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 (Donald S. Kurtz, J.), entered May 24, 2005. The order, insofar as appealed from, granted defendant’s motion for severance and denied plaintiff’s cross motion for summary judgment.

Order, insofar as appealed from, affirmed without costs.

Plaintiff commenced this action to recover first-party no-fault benefits as the assignee of 11 alleged eligible injured persons. The claims arose out of 11 separate accidents. Defendant failed to timely answer, and a default judgment was subsequently entered. Defendant moved to vacate the default judgment and sever the causes of action. Plaintiff subsequently cross-moved for summary judgment. Thereafter, by order dated May 24, 2005, the court granted that part of defendant’s motion seeking severance of the causes of action, denied, as moot, that part seeking vacatur of the default judgment “in that plaintiff has consented to vacate the default judgment,” and denied plaintiff’s cross motion for summary judgment “as it was filed in violation of a stay imposed by order to show cause dated August 24, 2004.” The instant appeal by plaintiff ensued.

A review of the record indicates that defendant’s answer clearly places at issue, inter alia, whether there was fraud as to the accidents and the necessity and reasonableness of the medical services rendered. We find that these defenses are likely to raise few, if any, common issues of law or fact, even if the assignors’ insurance policies are identical. Accordingly, the court below providently exercised its discretion in granting defendant’s motion to sever plaintiff’s causes of action (see Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co., 12 AD3d 185 [2004]; Mount Sinai Hosp. v Motor Veh. Acc. Indem. Corp., 291 AD2d 536 [2002]; S.I.A. Med. Supply [*2]Inc. v GEICO Ins. Co., 8 Misc 3d 134[A], 2005 NY Slip Op 51170[U] [App Term, 2d & 11th Jud Dists]; Metro Med. Diagnostics, P.C. v Motor Veh. Acc. Indem. Corp., 6 Misc 3d 136[A], 2005 NY Slip Op 50238[U] [App Term, 2d & 11th Jud Dists]). In view of the foregoing, plaintiff’s cross motion for summary judgment was properly denied.

Weston Patterson, J.P., Golia and Belen, JJ., concur.
Decision Date: May 17, 2006

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Eileen Nadelson, J.), entered March 18, 2005. The order denied plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action to recover first-party no-fault benefits for medical supplies furnished to its assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted a claim, setting forth the fact and the amount of the loss
sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med.
Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). The burden then shifted to defendant to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

In opposition to the motion, defendant provided evidence demonstrating the timely mailing of its denial of claim, based upon plaintiff’s assignor’s failure to appear for a pre-claim independent medical examination (IME) (see 11 NYCRR 65-3.8 [c]), as well as its letters to plaintiff’s assignor requesting the IME. Moreover, the record establishes that plaintiff’s assignor failed to appear for the scheduled IME. In view of the foregoing, in our opinion, plaintiff’s motion for summary judgment was properly denied (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d & 11th Jud Dists 2004]; see also D.A.V. Chiropractic P.C. v American Tr. Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50609[U] [App [*2]Term, 2d & 11th Jud Dists]).

Rios and Belen, JJ., concur.

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

SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : GOLIA, J.P., RIOS and BELEN, JJ.
AMAZE MEDICAL SUPPLY INC.
a/a/o MARTA YEPES,
Appellant,

-against-

ALLSTATE INSURANCE COMPANY,
Respondent.

Golia, J.P., concurs with the result only, in the following memorandum:

While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I am constrained to agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.
Decision Date: May 17, 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, Queens County (Anna Culley, J.), entered October 20, 2004. The order, insofar as appealed from, granted plaintiff’s motion to the extent of awarding plaintiff partial summary judgment in the sum of $1,997.

Order, insofar as appealed from, affirmed without costs.

In this action to recover first-party no-fault benefits for medical supplies provided to plaintiff’s assignor, plaintiff’s motion for summary judgment was granted as to its claims for $874 and $1,123, and denied as to two other claims. The instant appeal by defendant ensued.

The plaintiff established its prima facie entitlement to summary judgment on both claims since it provided proof that it submitted these claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). The presumption that an addressee received an item by mail may be created by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]). Plaintiff’s corporate officer alleged that it is plaintiff’s usual procedure to send billing by certified mail and he attached to the moving papers signed post office ledgers listing defendant as addressee, date stamped April 23, 2003 for the $874 claim and June 4, 2003 for the $1,123 claim. Thus, plaintiff made a prima facie showing of its entitlement to summary judgment thereby shifting the burden to defendant to come forward with a triable issue of fact (see Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 133[A], 2004 NY Slip Op 50447[U] [App Term, 2d & 11th Jud Dists]). [*2]

Defendant’s denial of claim form, in regard to the claim in the amount of $1,123, indicates that defendant’s denial was not timely made during the 30-day statutory period within which it was required to pay or deny said claim (11 NYCRR 65-3.8 [c]). The record contains no NF-10 denial of claim form for the $874 claim. Moreover, defendant’s requests for examinations under oath (EUOs) did not toll the 30-day claim determination period since its papers in opposition to plaintiff’s motion for summary judgment failed to demonstrate that the policy in effect contained an endorsement authorizing EUOs, pursuant to 11 NYCRR 65-1.1 (d), which regulation became effective on April 5, 2002. In view of the foregoing, defendant failed to show that its time to deny the claims was tolled (see Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56 [App Term, 2d & 11th Jud Dists 2004]). Accordingly, defendant is precluded from raising most defenses with respect thereto (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Consequently, plaintiff is entitled to summary judgment on the $1,123 claim as well as the claim in the amount of $874.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.
Decision Date: May 17, 2006

[*1]

Supreme Court, Appellate Term, Second Department, May 17, 2006

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants. Jaffe & Nohavicka, New York City, and Thomas Torto and Kathleen C. Waterman, New York City, for respondent.

