Lexington Acupuncture PC v. State Farm Ins. Co., 2006 NY Slip Op 26251, 2006 NY Misc LEXIS 1605 [App. Term, 2nd & 11th Jud. Dists., 2006]).

Accordingly, the Plaintiff’s motion is denied.

______________________________

J.D.C.

dated: September 26, 2006

at: Huntington,NY

Civil Court of the City of New York, Richmond County

8104/06

Attorney for Plaintiff, Andrew Carothers, M.D., P.C. (In Both cases):

Gregory Cherchione, Esq.

2444 Broadway, Suite 362

New York, NY 10024

Tel.: (212) 285-3800

Attorneys for Liberty Mutual Insurance Company (In Both Actions):

Burke, Lipton Puleo, McCarthy & Gordon

10 Bank Street, Suite 1040

White Plains, NY 10606

Tel.: (914) 997-8100

Peter P. Sweeney, J.

In this action to recover assigned first-party no-fault benefits, defendant moves for an order changing the venue of this action to Bronx County.

The venue provision of the Civil Court Act that governs transitory actions is Civil Court Act § 301. Civil Court Act § 301[a], as it pertains to the issue at hand, provides that “an action. . . shall be brought in . . .the county in which one of the parties resides at the commencement thereof.” Defendant contends that plaintiff improperly set venue in Richmond because neither plaintiff nor the defendant are residents of Richmond County.

In support of its contention that plaintiff is not a resident of Richmond County, defendant annexed various medical records indicating that plaintiff’s assignor resides in Bronx County. “If the plaintiff is an assignee of the cause of action, the original owner of the cause of action shall be deemed the plaintiff for the purpose of determining proper venue” (Civil Court Act § 305[a] ).

In support of its contention that defendant is not a Richmond County resident, defendant submitted the affidavit of one of its claims managers who stated that “Liberty does not have any claims, sales or offices of any kind in Richmond County, NY All no-fault bills are submitted to the New York State No-Fault office in Suffolk County.” The nearest claims office is in Nassau County. The nearest sales office to Richmond County is located in Kings County at 4201 Avenue M in Brooklyn. The nearest legal office is in New York County.”

Under the Civil Court Act, “[a] corporation . . . shall be deemed a resident of any county wherein it transacts business, keeps an office, has an agency or is established by law ” (Civil Court Act § 305[b]). The issue presented, as the court sees it, is whether defendant’s submissions demonstrated that defendant does not “transact business” within Richmond County within the meaning of (Civil Court Act § 305[b]). The Court holds that they do did not.

Defendant’s submissions did not foreclose the very distinct possibility that defendant issues insurance policies covering Richmond County residents. Likewise, defendant’s [*2]submissions did not foreclose the distinct possibility that defendant engaged in purposeful activity in Richmond County by regularly corresponding, by mail and/or telephone, with its policy holders in Richmond County by delivering insurance policies, sending invoices and seeking and collecting premiums from them. These acts, in the court’s view, would be sufficient to establish that defendant transacts business in Richmond County (see Mingmen Acupuncture Services, P.C. v. American Transit Ins. Co., 183 Misc 2d 270, 280 [Civ. Ct, Bronx County, 1999, Victor, J.]; Neurologic Services, P.C. v. American Transit Ins. Co., 183 Misc 2d 496, 498 [Civil Ct., Bronx County 1999, Ruiz, J.]; see also Rung v. United States Fidelity and Guaranty Co., 139 AD2d 914, 915 [4th Dep ‘t 1988] ). The court respectfully disagrees with the opposite result reached in Quality Medical Healthcare, P.C. v. American Transit Ins. Co., 182 Misc 2d 991 [Sup. Ct., Bronx County, 1999, Brigantti-Hughes, J.].

Accordingly, it is hereby

ORDERED that defendant’s motion is in all respects DENIED.

This constitutes the decision and order of the court.

