SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiff from so much of an order of the Civil Court of the City of New York, Kings County (Eileen Nadelson, J.), entered January 12, 2005. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment.

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

In this action to recover assigned first-party no-fault benefits, plaintiff established its prima facie entitlement to summary judgment by showing that it submitted a completed proof of 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 show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

Defendant cross-moved for summary judgment. Its claims representative stated in an affidavit that the bill was received on May 1, 2002 and denied on June 4, 2002. Since the [*2]defendant did not deny the claim within the 30-day prescribed period, it is precluded from raising most defenses (see Central Gen. Hosp. v Chubb Group Ins. Cos., 90 NY2d 195 [1997]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), including its defense that the bill was not received within 180 days of service as required under the regulations in effect at the time (11 NYCRR 65.11 [m] [3]; cf. Ocean Diagnositc Imaging P.C. v GMAC Ins., 7 Misc 3d 138[A], 2005 NY Slip Op 50865 [App Term, 2d & 11th Jud Dists]). [*3]

Accordingly, plaintiff’s motion for summary judgment is granted and the matter remanded for the calculation of statutory interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 and the regulations promulgated thereunder.

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

Golia, J., concurs in a separate memorandum. [*4]
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : PESCE, P.J., WESTON PATTERSON and GOLIA, JJ.
RADIOLOGY TODAY P.C.
A/A/O JOSE PEREZ,

Appellant,

-against-
ALLSTATE INSURANCE COMPANY,

Respondent.

Golia, J., 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 disagree 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.

It should be noted that between the submission by the plaintiff and the defendant there are no less than three (3) NF-10 denial forms attributable to the defendant, and not one of them is clearly referable to the NF-3 claim form submitted. [*5]

Although all three appear to address the same two MRI “treatment” of September 24, 2001 and October 11, 2001, they each indicate different dates of billing; different dates of receipt; and different names for the provider. What is even more disconcerting is that the affirmation of defendant’s counsel sets forth that these denials were issued more than 30 days from receipt of the claim. I note that in one instance, it was sent merely one day “late” and that the 30th day was a Sunday. Therefore, under the normal rules of statutory interpretation, it was, in fact, a timely response. Why the defendant failed to point that out is a mystery. I am also mystified as to why the defendant would be unable to easily meet the 30 day deadline given that the ground for denial is that the claim was not filed within the 180 day time period allotted to the claimant.

I am also at a loss to understand why defendants persist in their failure to clearly and unequivocally meet even the simplest of burdens placed upon them by regulations and the courts. These would include proof of mailing, timely and specific denials, timely requests for verifications, and objections to assignments, timely follow-up requests for independent medical examinations, etc.
Decision Date: March 27, 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 (Howard G. Lane, J.), entered October 12, 2004. The order denied defendants’ motion to dismiss the complaint pursuant to CPLR 3211 (a) (5).

Order affirmed without costs.

In this action, plaintiff insurance carrier seeks to recoup first-party no-fault basic economic loss payments from defendants, allegedly non-covered persons, that it made to its insured following an accident involving a vehicle driven and owned by defendants. Although the suit was brought outside the three-year statute of limitations for personal injuries, plaintiff claimed entitlement to the two-year toll on the running of the statute of limitations provided by Insurance Law § 5104 (b).

The court below properly denied defendants’ motion to dismiss the action. Defendants moved to dismiss solely on the theory that the three-year statute of limitations had run, and raised the issue of plaintiff’s insureds’ prior lawsuit in Bronx County (in which plaintiff herein allegedly could have asserted a lien upon the proceeds pursuant to Insurance Law § 5104 [b]).

Although the statute does not specify against which types of compensation such a lien may be asserted, it is well established in case law that a lien representing basic economic loss benefits paid to an insured can be asserted only against an economic damages award to an insured in a personal injury action, and not against a pain and suffering award (see e.g. Aetna [*2]Cas. & Sur. Co. v Jackowe, 96 AD2d 37, 42 [1983]; Safeco Insurance Co. of America v Jamaica Water Supply Co., 83 AD2d 427 [1981]). The alleged lack of any economic damages claim in the complaint in the Bronx action annexed to defendants’ reply papers was the rationale for the denial of the motion to dismiss.

The motion to dismiss the present action was properly denied because defendants presented insufficient evidence to establish that the present action was excluded from the ambit of Insurance Law § 5104 (b). Defendants presented a copy of a complaint and an index number, which is not evidence sufficient to establish, at this early stage, that plaintiff’s insureds could have or did recover, whether by jury award or settlement, amounts properly attributable to basic economic loss (see e.g. Aetna Cas. & Sur. Co. v S. Siskind & Sons, 209 AD2d 215 [1994]), or that plaintiff could have asserted a lien in the prior action and would therefore be barred from commencing the present action by the three-year personal injury statute of limitations. The foregoing determination is without prejudice to defendants again raising the claim that the
instant action was barred by the statute of limitations upon a sufficient showing,
through documentary evidence, that the plaintiff’s subrogors had instituted a prior
action against them which had the effect of taking the instant action outside of
the tolling provisions set forth in Insurance Law § 5104 (b).

Golia, J.P., Rios and Belen, JJ., concur.
Decision Date: March 27, 2006

[*1]

Supreme Court, Appellate Term, Second Department, April 6, 2006

APPEARANCES OF COUNSEL

Teresa M. Spina, Woodbury (Emilio A. Cacace of counsel), for appellant. Amos Weinberg, Great Neck, for respondent.

{**12 Misc 3d at 31} OPINION OF THE COURT

Memorandum.

Order modified by providing that plaintiff’s motion for summary judgment is granted to the extent of awarding plaintiff partial summary judgment in the sum of $3,971.20 and matter remanded to the court below for the calculation of statutory interest and assessment of attorney’s fees thereon and for all further proceedings on the remaining claim; as so modified, affirmed without costs.

In this action to recover first-party no-fault benefits, plaintiff A.B. Medical Services PLLC established a prima facie entitlement to partial summary judgment in the sum of $3,971.20, by proof that it submitted 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 2003]). While the court below awarded plaintiff summary judgment in the sum of $4,061.96, in his affirmation in support of plaintiff’s motion, David Safir, plaintiff’s “practice and medical billing manager,” specifically requested summary judgment in the sum of $3,971.20. Plaintiff has failed to make out a prima facie entitlement to a claim for the additional sum of $90.76. [*2]

It is uncontroverted on the record that defendant timely denied A.B. Medical’s claims in the respective sums of $1,972.08 and $1,999.12. However, a timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory or vague (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [App Term, 2d & 11th Jud Dists 2004]; see also Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2004]). The claims were essentially denied for failure to establish medical necessity. Although defendant was not required to attach to its denial of claim forms the peer reviews upon which the denials were purportedly based (see 11 NYCRR 65-3.8 [b] [4]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 7 Misc 3d 132[A], 2005 NY Slip Op 50605[U] [App Term, 2d & 11th Jud Dists 2005]), defendant’s denial of claim forms fail to set forth with sufficient particularity the factual basis and medical rationale for its denial based on lack of medical necessity, and it is therefore precluded from asserting said defense (see Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [2004], supra). Moreover,{**12 Misc 3d at 32} the peer reviews submitted by defendant in opposition to plaintiff’s motion were unsworn, and therefore in inadmissible form (see A.B. Med. Servs. PLLC v Motor Veh. Acc. Indem. Corp., 6 Misc 3d 131[A], 2005 NY Slip Op 50088[U] [App Term, 2d & 11th Jud Dists 2005]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 2004]). In any event, even assuming said reports’ admissibility and that they set forth a sufficient factual basis and medical rationale for denial of the claims, they cannot remedy the factual insufficiency of defendant’s denials (see Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664 [2004], supra).

Golia, J., dissents and votes to reverse the order and deny plaintiff’s motion for summary judgment. As set forth in the majority opinion, it is “uncontroverted on the record that defendant timely denied A.B. Medical’s claims in the respective sums of $1,972.08 and $1,999.12” (at 31). The majority also acknowledges that the regulations do not require defendants to attach a copy of the peer review report to an NF-10 denial of claim form. Nevertheless, my colleagues assert that the denial of claim form failed to state, with the requisite specificity, the reasons the claims were being denied.