{**12 Misc 3d at 53} OPINION OF THE COURT

Memorandum.

Order reversed without costs, plaintiffs’ motion for summary judgment granted as to plaintiff SZ Medical P.C.’s claims for $182.37 and $532.42, plaintiff JH Chiropractic P.C.’s claims for $168.50 and $256.94, and New Wave Oriental Acupuncture P.C.’s claim for $660.56 and its two claims for $700, and matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees.

In this action to recover first-party no-fault benefits for medical treatment provided to their assignor, plaintiffs SZ Medical P.C., JH Chiropractic P.C., and New Wave Oriental Acupuncture P.C. established their prima facie entitlement to summary judgment by proof that they submitted claims, setting forth the fact and amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). The burden then shifted to defendant to establish triable issues of material fact (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

We note at the outset that in its claim denial form, defendant considered SZ Medical P.C.’s claim for $473.20 as a claim for $532.42, the correct total of the charges for the various treatments set forth in the claim form, and we so modify the amount sought (A.B. Med. Servs. PLLC v Allstate Ins. Co., 8 Misc 3d 137[A], 2005 NY Slip Op 51270[U] [App Term, 2d &{**12 Misc 3d at 54} 11th Jud Dists 2005]). As [*2]to JH Chiropractic P.C.’s claim for $256.94, defendant proved no denial, nor did it assert any ground to excuse its failure to pay or deny the claim within the statutory time (Insurance Law § 5106 [a]), and JH Chiropractic P.C. is therefore entitled to summary judgment thereon. Although defendant proved timely denials of plaintiffs’ remaining claims, insofar as they were based on the defense of lack of medical necessity of the services rendered, they were factually insufficient, conclusory and vague, and thus without merit as a matter of law (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004]; see also Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564, 565 [2005]). Defendant denied SZ Medical P.C.’s claim for $532.42 following a “medical review” which determined that the provider had failed to prove the treatment’s medical necessity. The denial form also stated that, on the basis of an independent medical examination (IME), the eligible injured person required no further treatment. Defendant denied JH Chiropractic P.C.’s claim for $168.50 and both of New Wave Oriental Acupuncture P.C.’s claims for $700 as lacking medical necessity, also on the basis of a “medical review” (or “medical audit”). No IME report was attached to the claim denial forms nor did said forms include sufficient factual assertions derived from the report or a medical rationale based thereon to establish the defense of lack of medical necessity in the absence of the report (e.g. Ocean Diagnostic Imaging P.C. v Lumbermens Mut. Cas. Co., 7 Misc 3d 135[A], 2005 NY Slip Op 50743[U] [App Term, 2d & 11th Jud Dists 2005]).

Although plaintiffs, in their moving papers, attached a copy of an unsworn nurse’s peer review report to copies of certain of defendant’s claim denial forms, said report did not assert sufficient facts and a medical rationale based thereon to establish a lack of medical necessity (Chi-Ti Acupuncture, P.C. v Hartford Acc. & Indem. Co., 10 Misc 3d 146[A], 2006 NY Slip Op 50148[U] [App Term, 2d & 11th Jud Dists 2006]). We note, in any event, that a nurse’s unsworn peer review report is inadmissible and therefore of no probative value (Dombrowski v Moore, 299 AD2d 949, 951 [2002]), and defendant offered no excuse for its failure to submit the report in admissible form (Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1068 [1979]). Moreover, a nurse is a mere lay informant for purposes of medical diagnosis and treatment, and is not competent to render medical opinions (Dombrowski v Moore, 299 AD2d at 951){**12 Misc 3d at 55} absent an accounting of his or her training, observations or experience sufficient to establish such competence (Medwide Med. Supply Inc. v Country-Wide Ins. Co., 8 Misc 3d 131[A], 2005 NY Slip Op 51078[U] [App Term, 2d & 11th Jud Dists 2005]; Jamil M. Abraham M.D. P.C. v Country-Wide Ins. Co., 3 Misc 3d 130[A], 2004 NY Slip Op 50388[U] [App Term, 2d & 11th Jud Dists 2004]; see People v Morehouse, 5 AD3d 925, 928 [2004]; People v Munroe, 307 AD2d 588, 591 [2003]).

