Civil Court of the City of New York, Bronx County

74244/03

Lizbeth González, J.

The plaintiff is a medical provider who seeks payment for no-fault medical services rendered to the assignor. The claim was rejected by the defendant-insurer on the ground of lack of medical necessity. At trial, the plaintiff’s bills were not accepted into evidence pursuant to CPLR 4539(b) because its computer copies, unlike the originals, were unsigned. The defendant’s interrogatories, however, establish that the plaintiff’s bills were received and that a deficiency in the amount of $1261.81 remains outstanding. The defendant, which produced no witnesses, argues that the claim should be denied because the plaintiff failed to introduce into evidence an assignment of benefits as part of its prima facie case. This Court is compelled to follow the authority of the Appellate Term, First Department, which recently held that an insurer’s failure to object to the adequacy of a plaintiff’s no-fault claim form within 10 days of receipt waives any defenses based thereon, including any deficiencies in the assignment of benefits. (Laufer v Lumberman’s Mutual Casualty Co., NYLJ, Oct. 17, 2005, at 27, col. 1 .) The defendant, which failed to introduce its denial into evidence, concedes that no objection to the plaintiff’s omission of its assignment was raised.

After careful consideration, this Court determines that the plaintiff met its prima facie burden by a preponderance of the credible evidence. The Clerk of the Court is directed to enter judgment for the plaintiff in the amount of $1261.81 together with statutory interest, attorney’s fees and costs.

This constitutes the decision and judgment of the Court.

Dated:January 5, 2006

So ordered,

_________________________________

Hon. Lizbeth González

[*1]

Civil Court of the City of New York, Kings County, January 3, 2006

APPEARANCES OF COUNSEL

Alden Banniettis, Brooklyn, for plaintiff. Tell, Cheser & Breitbart, L.L.P., for defendant.

OPINION OF THE COURT

Arlene P. Bluth, J.

When defending a claim for first-party no-fault benefits, an insurer may raise at any time the defense that the alleged injuries do not arise out of an insured incident. What must the insurer present at trial when asserting that the injuries are the result of an accident staged in furtherance of an insurance fraud scheme? As explained more fully below, this court holds that the term “fraud” as used in that context is a red herring. This is because it does not matter whether the accident was staged in furtherance of an insurance fraud scheme or was deliberately caused under some other circumstances. The relevant inquiry is whether the collision was a true accident—that is, was it unintentional? Quite simply, if it was not an accident, then it falls outside the scope of the no-fault policy.

In these actions, plaintiff V.S. Medical Services, P.C. seeks to recover first-party no-fault benefits for medical services rendered to its assignors. At issue is $2,242.87 for treatment rendered to Carlos Gaviria and $12,997.06 for treatment rendered to Ysidro Liriano. Both assignors were involved in the same alleged accident, and plaintiff’s claims for the treatment rendered to them were all denied based on defendant’s claim that the alleged accident was staged. Therefore, since there were common questions of law and fact, the trials were held jointly before this court on November 16, 2005. Defendant Allstate Insurance Company [*2]presented three witnesses: the insured, Victor Herasme; an outside investigator, Robert J. Sasso; and a claims examiner, Sandra Pryce. Plaintiff did not present any witnesses.

In the action pertaining to assignor Ysidro Liriano (Index No. 55821/04), a prior decision/order issued by Honorable Ellen M. Spodek on March 21, 2005 denied cross motions for summary judgment and found that although plaintiff had made out its prima facie case, defendant had raised an issue of fact as to whether the accident was staged. Therefore, the trial on the claims for Mr. Liriano was limited to the issue of whether the collision was an insured incident. As to the other assignor, Mr. Gaviria, plaintiff was still required to make out its prima facie case.

Based upon the testimony and evidence introduced at trial and having had the opportunity to observe the demeanor and credibility of the witnesses’ testimony, the court finds as follows:

Findings of Fact

The assignors herein were involved in an alleged accident on May 8, 2001. One of the assignors, Mr. Gaviria, was driving, and the other, Mr. Liriano, was one of his passengers. The car, a 1985 Nissan, was owned and insured by Victor Herasme, who was defendant’s first witness. Mr. Herasme credibly testified that he frequently loaned out his car to people in the neighborhood. He testified that he had gotten into an accident with the car in or about January 2001, while he was driving; and that just prior to the accident in May 2001 which gave rise to this suit, he had lent the car to Mr. Gaviria (known to him only as “Carlos”), whom he knew casually from around the neighborhood. Mr. Herasme testified that Mr. Gaviria returned the car to him with a “small scratch”; when Mr. Herasme questioned him about it, Mr. Gaviria admitted that he had “scraped by a car” but refused to give details. Mr. Herasme also testified that he is known as Victor, that Mr. Gaviria only called him Victor, and that he was not called Jose by anyone, including Mr. Gaviria. However, when Mr. Gaviria was questioned by defendant in an examination under oath (EUO), the signed transcript of which was introduced into evidence as exhibit A, Mr. Gaviria flatly denied knowing Victor Herasme or anyone named Victor, and claimed to have borrowed the car from a man named Jose.

Defendant’s second witness was Robert J. Sasso, chief executive officer (CEO) of Above Average Investigations, Inc. He was hired by defendant to locate the following witnesses and serve them with subpoenas to testify at the trial: Mr. Gaviria (the driver and an assignor), Mr. Herasme (the owner and insured), Mr. Liriano (a passenger and an assignor), and the treating physician, Dr. Leonid Livchits. Mr. Sasso was unable to serve Mr. Gaviria, but successfully served the other three individuals. Of those, only Mr. Herasme appeared.

