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 October 29, 2004. The order granted plaintiff’s motion for summary judgment.

Order affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to its assignors, plaintiff health care provider established a prima facie entitlement to summary judgment by proof that it submitted claims, 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]). Even assuming that defendant had a right to request an examination under oath (EUO) (see Star Med. Servs. v Eagle Ins. Co., 6 Misc 3d 56 [2004]), there is no merit to defendant’s contention that the failure of one of plaintiff’s assignors to appear for an EUO precludes summary judgment with respect to the claims submitted on behalf of said assignor. Defendant failed to send the EUO demand to said assignor at his proper address, and the sending of an EUO request to said assignor’s attorney was insufficient to toll the 30-day statutory period (11 [*2]NYCRR 65-3.8 [c]) within which defendant was required to pay or deny the claim. Accordingly, defendant is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

However, defendant is not precluded from asserting the defense that the alleged injuries do not arise out of a covered accident, despite the untimely denials of the claims (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). The transcripts of the EUO testimony given by one of plaintiff’s assignors and by defendant’s insured were insufficient to demonstrate that defendant’s denial was based upon a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). Accordingly, the order granting plaintiff’s motion for summary judgment should be affirmed.

Rios and Belen, JJ., concur.

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

Golia, J.P., dissents and votes to reverse the order and deny plaintiff’s motion for summary judgment.

I am in agreement with the majority that an untimely denial does not preclude a defendant from asserting the defense that the claimed collision was in furtherance of a scheme to defraud (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]).

However, I disagree that the transcripts of the examination under oath (EUO) testimony given by one of plaintiff’s assignors coupled with that of defendant’s insured was insufficient to demonstrate that defendant’s denial was based upon a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]).

Even though the defendant’s insured was not present when the accident occurred, his EUO testimony provided actual observations of facts which he made when he arrived at the scene of the accident. Those observations are in direct conflict with the testimony provided by one of the plaintiff’s assignors as to what she claimed she did after the accident. The clear factual conflict between these EUO transcripts is sufficient to meet the standard set forth in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d at 199).
Decision Date: March 7, 2006

[*1]

Civil Court of the City of New York, Kings County, March 7, 2006

APPEARANCES OF COUNSEL

Marylou A. Paolucci, Smithtown, for plaintiffs. Bruno, Gerbino, & Soriano, LLP, Melville, for defendant.

OPINION OF THE COURT

Karen Rothenberg, J.

In this action to recover no-fault first-party benefits for services provided to its assignor for an accident that occurred on December 8, 2000, plaintiffs establish a prima facie entitlement to summary judgment by proof that they submitted to defendant the statutory claim forms, setting forth the fact and the amount of the losses sustained ($4,427.36, $2,490.78, $1,945.56, $505.50, $208.25, and $500) and that payment of no-fault benefits was overdue (see A.B. Med. Servs. PLLC v Country-Wide Ins. Co., 6 Misc 3d 137[A], 2005 NY Slip Op 50255[U] [App Term, 2d & 11th Jud Dists 2005]). The burden then shifts to the defendant to rebut plaintiffs’ prima facie case by the submission of proof in admissible form sufficient to raise a triable issue of fact (see A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86[*2][App Term, 2d & 11th Jud Dists 2004]).

In regard to the claim of G.A. Physical Therapy in the amount of $208.25, defendant submits evidence of an arbitral award in its favor which denied no-fault benefits to this claimant for a bill dated March 21, 2001. There is no dispute that this is the same bill being litigated in this action. The prior arbitral award should be accorded res judicata effect against plaintiff in this action. It is well settled that res judicata and collateral estoppel are applicable to arbitration awards, including those rendered in disputes over no-fault benefits, and will bar relitigation of the same claim or issue (see Matter of Ranni [Ross], 58 NY2d 715 [1982]; Monroe v Providence Washington Ins. Co., 126 AD2d 929 [3d Dept 1987]). While defendant did not move for summary judgment dismissing this claim on these grounds, the court has authority to grant summary judgment to a nonmoving party if justified by the record. (CPLR 3212 [b].) Accordingly, plaintiff, G.A. Physical Therapy P.C.’s claim for $208.25 is dismissed.