Defendant’s denial of JH Chiropractic P.C.’s claim for $168.50 as untimely is without merit. Defendant acknowledged receipt of the claim on the 45th day from the date the first treatment listed therein was rendered thereby necessarily conceding that it was timely submitted, i.e., mailed (see 11 NYCRR 65-1.1 [claims must be submitted within “45 days after the date (the) services (were) rendered”]; NY State Ins Dept Informal Op No. 03-06-30 [June 30, 2003] [“the 45 day period for mailing of a written proof of claim . . . begins the day after the services are rendered”]). With respect to SZ Medical P.C.’s claim for $182.37, and New Wave Oriental Acupuncture P.C.’s claim for $660.56, plaintiffs do not dispute that they failed to submit their claims in the requisite time. However, 11 NYCRR 65-1.1 provides that: “The . . . time limitations for the submission of proof of claim shall apply unless the eligible injured person [or that person’s representative] submits written proof providing [*3]clear and reasonable justification for the failure to comply with such time limitation.” Further, 11 NYCRR 65-3.3 (e) provides:

“When an insurer denies a claim based upon the failure to provide timely written notice of claim or timely submission of proof of claim by the applicant, such denial must advise the applicant that late notice will be excused where the applicant can provide reasonable justification of the failure to give timely notice.” (Emphasis added.)

Defendant points to no portion of its claim denial forms which contain the required advisement, nor does it allege that it communicated said advice in any other manner. Accordingly, defendant waived reliance on the 45-day rule as a basis to deny the claims and plaintiffs should be awarded summary judgment on these claims as well.

Finally, defendant’s challenge to the absence of an authentication of assignor’s signatures on the assignment of benefits forms is also without merit. We have held that the failure to authenticate{**12 Misc 3d at 56} an assignor’s signature cannot be considered an assignment defect “in the absence of any statutory or regulatory requirement for the same” (Amaze Med. Supply Inc. v Lumbermens Mut. Cas. Co., 6 Misc 3d 131[A], 2005 NY Slip Op 50084[U], *2 [App Term, 2d & 11th Jud Dists 2005]). Even if such absence rendered the assignment defective, defendant’s failure to seek verification of the assignment, within 10 days of the claims’ receipt and to allege such deficiency in its claim denial forms, constituted a waiver of any defense with respect thereto (e.g. A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 10 Misc 3d 128[A], 2005 NY Slip Op 51902[U] [App Term, 2d & 11th Jud Dists 2005]).

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

Golia, J.P. (concurring with the result only): I am constrained to agree with the ultimate disposition in the decision reached by the majority. I, however, wish to note that I do not agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.

Rios and Belen, JJ., concur; Golia, J.P., concurs in a separate memorandum.

Civil Court of the City of New York, Kings County

96268 KCV 2004

Delores J. Thomas, J.

In the instant action plaintiff, a medical supplies provider, sues to recover $2,882.85 for medical supplies provided to its assignor Barry Galleh for injuries stemming from an auto accident on March 3, 2004.

At trial, the parties stipulated to plaintiff’s prima facie case and defendant’s timely denial of claim. The parties further agreed that the only issue for trial would be defendant’s defense of lack of medical necessity. The parties also stipulated the following documents into evidence:

Plaintiff’s Exhibits:

1A – Invoice dated May 20, 2002 for $1,532.85

1B – Invoice dated April 10, 2004 for $ 1,350.00

2A – Prescription from Oleg Barshay, D.C. dated March 5, 2004

2B – Prescription from Oleg Barshay D.C. dated April 19, 2004

3 – April 13, 2004 chiropractic report from Oleg Barshay for Barry Galleh

Defendant’s Exhibits:

A1 – NF10 dated May 10, 2004

A2 – NF10 dated June 1, 2004

B1 – Peer Review dated May 5, 2004

B2 – Peer Review dated May 28, 2004

The supplies at issue were: cervical pillow, Philadelphia tracheotomy cervical collar, TLSO Dorso-lumbar surgical supply, lumbar cushion, bed board, egg crate mattress, thermophone, EMS Unit, EMS accessory Kit, EMS belt, massage and an infra-red heating lamp (Exhibit 1A & 1B).

At trial, defendant called Ronald A. Csillag, a doctor of chiropractic [“D.C.”] the person who performed the per review. Dr. Csillag was qualified without objection as an expert in the practice of chiropractics. Dr. Csillag testified that the cervical pillow prescribed for the assignor is usually prescribed for injuries which are chronic in nature. He described the assignor’s injury as being acute and opined that the pillow was not needed and that the patient could have simply been instructed to roll up a towel and use it with the same benefit. In the peer review report, Dr. Csillag indicated that the effectiveness of cervical pillows in whiplash associated disorders is inconclusive and cites as authority several publications, (i.e. Whiplash Associated Disorders, [*2]Spine 1995, 20 (85); 25-73s Clinical Evidence BMJ Publishing Group, page 232-2003).

With regards to the lumbosacral belt and cervical collar, Dr. Csillag testified and wrote in the peer review report that these supplies were unnecessary because these devices work through immobilization and this type of support is not consistent with the trend in the management of lumbar sprains. He also wrote and testified that current scientific research documents the importance of early range of motion as mobility enhances recovery (see Defendant’s Exhibit B-1, pg. 4). Dr. Csillag cited the text, Physical Medicine and Rehabilitation: State of the Art Reviews: Vol. 9(3) October 1995 as supporting authority(Id.). Dr. Csillag further testified that many of the medical supplies were unnecessary because there was no indication from the treating doctor how to use them or to what areas to apply the device. He further opined that the patient was undergoing physical therapy, chiropractic care, acupuncture, message therapy and adjunctive therapy and that the massager, infrared heating lamps, EMS Unit and associated EMS equipment represented a duplication of services.