Finally, defendant presented Sandra Pryce, a claims representative who works in defendant’s special investigations unit. Ms. Pryce testified that she has been employed for 38 years by defendant, and for 11 years in her current position. Her job includes the review of files referred by the claims department for suspicion of fraud (meaning a noncovered incident), and making the ultimate determination of whether to pay or deny those claims after investigation. Ms. Pryce testified she was referred the file because another Allstate employee had spoken to the driver, Mr. Gaviria, who denied any involvement in an accident. (As described above, he later changed his story when questioned by defendant under oath.) Ms. Pryce testified that the investigation revealed the following facts, and based thereon she determined that the accident [*3]was staged and that the claims should be denied:

(1) In his EUO, Mr. Gaviria denied knowing Mr. Herasme, the insured and owner of the vehicle he was driving.

(2) The alleged accident occurred on May 8, 2001, just under one month after the policy was taken out on April 9, 2001, and the policy was terminated for nonpayment on June 9, 2001, just over a month later.

(3) In a similar pattern, Mr. Herasme had taken out a policy on the car on December 28, 2000, the car was involved in an alleged accident less than a month later on January 19, 2001, and that policy was terminated for nonpayment on February 27, 2001.^[FN1]

(4) In both accidents, there was minimal damage to the car, there were several passengers in the car, and no one was taken to the emergency room, although medical treatments were started later. In addition, both accidents occurred on Seventh Avenue in Manhattan—the first at 19th Street, and the second at 32nd Street.

(5) There were several inconsistencies in the EUO testimony of Mr. Gaviria, the driver, and Mr. Torres, one of the passengers (and the only one of the four passengers who appeared for an EUO). Ms. Pryce noted that they conflicted in very basic ways, including the number and gender of the passengers, whether the police witnessed the accident or were called to the scene, the purpose of the trip and destination of the car. In his EUO, Mr. Gaviria stated that besides him, there were three other people in the car, all male, and one whom he could not even identify; Mr. Torres said there were four other people, and that one was female. Mr. Gaviria said the police were on the scene to witness the accident; Mr. Torres said they were called and arrived later. Mr. Gaviria’s testimony on this point was contradicted by the police report, which Ms. Pryce reviewed as part of defendant’s file. Mr. Gaviria also said that they had been on their way to pick up the mother of one of the passengers, while Mr. Torres said they were just cruising aimlessly. Ms. Pryce credibly testified that, in her experience, these types of inconsistencies—especially as to the number and identity of people in the vehicle—are indicative of a staged accident.

Based on all of these factors, and after consultation with Hazel Johnson, the original claims representative who had forwarded the file to her, Ms. Pryce determined that the accident was staged and therefore not a covered incident, and had the subject claims denied on that basis. She also duly notified the National Insurance Crime Bureau and the New York State Insurance Fraud Bureau.

Conclusions of Law

A. “Fraud” Is Not the Issue

No-fault insurance policies only cover vehicular accidents. An accident is, by definition, unintentional; a deliberate collision is not an accident. Therefore, damages resulting from a deliberate collision are not covered by no-fault insurance. (See Matter of Allstate Ins. Co. v Massre, 14 AD3d 610 [2d Dept 2005] [no coverage where claimant was injured in an intentional collision]; Matter of Government Empls. Ins. Co. v Robbins, 15 AD3d 484 [2d Dept 2005] [no [*4]coverage for claimant where collision was deliberately caused by the driver of the other vehicle]; Westchester Med. Ctr. v Travelers Prop. Cas. Ins. Co., 309 AD2d 927 [2d Dept 2003] [no coverage where wife was injured when her husband tried to kill her by deliberately driving their car over an embankment while he exited the vehicle]; Matter of Progressive Northwestern Ins. Co. v Van Dina, 282 AD2d 680 [2d Dept 2001] [no coverage where claimant was injured when she was mugged by driver of another car while loading packages into her trunk and was pulled under offender’s car].) This line of cases makes clear that even where the individual claiming benefits had no involvement in causing the collision but was merely an innocent injured party, coverage is properly denied because the collision was not an accident.

Moreover, it does not matter “whether the intentional collision was motivated by fraud or malice.” (Matter of Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522, 523 [2d Dept 2003]; see also Progressive N. Ins. Co. v Rafferty, 17 AD3d 888, 889 [3d Dept 2005] [no coverage where claimant deliberately rammed his car into person with whom he had been fighting].) While some intentional collisions are the products of insurance fraud schemes, others are not. In all such cases, it is the deliberate, nonaccidental character of the incident that makes it ineligible for no-fault coverage. Put another way, the no-fault policy only covers accidents; it does not cover deliberate incidents. It does not matter whether the incident was a deliberate mugging, an attempted murder, a product of road rage, or a cold, calculated scheme to defraud the insurance company—if it was deliberate, it is not a covered incident under the no-fault policy.