What they fail to recognize is that the specific reason for the denial was the “negative” peer review report (see 11 NYCRR 65-3.8 [b] [4]). That is all the specificity that is required under that regulation which states: “If the specific reason for a denial of a no-fault claim . . . is a . . . peer review report . . .” (id.; emphasis added).

To follow the reasoning of the majority would be to require a nonphysician claims examiner to interpret a physician’s peer review report, and then list, with specificity, the medical reasons for the claim’s denial. It seems a tad incongruous for the regulations to permit the NF-10 denial of claim form to be sent without attaching the doctor’s peer review report and then to require a “lay” person to interpret that report and state with “specificity” the doctor’s reasons for finding the treatment medically unnecessary.

In the case at bar, the claimant submits an affidavit stating that it requested a copy of that report but never received same. The defendant submits an affidavit by a person in charge of the file stating that no such request is present in the file. For the purpose of the issues before this court, it doesn’t matter if the request was sent, if the mail was lost, or if the defendant’s affidavit is inaccurate, inasmuch as the regulations do not provide{**12 Misc 3d at 33} for any draconian remedy for defendant’s failure to provide the report in a timely manner. The claim denials were mailed on the 20th and 27th of January 2003, and the request for the peer review was not mailed until July 18, 2003. The underlying action was “commenced” two months later, on September 17, 2003. Apparently, the claimant waited six months to request the reports but waited less than two months to decide to bring this action.

Finally, a question arises as to whether the failure of the defendant to submit a “sworn” copy of the peer review report, in opposition to a claimant’s motion for summary judgment, mandates that the motion be granted. I do not find such a failure to be fatal when opposing a motion for summary judgment, for the reasons stated in my dissent in Ocean Diagnostic Imaging, P.C. v Lancer Ins. Co. (6 Misc 3d 62 [App Term, 2d & 11th Jud Dists 2004]).

Pesce, P.J., and Rios, J., concur; Golia, J., dissents in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, March 27, 2006

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants.

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

Memorandum.

Order, insofar as appealed from, affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to their assignors, plaintiffs moved for partial summary judgment in the sum of $5,460.79. On appeal, plaintiffs have limited their claim to the sum of $5,427.09. Plaintiffs established a prima facie entitlement to summary judgment by proof that they submitted the 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 2003]).

In opposition to plaintiffs’ motion, defendant argued that the claims were properly and timely denied on the ground of lack of medical necessity based on peer review reports. For the reasons set forth herein, this defense is unavailing to defendant. We note initially that the record [*2]does not contain denial of claim forms submitted by A.B. Medical Services PLLC in the respective{**12 Misc 3d at 10} sums of $71.40, $218.35 and $71.06. Having failed to pay or deny these claims within the 30-day statutory period (11 NYCRR 65-3.8 [c]), defendant is precluded from raising most defenses with respect to said claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

It is uncontroverted on the record that the remaining claims were timely denied. However, a “timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no 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 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2004]). The claims by A.B. Medical in the sum of $1,144.65 ($182.37, $71.06 and $891.22) were denied for lack of medical necessity based on an annexed peer review which failed to state the factual basis and medical rationale for the recommended denial of said claims. A.B. Medical’s claim for $1,573.24 was denied on the ground of lack of medical necessity based on a peer review report which disallowed reimbursement of no-fault benefits due to the lack of sufficient information, including prior medical examinations, which the record indicates were available. In the absence of a showing by defendant that it attempted to procure these reports through verification requests for the purpose of conducting the peer review, defendant is precluded from asserting the defense of lack of medical necessity as to this claim (see 11 NYCRR 65-3.5 [b]; 65-3.6 [b]; A.B. Med. Servs. PLLC v American Mfrs. Mut. Ins. Co., 6 Misc 3d 133[A], 2005 NY Slip Op 50114[U] [App Term, 2d & 11th Jud Dists 2005]; Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004]).

The remaining claims were denied for failure to establish medical necessity based on “peer review[s].” Although defendant was not required to attach to its denial of claim forms the peer reviews upon which the denials were purportedly based (see 11 NYCRR 65-3.8 [b] [4]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 7 Misc 3d 132[A], 2005 NY Slip Op 50605[U] [App Term, 2d & 11th Jud Dists 2005]), the defendant’s denial of claim forms fail to set forth with sufficient particularity the factual basis and medical rationale for its denials based on lack of medical necessity, and it is therefore precluded from asserting said defense (see Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [2004], supra).{**12 Misc 3d at 11}

In opposition to plaintiffs’ motion, defendant also asserted the defense that plaintiffs’ assignor was involved in a fraudulent scheme to procure the subject insurance policy in order to pay reduced insurance premiums, and that, consequently, plaintiffs providers were not eligible to recover assigned no-fault benefits. Vehicle and Traffic Law § 313 provides in pertinent part: “(1) (a) No contract of insurance . . . shall be terminated by cancellation by the insurer until . . . after mailing to the named insured . . . a notice of termination by regular mail . . . .” Vehicle and Traffic Law § 313 “supplants an insurance carrier’s common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively” (Matter of Liberty Mut. Ins. Co. v McClellan, 127 AD2d 767, 769 [1987]; see also Matter of Cruz v New Millennium Constr. & Restoration Corp., 17 AD3d 19 [2005]; Matter of Metlife Auto & Home v [*3]Agudelo, 8 AD3d 571 [2004]; Matter of Integon Ins. Co. v Goldson, 300 AD2d 396 [2002]; Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293 [2000]). The statute “places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured’s negligence” (Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d at 298). There has been no allegation that defendant effectively cancelled the subject insurance policy pursuant to section 313.

However, case law has made clear that whereas the policy may not be retroactively cancelled, thereby protecting “innocent third parties who may be injured due to the insured’s negligence” (id. at 298), in “an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured’s misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured” (id. at 298-299). The issue presented here is whether, assuming the insurance policy was fraudulently procured, plaintiff health care provider is an “innocent” third party which case law protects and, thus, as assignee of the insured who allegedly perpetrated the fraud, acquires greater rights than had by the assignor. We hold that only innocent third parties who are injured are protected (id. at 298), and not a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured’s no-fault benefits. Contrary to plaintiffs’ contention, the defense of fraudulent procurement of an insurance{**12 Misc 3d at 12} policy, which is nonwaivable and hence exempt from the 30-day preclusion rule, may be asserted as against plaintiffs providers in this action seeking to recover assigned no-fault benefits (cf. Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 751-752 [2002]). Upon our review of the record, we find that defendant’s submissions in support of its defense were sufficient to raise issues of fact as to whether the insurance policy was fraudulently procured. Therefore, plaintiffs’ motion for partial summary judgment was properly denied. To the extent that Ocean Diagnostic Imaging P.C. v Commerce Ins. Co. (7 Misc 3d 133[A], 2005 NY Slip Op 50642[U] [App Term, 2d & 11th Jud Dists 2005]) may be inconsistent with the determination herein, the dicta set forth therein should not be followed (see Ocean Diagnostic Imaging, P.C. v Nationwide Mut. Ins. Co., 11 Misc 3d 135[A], 2006 NY Slip Op 50477[U] [2006]).

Golia, J. (concurring 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 disagree 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.

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

Suffolk Dist Ct

HUC 2181-05

Appearances:

Fazio, Rynsky & Associate

Attorneys for Plaintiff

175 Eileen Way

Syossett, New Yor 11791

Stern & Montana, LLP

Attorneys for Defendant

Trinity Centre

115 Broadway

New York, New York 10006

C. Stephen Hackeling, J.

The plaintiff, Preferred Medical Imaging, P.C. (via Court documents No.1 & 4) moves this Court for a two pronged Order, directing the Court Clerk to seal its records and enjoining, for privacy reasons, the defendant and its counsel from disclosing any documents or information it may obtain via disclosure directives arising out of this action. The defendant, Liberty Mutual Insurance Co. (via Court documents 2 and 3) vigorously opposes the requested relief, asserting amongst other reasons, the First and Sixth Amendments of the United States Constitution, requiring public and press access to Court proceedings. For the following reasons the movant is granted a modified temporary sealing order and is denied any further relief.