Plaintiff did not call a witness but as indicated the report of Dr. Barshay was admitted into evidence as Plaintiff Exhibit 3. The Initial Diagnosis portion of the report indicates:

1. Traumatic cervical sprain/strain with cervical myofascitis and possible radicular involvement, complicated by C4-C5 and C5-C6 bulging disc (MRI finding).

2. Traumatic Lumbar sprain/strain with intermittent radiating sciatic neuralgia, concomitant with Lumbar myofascitis (MRI finding pending).

3. Post traumatic cervicogenic headaches.

4. Head and right knee contusion.

5. Multiple intersegmental functional dysarthroses of the cervical thoracic and lumbar vertebral motor units.

The report also list a patient management plan, to wit: “The treatment in this case was directed toward conservative chiropractic management. This consisted of specific vertebral adjustments to correct functional dysarthroses and adjunctive therapy in the form of manual intersegmental traction. To enhance recovery, manual massage therapy and acupuncture by a licensed therapist was incorporated into the treatment plan. The frequency of treatments is 2-3 times a week. The patient was also advised to wear an orthopedic lumbosacral support and cervical collar to minimize pain and prevent a re-injury. A TENS unit was given to the patient and after a two week trial was proven to be effective for pain management.”

Since the only issue for trial was whether the supplies provided to the assignor were medically necessary, defendant bore the burden of proof on this issue (A.R. Medical Art. P.C. v. State Farm Mut. Auto Ins. Co., 11 Misc 3d 1057 [A][Civ. Ct., Kings Co. 2006]; CityWide Social Work & Psychological Servs. v. Travelers Indem. Co. 3 Misc 3d 608 [Civ. Ct., Kings Co., 2004]; Elm Medical P.C. v. American Home Assurance Co., 2003 NY Slip Op. 51357 [U], 2003 WL 22471156 [Civ. Ct., Kings Co., 2003]; Fifth Ave. Pain Control Ctr. v. Allstate Ins. Co., 196 Misc 2d 801 [Civ. Ct., Queens Co., 2003]).

A no-fault insurer defending a denial of first party benefits on the ground that the billed for services or equipment/supplies were not “medically necessary” must show that the services or supplies/equipment provided were inconsistent with generally accepted medical/professional practices. The opinion of the insurer’s expert, standing alone, is insufficient to carry the insurer’s burden of proving that the services or supplies/equipment were not “medically necessary”

[*3](CityWide Social Work & Psychological Servs. v. Travelers Indem. Co. , supra at 609; Ultimate Med. Supplies v. Lancer Ins. Co., 7 Misc 3d 1002 [A] [Civ. Ct., Kings. Co. 2004]).

In United Medical Supplies v. Lancer Ins. Co., supra, plaintiff had supplied its assignor with certain medical equipment (i.e. TENS Unit, LSO, etc) pursuant to a prescription. Defendant denied payment based upon a peer review. At trial, the peer review doctor, Dr. Moshkovski, testified that based upon her experience none of the prescribed durable medical equipment was necessary. She cited no authority other than her own experience. Judge Alice Fisher Rubin found it clear that Dr. Moshkovski admitted to never having prescribed any of the subject medical equipment with the sole exception of ice packs, on no basis other than her own opinion. Thus, the court held that such an opinion was biased against the prescribing doctor so as to make the peer review a nullity and not credible.

The instant case is at opposite with the facts of United Medical Supplies v. Lancer Ins. Co. supra. Here Dr. Csillag opinion as to whether the various medical supplies were necessary was based not only upon his experience but based upon medical authority cited in the peer review reports (Defendant’s Exhibit B, page 4). Dr. Csillag wrote in his report and testified that the type of lumbar support prescribed was no longer used to manage lumar sprains because it immobilized that portion of the body and the current trend in treatment was to allow mobility because mobilization fostered recovery. Dr. Csillag also testified that the massager, infrared heating lamp, EMS unit and associated EMS equipment was a duplication of services available and provided through the physical therapy, chiropractic care, acupuncture, message therapy and adjunctive therapy that the assignor was to have begun as of the April 13, 2004 report.

Considering the testimony of Dr. Csillag at trial coupled with the contents of the peer review reports of May 5, 2004 (Defendant’s Exhibit B1) and May 28, 2004 (Defendant’s Exhibit B2) the Court finds defendant has proven its defense that the supplies were not medically necessary. The burden now shifts to plaintiff to refute defendant’s evidence.

As previously indicated, plaintiff did not call a doctor but relied upon its cross examination of Dr. Csillag and the report of Dr. Barshay. It is undisputed that a chiropractor may prescribe the supplies which are the basis of this litigation (ABC Med. Mgt. v, GEICO Gen. Ins. Co., 3 Misc 3d 181 [Civ. Ct., Queens Co., 2003]) and such may be justified in light of the patient’s overall condition (Id); herein, however, there is no evidence in the record to refute defendant’s expert witness’ testimony (cf A.R. Med. v. State Farm, supra) and to explain why the medical supplies were necessary.

In A.R. Med. v. State Farm, supra plaintiff also did not call the treating doctor; however, in that case the treating doctor had issued a Letter of Medical Necessity, which was stipulated into evidence, in which he clearly set forth the reasoning and purpose for the conduction of the NCV/EMG test that were at issue.