In regard to the bills for services rendered by A.B. Medical Services PLLC, Daniel Kim’s Acupuncture P.C., and Royalton Chiropractic P.C., defendant submits evidence that in December 2001, prior to the commencement of this litigation, plaintiffs submitted these claims to the American Arbitration Association (AAA). Defendant also submits evidence that in August 2003 it received notification from AAA that plaintiffs withdrew these claims with prejudice. Defendant argues therefore that plaintiffs are precluded from maintaining these actions. In reply, plaintiffs’ counsel contends that it was plaintiffs’ intention to withdraw the claims with prejudice only from arbitration and without prejudice to litigation. Counsel’s argument is without merit. Regardless of their intentions, plaintiffs are bound by their election to arbitrate their claims and are precluded from maintaining this litigation.

Pursuant to Insurance Law § 5106 (b) “[e]very insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits . . . to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.” Once the election is made to arbitrate a claim for first-party no-fault benefits, the right to litigate future claims arising out of the same accident is foreclosed (see Roggio v Nationwide Mut. Ins. Co., 66 NY2d 260 [1985]). In Roggio (supra), the Court of Appeals dismissed the plaintiff’s complaint for first-party benefits holding that a claimant, denied recovery in arbitration as to certain medical bills, cannot then resort to the courts to seek recovery of later medical bills that arise out of the same accident. The Court’s rationale being to prevent claimants “flit[ting] between forums for the resolution of issues or items of damage arising from a single injury . . . [which] would represent an intolerable drain on our resources for dispute resolution, senselessly prolonging controversies and inviting inconsistent adjudications.” (Roggio at 263.) The Court further reasoned that by providing claimants “an option to litigate after disappointments in arbitration [would] obviously [be] inconsistent with [the] legislative purpose” of the No-Fault Law. (Roggio at 264.)

After Roggio, courts have invariably held that the election to arbitrate a claim for first-party benefits, waives the right to litigate all subsequent claims that arise out of the same [*3]accident (see Cortez v Countrywide Ins. Co., 17 AD3d 508 [2d Dept 2005]; Gaul v American Employers’ Ins. Co., 302 AD2d 875 [4th Dept 2003]; Gibeault v Home Ins. Co., 221 AD2d 826 [3d Dept 1995]).

In Roggio, and the other cited cases, the issue involved litigation of subsequent claims after an arbitral award on an initial claim. In this matter the issue involves litigation of claims originally submitted to arbitration where no arbitral award was made. Nevertheless, in this judicial district, at least, it appears that once the claim is submitted to arbitration, it must be adjudicated in that forum. In Rockaway Blvd. Med. P.C. v Progressive Ins. (2003 NY Slip Op 50938[U] [App Term, 2d & 11th Jud Dists 2003]), the plaintiff’s claim at arbitration was dismissed without prejudice to plaintiff renewing its application for arbitration upon production of a proper assignment. Instead, the plaintiff commenced litigation of the claim. The court, citing Roggio, dismissed the complaint and held that “once a claimant chooses arbitration, it cannot resort to the courts.” (At *2.)

In light of the above, this court is reluctant to limit Roggio to its precise facts. Accordingly, once a claim for first-party benefits is submitted to arbitration, the claimant is bound by that election and cannot reopt for litigation, even if the merits of the matter were not reached. Accordingly, while defendant did not move to dismiss these claims, the court, after review of the record, is awarding summary judgment to the defendant dismissing these plaintiffs’ claims for bills in the amounts totaling $4,427.36, $2,490.78, and $505.50.