Nevertheless, our appellate courts commonly invoke the term “fraud” when discussing the defense of lack of coverage; this may be because so many cases involving allegedly noncovered incidents center on accidents purportedly staged for the purpose of generating fraudulent insurance claims. (See State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490, 491 [2d Dept 2003] [“A deliberate collision caused in furtherance of an insurance fraud scheme is not a covered accident”]; see also Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2d Dept 2002]; A.B. Med. Servs. PLLC v Encompass Ins., 10 Misc 3d 127[A], 2005 NY Slip Op 51892[U] [App Term, 2d & 11th Jud Dists 2005]; Ocean Diagnostic Imaging, P.C. v Utica Mut. Ins. Co., 9 Misc 3d 138[A], 2005 NY Slip Op 51745[U] [App Term, 9th & 10th Jud Dists 2005]; Careplus Med. Supply Inc. v Allstate Ins. Co., 9 Misc 3d 131[A], 2005 NY Slip Op 51598[U] [App Term, 2d & 11th Jud Dists 2005]; A.B. Med. Servs. PLLC v State-Wide Ins. Co., 7 Misc 3d 136[A], 2005 NY Slip Op 50785[U] [App Term, 2d & 11th Jud Dists 2005]; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]; A.B. Med. Servs. v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept 2003].) Perhaps the seminal embodiment of this formulation is the Second Department’s pronouncement that “[a] deliberate collision caused in furtherance of an insurance fraud scheme is not a covered accident.” (State Farm v Laguerre, 305 AD2d at 491.) No-fault insurers and practitioners (including the parties and their counsel in this case) have also adopted the nomenclature of fraud when litigating claims involving allegedly staged accidents. This is true even though the no-fault regulations do not mention “fraud” as a defense to payment, but rather refer only to noncovered incidents. (See, e.g., 11 NYCRR 65-3.8 [e] [2].)

Unfortunately, the “fraud” label has created the mistaken impression that the insurance [*5]company must prove that the “accident” was the product of a fraudulent motive or scheme. But the fraud label is merely a distraction, since the focus for a “lack of coverage” defense must always be whether the collision was deliberate or a true accident. That is, the court must determine whether the incident was unintentional (i.e., a true accident) or whether at least one driver intended to make contact (i.e., a deliberate event).

B. Establishing a Staged Accident Defense

In the no-fault context, the plaintiff need not prove coverage as part of its prima facie case. (See, e.g., Amaze Med. Supply Inc. v Lumbermens Mut. Cas. Co., 10 Misc 3d 127[A], 2005 NY Slip Op 51898[U] [App Term, 2d & 11th Jud Dists 2005]; Contemp. Med. Diag. & Treatment, P.C. v Government Empls. Ins. Co., 6 Misc 3d 137[A], 2005 NY Slip Op 50254[U] [App Term, 2d & 11th Jud Dists 2005]; Triboro Chiropractic & Acupuncture v Electric Ins. Co., 2 Misc 3d 135[A], 2004 NY Slip Op 50215[U] [App Term, 2d & 11th Jud Dists 2004] [setting forth the elements of the plaintiff’s prima facie case, namely, that the statutory claim form, setting forth the fact and the amount of the loss sustained, was submitted to the defendant, and that payment of no-fault benefits is overdue].) Instead, the plaintiff’s prima facie case establishes a presumption of coverage. (See A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 822, 825 [Civ Ct, Kings County 2005].)

Before trial, it is well established that to defeat a plaintiff’s motion for summary judgment for first-party no-fault benefits, a defendant asserting a lack of coverage defense must set forth admissible evidence of “the fact or [a] founded belief that the alleged injury does not arise out of an insured incident.” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; St. Luke’s Roosevelt Hosp. v Allstate Ins. Co., 303 AD2d 743 [2d Dept 2003]; Diagnostic Rehab. Medicine Serv., P.C. v Farm Family Cas. Ins. Co., 7 Misc 3d 137[A], 2005 NY Slip Op 50826[U] [App Term, 1st Dept 2005]; Ocean Diagnostic Imaging P.C. v Allstate Ins. Co., 6 Misc 3d 134[A], 2005 NY Slip Op 50189[U] [App Term, 9th & 10th Jud Dists 2005].) In other words, when the defense is based on lack of coverage, to defeat plaintiff’s motion for summary judgment, the defendant must come forward with evidence in admissible form that creates an issue of fact and rebuts that presumption of coverage.

Once the plaintiff’s motion for summary judgment is denied, however, there is a dearth of case law to address what showing the insurer must make at the trial to defeat the claim for first-party no-fault benefits. This court found only two published decisions addressing this issue, and they conflict with each other. In one, the court extrapolated the standard for defeating a summary judgment motion into the trial context. In A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., Judge Jack M. Battaglia of this court held that if the insurer raises a lack of coverage defense, it is its burden at trial to come forward with evidence of ” ‘the fact’ [of lack of coverage or the] ‘found[ation for its] belief’ that there is no coverage.” (A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 822, 824 [Civ Ct, Kings County 2005], quoting Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 19-20 [2d Dept 1999].) A completely different approach was taken by Judge Loren Baily-Schiffman of this court. In JSI Expert Serv. v Liberty Mut. Ins. Co. (7 Misc 3d 1009[A], 2005 NY Slip Op 50513[U] [Civ Ct, Kings County 2005]), Judge Baily-Schiffman rejected the approach of the A.B. Med. court. Instead, she focused on the fraud aspect and applied the “clear and convincing evidence” standard, the unusually high standard required to prove an independent cause of action for fraud. “This Court holds that the insurer’s defense of fraud, whether it be a staged accident or other fraud, requires [*6]proof by clear and convincing evidence.” (JSI Expert Serv. v Liberty Mut. Ins. Co., 7 Misc 3d 1009[A], 2005 NY Slip Op 50513[U], *3 [Civ Ct, Kings County 2005].)