Application for File Sealing and Gag Order

The Undisputed Relevant Facts

The plaintiff brought this action as a medical service provider, seeking to recover the assigned “No Fault” automobile insurance benefits assigned to it by Bevolin Lewis and Edwin Lewis. Plaintiff is an authorized medical service provider who allegedly [*2]rendered approximately $5,000.00 of MRI image services to Mr. Lewis,

-1-

and his son between October 7 and October 11, 2004, pursuant to a physician’s referral. The plaintiff timely took assignments of claims and billed for the services. The defendant timely denied plaintiff’s claim, precipitating the instant action. On or about January 5, 2005 the Court signed an order compelling the plaintiff to disclose assorted documentary business management agreements and tax returns of the plaintiff and its alleged principal Dr. Robert Schepp for the years 2002-2003. Many of the documents sought had previously been disclosed in an affidavit or Dr. Schepp, filed in a pending unrelated Nassau County Supreme Court action.

Disputed Issues

The defendant has interposed a myriad of defenses in its answer. Its counsel has argued that its strongest position is that the plaintiff’s business practices constitute a systematic and persistent violation of the New York State No-Fault Laws as codified in Sec. §5101. It is alleged that the claims generated are the result of an illegal financial relationship in violation of Sec. 238 of the Public Health Law and Article 15 of the Business Corporation Law. It is the defendant’s position that plaintiff is in fact not an authorized medical service provider as it is not constituted by, or supervised by, a physician. It is asserted that the plaintiff is one of many providers who seek to abuse the “no fault” insurance system by simply purchasing a physician’s letterhead for the purpose of allowing non physician laymen to set up and run corporate medical service provider corporations. In this instance the crux of this discovery dispute involves the production of tax returns for Dr.Robert Schepp and for affiliated corporations which also employ Dr. Schepp. The defendant asserts that these returns will establish that Dr.Schepp receives “frontman only” compensation which bears no relationship to his alleged corporate ownership interest. The plaintiff denies this contention and asserts that without the requested relief Dr. Schepp’s privacy rights will be violated and that these documents will be circulated to other insurance carriers and their attorneys.

Discussion

The Court is not naive to the import of the underlying discovery struggle concerning this application. This Court administers approximately 10,000 no-fault actions annually which often contain multiple unrelated plaintiff providers and unrelated defendant insurers in the same complaint. At the call of each no-fault calendar, dozens of insurance companies and their counsel discuss joint legal strategies amongst themselves. During proceedings they have often argued to the Court the insurance industry’s assertion that the no-fault system is plagued with systematic fraud and abuse. On several [*3]occasions the Court has observed insurance company expert testimony which evidences the collective efforts of the insurance industry to mutually share fraudulent “No Fault” claim information in a common data base.

-2-

Sealing the Record

The Court notes that much of the material plaintiff wishes to seal is already publicly available in that it evidently has been produced in a pending Nassau County Supreme Court action titled AIU Inc. Co.v. Deajess Medical Imaging, PC. At least one decision has been published to date concerning this action. (see, 2/10/2006 NYLJ p. 22, col. 1, et seq.).

The legal standard and/or predicate statute for the requested relief is not stated in the plaintiff’s papers. However the law is clear that “Except where otherwise provided by statute or rule, a Court shall not enter an order in any action or proceeding sealing the Court records, whether in whole or in part, except upon a finding

of good cause, which shall specify the grounds thereof”. 22 NYCRR §216.1 (a). As stated by the Appellate Court in Danco Laboratories, Ltd., v. Chemical Works of Gedeon Richter, Ltd. 274 AD2d 1 (1st Dept. 2000);

We start by taking note of the broad constitutional proposition, arising from the First and Sixth Amendments, as applied to the States by the Fourteenth Amendment, that the public, as well as the press, is generally entitled to have access to Court proceedings. Since the right is of constitutional dimension, any order denying access must be narrowly tailored to serve compelling objectives… However, the right of access is not absolute. Moreover, access may still be respected in keeping with constitutional requirements while sensitive information is restricted in keeping with “the State’s legitimate concern for the well-being” of an individual (Globe Newspaper corp. v. Superior Court, [457 US 596], at 609.)

Clearly, the function of this Court is to apply a balancing test and fashion an Order which serves to protect both Dr. Schepp’s privacy interests and to faciliate the public’s right to observe the Court’s proceedings. Absent compelling evidence of fully articulated immediate prejudice, an unconditional sealing order is unwarranted. No prejudice is indicated for the bulk of the information disclosed to date as many of the documents are already in the public domain, i.e. the Nassau Supreme Court. In the present matter, the Court finds that good cause to seal exists only as to the possibility of identity theft and perhaps patient information. It has been the practice of this Court to redact this type of information from its decisions which are to be published on-line. Therefore, to this limited extent, the plaintiff’s [*4]motion is granted. It is Ordered that the file will be sealed for a 14

-3-

day period during which time the movant shall review the Court file and submit ( on 5 days notice ) a copy of a proposed redacted file which is consistent with this decision to redact only identification numbers and patient infromation. The Clerk shall be permitted to exhibit the movant’s redacted file for public viewing after the 14 days sealing period.

Enjoining Defendant from Information Disclosure

The real objective of the plaintiff’s application is to obtain an Order of this Court which prohibits the defendant and its attorneys from disclosing any documents or the information obtained in

this action to any other party. While not expressly labeled; this clearly is a request for a permanent injunction. The Suffolk County District Court, as constituted by the Uniform District Court Act, has limited equitable powers. Sec.§209 of the UDCA expressly provides “(b) Injunction or Restraining Order. No injunction or restraining order shall issue out of or by this Court unless…” The statute provides for only four allowable injunction instances which involve criminal zoning, waste, chattel recovery, and money judgment enforcement proceedings. No predicate basis has been plead or otherwise articulated which allows the Court to consider an Article 63 New York CPLR injunction application. Accordingly, the injunction component of this application is denied.

_____________________________

J.D.C.

Decision to be published____yes____no.

-4-

—[*1]

Mercure, J.P. (1) Appeal from an order of the Supreme Court (Stein, J.), entered December 21, 2004 in Greene County, which, inter alia, granted petitioner’s application pursuant to CPLR 7511 to vacate an arbitration award, and (2) motion to dismiss appeal.

The parties are automobile insurance companies who insure, respectively, two policyholders involved in a motor vehicle accident that occurred in July 2001. After paying $50,000 in no-fault benefits, respondent filed an application for mandatory arbitration with Arbitration Forums, Inc., a company that administers no-fault arbitrations in New York (see Insurance Law § 5105). In January 2004, an arbitrator rendered a decision finding that “[respondent] (Selective) submitted proof [of] negligence against [petitioner] (Utica), 70%, comparative negligence applied.” The determination further stated that “Comp[aritive] Neg[ligence] applies, find [respondent]—30%[;] [petitioner]—70%” and awarded $35,000 to respondent. After receiving the arbitrator’s findings, petitioner commenced this CPLR article 75 proceeding seeking an order vacating the arbitrator’s determination. Respondent cross-moved for confirmation of the award. Supreme Court, finding the arbitrator’s award to be “exceedingly indefinite,” vacated the award and remanded the matter to the arbitrator to clarify her findings. [*2]Respondent did not seek a stay of the court’s order, but instead filed an appeal to this Court.

Meanwhile, the arbitrator issued an amended decision indicating that the “liability percentage was reversed,” finding respondent’s insured to have been 70% at fault and petitioner’s insured to have been 30% at fault, and reducing respondent’s award to $15,000. Upon respondent’s petition for vacatur, Supreme Court concluded that the arbitrator’s amended decision further confounded the issue. The court vacated the amended award and remanded the matter to the arbitrator for further guidance. In a second amended decision, the arbitrator again awarded respondent $15,000. Petitioner then moved to dismiss this appeal as moot, asserting that the arbitrator has now issued a definitive decision establishing liability.