The remaining bills submitted by D.A.V. Chiropractic P.C. in the amounts of $189.54, $302.12, and $1,999.12, and Square Synagogue Transportation Inc., in the amount of $500, were not the subject of a prior arbitration. As to these bills, defendant’s denials, except for the bill in the amount of $1,999.12, are untimely on their face. Defendant contends that these claims were properly denied based upon the assignors’ failure to attend independent medical examinations (IMEs). Defendant however, fails to produce competent proof in admissible form that it made timely verification requests for IMEs, extending the 30-day period within which it must pay or deny the claims (see Ocean Diagnostic Imaging P.C. v New York Cent. Mut. Fire Ins. Co., 9 Misc 3d 138[A], 2005 NY Slip Op 51772[U] [App Term, 2d & 11th Jud Dists 2005]). The affidavit of defendant’s no-fault claims representative, Cathy Symonds, is deficient and fails to establish that requests for IMEs were timely mailed to the assignors (see Careplus Med. Supply Inc. v Gen. Assur. Co., 7 Misc 3d 126[A], 2005 NY Slip Op 50429[U] [App Term, 9th & 10th Jud Dists 2005]). Even assuming that defendant submitted proper proof of mailing of the initial IME requests, defendant has failed to demonstrate that it complied with a timely follow-up request (see New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583 [2d Dept 2002]). In light thereof, defendant is precluded from asserting its defense of the assignors’ nonappearance at scheduled IMEs for these three claims. In regard to the bill in the amount of $1,999.12, it is undisputed that defendant timely denied the claim. This denial, like the others, was based upon the assignors’ nonappearance for IMEs. Although the denial was timely, the defendant’s failure to follow up its request for verification, makes the denial “ineffective to avoid preclusion” (see King’s Med. Supply Inc. v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450[U], *3 [App Term, 2d[*4]& 11th Jud Dists 2005]).

Based on the foregoing, plaintiffs’ motion for summary judgment is granted in part and denied in part. Judgment shall be entered in favor of plaintiffs, D.A.V. Chiropractic P.C. in the amounts of $2,490.78 and Square Synagogue Transportation in the amount of $500, plus statutory interest and attorney’s fees as provided by Insurance Law § 5106 (a) and the regulations promulgated thereunder, as well as costs and disbursements. Defendant is awarded summary judgment dismissing the remainder of the claims.

Civil Court, Kings County

33911/02

Karen Rothenberg, J.

Defendant State Farm Mutual Auto Ins. Co. (hereinafter “State Farm”) moves pursuant to CPLR 3211(a)(5) to dismiss the plaintiffs’ actions on the grounds that plaintiffs are collaterally estopped from maintaining the actions in light of a declaratory judgment entered in Supreme Court. After review of the papers submitted herein, this court hold that collateral estoppel is not applicable and the plaintiffs are not bound by the declaratory judgment.

In 2002, plaintiffs, as assignees of Marie Paul and Estella Amilcar, commenced these actions to recover first-party no-fault benefits for medical services provided to the assignors for an accident that occurred on February 21, 2001. On March 12, 2003, State Farm commenced a declaratory judgment action in Supreme Court, Kings County for a determination that it was not obligated to provide coverage for the accident. These assignors, but not the assignees, were among the persons served in the declaratory judgment action. State Farm moved for a default judgment against the parties based upon their failure to appear, and said motion was granted by order of the Hon. Laura Jacobson entered in the Clerk’s Office of the Supreme Court on April 12, 2004. The default order provided that “State Farm Mutual Auto Ins. Co. has no obligation to provide UM, SUM or PIP benefits to the …. passengers, Estella Amilcar [and] Marie Paul…”, and [*2]stated that the “loss of 2-21-01 was intentional and therefore an uncovered event.”

Defendant argues that the declaratory judgment should be entitled to collateral estoppel effect, thereby precluding plaintiffs from maintaining these actions for no-fault benefits. Collateral estoppel, or issue preclusion, may be applied in a subsequent action to prevent a party or those in privity, from relitigating an issue decided in a prior adjudication. (see Ryan v New York Tel. Co., 62 NY2d 494, 478 N.Y.S.2d 823). In order to invoke collateral estoppel it must be shown that (1) there was a full and fair opportunity to contest the decision that is alleged to be dispositive in the present action and (2) the issue in the present proceeding is identical to that decided in the prior proceeding. (see Langdon v. WEN Management Co., 147 AD2d 450, 537 N.Y.S.2d 603).