Besides these two posttrial decisions, the issue of whether the incident was a true accident or a deliberate event also arises in another context. In cases where an insurer petitions the Supreme Court to permanently stay arbitration of a claimant’s no-fault claim on the ground that the collision was not a covered incident, the Supreme Court holds a framed issue hearing on that sole issue. In those posthearing decisions, the case law from the Second Department makes clear that whether a collision is a covered incident depends upon whether it was intentionally caused. (See Matter of Allstate Ins. Co. v Massre, 14 AD3d 610 [2d Dept 2005]; Matter of Government Empls. Ins. Co. v Robbins, 15 AD3d 484 [2d Dept 2005]; Westchester Med. Ctr. v Travelers Prop. Cas. Ins. Co., 309 AD2d 927 [2d Dept 2003]; Matter of Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522, 523 [2d Dept 2003]; Matter of Progressive Northwestern Ins. Co. v Van Dina, 282 AD2d 680 [2d Dept 2001].) If the collision was an intentional occurrence, then it is outside the scope of the no-fault policy regardless of why or how it occurred or who was behind it.

That does not mean that an insurer cannot or should not put forth evidence of a fraudulent scheme in order to prove that the collision was not an accident; it does mean, however, that the insurer need not prove fraud. In Matter of Eagle Ins. Co. v Davis (22 AD3d 846 [2d Dept 2005]), the Second Department held that the Supreme Court should have considered evidence proffered on the issue of fraud, insofar as it bore on the question of whether the collision was a covered incident. “When [the insurer] raises an issue of fact as to whether the automobile collision . . . was deliberate or intentional, the issue of fraud is subsumed under the coverage issue. Evidence of such fraud should be considered in determining the broader coverage issue.” (Id. at 847 [citations omitted]; see also Matter of Government Empls. Ins. Co. v Spence, 23 AD3d 466 [2d Dept 2005].) Thus, the insurer may introduce evidence of a fraudulent scheme or motive to the extent that it is probative of the question of whether the collision was a true accident. In other words, evidence of fraud can serve as circumstantial evidence that this was not a covered incident. While “unsubstantiated hypotheses and suppositions” are not enough to make out a lack of coverage defense (see Amstel Chiropractic v Omni Indem. Co., 2 Misc 3d 129[A], 2004 NY Slip Op 50088[U], *1 [App Term, 2d & 11th Jud Dists 2004]), an insurer’s evidence of a purposeful collision will often be circumstantial. This is to be expected; in the absence of a mea culpa from one of the participants, the insurer—and ultimately the court—must examine the facts and circumstances of the incident to determine whether they give rise to an inference of lack of coverage. (See, e.g., A.B. Med. Servs., 7 Misc 3d 822.) Circumstantial evidence is sufficient if a party’s conduct “may be reasonably inferred based upon logical inferences to be drawn from the evidence.” (Benzaken v Verizon Communications, Inc., 21 AD3d 864, 865 [2d Dept 2005].)

C. Burdens of Proof at Trial

As set forth in section B above, the plaintiff need not prove coverage as part of its prima facie case. Instead, the plaintiff’s prima facie case establishes a presumption of coverage. When the defense is based on lack of coverage, therefore, the defendant need only come forward with evidence that rebuts that presumption of coverage. That is, once the plaintiff has made out its prima facie case, the burden of production (also called the burden of going forward) on the issue [*7]of coverage falls upon the defendant, and the defendant must demonstrate that it has a founded basis for believing that the alleged collision was intentionally caused. The burden of persuasion, however, remains on the plaintiff, who must prove its case by a fair preponderance of the credible evidence. (See Kalra v Kalra, 149 AD2d 409, 411 [2d Dept 1989]; Prince, Richardson on Evidence § 3-206 [Farrell 11th ed].) “[I]f the insurer carries its burden of coming forward, plaintiff must rebut it or succumb.” (A.B. Med. Servs., 7 Misc 3d at 825 [internal quotation marks and citation omitted].) How much evidence must defendant produce to satisfy its burden of production? There is no magic formula, but clearly it must be enough to rebut the presumption that the injuries were caused by a covered incident, that is, a true accident. (See Prince, Richardson on Evidence § 3-202.) After all the evidence has been presented, the court must decide whether the evidence of coverage preponderates in favor of the plaintiff, the party who bears the burden of persuasion. If the evidence weighs against the plaintiff, or is so evenly balanced that it is impossible to determine the matter, then judgment must be given for the defendant. (See Roberge v Bonner, 185 NY 265 [1906].)

D. Conclusion

Addressing the issue of plaintiff’s prima facie case, the court finds that plaintiff made out its prima facie case as to assignor Ysidro Liriano on its summary judgment motion; at trial, plaintiff made out its prima facie case as to the other assignor, Carlos Gaviria, via the admissions of defendant, through the testimony of Ms. Pryce, that it received the claims submitted for Mr. Gaviria.

In this trial, defendant came forward with sufficient evidence to rebut the presumption of coverage by showing that it had a founded belief that the injuries did not arise from a covered incident—that is, that the accident was staged because at least one driver intended to make contact.^[FN2] The court finds that the insurer, by Ms. Pryce, testified credibly that its denials of plaintiff’s claims were based, or founded, upon the results of her investigation—including the profile and claim history of the car (older model, accident shortly after insurance taking effect and policy cancelled shortly thereafter for nonpayment on two separate occasions), several passengers in the car, no emergency room treatment for any passenger, several material discrepancies in the car’s occupants’ stories as to the number and gender of people in the car, where they were going, and the driver denying knowing the owner of the car. At trial, defendant also presented Mr. Herasme’s unrebutted testimony that his car suffered only a “small scratch” in the alleged accident—an event which sent no one to the emergency room, but which allegedly resulted in over $15,000 in treatment for these assignors alone.^[FN3] Thus, the evidence produced by defendant rebutted the presumption of coverage which attached to plaintiff’s prima facie case, and shifted the burden of production back to plaintiff. [*8]

Plaintiff wholly failed to carry that burden. Plaintiff produced no evidence to rebut any of defendant’s proof; plaintiff did not even produce its assignors or any other witnesses to the alleged incident. Instead, plaintiff relied on its counsel’s vigorous cross-examination of defendant’s witnesses. The tactic did not succeed, and defendant’s credible proof stands unrefuted. Thus, based upon a fair preponderance of the evidence, this court finds that the subject collision was not a covered incident.