It is well settled that “an appeal will be considered moot unless the rights of the parties will be directly affected by the determination of the appeal and the interest of the parties is an immediate consequence of the judgment” (Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714 [1980]; see Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 810-811 [2003], cert denied 540 US 1017 [2003]). Here, it cannot be said that a determination by this Court would not affect the rights of the parties. A holding that Supreme Court erred in vacating the award would result in reinstatement of the original award. On the other hand, if the Court upholds the vacatur, the parties will be bound by the most recent amended award—subject to any right of respondent to challenge that award—which purports to reverse the percentages of liability assigned in the original award. Inasmuch as the parties’ rights and liabilities will be directly affected by our resolution of this appeal, the dispute is justiciable and petitioner’s motion is therefore denied.

Turning to the merits, we conclude that Supreme Court properly vacated the initial arbitration award. Where arbitration is compulsory, “the standard for judicial review of the award is more exacting than in voluntary arbitration” (Matter of Furstenberg [Aetna Cas. & Sur. Co.—Allstate Ins. Co.], 49 NY2d 757, 758 [1980]) and “[t]o be upheld, an award . . . must have evidentiary support and cannot be arbitrary and capricious” (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). Particularly relevant here, an award may be vacated where the arbitrator “so imperfectly executed it that a final and definite award upon the subject matter submitted was not made” (CPLR 7511 [b] [1] [iii]; see Matter of Meisels v Uhr, 79 NY2d 526, 536 [1992]).

As Supreme Court explained, the original award is internally inconsistent because it states that respondent was 70% negligent, yet apportions only 30% of fault against respondent. Further confusion was created by the arbitrator’s incorrect statement that respondent’s insured was cited for a traffic violation at the scene, whereas it was in fact petitioner’s insured who was cited. Finally, we note that in seeking to vacate the first amended award—which suffered from many of the same infirmities as the original award—respondent itself characterized the award as “ambiguous and indefinite and as written, fail[ing] to present a coherent, rational determination.” Under these circumstances, we agree with Supreme Court that vacatur of the original award was required.

Respondent’s remaining contentions are either academic, unsupported by the record or otherwise lacking in merit.

Crew III, Peters, Mugglin and Kane, JJ., concur. [*3]Ordered that the motion is denied, without costs. Ordered that the order is affirmed, without costs.

Civil Court of the City of New York, Kings County

106648 / 04

Jack M. Battaglia, J.

Plaintiff appeared by Gary Tsirelman, Esq, Greg Lansky, Esq., and Massimiliano Valerio, Esq. of Gary Tsirelman, P.C.; Defendant appeared by Robert B. Brown, Esq. and Samuel K. Rubin, Esq. of Picciano and Scahill, P.C.

A licensed acupuncturist is entitled to recover assigned first-party no-fault benefits based upon the “prevailing fee [for licensed services] in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established” by the Superintendent of Insurance. (See 11 NYCRR §68.5[b].) The provider bears the burden of coming forward with evidence of the “prevailing fee” in its geographic location, while the insurer has the burden of coming forward with evidence that the provider’s fee is not “consisten[t] with charges permissible for similar procedures.”

Power Acupuncture, PC is seeking to recover from State Farm Mutual Automobile Insurance Company the total unpaid balance on six bills submitted to the insurer, which amount the parties have stipulated to be $800.24. Each of the bills describes the service rendered as “acupuncture”, and seeks compensation at the rate of $100.00 for each treatment session. The insurer paid on each bill at the rate of $42.84 per session, staing that “[t]his base fee was calculated according to the New York Workers’ Compensation Board Schedule of Medical Fees. (New York Workers’ Compensation Board Schedule of Medical Fees, Page 9.)”

At a trial, of sorts, held on September 16 and September 28, 2005, each party presented one witness. Power Acupuncture offered the testimony of Elyse Josephs, a licensed acupuncturist, who described generally the theory and practice of acupuncture, the training and licensing requirements for acupuncturists, and the certification requirements for physicians and chiropractors who render acupuncture services. (See, generally, Education Law §§8211, 8216[3].) State Farm offered the testimony of Donna Frederick, one of its claims representatives, who described the insurer’s practice of paying for acupuncture services rendered by licensed acupuncturists at the rate provided in the Workers’ Compensation Board fee schedule for [*2]acupuncture services rendered by a physician.

The parties recognized at trial that the resolution of their dispute depended essentially on an interpretation and application of the No-Fault Law (see Insurance Law §5102 et seq.) and the Superintendent of Insurance’s implementing regulations. Specifically, the issue is whether a licensed acupuncturist is entitled to be paid based upon the “prevailing fee” charged by acupuncturists for licensed services, or based upon the fee provided for payment of acupuncture services rendered by a physician. The parties agreed to submit briefs arguing their respective views of the law and regulations. They also agreed, for this case only, that, if the Court determined that Power Acupuncture is entitled to be paid based upon the “prevailing fee”, the fee shall be deemed to be $100.00 per session. This Court has since held in another case that the provider bears the burden of coming forward with evidence as to the “prevailing fee”. (See AVA Acupuncture P.C. v Elco Administrative Services Co., 10 Misc 3d 1079[A], 2006 NY Slip Op 50158[U], *6-*8 [Civ Ct, Kings County].)

Section 5102(a)(1) of the No-Fault Law defines “basic economic loss” as including “[a]ll necessary expenses incurred for…professional health services”, “subject to the limitations of” §5108 of the Law. (See Insurance Law §5102[a][1].) Section 5108 provides that the Superintendent of Insurance “shall promulgate rules and regulations implementing and coordinating the provisions of” the No-Fault Law and the Workers’ Compensation Law “with respect to charges for the professional health services specified in” §5102(a)(2), “including the establishment of schedules for all such services for which schedules have not been prepared and established by the chairman of the workers’ compensation board.” (See Insurance Law §5108[b].) But the “charges for services specified in” §5102(a)(1) “shall not exceed the charges permissible under the schedules prepared and established by the chairman of the workers’ compensation board.” (See Insurance Law 5108[a].)

Under the statute, therefore, if a charge for a covered “professional health service” is found in a Workers’ Compensation schedule, that is the permissible charge under the No-Fault Law; but, if there is no charge for the service found in a Workers’ Compensation schedule, the charge is to be determined by the regulations of the of the Superintendent of Insurance. Some uncertainty arises, however, because the No-Fault Law speaks in terms of covered services, whereas the Workers’ Compensation schedules establish fees according to the licensed status of the provider. As will appear, acupuncture services rendered by a certified physician are compensated at a different fee under the Workers’ Compensation schedules than acupuncture services rendered by a certified chiropractor, and, most importantly for present purposes, there is no coverage under the Workers’ Compensation schedules for acupuncture services rendered by a licensed acupuncturist.

The Superintendent’s no-fault regulations are not entirely successful in dissipating any uncertainty, as this action illustrates. They provide, in the first instance, that “[c]harges for [professional health] services shall be covered pursuant to schedules promulgated under section 5108 of the Insurance Law and Part 68 of this Title (Regulation 83).” (See 11 NYCRR §65-[*3]3.16[a][6].) In Part 68, the Superintendent adopts the “existing fee schedules prepared and established by the chairman of the Workers’ Compensation Board”, and, “[i]f a fee schedule has been adopted for a licensed health care provider, the fee for services provided shall be the fee adopted or established for that licensed health care provider.” (See 11 NYCRR §68.1[a], [b][2].) A “licensed healthcare provider” is defined as a “licensed healthcare professional acting within the scope of his or her license or an entity properly formed in accordance with applicable law and acting within the scope of its license.” (11 NYCRR §68.1[b][3].)

When acupuncture services are rendered by a certified physician or chiropractor, the determination of the permissible charge is relatively clear. There is a Workers’ Compensation Medical Fee Schedule and a Workers’ Compensation Chiropractic Fee Schedule (as well as schedules for podiatry and psychology.) The respective fee schedules provide a “unit value” or “relative value” for described services and a “conversion factor” for each of four geographic regions. The permissible charge is determined by multiplying the relative value for the service by the conversion factor, which is a monetary amount identified by the zip code of the provider. Both the Medical Fee Schedule and the Chiropractic Fee Schedule describe four acupuncture services, two with electrical stimulation and two without, two for the initial 15 minute “one-on-one contact with the patient” and two for additional 15 minutes of contact. The relative values are the same for each of the services in both the Medical Fee Schedule and the Chiropractic Fee Schedule.