For collateral estoppel to be applied, it must be established that plaintiffs, who were not parties to the previous action, are privy to the prior judgment. (see Green v. Santa Fe Industries, Inc., 70 NY2d 244, 519 N.Y.S.2d 793). The determining factor is the point in time when the relationship between the party to the prior litigation and the person(s) claimed to be a privy is formed. In the assignor-assignee context, “privity must have arisen after the event out of which the estoppel arises.” Gramatan Home Investors Corp., v. Lopez, 46 NY2d 481 at 486, 414 N.Y.S.2d 308 at 312. As the Court of Appeals in Gramatan, cited supra, explained:

“an assignee is deemed to be in privity with the assignor where the action

against the assignor is commenced before there has been as assignment. In

that situation, at the time the assignee succeeded to the rights of the assignor, the subject matter of the assignment was then embroiled in litigation and was

subject to the claims of the third parties and the assignee is charged with notice

that his rights to the assignment are subject to competing claims. Conversely

an assignee is not privy to a judgment where the succession to the rights affected

thereby has taken place prior to the institution of the suit against the assignor.”

(Gramatan Home Investors Corp., v. Lopez, supra, at 486; 312.)

In the instant situation, since assignments were made prior to the commencement of the declaratory judgment action against the plaintiffs’ assignors, plaintiffs are not bound by the terms of the judgment. Moreover, in light of the fact that the declaratory judgment was obtained by default, there was no actual litigation on the merits, and therefore there is no identity of issues between this action and the prior determination in the declaratory judgment action. (see Zimmerman v. Tower Ins. Co., 13 AD3d 137, 788 N.Y.S.2d 309; Chambers v. The City of New York, 309 AD2d 81, 76 N.Y.S.2d 708).

In light of the foregoing, the defendant’s motion is denied in its entirety.

This constitutes the decision/order of the court.

March 3, 2006 ———————————————————-

DateJudge, Civil Court

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, First District (Howard S. Miller, J.), dated October 19, 2004. The order denied plaintiff’s motion for summary judgment without prejudice to renewal upon proper proof of medical necessity.

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

In this action to recover first-party no-fault benefits for medical services provided 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]; Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U] [App Term, 9th & 10th Jud Dists]). Contrary to the motion court’s determination, plaintiff was not required to submit a physician’s affidavit to establish medical necessity as part of its prima facie case, since medical necessity is established in the first instance by proof of submission of the claim form (see Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004]). Defendant timely denied the claim on the ground of lack of medical necessity based on a peer review report appended to plaintiff’s moving papers, wherein the peer reviewer stated, inter [*2]alia, that “a review of the records reveals no evidence of a thorough physical examination and history having been performed by the referring doctor,” and that “[u]ntil such pertinent information is made available for my review reimbursement cannot be suggested.”

Where an insurer’s denial is based on a peer review, which concludes that there was no medical necessity due to “the lack of sufficient information” upon which the reviewer could make such determination, it fails to set forth an adequate factual basis and medical rationale and is thus deficient (see Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d at 96-97), without a showing that defendant sought to obtain such information by means of a request pursuant to the verification procedures (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]). However, “[w]here . . the [peer review] report clearly indicates that the pertinent physician’s reports and other documentation had been requested and provided for the purpose of conducting a peer review, and the conclusion of lack of medical necessity is based on the peer reviewer’s opinion, in effect, that there was no substantiation in the reports and documents reviewed of medical necessity for the . . . medical treatment provided, the defendant insurer is not obligated to seek further verification . . . and such peer review is sufficient to raise an issue of fact precluding summary judgment in favor of [a] plaintiff [provider]” (Amaze Med. Supply Inc. v Travelers Prop. Cas. Corp., 7 Misc 3d 128[A], 2005 NY Slip Op 50452[U] [App Term, 2d & 11th Jud Dists]).