The April 13, 2004 report from Dr. Barshay merely sets forth what the finding of the patient’s examination were, the diagnosis, a management(treatment) plan and a prognosis. This Court has no way of knowing why these supplies were prescribed. Viewing Dr. Barshay’s report (Plaintiff’s Exhibit No. 3), the only portion that may be read as giving any indication of why the supplies were prescribed appears in the Patient Management section where Dr. Barshay indicated, “The patient was also advised to wear an orthopedic lumbosacral support and cervical collar to minimize pain and prevent a re-injury.” In light of the reasoning set forth in the peer [*4]review and the testimony at trial, plaintiff evidence in rebuttal is insufficient to prove medical necessity for the supplies.

Accordingly, judgment for defendant, the summons and complaint are dismissed.

Defendant shall serve a copy of this decision/order with Notice of Entry upon the appropriate clerk and the plaintiff within 15 days after receipt.

This constitutes the decision and order of the Court.

DATED: May 16, 2006

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court

—[*1]

In a subrogation action to recover insurance benefits paid to the plaintiff’s insured, the plaintiff appeals from an order of the Supreme Court, Queens County (Rosengarten, J.), dated February 17, 2005, which granted the defendants’ motion for summary judgment dismissing the complaint.

Ordered that the order is affirmed, with costs.

We agree with the plaintiff’s contention that the no-fault provisions of the Insurance Law (see Insurance Law § 5102 [a], [b]; § 5103 [a]) do not bar it from seeking recovery of benefits it paid to its insured for “extended economic loss” pursuant to an “additional personal injury protection” endorsement (Allstate Ins. Co. v Stein, 1 NY3d 416, 417 [2004]; see Allstate Ins. Co. v Mazzola, 175 F3d 255 [2d Cir 1999]). However, the defendants established their entitlement to judgment as a matter of law by submitting evidence that the plaintiff’s subrogor unsuccessfully sought to recover damages for his extended economic loss from them in a prior action, which culminated in a jury verdict in their favor. An insurance company which has paid additional personal injury protection benefits for extended economic loss has a traditional equitable right of subrogation, and thus acquires only the rights that its subrogor had, with no enlargement or diminution (see Allstate Ins. Co. v Stein, supra). Since the plaintiff’s subrogor unsuccessfully sought to recover damages for extended [*2]economic loss in a prior action, the jury verdict in that action is entitled to preclusive effect on the issue of the plaintiff’s entitlement to recoup the benefits it paid to its subrogor for extended economic loss. Accordingly, the motion for summary judgment dismissing the complaint was properly granted. Schmidt, J.P., Krausman, Luciano and Covello, JJ., concur.

Civil Court of the City of New York, Kings County

KCV29614/2005

Plaintiff by Baker, Sanders, Barshay, Grosssman, Fass Muhlstock & Newwirth

Defendant by Nicolini, Paradise, Ferretti & Sabella

Richard Velasquez, J.

In this action, plaintiff, Universal Open MRI of the Bronx, PC, seeks to recover first-party no-fault benefits in the amount of $1,842.26 from defendant State Farm Mutual Auto Ins. for health care services rendered to its assignor(s) who were allegedly injured in an automobile accident. Defendant denied plaintiff’s claims on the basis that the alleged injuries “do not arise out of an insured incident.” The trial was held before this Court on February 14, 2006. At the start of the trial, the parties stipulated to plaintiff’s prima facie case and defendant’s denial based on the ground of lack of coverage due to no true accident. Defendant State Farm presented one witness, State Farm Special Investigative Unit (SIU) investigator Don Willsey. Plaintiff did not present any witnesses.

The trial then proceeded on defendant’s defense of lack of coverage. SIU investigator Willsey testified that after receiving the file on Mr. Julio Garcia, assignor herein, he performed a preliminary investigation of the claim and tried to contact the parties involved in the alleged accident, including the insured in this case and the assignor, Mr. Garcia, with no success. In addition, he testified that as part of his preliminary investigation, he reviewed the police accident report and intended to interview the police officer who arrived at the scene, but did not as someone from his office had previously interviewed said officer. Mr. Willsey also testified that as part of his investigation, he obtained information from the National Insurance Crime Bureau (NICB) which serves as a clearing house for data from insurance companies concerning claims made against insurance policies, and State Farm’s Frequency Tracking System, an internal database of all claims made against State Farm policies. As for State Farm’s Frequency Tracking System, he testified that data from prior losses may be retrieved using an individual’s name, social security number, address, date of birth, and vehicle identification number (VIN), to determine any connection between the parties involved in the current claim with prior claims against State Farm. His research concluded that: “the owner of claimant vehicle had a prior claim history; owner and driver of the vehicle were not insured.”

Plaintiff objected to defendant offering this information into evidence and, after voir dire of Mr. Willsey, moved to preclude this testimony on several grounds including [*2]hearsay. This Court ruled in plaintiff’s favor on the hearsay objection to the admittance into evidence of Frequency Tracking System results. Mr. Willsey further testified that he received the file for investigation “shortly” after the alleged accident, sometime in September or October of 2002. When cross-examined about the gap in time (approximately four months) between the incident in question and his receipt of the Garcia file, he stated that a prior investigator had been assigned to the case.