A physician, however, will be entitled to a higher fee for each of the described services, because the conversion factors for physicians range from $6.49 to $8.45 across the four regions, whereas those for chiropractors range from $4.44 to $5.78. For example, when the relative value for an initial 15 minute contact for acupuncture without electrical stimulation rendered by a physician, i.e. 3.55, is multiplied by the conversion factor for physicians in Region IV (where Power Acupuncture is located), i.e. $8.45, the permissible charge is $30.00, whereas when the same relative value is multiplied by the conversion factor for chiropractors in Region IV, i.e. $5.78, the permissible charge is $20.52. The difference presumably reflects the relative market values for the services in various geographic areas.

But what about acupuncture services rendered by a licensed acupuncturist, for whom there is no “dedicated” Workers’ Compensation fee schedule. In a section of the regulations titled “[e]stablishment of certain health provider schedules”, the Superintendent of Insurance “establishes fee schedules for professional health services referred to in” §5102(a)(1) “for which schedules have not been prepared and established by the chairman of the Workers’ Compensation Board.” (11 NYCRR §68.2[a].) Those schedules are to be found in Appendix 17-C. (See id.) In Appendix 17-C, the Superintendent establishes fee schedules for various dental, social work, therapy, optometric, and thermographic services, but not for any acupuncture services.

In a section titled “[h]ealth services not set forth in schedules”, the Superintendent prescribes the method for determining the permissible charge for such services, first for when the Superintendent “has adopted or established a fee schedule applicable to the provider” (see 11 [*4]NYCRR §68.5[a]), and then for when the Superintendent has not done so (see 11 NYCRR §68.5[b]). For our purposes, the Superintendent has not “adopted” a fee schedule applicable to licensed acupuncturists, since none has been established by the chairman of the Workers’ Compensation Board, and the Superintendent has not as yet “established” a fee schedule applicable to licensed acupuncturists, as was done in Appendix 17-C for other providers that were not covered by a Workers’ Compensation Fee Schedule.

In such circumstances “the permissible charge for such service shall be the prevailing fee in the geographic area of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent.” (11 NYCRR §68.5[b].) Indeed, in two opinions, dated, respectively, January 5, 2004 and October 6, 2004, the Office of General Counsel of the New York State Insurance Department reaches the same conclusion. (See also Great Wall Acupuncture, P.C. v Geico General Ins. Co., 8 Misc 3d 1019(A), 2005 NY Slip Op 51199[U], *2 [Civ Ct, Kings County].)

State Farm argues nonetheless that the statute and regulations “are clear that where there is a scheduled service (acupuncture) but an unscheduled provider (licensed acupuncturist) the provider is limited to the fee identified for the scheduled service absent a showing of unusual procedures or unique circumstances.” (See Defendant’s Trial Memorandum of Law, at 7.) In doing so, State Farm characterizes the Insurance Department’s opinions as “erroneously perpetuat[ing] a mistake and application of [its own] regulation.” (See id., at 14-15.) In this latter regard, State Farm’s position is clearly and seriously at variance with the mandate that we give deference to the opinions of the Superintendent. (See Medical Society of State v Serio, 100 NY2d 854, 863-64 [2003].)

On its own merits, moreover, State Farm’s argument ignores the reasonably clear fabric of the Superintendent’s regulations, as well as its own failure, if not inability, to explain why, assuming its position were correct, the licensed acupuncturist should be compensated according to the conversion factor for a physician rather than for a chiropractor. The proposition is not self-evident, either logically or legally, and there was no evidence at trial to support it.

It is true, no doubt, that, even under the applicable regulation, the insurer may “review” the acupuncturist’s charges “for consistency with charges permissible for similar procedures already adopted or established by the superintendent.” (See 11 NYCRR §68.5[b].) For a number of reasons, however, that qualification to payment on a “prevailing fee” basis cannot help State Farm here. First, that is not the basis on which Power Acupuncture’s charges were reduced, as stated in State Farm’s denials. It is clear from the denials that the “fee was calculated according to the…Schedule for Medical Fees”, and, as has been demonstrated, that was wrong. More importantly, neither in the denials nor at trial was there any showing that, even ignoring the identity and status of the practitioner, the acupuncture services that were rendered were “similar” to the services described in the fee schedule and associated with the particular relative value used in the calculation. [*5]

State Farm contends that “the claimant would have the burden to show that the reduction is not consistent with the fees for such scheduled services.” The contention is inconsistent with both the structure and clear meaning of the governing regulation, which states that the permissible charge “shall be the prevailing fee”, only “subject to review by the insurer.” (See 11 NYCRR §68.5[b].) Whatever effect might be given the results of the insurer’s “review”, the insurer that denies or reduces payment based upon such a review must bear the burden of, at least, coming forward with evidence that the provider’s fee is not “consisten[t] with charges permissible for similar procedures.” (See id.)

To the extent that State Farm is contending that, generally, the fee for a service described in any fee schedule can never be higher than the maximum fee that would be permissible for any provider for whom there is such a schedule, or that, specifically, a licensed acupuncturist is never permitted a fee for any service described in the physician’s fee schedule that is higher than the fee permitted for the physician, those contentions are not supported by either the statute or current regulations. The statute provides only that, when there is an applicable Workers’ Compensation fee schedule, the fee for no-fault benefits may not exceed the amount determined by that schedule, “except where the insurer or arbitrator determines that unusual procedures or unique circumstances justify the excess charge” (see Insurance Law §5108[a]); and, when there is no such applicable fee schedule, the Superintendent need only “consult[]” and “coordinat[e]” with the chairman of the Workers’ Compensation Board in establishing an appropriate fee (see Insurance Law §5108[b]). Although the Superintendent may well have the authority to promulgate regulations that would provide as State Farm contends, that authority has not been exercised.

Specifically, the statute that authorizes a certification program for physicians and others who are not licensed acupuncturists, is subject to the proviso that “such certified acupuncturists do not represent themselves as licensed acupuncturists.” (See Education Law §8216[3].) The statute clearly reflects at least an assumption that the acupuncture services rendered by a certified physician and those rendered by a licensed acupuncturist are not the same. On this record, that statutory assumption is enough to require rejection of State Farm’s practice of automatically reducing bills submitted by licensed acupuncturists to the fees permissible for certified physicians.

Given the conclusions required by this record to resolve this case, it is both unnecessary and inappropriate for the Court to address Power Acupuncture’s other arguments concerning, what it calls, the “Review Clause”, including the questions raised concerning its constitutionality and its meaning and application. (See Post-Trial Memorandum, at 15-32.) The Court notes, moreover, that, although it may have the jurisdiction to pass on most, if not all, of those questions in the context of an action seeking payment of one or more bills, such an action does not appear to this Court to be the most appropriate vehicle for a full exploration and considered resolution of those questions. [*6]

It appears to this Court that those healthcare providers and insurers regularly participating in no-fault first-party benefits litigation have chosen litigation strategies that involve litigating and relitigating the same issues in hundreds, if not thousands, of actions before different Civil Court and District Court judges, crowding out the types of actions the limited-jurisdiction courts were designed to resolve. The Court recognizes and appreciates that, in this action, the parties took a somewhat different tack, and have clearly expended significant effort to brief a wide range of questions that are raised by the statute and regulations as they apply to the services rendered by licensed acupuncturists. It seems true, nonetheless, that a broader-scoped proceeding in Supreme Court one in which a number of providers and insurers might participate would be a more appropriate forum for resolution of the constitutional and other questions raised by this, and other, no-fault actions.

The Court has noted Plaintiff’s counsel’s request for an attorney fee in excess of the limitations generally applied to no-fault disputes. (See 11 NYCRR §65-4.6.) And, again, the Court recognizes the effort made by counsel for both parties. But this case has not been resolved on the issues that attracted much of Plaintiff’s counsel’s attention. In the world of no-fault, moreover, where the parties do not want for creativity in raising new questions for the courts to resolve, there is a real risk that the exception to the limitations will render the rule meaningless.

Judgment is awarded to Plaintiff for $800.24, with statutory interest and attorney fees, plus costs.

March 20, 2006__________________________

Judge, Civil Court

Supreme Court, Nassau County

017608-05

Steven M. Jaeger, J.