In the instant case, the denial of claim form was, in effect, based on the lack of sufficient information, which, in the absence of a showing by defendant that it availed itself of the claim verification procedures for the purpose of conducting the peer review, precludes defendant from asserting the defense of lack of medical necessity (A.B. Med. Servs. PLLC v American Mfrs. Mut. Ins. Co., 6 Misc 3d 133[A], 2005 NY Slip Op 50114[U], supra; Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95, supra; cf. [*3]
Amaze Med. Supply Inc. v Travelers Prop. Cas. Corp., 7 Misc 3d 128[A], 2005 NY Slip Op 50452[U], supra).

Accordingly, the order is reversed, plaintiff’s 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.
Decision Date: March 3, 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 (Donald S. Kurtz, J.), entered January 19, 2005. The order, insofar as appealed from, granted plaintiffs’ motion for summary judgment on the first cause of action regarding assignor Robert Gevorkov.

Order, insofar as appealed from, reversed without costs and plaintiffs’ motion for summary judgment on the first cause of action regarding assignor Robert Gevorkov denied.

Contrary to plaintiffs’ contention, defendant’s appeal was timely taken. According to the affidavit of service, defendant was served with the order with notice of entry on January 24, 2005 and, therefore, had 35 days from that date to take an appeal (CPLR 5513 [a], [d]; 2103, 5515). Defendant served plaintiffs with its notice of appeal on February 24, 2005. Since service of the notice of appeal was timely, we deem excusable the late filing of the notice of appeal on March 7, 2005 (see CPLR 5520 [a]; Messner v Messner, 42 AD2d 889 [1973]).

In an action to recover first-party no-fault benefits, a plaintiff establishes a prima facie entitlement to summary judgment by proof that it submitted a claim, setting forth the fact and the [*2]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]). In the instant case, plaintiffs failed to demonstrate an entitlement to summary judgment on the first cause of action regarding assignor Robert Gevorkov since they failed to adequately establish that they submitted the claim forms to defendant (see A.B. Med. Servs. v State Farm Mut. Auto. Ins. Co., 3 Misc 3d 130[A], 2004 NY Slip Op 50387[U] [App Term, 2d & 11th Jud Dists]). Proof of proper mailing requires evidence of “actual mailing or . . . a standard office practice or procedure
designed to ensure that items are properly addressed and mailed” (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001]; see also Matter of Rodriguez v Wing, 251 AD2d 335, 336 [1998]; Amaze Med. Supply v Allstate Ins. Co., 2 Misc 3d 138[A], 2004 NY Slip Op 50264[U] [App Term, 2d & 11th Jud Dists]; S & M Supply, Inc. v GEICO Ins., 2003 NY Slip Op 51192[U] [App Term, 2d & 11th Jud Dists]). Plaintiffs’ proof, the affidavit of Dr. Ovshayev, who described herself as a principal of Magnezit Medical Care, P.C., made no reference to said plaintiff’s standard office mailing practices or procedures, and the bare averment that the “required proof of claims [were submitted] in a timely manner” and that bills for the services rendered to Robert Gevorkov were mailed to defendant on given dates did not establish that she had personal knowledge that the claim forms were timely mailed to defendant (see S & M Supply, Inc. v GEICO Ins., 2003 NY Slip Op 51192[U], supra; Amaze Med. Supply v Colonial Penn Ins. Co., 3 Misc 3d 135[A], 2004 NY Slip Op 50471[U] [App Term, 2d & 11th Jud Dists]; Jul & Pol Corp. v American Tr. Ins. Co., 2003 NY Slip Op 51153[U] [App Term, 2d & 11th Jud Dists]). Since plaintiffs did not provide proof of proper
mailing of the claim forms regarding assignor Robert Gevorkov, the lower court’s order, insofar as appealed from, should be reversed and plaintiffs’ motion for summary judgment as to assignor Gevorkov denied.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.
Decision Date: February 28, 2006