Mr. Willsey also testified that he attempted to interview the parties involved in the incident, but was unable to do so. Having had no success in interviewing the parties, Mr. Willsey recommended to his attorney that Examinations Under Oath (EUO) be scheduled for the parties involved in the incident. According to Mr. Willsey, none of the parties involved in the alleged accident appeared for EUO’s.

Based on all of these factors together with the fact that the insured’s vehicle was not at the accident scene at the time the police arrived, Mr. Willsey determined that the accident was staged and therefore it was not a covered accident. Thus, he recommended the subject claim be denied.

DISCUSSION

Generally, an insured seeking to recover for a loss under an insurance policy has the burden of proving that a loss occurred and also that the loss was a covered event within the terms of the policy. A.B. Medical Services, PLLC v. State Farm Mutual Automobile Ins. Co., 7 Misc 3d 822, 795 NYS2d 843 [Civ. Ct. Kings County 2005] citing Gongolewski v. Travelers Ins. Co., 252 AD2d 569, 675 NYS2d 299 [2d Dept. 1998]. Whatever the risk or loss covered, it has long been the insured’s burden to prove coverage under the policy. A.B. Medical Services, id. at 825. In an action for first-party no-fault benefits, an insured’s proof is relatively simple a properly completed claim by the provider of medical services or supplies makes out a prima facie showing of coverage. Amaze Medical Supply Inc., v. Eagle Ins. Co., 2 Misc 3d 128 (A), 754 NYS2d 918, 2003 NY Slip. Op. 51701[U][App. Term, 2d and 11th Jud. Dists.]. As in the related area of “medical necessity”, the plaintiff’s prima facie showing establishes a “presumption of coverage”. A.B. Medical Services, id at 825. Once the plaintiff makes a prima facie showing, the burden of explanation or of “going forward with the case” falls upon the defendant. Mount Sinai Hosp. V. Triboro, 263 AD2d 11, 699 NYS2d 77 [2d Dept., 1999].

No-fault insurance policies cover only vehicular accidents. A deliberate collision is not a covered accident. State Farm Mutual Automobile Ins. Co. V. Laguerre, 305 AD2nd490, 759 NYS2nd 531 [2nd Dept.2003]; Allstate Insurance Co.v. Massre, 14 AD3rd 610, 789 NYS2d 206 [2nd Dept. 2005]. When a collision is an intentional act, not an accident, there is no coverage “regardless of whether the intentional collision was motivated by fraud or malice.” Government Employees Ins. Co. v. Shaulskaya, 302 AD2nd 522, 523, 756 NYS2nd 79 [2nd Dept. 2003].

Standard of Proof in Summary Judgment Context

The law is well settled in a no-fault summary judgment context that the insurer need only demonstrate to the court that it had a “founded belief” that the alleged accident was intentionally caused in order to survive a summary judgment motion by plaintiff-provider. Amaze Medical Supply Inc. V. Lumbermens Mutual Cas. Co., 10 Misc 3d 127(A), 809 NYS2d 480 (Table), 2005 WL 3115289 citing Central Gen. Hosp. V. Chubb Group of Ins. Cos., 90 NYS2d 195, 199 (1997). However, defendant-insurer’s founded belief is usually [*3]not enough to obtain judgment on its own. To win on its summary judgment motion, defendant must make a prima facie “lack of coverage” showing and if plaintiff does not come forward to rebut defendant-insurer wins. Central Gen. Hosp., id at 199; A.B.Medical Services, PLLC, supra at 825. In addition, this Court recognizes that for the purposes of summary judgment motions, parties are permitted, within limits, to rely on otherwise inadmissible information. Zuilkowski v. Sentry Insurance A Mutual Company, 114 AD2d 453, 494 NYS2d 363 [1985]. However, what is admissible at this stage of litigation will not necessarily be admissible at trial.

Standard of Proof at Trial

At trial, the question remains just how much “admissible evidence” the defendant-insurer must produce to satisfy its evidentiary burden where nonpayment of a no-fault claim is based on a collision being a non-covered event. The second question concerning this Court is whether the elements of fraud must be proved where a claim has been denied based on 11 NYCRR 65-3.8 (e)(2) “circumstances of the accident not covered by no-fault”.

There have been several recent well-reasoned decisions regarding the standards of proof for “fraud” or “no true accident”, as well as a discussion of whether allegations of fraud are necessary in the context of a no-fault denial based on “no true accident”. Three of these decisions have been particularly helpful in analyzing the complexities involved in no-fault cases where the defense against payment of claims is lack of coverage based on allegations of fraud or that the collision was intentionally caused: A.B. Medical Services, PLLC v. State Farm Mutual Automobile Ins. Co., supra ; JSI Expert Service v. Liberty Mutual Ins. Co., 7 Misc 3d 1009(A), 801 NYS2d 235 [Civ. Ct., Kings County 2005]; and V.S. Medical Services, P.C. v. Allstate Insurance Company, 11 Misc 3d 334, 2006 WL 16289 [Civ. Ct., Kings County 2006]. After thorough review and consideration of each of these opinions, this Court has decided that it must determine first whether the tort of common law fraud must be proved where a denial is based on 11 NYCRR§65-3.8(e)(2) “circumstance of the accident not covered by no-fault”; and second, the standard of proof for a staged accident, or “no true accident”.

Should Fraud be Litigated in a No-Fault Trial?