Upon the foregoing papers, defendant’s motion pursuant to CPLR §602 severing

plaintiff’s causes of action is denied. The issue raised is whether plaintiff should be permitted to join unrelated assigned claims for no-fault benefits.

The four causes of action in plaintiff’s complaint seek to recover no-fault benefits for each of four unrelated claimants who received treatment by the same medical provider, plaintiff Westchester Medical Center (hereinafter “Medical Center”). The claimants were each covered under a uniform policy of insurance issued by the same insurance company, defendant Liberty Mutual Insurance Company (hereinafter “Liberty”), and each allegedly assigned their right to no-fault benefits to the Medical Center.

The plaintiff further alleges that no-fault billing was mailed to defendant in a timely manner and that the bills remain unpaid. The New York State No-Fault Law, Insurance Law §5106(a) imposes upon insurers a prescribed time frame for settling bodily injury claims covered by a policy of bodily injury liability insurance:

“Payments of first party benefits and additional first party benefits shall be made as the loss if incurred. Such benefits are overdue if not paid within thirty days after the [*2]claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month. If a valid claim 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 b the superintendent in regulations.

The defendant argues that since the respective injuries of the claimants were unrelated, the accidents took place on various dates, and each claim submitted by the assignee was handled in a distinct manner, the causes of action should be severed. Defendant further argues that if the causes of action are not severed, it would involve mini-trials as to the individual claims.

While defendant’s Answer alleges numerous affirmative defenses as to procedure under the no-fault statute and, among others, medical necessity and fraudulent conduct, the Answer was verified by counsel and the motion was supported

only by an affirmation of counsel. There was no evidentiary proof nor an affidavit by a person with knowledge of the facts herein.

CPLR §601 encourages and permits joinder with as many claims as one plaintiff might have against one defendant, regardless of whether such claims are unrelated or inconsistent. Collins v. Telcoa Intern. Corp., 283 AD2d 128, 131 (2d Dept. 2001). CPLR §1002(a) states: “Persons who assert any right to relief jointly, severally, or in the alternative arising out of the same transaction or occurrence, or series of transactions or occurrences, may join in one action as plaintiffs if any common question of law or fact would arise.”

The purpose of this policy of liberal joinder is to prevent multiplicity of suits so that the aggrieved party can obtain relief in one action. Saunders v. Saunders, 54 Misc 2d 1081 (Supreme Ct Kings Co. 1967). “It is also intended to reduce the caseload of the courts and its personnel and avoid unnecessary expenditure of time, money and manpower.” Aviyon Medical Rehabilitation v. Allstate Insurance Co., 4 Misc 3d 1011(A), 2004 NY Slip Op 50819(U)(Supreme Ct Kings Co. 2004).

CPLR §603 provides, however, that a court may order severance “in furtherance of convenience or to avoid prejudice.” The decision whether to grant a severance pursuant to CPLR §603 is a matter of judicial discretion, which will not be disturbed on appeal absent an abuse of discretion or prejudice to a substantial right of the party seeking severance. Anderson v. Singh, 305 AD2d 620 (2d Dept. 2003); Finning v. Niagra Mohawk Power Corp., 281 AD2d 844 (3rd Dept. 2001); Aviyon Medical Rehabilitation, supra.

The Appellate Division, Second Department held in the leading case that when “…the claims arise out of a uniform contract of insurance and involve interpretation of the same no-fault provisions of the Insurance Law…” joinder of 29 claims by one assignee-plaintiff was proper under CPLR 1002(a). Hempstead General Hospital v. Liberty Mutual Ins. Co., 134 AD2d 569 (2d Dept. 1987). Defendant Liberty relies on [*3]Mount Sinai Hospital a/a/o Jefferson v. MVIAC, 291 AD2d 53 (2d Dept. 2002), for the proposition that in actions for reimbursement of no-fault benefits with multiple assignees and assignors, the claims must be severed, where there is no common contract of insurance and no other similarity except that no-fault benefits were not paid.

However, Liberty’s reliance on Mount Sinai, supra, is misplaced. It is distinguishable from the instant case because in Mount Sinai both the assignees and assignors were different. While the Appellate Division approved severance as a “provident exercise of discretion”, it modified the order appealed from to join two causes of action on behalf of the same assignor-claimant, citing Hempstead General Hospital. The instant case involves only one assignee-provider and four unrelated assignors-claimants, similar to but less than the 29 in Hempstead General Hospital, supra.

More recently, the Second Department, in Poole v. Allstate Insurance Co., 20 AD3d 518 (2d Dept. 2005), severed 47 unrelated claims brought by one assignee against one insurance company. The Court not only cited Hempstead General Hospital without disapproval, but in its ruling held joinder of 47 claims in a single trial to be an “improvident exercise of discretion” because it was “unwieldy” and potentially confusing to a trier of fact. See also, Radiology Resource Network v. Fireman’s Fund Insurance Co., 12 AD3d 185 (1st Dept. 2004)(68 claims severed); cf, Aviyon Medical Rehabilitation, supra (36 claims appropriately joined).

While there may be support for granting severance in no-fault actions, which Liberty mis-characterizes as controlling on this Court, analysis of the cases suggests that Hempstead General Hospital has never been overruled by the Second Department and that severance remains a matter of judicial discretion based upon a weighing of all the circumstances in a particular case.

For instance, the Appellate Term has cited Radiology and Mount Sinai with approval in granting severance in a number of recent cases. Metro Med v. MVAIC, 6 Misc 3d 136A, 2005 NY Slip Opinion 50238 (U)( App Term 2d Dept. 2005)(3 claims); S.I.A. Med. v. GEICO, 8 Misc 3d 134A, 2005 NY Slip Opinion 51170(U)(App Term 2d Dept. 2005)(11 claims); Berger v. Liberty Mutual, 10 Misc 3d 139A, 2005 NY Slip Opinion 52204(U)(App Term 2d Dept. 2005)(14 claims). While Liberty argues that these decisions are binding on this Court and overrule Hempstead General Hospital, such argument is baseless. As a court of original jurisdiction, this Court is bound by stare decisis to follow determinations of the Appellate Division or the Court of Appeals. Ross Bicycles, Inc v. Citibank, 149 AD2d 330 (1st Dept. 1989); People v Young, 82 Misc 2d 964 (Nassau County Ct 1975).

Not only has the Second Department not overruled Hempstead General Hospital, but even the First Department, in Radiology, supra, reconciled its ruling by explaining that Hempstead General Hospital “…does not stand for the proposition that the granting of a severance motion…is an abuse of judicial discretion.” The standard applied in all of the cited cases remains the appropriate exercise of judicial discretion and the analysis remains focused on the circumstances in each particular case.

Although the facts of each cause of action herein may be different, each involves the same provider, the same insurance company, the same insurance contract, and common questions of the application and interpretation of Insurance Law §5106(a). Defendant has failed to submit any proof or documentary evidence to the contrary. [*4]Conclusory allegations (only made by counsel) that the claimants engaged in fraudulent conduct or that treatment was not medically necessary is an insufficient basis to sever these four actions. Considering all of these factors, the Court finds that the joinder of only four (4) assignors-claimants does not impose an undue burden on defendant nor would it likely create confusion for the trier of fact.

Accordingly, defendant’s motion to sever is denied.

This shall constitute the Decision and Order of the Court.

Dated: March 17, 2006

_____________________________________

STEVEN M. JAEGER, A.J.S.C.

Civil Court of the City of New York, Queens County

108007-02

Howard G. Lane, J.

Plaintiff commenced this action to recover first-party no-fault benefits for medical services rendered to its assignors Sandra Dorsett and Sharon Little, pursuant to New York’s No-Fault Insurance Law § 5101 et. seq., as well as statutory interest and attorney’s fees. Thereafter, plaintiff moved for summary judgment on its claims in the amount of $3,177.54, on the ground that defendant failed to pay or to deny its claims within the statutory 30-day period as required by Insurance Law section 5106 (a).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

Plaintiff maintains that it is entitled to summary judgment because the defendant failed to pay or deny the claims within thirty (30) days of receipt as required by the Insurance Law § 5106 (a). Plaintiff proved that it submitted a timely and proper notice of claim pursuant to the No-Fault statute for medical treatment rendered, which defendant acknowledged receiving, denying and not paying. (See, Capio Medical, P.C. ex rel. Berger v. Progressive Cas. Ins. Co., 7 Misc 3d 129(A), 2005 NY Slip Op 50526(U) [App Term 2nd and 11 th Jud. Dist.]; Park Health Center v. Prudential Insurance Co., 2001 WL 1803364 [App Term 2nd and 11th Jud. Dist. 2001]). The burden then shifted to defendant to show the existence of a triable issue of fact. See, Alvarez v. Prospect Hosp. 68 NY2d 320, 324 (1986).