Accordingly, judgment is for defendant, and the complaints are hereby dismissed.

Footnotes

Footnote 1: Ms. Pryce explained that defendant was obligated to reinsure the vehicle because it was in the assigned risk pool, and due to the luck of the draw, Allstate got the vehicle twice.

Footnote 2: In this case, defendant denied the subject claims because, inter alia, the injuries were not caused by an accident. However, even if the denials were not premised upon lack of coverage, the outcome would be the same since at trial defendant established the defense of lack of coverage, and said defense is not subject to preclusion.

Footnote 3: In finding that the alleged injuries were not the result of a covered incident, this court does not suggest that fraud was committed by the medical provider with regard to the billed-for treatment, an issue not before the court in this trial.

Supreme Court, Bronx County

13527/2005

For Petitioner

Matthew E. Schaefer Esq.

Freiberg & Peck, LLP

12 East 41st Street, New York, NY 10017

Lucy Billings, J.

Petitioner seeks to vacate a New York No-Fault Arbitration Panel award dated February 24, 2004, granting respondent’s claim for reimbursement of medical expenses arising from a motor vehicle collision. Petitioner claims the arbitrator lacked jurisdiction over petitioner. C.P.L.R. § 7511(b)(1)(iii). While the court may lack personal jurisdiction over petitioner, based on the uncontradicted attestation that petitioner has not transacted or been licensed to transact business in New York, C.P.L.R. §§ 301 and 302; LaMarca v. Pak-Mor Mfg., 95 NY2d 210, 214 (2000), petitioner still may have been subject to the arbitration forum, so that the arbitrator’s award was within her power. C.P.L.R. § 7511(b)(1)(iii).

I.CONTACTS WITH NEW YORK

It is undisputed that petitioner is a Pennsylvania corporation transacting business in that state. Although not addressed in the petition or supporting affidavits, the arbitration decision concludes, and petitioner does not contradict, that it insured a vehicle involved in the collision from which the claimed medical expenses arose and which occurred in New York. A contract of insurance covering a vehicle travelling in New York does not amount to sufficient contact with the state to confer jurisdiction. C.P.L.R. § 302(a)(1); Chase Manhattan Bank v. AXA Reins., UK, 300 AD2d 16, 19 (1st Dep’t 2002); New York Cent. Mut. Ins. Co. v. Johnson, 260 AD2d 638, 639 (2d Dep’t 1999).

No evidence or even allegations, however, indicate that the insured vehicle was not registered in New York or that the vehicle owner was not a New York resident. These facts may bear on whether the court would have jurisdiction here. Preferred Mut. Ins. Co. v. Fu Guan Chan, 267 AD2d 181, 182 (1st Dep’t 1999); New York Cent. Mut. Ins. Co. v. Johnson, 260 AD2d at 639.

II.THE REQUIREMENT THAT INSURERS SUBMIT TO ARBITRATION

More to the point for purposes of the arbitrator’s power, C.P.L.R. § 7511(b)(1)(iii), the owner and operator of a motor vehicle insured for liability by a Pennsylvania insurer still may be “covered persons” under New York Insurance Law § 5102(j), if the vehicle had in effect the “financial security” required by New York Vehicle and Traffic Law (VTL) § 311. NY Ins. Law § 5102(j); Marshall v. Nationwide Mut. Ins. Co., 166 AD2d 852, 853 (3d Dep’t 1990). Since even [*2]a non-resident owner of a vehicle travelling in New York must comply with New York law, making the owner liable for the vehicle’s negligent operation, VTL § 388(1) and (3), a non-resident owner’s failure to maintain the required financial security subjects the owner to penalties. VTL § 318(4). See Servido v. Superintendent of Ins., 53 NY2d 1041 (1981), aff’g 77 AD2d 70, 85 (1st Dep’t 1980); General Acc. Ins. Co. v. Tran, 246 AD2d 543, 544 (2d Dep’t 1998); Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d 358, 359 (Sup. Ct. Kings Co. 2005). “Financial security” means “ability to respond in damages for liability arising out of the ownership, maintenance or use of a motor vehicle as evidenced by an owner’s policy of liability insurance.” VTL § 311(3). VTL § 311(4)(a) defines an “owner’s policy of liability insurance” as a liability policy with prescribed minimum limits.

If the vehicle involved here was owned by a New York resident or registered in New York, so that petitioner in fact transacted business here, requiring petitioner’s policy covering the vehicle to meet VTL § 311(4)(a)’s requirements, NY Ins. Law § 5107, or petitioner’s policy otherwise met them, petitioner would be an “insurer” subject to New York’s claims settlement procedures. NY Ins. Law §§ 5102(g), 5106(b). Those procedures in turn require insurers to provide the option of arbitration by the New York No-Fault Arbitration Panel for claimants seeking benefits. Id.; Hospital for Joint Diseases v. Allstate Ins. Co., 5 AD3d 441, 442 (2d Dep’t 2004).