In JSI Expert Service v. Liberty Mutual Ins. Co., supra , the defense raised for nonpayment of claims was fraud.^[FN1] There, citing Rudman v. Cowles Communications, 30 NY2d 1 (1972), Judge Bailey-Schiffman found that “proof of fraud must be made by clear and convincing evidence.” Indeed, the standard of proof for the tort of common law fraud has long been viewed as requiring proof beyond a preponderance of the evidence as will be discussed below. This Court is concerned, however, that proving the elements of common law fraud by clear and convincing evidence where nonpayment of a no-fault claim is based on a collision being an intentional act, is not what 11 NYCRR §65-3.8 envisioned.

The intent of the no-fault law as found at 70A NY Jur.2d Insurance § 1774 (updated March 2006) is as follows:

The purposes of this statute were to remove a vast majority of claims arising from [*4]vehicular accidents from the sphere of common-law tort litigation, and to establish a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of such accidents. [emphasis added].

Our Court of Appeals has upheld the constitutionality of the No-Fault law and in so doing stated, inter alia: …”it was concluded in all reports that the tort system was plagued by long delays in claim payment. The tort system places an inordinate strain on the State’s court systems and judicial resources. The No-Fault law sought to cure these ills by guaranteeing prompt and full compensation for economic losses…and to reduce the long delays experienced under judicial procedures and to lessen the burden on our State Courts.” Montgomery v Daniels, 38 NY2d 41, 378 NYS2d 1, 340 NE2d 444 [1975].

A review of the elements of the tort of common law fraud demonstrates why proving fraud by clear and convincing evidence in a no-fault trial is inconsistent with the purposes of No-Fault law, and why it is not necessary to allege fraud as a defense for refusal to pay a no-fault claim.

To sustain a cause of action based on actual fraud, the plaintiff had to establish that (1) the defendant made material representations that were false, (2) the defendant knew the representations were false and made them with the intent to deceive the plaintiff, (3) the plaintiff justifiably relied on the defendant’s representations, and (4) the plaintiff was injured as a result of the defendant’s representations. Cerbanono v.Price, 7 AD3d 479, 775 NYS2d 585 [2d Dept. 2004]. (See also, Giurdanella v. Giurdanella, 226 AD2d 342, 640 NYS2d 211; Matter of Garvin, 210 AD2d 332, 620 NYS2d 400).

Clearly, proving these elements (and proving them by clear and convincing evidence) will consume a significant amount of trial time and could be very costly.

Clear and Convincing Standard vs. Preponderance of the Credible Evidence

While common law fraud must be proved by clear and convincing evidence, as Judge Bailey-Schiffman found in JSI Expert Service, the standard common to most civil cases is a preponderance of the credible evidence. What, then, distinguishes civil cases where a preponderance of the credible evidence standard of proof is sufficient, and those where the issue to be decided must meet the clear and convincing standard?

The case of In the Matter of Father Philip K. Eichner v. Dillon, 73 AD2d 431, 426 NYS2d 517 [2d Dept. 1980] sheds light on the distinction between the two types of civil cases. In Eichner, a priest brought a proceeding to have a religious brother (in a chronic vegetative state) declared incompetent, and to obtain judicial approval for withdrawal of extraordinary life-sustaining measure consisting of a respirator. The Eichner court grappled with the standard of proof necessary to determine whether the Priest, Eichner, had the requisite legal authority to make the decision that life-support should be removed from the religious brother. There the court reasoned:

[W]e cannot abide by the suggestion that a preponderance of the credible evidence’ standard, common to most civil proceedings, would be sufficient here. Rather we elect the [*5]middle tier standard of proof, that of clear and convincing evidence. …[T]his standard is appropriate where the interests at stake are deemed to be more substantial than mere loss of money.’ Similarly, the clear, unequivocal and convincing standard of proof [is used] to protect particularly important individual interests in various civil cases. Id. at 523.

Eichner cites to examples of cases where “the clear and convincing evidence” standard is utilized only where the “interests at stake” are deemed more significant than ordinary”: reformation of a contract (Ross v. Food Specialities, 6 NY2d 336, 189 NYS2d 857, 160 NE2d 618); a filiation proceeding (Commissioner of Public Welfare of City of NY v. Ryan, 238 App. Div. 607, 265 NYS 286); an action based upon a claim against a deceased, (Matter of Cady, 211 App. Div. 373, 207 NYS 385); in deportation proceedings (Woodby v. Immigration and Naturalization Serv., 385 US 278, 87 S.Ct. 483, 17 L.Ed.2d 362); and for a claim of fraud (United States v. American Bell Tel. Co., 167 US 2224, 17 S.Ct. 809, 42 L.Ed. 144).