DEFENDANT’S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

Defendant maintains that it issued timely denials to plaintiff’s claim and in its opposition papers asserts the defense of lack of medical necessity. It is well settled that for an insurer’s denial of claim form to be deemed timely, the insurer must prove that it generated the denial of claim within thirty (30) days of receipt of plaintiff’s proof of claim and that it also mailed the denial to the claimant within the same time period. (See A.B. Medical Services, PLLC v. GEICO Ins. Co., 2 Misc 3d 26, [App Term, 2nd & 11 Jud Dists. 2003]). [*2]

Defendant submits denial of claims form that indicate that the bill was being denied due to a lack of medical necessity. The denials for the bills are timely on their face. In support of its motion defendant submits copies of the denials and purported proof of mailing of its denials (S & M Supply, Inc. v. Geico Ins. Co., 2003 NY Slip Op 51192[U] [2d & 11th Jud Dists 2003]). Specifically, defendant proffers the affidavit of Ms. Joan Rolfe, a claims representative employed by the defendant, and the affidavit of Matt Olmstead, an employee of defendant who is employed as a Senior Operations Staff Analyst at Southwest Output Processing Center.

The two affidavits submitted by defendant do not establish mailing because neither Ms. Rolfe nor Mr. Olmstead state in their affidavits that they had personal knowledge that the denial of claim was actually sent to plaintiff (Presbyterian Hosp. v. Maryland Casualty Ins. Co., 226 AD2d 613 [2d Dept 1996]); nor does either affidavit create a presumption of mailing because neither sufficiently describes the standard operating procedures defendant uses to ensure that its denials and requests for verification are mailed (S & M Supply, Inc. v. GEICO Ins. Co., 3 Misc 3d 136A [2d & 11th Jud Dists 2004]). Although the affidavits provide information on the preparation and mailing of the denial of claims, they do not include sufficient factual information describing how defendant’s regular office practices and procedures for mailing denials are “geared as to ensure the likelihood that [the denial of claim] is always properly addressed and mailed.” Clark v. Columbian Mutual Life Ins. Co., 221 AD2d 227, 228 (1st Dept 1995), quoting Nassau Ins. Co. v. Murray, 46 NY2d 828, 830 (1978).

Specifically, defendant failed to state sufficiently, or describe with particularity the regular office practices and procedures defendant uses to ensure that denials are properly and timely mailed, including, but not limited to the following: (1) whether the NF-10’s generated by computer by the claims representative are compared with the NF-10’s that “[come] into the Southwest Output Processing Center’s job queue;” (2) the specific date that the denial was actually mailed to plaintiff; (3) whether the envelope contained the NF-10’s and that the envelope was correctly addressed; (4) whether any computer printout or record was generated and reviewed which listed the claimants who were allegedly mailed NF-10’s on the date or dates that defendant alleges it mailed the NF-10’s; and (5) whether it was the duty of the claims representative or Senior Operations Staff Analyst to ensure compliance with said office practices and procedures or whether the claims representative or Senior Operations Staff Analyst had actual knowledge that said practices and procedures were complied with. (See, Contemp. Med. Diag & Treatment, P.C. v. GEICO Ins. Co., 6 Misc 3d 137(A), 2005 NY Slip Op 50254 [U] [2d & 11th Jud Dists 2005]).

The court finds the assertions of Ms. Rolfe and Mr. Olmstead conclusory and such assertions fail to specify either that it was the duty of either one of them to ensure compliance with said office procedures or that either one had actual knowledge that said procedures were complied with. (See, Contemp. Med. Diag & Treatment, P.C. v. GEICO Ins. Co., 6 Misc 3d 137(A), 2005 NY Slip Op 50254[U] [2d & 11th Jud Dists [*3]2005]). As defendant’s papers in opposition to plaintiff’s motion for summary judgment do not contain an affidavit of someone with personal knowledge that its denial was actually mailed, or describe the standard office practices or procedures used to ensure that such denials were properly addressed and mailed (see Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d [2d Dept 2001]), defendant failed to establish by competent evidence that it timely mailed its denials, and therefore, defendant is precluded from offering all of its defenses in the instant matter.

Accordingly, plaintiff’s motion for summary judgment is granted. Judgment shall be awarded in favor of plaintiff in the amount of $3,177.54, together with statutory interest and attorneys fees.

_____________________

3/15/06 HOWARD G. LANE

DateJudge of the Civil Court

[*1]

Civil Court of the City of New York, Queens County, March 9, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (David Barshay of counsel), for plaintiff. Peter X. Dodge, P.C., Uniondale, for defendant.

OPINION OF THE COURT

Bernice D. Siegal, J.

Background

The plaintiff, a health care provider, brought the within action, by service of a summons and complaint upon defendant insurer on August 16, 2002 to recover for services rendered under no-fault, to Albert Mullakandov, Alik Mullakandov and Djabrail Moukhtarov, relating to injuries allegedly arising out of a motor vehicle accident in which Albert and Alik were passengers in an automobile owned and operated by policyholder Djabrail and occurring on October 12, 2001.

Trial of this action was commenced in this part on December 6, 2005 and was continued through December 8, 2005, with the parties stipulating, with respect to plaintiff’s case, as to the submission by plaintiff to defendant of the underlying NF-3 proofs of claim, the execution of the assignments of benefits from Albert and Alik to plaintiff on November 12, 2001 and December 3, 2001; and as to defendant, the timely issuance by defendant of its NF-10 denials. After plaintiff rested and in the course of defendant’s case-in-chief, defendant sought to introduce into evidence certified transcripts of the examinations under oath (EUOs) of Albert and Alik taken on November 5, 2002. Plaintiff’s counsel objected to their admission and the trial was adjourned to December 22, 2005 for the submission of legal memoranda and for oral argument before the court.

On the latter date, plaintiff’s counsel argued, regarding the admission into evidence of the EUOs, that the assignors/deponents were nonparties and that the requirements for the admissibility of nonparty depositions, as provided by CPLR 3117 (a) (3), have not been met in this case and further, in any event, under long-standing case law (the “New York rule”), the declarations of an assignor, whether made before or after the assignment, are inadmissible as against the assignee. Defense counsel, in response, argued that the plaintiff, as assignee, is bound by the statements of its assignors, that the EUO transcripts, properly certified, are akin to certified examination before trial (EBT) transcripts and may be used at trial and in the same manner as provided under CPLR 3117. The court [*2]reserved decision thereon and further adjourned the case for trial.

The primary issue, therefore, presented to this court for its adjudication in the matter at bar is: Whether defendant is precluded, by operation of either the “New York rule” or the provisions of CPLR 3117 governing the admissibility of nonparty depositions.

Findings of Law

At the outset, as the EUOs of the two particular above-mentioned nonpolicyholder/assignors were taken in November 2002, after both the execution of the assignments in November and December of the preceding year and also three months after the institution of the within action, the court’s application of any and all relevant statutory and/or case law are necessarily limited to the facts of this case.

The so-called “New York rule” is a venerable doctrine, its antecedents going back to the middle of the nineteenth century, to wit, Paige v Cagwin (7 Hill 361 [NY Sup Ct 1843]), and long before the advent of our State’s no-fault insurance statutes and regulations. One of the very few decisions directly on point is the recent one of Judge Baily-Schiffman in JSI Expert Serv. v Liberty Mut. Ins. Co. (7 Misc 3d 1009[A], 2005 NY Slip Op 50513[U], *3-4 [Civ Ct, Kings County 2005]), wherein she discussed the New York rule and its application to the admissibility of the EUOs of plaintiff’s assignors, quoting Prince, Richardson on Evidence § 8-242 (Farrell 11th ed) as follows:

” ‘In New York declarations of a vendor or assignor of a chattel or chose in action, whether made before or after the transfer, are inadmissible to affect the claim or title of a subsequent transferee for value’ . . .