If the vehicle was registered in a state other than New York, then to be an “insurer” subject to New York’s arbitration procedures, NY Ins. Law §§ 5102(g), 5106(b); 11 N.Y.C.R.R. § 65.18(a)(1), petitioner, “an unauthorized insurer” in New York, but “authorized to transact business in another state,” must have filed a consent to service and a declaration that petitioner’s policy be considered in compliance with VTL § 311. VTL § 311(4)(c). See VTL § 344(a); 11 N.Y.C.R.R. § 65-1.8(c); Marshall v. Nationwide Mut. Ins. Co., 166 AD2d at 853; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 360 & n.1. Such actions by the insurer are akin to an agreement to arbitrate or participation in the arbitration process, subjecting the insurer to the arbitration forum’s jurisdiction. Nardor v. Gondol, 17 AD3d 142, 143 (1st Dep’t 2005).

Medical expenses arising from a collision involving a vehicle registered outside New York and covered by an insurer authorized only in another state may be compensable based not only on the insurer’s conformance with the above statutory provisions. Compensation also may be available based on an insurance policy that itself permits an interpretation extending coverage to meet other states’ financial security requirements, commonly referred to as an “‘Out-of-State Insurance’ clause.” General Acc. Ins. Co. v. Tran, 246 AD2d at 544. See American Home Assur. Co. v. Employers Mut. of Wausau, 54 NY2d 874 (1981), aff’g 77 AD2d 421, 427 n.4, 428 (1st Dep’t 1980); Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 361 & n.2.

III.THE ARBITRATION AWARD

The arbitrator relied on New York Insurance Law § 5107. That statute requires insurers transacting or authorized to transact business in New York to sell, whether in New York or in another state, motor vehicle liability policies that meet New York’s financial security requirements and to reimburse medical expenses arising out of insured vehicles’ use in New York. Midwest Mut. Ins. Co. v. Pisani, 250 AD2d 512, 513 (1st Dep’t 1998); Allstate Ins. Co. v. Ramos, 234 AD2d 41, 42 (1st Dep’t 1996). While petitioner may not have presented the arbitrator with admissible evidence that petitioner neither transacts, nor is authorized to transact business in New York, and therefore is not subject to § 5107, petitioner does attest to those facts here, albeit without specifically addressing where the vehicle owner resides or where the vehicle is registered.

Nonetheless, even though Insurance Law § 5107 may not apply to petitioner, the provisions outlined above, in particular VTL §§ 311(4)(c) and 344(a) and 11 N.Y.C.R.R. § 65-1.8(c) or the “out-of-state insurance clause,” may apply. If they do, they would require petitioner to reimburse medical expenses arising out of its insured vehicles’ use in New York and subject petitioner to New York’s arbitration procedures, NY Ins. Law §§ 5102(g), 5106(b); 11 N.Y.C.R.R. § 65.18(a)(1), regardless whether Insurance Law § 5107 applies. General Acc. Ins. [*3]Co. v. Tran, 246 AD2d at 544; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 361 & n.2.

IV.THE RELEVANT FACTS

Although petitioner presents facts relevant to the court’s jurisdiction and to Insurance Law § 5107’s application, the record does not reveal, first, where petitioner’s insured vehicle was registered or where the vehicle owner resided. Even if the vehicle was registered outside New York and the owner is a nonresident of this state, the record nowhere discloses petitioner’s vehicle liability policy: whether it complied with New York’s financial security requirements, whether petitioner filed a declaration that the policy be considered in compliance, or whether it contained an out-of-state insurance provision. VTL §§ 311(4)(c), 344(a); 11 N.Y.C.R.R. § 65-1.8(c); General Acc. Ins. Co. v. Tran, 246 AD2d at 543-44; Marshall v. Nationwide Mut. Ins. Co., 166 AD2d at 853; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 360-61 & ns. 1-2. These facts all bear on whether the policy may in fact provide for payment of first party benefits for a collision in New York and require petitioner to provide claimants the option of arbitration by the New York No-Fault Arbitration Panel. NY Ins. Law §§ 5103, 5106(b); 11 N.Y.C.R.R. §§ 65.18(a)(1), 65-1.8(c).

V.CONCLUSION

In sum, the issue here is not whether the court has jurisdiction over petitioner, but whether the arbitrator did, or, more precisely, whether the arbitrator had the power to award respondent benefits payable by petitioner. C.P.L.R. § 7511(b)(1)(iii). Absent the facts determinative of this issue, the court denies the petition to vacate the arbitration award. This decision constitutes the court’s order and judgment dismissing the proceeding.

DATED: December 31, 2005_______________________

LUCY BILLINGS, J.S.C.

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 (Peter Paul Sweeney, J.), entered December 15, 2004. The order granted plaintiff’s motion for summary judgment.

Order reversed without costs and plaintiff’s motion for summary judgment denied.

In this action to recover first-party no-fault benefits for health care services rendered to its assignor, 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]). Inasmuch as defendant failed to pay or deny the claims within the 30-day prescribed period (11 NYCRR 65-3.8 [c]), it was precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). However, despite the untimely denials, defendant was not precluded from asserting the defense that the alleged injuries did not arise out of an insured incident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [*2][1997]).

Defendant’s submissions, which included an affidavit of defendant’s claims specialist and a copy of the transcript of the examination under oath of plaintiff’s assignor, were sufficient to support its allegations of fraud, and to demonstrate that the defense was based upon a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp., 90 NY2d at 199). Accordingly, since [*3]
defendant demonstrated the existence of a triable issue of fact as to whether there was a lack of coverage (see id.; Zuckerman v City of New York, 49 NY2d 557 [1980]), plaintiff’s motion for summary judgment should have been denied by the court below.