No-Fault Regulation 11NYCRR 65-3.8(e)(2)

No-fault regulations provide for a denial of a claim for the following reasons:

(1) no coverage on the date of accident;

(2) circumstances of the accident not covered by no-fault; or

(3) statutory exclusions pursuant to section 5103(b) of the insurance law. Id. at 11 NYCRR 65-3.8 (e).(emphasis added)

If an insurer has a “founded belief” that the alleged accident was not a true accident, it can deny the claim based on 11 NYCRR 65-3.8(e)(2). At trial, the insurer must show, through admissible evidence, facts and circumstances leading a trier of fact to conclude that more likely than not, the circumstances of the collision are not covered by no-fault. If this threshold is reached, the burden shifts to the plaintiff to rebut the defendant’s case. Nowhere in the no-fault statute or regulations is there a requirement that in order to prevail on denial of a claim pursuant to 11 NYCRR 65-3.8(e), common law fraud must be proved. In fact, as Judge Jack Battaglia in A.B. Medical Services, PLLC v. State Farm Mutual Automobile Insurance company, supra , and Judge Arlene Bluth in V.S. Medical Services, P.C. v. Allstate Insurance Company, supra , point out: “Damages resulting from a deliberate collision are not covered by no-fault insurance regardless of the existence of fraudulent motivation.” V.S. Medical Services, Id. At 3. Judge Bluth goes on to state: “Put another way, the no-fault policy only covers accidents; it does not cover deliberate incidents. It does not matter whether the incident was a deliberate mugging, an attempted murder, a product of road rage, or a cold calculated scheme to defraud the insurance company. If it was deliberate, it is not a covered incident under the no-fault policy.”

While our appellate courts commonly invoke the term “fraud” when discussing the defense of “staged accident”, it is a “lack of coverage” they are discussing not necessarily fraud. It seems to make no difference why the incident occurred. If it were made to happen, then it is not an accident and therefore not a covered accident. See State Farm V. Laguerre, 305 AD2d 490, 491, 759 NYS2d 531 [2d Dept. 2003].

In the instant matter, defendant contends that the evidentiary burden for defeating a summary judgment motion “founded belief” (incident was staged) should apply in a trial context. This Court disagrees. As mentioned earlier, to win on its own summary [*6]judgment motion, defendant must make a prima facie “lack of coverage” showing and if plaintiff does not go forward to rebut, then summary judgment is granted to defendant-insurer. Central General Hospital v. Chubb Group of Ins. Co.,90 NY2d 195, 199 [1997].. Moreover, this court is concerned that “fact or founded belief” as the evidentiary burden in no true accident cases contravenes the intent of the No-Fault insurance law. Such a minimal showing would allow routine denial of claims by insurers and open the floodgates to permit insurers who have not timely denied a claim to use a “no true accident” defense (understanding that the standard of proof is minimal) and defeat the primary purposes of the no fault law.

As far as the shifting burdens of proof in a no-fault staged accident or intentional collision case, Judge Jack Battaglia provides an excellent analysis in A.B. Medical Services. The bottom line is that in a “staged accident” case, the defendant has the burden of “coming forward” with proof in admissible form that a staged accident occurred; The plaintiff bears the burden of persuasion and rebutting defendant’s evidence, or the plaintiff “succumbs”. This Court finds that the standard of proof is “preponderance of the evidence”, often defined as the existence of the “fact” being more probable than its non-existence. After all the evidence has been presented, the trier of fact must decide whether the evidence preponderates in favor of the plaintiff or defendant.

CONCLUSION

In this trial, defendant failed to come forward with proof in “admissible form” to establish the “fact” or the evidentiary “foundation” to buttress its belief that the injuries alleged by the assignor did not arise from an insured accident. Defendant failed to adduce sufficient admissible evidence to rebut the presumption of coverage that attaches to the plaintiff’s properly completed claim form.

While SUI investigator Willsey’s testimony is entitled to some weight (see Travelers Indemnity Co. V. Morales, 188 AD2d 350, 351, 591 NYS2d 27 [1st. Dept. 1992], it is clear to this Court that much of the information that SUI investigator Willsey relied upon in his testimony was hearsay and was not admissible due to the lack of appropriate foundation. The defendant sought to introduce information obtained from the National Insurance Crime Bureau (NICB) in establishing its case of intentional collision, but failed to lay any foundation or make any showing that would support the admissibility of this information.

In addition, Mr. Willsey testified that as part of his investigation, he utilized State Farm’s Frequency Tracking System to determine any prior loss history of any of the parties and/or any of the vehicles involved in the present incident. His search revealed that the owner of claimant vehicle had a prior claim history with State Farm and that the owner and driver were not insured. Again, this Court concluded that without the requisite foundation, this information is inadmissible hearsay.

Defendant also asserts an inference of intentional collision should be made by the alleged failure to cooperate by the assignor and /or other parties involved in this incident and the fact that the insured vehicle was not at the scene of the accident at the time police arrived. The fact that the vehicle was not at the scene of the accident is not determinative of anything. Even though defendant-insurer may wish to use failure to cooperate as one indicia of “no true accident” instead of as a defense, it did not offer any admissible evidence as to plaintiff’s assignors’ failure to cooperate.

Based upon the testimony at trial and the acts discussed above, this Court [*7]concludes that the defendant has failed to come forward with evidence of a staged accident or that the loss giving rise to this action was intentional, and thus the burden of persuasion was never shifted to plaintiff. Accordingly, judgment for plaintiff in the sum of $1,842.26, together with statutory interest and attorney’s fees. This constitutes the decision and order of the Court.

Dated: May 11, 2006 ________________________________

RICHARD VELASQUEZ, J.C.C.

Footnotes

Footnote 1:“Defendant denied plaintiff’s claims on the basis that [w]e do not provide coverage for any insured’ who has made fraudulent statements or engaged in fraudulent conduct in connection with the accident or loss for which coverage is sought under this policy.'” JSI Expert Service, id at 237.