“This rule stems from the decision in Paige v Cagwin . . . Except where the statements were made by the real party in interest, such as a decedent, the New York doctrine will apply and the statements of the former . . . assignor will not be admissible to affect . . . the claim of the subsequent . . . assignee.” (See also Prince, Richardson on Evidence § 8-243 [Farrell 11th ed].)

Pursuant to this doctrine, Judge Baily-Schiffman reversed her previous trial ruling permitting the admission of testimony as to the assignors’ EUO statements (which defendant insurer had sought to introduce as admissions probative of its affirmative defense that the underlying accident was “staged”), and ordered that such testimony be stricken.

As stated in Richardson § 8-243 (at 550-551), the doctrine first enunciated in Paige (supra) “is inapplicable when the admissions of a former owner of personal property are offered [*3]against a person who claims through representation, such as an executor, administrator, heir or trustee in bankruptcy. The former owner’s admissions are receivable against such a person.” In the case at bar, the court finds that plaintiff assignee has not brought the action in the capacity as the representative of the aforementioned assignors (e.g., as executor, administrator or other such capacity referred to in section 8-243). Thus, the above exception to the New York rule is not applicable here.

Plaintiff has also cited several cases in support of its contention that an assignor is a nonparty rather than a real party-in-interest, among them Inwood Hill Med., P.C. v General Assur. Co. (10 Misc 3d 18 [App Term, 1st Dept 2005]), and the court finds that the assignors cannot be considered as real parties-in-interest.

Defendant countered with authority the court finds inapposite to the case at bar. In Dlugosz v Exchange Mut. Ins. Co. (176 AD2d 1011, 1012 [3d Dept 1991]), the transcripts of the EUOs of the plaintiff and her husband were held to be admissible as containing “statements of a party to the lawsuit and as extrajudicial admissions of a party.” However, the court finds significant that the deponent husband was also an extra insured under the subject policy and, therefore, it is clear to this court that he was a party united in interest. Another action which this court finds distinguishable involves a homeowner’s insurance policy in which defendant insurer asserted an arson defense (Kamenov v Northern Assur. Co. of Am., 259 AD2d 958 [4th Dept 1999]). There, the Court held that the trial court had erred in precluding the admission into evidence of portions of the EUO testimony of plaintiff’s husband as to the insurance claim. However, in that matter, the husband was also found to be the plaintiff’s agent. Therefore, unlike the case law relied upon by the defense, the court finds that the assignors herein are neither in privity with plaintiff, nor otherwise real parties-in-interest. Nor can the plaintiff assignee here be found in any manner to have brought the instant action in a representative capacity.

Nonetheless, this court is also cognizant of the long-established principle, asserted by defendant herein, that an “assignee stands in the shoes of the assignor and takes the assignment subject to any preexisting liabilities” (Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489, 489 [2d Dept 2001]). That general principle remains alive and well today in no-fault actions, albeit modified and refined by the limited nature of no-fault claims assignments and by operation of New York State’s Insurance Law and no-fault regulations promulgated thereunder. (See A & S Med. v Allstate Ins. Co., 196 Misc 2d 322 [App Term, 1st Dept 2003], affd 15 AD3d 170 [1st Dept 2005].) Further, a thorough reading of the “forefather” of the New York rule (Paige v Cagwin, supra) reveals that the rationale for the court’s decision was primarily an evidentiary determination that the proffered evidence in that case—out-of-court statements made by a third party offered against the plaintiff endorsee of a promissory note—was inadmissible hearsay. Specifically, the court there stated:

“[T]he note . . . is subject to the same defence in the hands of the endorsee as when it was in the hands of the endorser; but it by no means follows that the mere declarations of such endorser can affect the rights of the endorsee. The means of proving a defence may be affected, but the right to make it is not impaired. [*4]The defence still exists; but it must be established by testimony and not by mere declarations.” (7 Hill at 379-380.)

This court finds it also significant that Paige v Cagwin, though finding such statement to be inadmissible hearsay as it was proffered by a third party, does not preclude a defense, so long as it may be proven by other than inadmissible out-of-court declarations. Therefore, as applicable to no-fault actions, while it is well established that the statements made by an assignor (though a nonparty) in an EUO may be offered by a defendant insurer against a provider/assignee to prove a lack of coverage defense (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]) in opposition to a summary judgment motion^[FN*] despite being hearsay (see Bond v Giebel, 14 AD3d 849 [3d Dept 2005]; Kwi Bong Yi v JNJ Supply Corp., 274 AD2d 453 [2d Dept 2000]), EUO statements are nonetheless hearsay. As such, such statements are inadmissible at trial unless, for example, they are used for impeachment purposes upon cross-examination in the event such declarant/assignor testifies.

However, even assuming arguendo that this court would have held that the “New York rule” does not apply to the case at bar, the court finds, for the reasons discussed below, that the result must be the same. The applicable no-fault regulations provide that “upon request by the Company [i.e., the insurer], the eligible injured person or that person’s assignee or representative shall: . . . as may reasonably be required submit to examinations under oath by any person named by the Company and subscribe same” (11 NYCRR 65-1.1 [d] [Conditions] [Proof of Claim. Medical, Work Loss, and Other Necessary Expenses]).

However, the no-fault regulations offer little, if any, guidance pursuing a defense through litigation. As was stated by our state Court of Appeals, “If more harmony and clarity are to be achieved, we earnestly invite the Legislature to study and remedy the Rube-Goldberg-like maze” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 286 [1997]). The experience in the trial courts attempting to reconcile the rules of evidence and civil practice with regulations promulgated which are more suited to arbitration should now be a sufficient signal to the Legislature that some action on its part is required. This is particularly true given the avalanche of no-fault litigation threatening to crush the court system, which is the exact opposite of the purposes of New York’s No-Fault Insurance Law, to wit: “to remove the vast [*5]majority of claims arising from 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” (Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 214 [1996]), while “still allow[ing] carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices” (Presbyterian Hosp. v Maryland Cas., supra at 285).

Moreover, it is not insignificant that in the instant case the EUOs were requested and held after the within action had been commenced. The use of EUOs is a device utilized for verification of proof of claim, in accordance with the regulations in effect as of April 5, 2002, such verification to be requested in accordance with strict guidelines (11 NYCRR subpart 65-3). It is noteworthy, however, that compliance with a request for an EUO was not mandated under the regulations in effect during the claim process herein. Additionally, the provisions in effect under the “new” regulations, with respect to the use of EUOs, lack the protections found in article 31 of the CPLR governing the use of EBTs (e.g., subpoena of a nonparty witness with such subpoena served upon the adversary—CPLR 3106 [b]). It is clear to the court that defendant’s use of EUOs was improper, as it could not be considered as a device for verification of proof of claim, as permitted under the regulations not yet in effect when the underlying claim arose; and, secondly, even if viewed as allowable under 11 NYCRR 65-1.1 (d), as the kind of “red-tape dilatory” practice referred to in Presbyterian (supra at 285), in light of its use some three years after the submission of the underlying claims. As the defendant here chose to forgo the use of EBTs and rather opted (and improperly so) to utilize EUOs, it appears that a conscious effort was made to circumvent the CPLR.

Therefore, although an EUO can be used as a shield by an insurer against payment of a no-fault claim where an assignor has failed to comply with a properly noticed EUO request, given the strictures of New York rules of evidence, this court reaches the opposite conclusion when seeking to admit an EUO transcript into evidence at trial.

Accordingly, the court finds that the defendant is precluded from introducing into evidence at trial and to the extent set forth above the EUO testimony of the assignors, Albert Mullakandov and Alik Mullakandov, as against the plaintiff.

Footnotes

Footnote *: The court finds, parenthetically, that such EUO transcripts may be admissible in opposition to a motion for summary judgment (see A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co., 7 Misc 3d 14 [App Term, 2d Dept 2005]; see also Chin v Ademaj, 188 AD2d 579 [2d Dept 1992]; Ratut v Singh, 186 Misc 2d 350 [Civ Ct, Kings County 2000]).