Pesce, P.J., and Belen, J., concur.

Golia, J., concurs in a separate memorandum.
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT: PESCE, P.J., GOLIA and BELEN, JJ.
JEFFREY I. RUBIN, PHD PSYC. SVCS., PC,
Assignee of ELSIE PLAISIMOND,
ELSIE PLAISMOND, ELSIE PLCUSMOND
and ELSIE PLAISMOND,

Respondent,

-against-
UTICA MUTUAL INS. CO.,

Appellant.

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.
Decision Date: December 30, 2005

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, Third District (Erica L. Prager, J.), entered November 23, 2004. The order, sua sponte, severed the causes of action without passing upon plaintiffs’ motion for summary judgment.

On the court’s own motion, the notice of appeal from so much of the order as, sua sponte, severed the causes of action is treated as an application for leave to
appeal, and such leave is granted (see Tilcon N.Y. v Transcontinental Ins. Co., 261 AD2d 608 [1999]).

Order unanimously modified by remanding the matter of Valery A. Berger, M.D., Assignee of Svetlana Demine v Liberty Mutual Insurance Company to the court below for a determination of said plaintiff’s motion for summary judgment; as so modified, affirmed without costs.

In or about February 2004, 11 different plaintiffs commenced this action to recover [*2]attorney’s fees and interest on 14 first-party no-fault claims, based on 14 unrelated assignors involved in accidents on 14 different dates, which defendant allegedly untimely paid. A review of the record indicates that said claims have no common contract of insurance and have no relation or similarity to each other, other than the fact that the no-fault benefits were allegedly untimely paid by defendant. Consequently, we find that the court below did not abuse its discretion in severing the causes of action in the furtherance of convenience (see CPLR 603; Mount Sinai Hosp. v Motor Veh. Acc. Indem. Corp., 291 AD2d 536 [2002]). Thus, plaintiffs’ remaining contentions are rendered academic. However, since the first cause of action relating to Valery A. Berger, M.D. remained under the original index number following severance, the court below should have determined the summary judgment motion on behalf of this plaintiff. Accordingly, the case is remanded for such a determination.
Decision Date: December 30, 2005

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 (Jack Battaglia, J.), entered November 16, 2004. The order granted plaintiffs’ motion for summary judgment.

Order reversed without costs and plaintiffs’ motion for summary judgment denied.

In general, a health care provider establishes a prima facie entitlement to summary judgment by proof that it submitted a claim, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). Affidavits of the persons who rendered medical services to plaintiffs’ assignors were submitted in support of plaintiffs’ motion for summary judgment. Although the affiants stated that it was the practice of their offices to mail claim forms within five business days of the date on the claim form, this was not sufficient to constitute proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed (see Residential Holding Corp. v [*2]Scottsdale Ins. Co., 286 AD2d 679 [2001]). Nor did the affidavits state that it was the duty of the affiants to ensure compliance with said office procedures or that the affiants had actual knowledge that said office procedures were complied with (see Contemp. Med. Diag. & Treatment, P.C. v Government Empls. Ins. Co., 6 Misc 3d 137[A], 2005 NY Slip Op 50254[U] [App Term, 2d & 11th Jud Dists]). Inasmuch as plaintiffs
herein failed to establish by competent proof that the claim forms were
submitted to defendant, they did not make the requisite showing to establish a prima facie entitlement to summary judgment, and the burden never shifted to defendant (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Accordingly, summary judgment should have been denied.

Pesce, P.J., and Belen, J., concur.

Golia, J., concurs in a separate memorandum.

[*3]
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : PESCE, P.J., GOLIA and BELEN, JJ.
VIKTOR GRIBENKO, M.D., P.C. and R.I.M MEDICAL
a/a/o OLEG DADASHEV, GENNADIY IZRAILOV,
SCOTT KLEIN, IVAN LAGODYUK, FAUD MEKHTIEV
and DAVID YUSUPOV,
Respondents,

-against-

Golia, J., concurs in the following memorandum:

I concur with the majority in reversing the order of the lower court, but need to amplify the distinction that I find between being a proponent of a motion for summary judgment and opposing a motion for summary judgment.

In the case at bar, plaintiffs moved for summary judgment directing payment for no-fault claims, based upon their contention that they had established a prima facie case that claims were properly sent and that defendant failed to pay or deny the claims within
30 days. The lower court granted summary judgment, and the majority of this court reverses, upon a finding that plaintiffs’ submissions failed to establish that the claim forms were, in fact, actually mailed to defendant.

While I am in agreement with this holding, I feel compelled to clarify the distinction between my support of this holding and my dissent from this court when it grants summary judgment to a plaintiff which establishes actual mailing where the defendant asserts that it mailed a denial but fails to properly establish that the denial form was mailed.

I have held in a number of cases, including my dissent in Ocean Diagnostic Imaging P.C. v New York Cent. Mut. Fire Ins. Co. (2005 NY Slip Op 51772[U] [App Term, 2d & 11th Jud Dists]), that:

“Although the defendant’s affidavits do not contain detailed mailing procedures [*4]necessary to establish proof that a certain item was mailed . . . , I do find that the sworn statements by defendant’s medical examination scheduler’ are sufficient for the purpose of denying a motion for summary judgment (see Weiss v Garfield, 21 AD2d 156 [1964]).” (emphasis added)

The important distinction is that an “incomplete” proof of mailing can be sufficient to warrant denying a motion for summary judgment but is not sufficient to warrant granting a motion for summary judgment.