Dated: September 22, 2006_____________________________

PETER P. SWEENEY

Civil Court Judge

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by defendant from a judgment of the Civil Court of the City of New York, Kings County (Bernadette F. Bayne, J.), entered March 8, 2004. The judgment, after a nonjury trial, awarded plaintiff the principal sum of $1,499.64.

Judgment affirmed without costs.

At the trial of this action to recover first-party no-fault benefits for medical services provided plaintiff’s assignor, plaintiff’s witness, an employee of its billing company, testified to the company’s business practices in generating and mailing no-fault benefits applications to insurers based upon information received from its clients,
the providers of the medical services. Defendant objected below that the witness was incompetent to establish the reliability, prima facie, of the information recorded therein. However, it is well-settled that where an entity “routinely relies upon the business records of another entity in the performance of its own business” (West Val. Fire Dist. No. 1 v Village of Springville, 294 AD2d 949, 950 [2002]; see People v DiSalvo, 284 AD2d 547, 548 [2001]), and “fully incorporate[s]” said information into records made in the regular course of its business (Plymouth Rock Fuel Corp. v Leucadia, Inc., 117 AD2d 727, 728 [1986]), the subsequent record is admissible notwithstanding that the preparer lacked personal knowledge of the information’s [*2]accuracy (William Conover, Inc. v Waldorf, 251 AD2d 727, 728 [1998]). The lack of knowledge goes “to the weight, not the admissibility” of the record (id.).

Plaintiff otherwise established the business record foundation for the admission of the records produced on the basis of the information imparted by plaintiff to the billing company (CPLR 4518 [a]; People v DiSalvo, 284 AD2d at 548), that said information was maintained in the regular course of plaintiff’s business, and that plaintiff had a business duty to impart that information to the billing company (People v Cratsley, 86 NY2d 81, 90 [1995]).

Defendant’s argument with respect to the proof of assignment is likewise without merit. Defendant admits that “there is proof that some assignment of benefit form was mailed and received” and that its claim denial form records that plaintiff sought no-fault benefits “as [the eligible injured person’s] assignee.” Having received such a form, it was defendant’s burden to timely object to the completeness of the form or seek verification of the fact of the assignment, and its failure to do so waived any defenses based thereon (see Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 [2005]; New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 6 Misc 3d 70 [App Term, 2d & 11th Jud Dists 2004]).

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

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from a judgment of the Civil Court of the City of New York, Queens County (Howard G. Lane, J.), entered August 10, 2004. The judgment, after a nonjury trial, and upon the denial of defendant’s motion for judgment as a matter of law pursuant to CPLR 4401, awarded plaintiff the principal sum of $1,061.63.

Judgment reversed without costs, defendant’s motion which was for judgment as a matter of law granted, and complaint dismissed.

In this action to recover first-party no-fault benefits for health care services rendered to plaintiff’s assignor, at the close of plaintiff’s case defendant moved pursuant to CPLR 4401 for judgment as a matter of law. The court reserved decision until after defendant presented its case, and then denied the motion, which defendant had renewed, and awarded judgment to plaintiff in the principal amount sought.

Whether considered solely on plaintiff’s proof or upon all the evidence presented, defendant’s motions should have been granted. Plaintiff rested its case without calling any witnesses. As its only proof, plaintiff offered into evidence, without objection, defendant’s [*2]response to a written interrogatory which established only that defendant received from plaintiff several bills on a given date, and that defendant timely denied these bills on the ground of the absence of medical necessity for the health care services provided. As a matter of law, plaintiff failed to establish the fact and the amount of the loss sustained and that payment of no-fault benefits was overdue by proof that it submitted to defendant “prescribed statutory billing forms” (Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742 [2004]; see Amaze Med. Supply v Eagle Ins. Co., 2
Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]) or its substantial equivalent (11 NYCRR 65-3.5 [f]). Accordingly, plaintiff failed to make out a prima facie case.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.
Decision Date: September 21, 2006