As stated by the Appellate Division in the early case of Braun v Carey (280 App Div 1019 [1952]), and cited with approval by the Court of Appeals in Sillman v Twentieth Century-Fox Film Corp. (3 NY2d 395 [1957]), the drastic remedy of “summary judgment on affidavits should not be granted where there is any doubt as to the existence of triable issues of fact” (Braun v Carey, 280 App Div at 1019-1020).

Accordingly, I concur with the majority in reversing the order of the lower court.
Decision Date: December 30, 2005

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, Third District (David A. Gross, J.), dated September 8, 2004. The order denied plaintiff’s motion for summary judgment.

Order unanimously affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff health care provider established a prima facie entitlement to summary judgment 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]; 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]). Since defendant failed to pay or deny the claims within the 30-day prescribed period (11 NYCRR 65-3.8 [c]), it 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 (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 [*2]NY2d 195, 201 [1997]). The affidavit submitted by defendant’s special investigator was sufficient to demonstrate that the defense was based upon a “founded belief that the alleged injur[ies] do[ ] not arise out of an insured incident” (Central Gen. Hosp., 90 NY2d at 199). Accordingly, since defendant demonstrated the existence of a
triable issue of fact as to whether there was a lack of coverage (see id.; Zuckerman v City of New York, 49 NY2d 557 [1980]), plaintiff’s motion for summary judgment was properly denied.
Decision Date: December 30, 2005

Civil Court, Kings County

95623/04

Delores J. Thomas, J.

In this action brought by a health care provider to recover no-fault benefits as assignee of Alex Zubaty, plaintiff moves for an order granting summary judgment against defendant in the sum of $540.00 plus statutory interest together with statutory attorney’s fees.

The No-Fault Law provides for payments for medical supplies provided to a person injured as a result of an accident arising out of the use or operation of a motor vehicle. To recover first-party benefits, a claimant must demonstrate a prima facie entitlement to summary judgment by setting forth proof that it submitted a claim, the fact and amount of losses sustained and that payment of benefits is overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2d Dept 2004]).

It is undisputed that defendant did not pay or deny the claim within the required 30-[*2]day period. Plaintiff contends there was no extension of the time period through verification requests. Although defendant requested an examination under oath (EUO), unless defendant can establish that the policy in effect entitled defendant to conduct an EUO and that it made a timely and proper verification request, tolling does not occur. Policies issued on or after April 5, 2002 must contain the revised prescribed endorsement to entitle the insurer to conduct an EUO (see, SZ Medical P.C. v. State Farm Mutual Auto Ins. Co., 9 Misc 3d 139 [A], 2005 NY Slip Op 51842 [U] [App Term, 1st Dept 2005]). Here, defendant has not demonstrated any basis to toll the 30-day period.

An untimely denial precludes defendant from interposing most defenses including the defense of lack of medical necessity (Amaze Med. Supply Inc. v. Eagle Ins. Co., 2 Misc 3d 139 [A], 2004 NY Slip Op 050279 [U] [App Term, 2d & 11th Jud Dists 2004]). However, defendant is not precluded from asserting the defense that the injuries do not arise out of a covered accident or a defense premised on staged accident fraud (see, Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195 [1997]; Metro Med. Diagnostics v. Eagle Ins. Co., 293 AD2d 751 [2nd Dept 2002]). However, to withstand a motion for summary judgment, defendant must raise a triable issue of fact (Alvarez v. Prospect Park Hospital, 68 NY2d 320 [1986]).

The denial of claim form (Exhibit A, annexed to Notice of Motion) states: “All no fault benefits denied based in part on A) the EUO; B) failure to establish proof of claim; C) failure to establish that the injuries arose out of the use and operation of the insured vehicle; and D) the treatment was not causally related to the claimed injuries.” In addition, in support of its fraud defense defendant submits the affidavit of Jeffrey Billington, claims adjuster in the no-fault department of defendant insurer. Billington does not state that he is a special insurance investigator or that he is trained in fraud detection. He asserts that plaintiff received aggressive medical treatment for a “relatively minor collision” as a basis for the EUO and to support a fraud claim. Billington concludes there is a “discernable pattern of circumstances and conduct consistent with staging of an accident.” He refers to the fact that the assignor sought treatment six days after the accident from a provider other than his personal doctor, that he was referred to get an MRI on an initial visit and that he was involved in a prior accident (four years ago) which was settled by the same attorney now representing plaintiff.

The insurer has the burden to come forward with proof in admissible form to establish the basis for its belief that there is no coverage (see, Mount Sinai Hospital v. Triboro Coach Inc., 263 AD2d 11 [2d Dept 1999]). An insurer’s “founded belief” that an accident was staged cannot be based upon unsubstantiated hypotheses and supposition (see, A.B. Medical Services v. Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept 2003]). The statements made by defendant’s counsel in the affirmation in opposition, that the injuries did not arise from the accident and/or that the accident was staged, are not based on personal knowledge and are of no probative value. In addition, the Court finds the assertions made by the claims representative are insufficient to support his finding of a pattern of circumstances and conduct which constitutes fraud. Defendant’s belief that treatments were unduly “aggressive” or unnecessary might have been addressed through a defense of lack of medical necessity if there had been a timely denial. Defendant has not submitted any proof specific to the circumstances of the accident to support a “founded belief” that the accident was staged.

Accordingly, plaintiff’s motion for summary judgment is granted. The clerk is directed to enter judgment in favor of plaintiff in the sum of $540.00 together with statutory interest and attorney’s fees. [*3]

This constitutes the decision and order of the Court.

DATED: December 30, 2005

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court