SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiffs from an order of the Civil Court, Kings County (E. Nadelson, J.), entered June 14, 2004, denying their motion for partial summary judgment in favor of D.A.V. Chiropractic P.C.

Appeal as taken by plaintiff Daniel Kim’s Acupuncture P.C. unanimously dismissed.

Order unanimously affirmed without costs.

In this action to recover first-party no-fault benefits for medical supplies furnished to its assignor, plaintiff D.A.V. Chiropractic P.C. established a prima facie entitlement to summary judgment by proof that it submitted claims, setting forth the fact and the [*2]
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]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 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]). Plaintiff, however, also submitted and relied upon defendant’s denial of claim forms which had unaffirmed peer reviews attached thereto. In opposition to the motion, defendant likewise relied upon said unaffirmed peer reviews which contained a sufficient factual basis and medical rationale so as to raise a triable issue of fact regarding medical necessity (see Pagano v Kingsbury, 182 AD2d 268 [1992]; Triboro Chiropractic & Acupuncture v Electric Ins. Co., 2 Misc 3d 135[A], 2004 NY Slip Op 50215[U] [App Term, 2d & 11th Jud Dists]). Accordingly, plaintiffs’ motion for partial summary judgment was properly denied.

Inasmuch as plaintiff Daniel Kim’s Acupuncture P.C. does not appear to be an aggrieved party, the appeal as taken by it is dismissed (CPLR 5511).
Decision Date: October 21, 2005

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal by defendant from an order of the District Court, Nassau County (S. Jaeger, J.), entered March 31, 2004, which granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment, or in the alternative, for an order compelling discovery.

Order unanimously affirmed without costs.

In this action to recover assigned first-party no-fault benefits, plaintiff health care provider established its prima facie entitlement to summary judgment by proof that it submitted a statutory claim form setting forth the fact and 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 shifted to defendant to create a triable issue of fact (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Defendant’s conceded failure to deny the claim (received September 12, 2002) until December 2, 2002, that is, well beyond the 30-day claim determination period, precluded most defenses unless defendant established a tolling of the statutory time (Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432, 434 [2004]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004]).

All post-claim independent medical examination and examination under oath verification requests must be made within prescribed time frames (11 NYCRR 65-3.5 [a], [b], [d]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584-585 [2002]), and “[a]ny attempt by the insurer to deny the claim prior to exhausting the verification protocols is [*2]premature and of no effect” (King’s Med. Supply Inc. v Allstate Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50451[U] [App Term, 9th & 10th Jud Dists]; see also New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d at 570 [2004]; King’s Med. Supply v New York Cent. Mut. Fire Ins. Co., 5 Misc 3d 136[A], 2004 NY Slip Op 51550[U] [App Term, 2d & 11th Jud Dists]). Neither of defendant’s initial examination requests were issued timely nor did they schedule the examination within the requisite 30-day period. Accordingly, defendant’s verification requests failed to toll the 30-day claim determination period.

As to the defense that the incident was staged to defraud, which defense survives the preclusion sanction (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]), as plaintiff properly argued below, none of defendant’s proof offered to establish the defense was submitted in admissible form. Defendant’s counsel alleged no basis to support an inference that the facts asserted in his statements were based on personal knowledge. Defendant’s “no-fault suit specialist” asserted merely the conclusory reference to “a possible staged fraudulent accident” based on unspecified “material misrepresentations made in the presentation of her claims,” an unsworn police accident report, and unsworn investigators’ reports, the latter of which concerned only alleged irregularities in the treatment and billing process, not the traffic incident, and thus, did not support a defense that survived the preclusion sanction (see Ocean Diagnostic Imaging P.C. v Prudential Prop. & Cas. Ins. Co., ____ Misc 3d _____, 2005 NY Slip Op ____ [App Term, 9th & 10th Jud Dists, February 17, 2005] [“Since defendant failed (timely to deny the claim) . . . it is precluded from raising
. . . its defense of provider fraud”]; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]). The adverse operator’s statements as recorded on the police accident report, plainly self-serving, hearsay statements, were inadmissible for the purpose offered (Hoffman v Eastern Long Is. Transp. Enter., 266 AD2d 509, 510 [1999]; see also Cover v Cohen, 61 NY2d 261, 274 [1984]; Wolf v We Transp., 274 AD2d 514 [2000]). Thus, defendant failed to establish a triable issue of fraud (see e.g. 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] [claims examiner’s conclusory assertions as to fraud insufficient]; Ocean Diagnostic Imaging, P.C. v Lancer Ins. Co., 6 Misc 3d 62 [App Term, 2d & 11th Jud Dists 2004] [unsworn investigation reports inadmissible in opposition to summary judgment motion]; Melbourne Med. P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004] [attorney’s factual allegations, without personal knowledge of the investigation, mere unsubstantiated hearsay]; Dotzel v Allstate Ins. Co., 2003 NY Slip Op 50853[U] [App Term, 9th & 10th Jud Dists] [unsworn investigation reports inadmissible in opposition to summary judgment motion]). [*3]

In light of the foregoing, defendant’s remaining contentions need not be addressed.
Decision Date: October 21, 2005

[*1]

Supreme Court, Appellate Term, Second Department, October 21, 2005

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants. Bruno Gerbino & Macchia LLP, Melville (Charles W. Benton of counsel), for respondent.

{**10 Misc 3d at 51} OPINION OF THE COURT

Memorandum.

Order insofar as appealed from modified by granting plaintiff A.B. Medical Services PLLC partial summary judgment in the sum of $6,765.47, plaintiff D.A.V. Chiropractic P.C. partial summary judgment in the sum of $593.94, and plaintiff Lvov Acupuncture P.C. partial summary judgment in the sum of $1,690.56, and as to those sums, the matter is remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees, and for all further proceedings on said plaintiffs’ remaining claims; as so modified, affirmed without costs.

Appeal insofar as taken by plaintiff Square Synagogue Transportation Inc. unanimously dismissed.

Plaintiffs A.B. Medical Services PLLC, D.A.V. Chiropractic P.C. and Lvov Acupuncture P.C. established their prima facie entitlement to summary judgment by proof that they submitted statutory claim forms, setting forth the fact and amount 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]). Upon such proof, the burden shifted to defendant to create a triable issue of fact (Alvarez v Prospect Hosp., 68 NY2d 320, 324[*2][1986]). Absent tolling of the statutory time (Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432, 434 [2004]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004]), defendant’s conceded failure to deny the claims until December 2, 2002 violated the 30-day claim determination period and precluded it from interposing most defenses (aside from its claim that the incident was staged to defraud) as to all claims mailed on or before November 2, 2002.

As to the fraud defense, which survives the preclusion sanction (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293{**10 Misc 3d at 52} AD2d 751 [2002]), none of the proof offered to establish that the underlying incident was staged to defraud defendant was submitted in admissible form. None of the investigators’ reports or operators’ statements were sworn, defendant’s counsel alleged no basis to support an inference that any of the facts asserted in his statements were based on personal knowledge, and Tonya Miller, defendant’s claims representative, asserted in her affidavit merely the conclusory statement that “material misrepresentations [were] made in the presentation of the claim” and failed to adopt any of the factual assertions contained in the attached reports and statements. Thus, defendant failed to establish a triable issue of fraud (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]; Ocean Diagnostic Imaging, P.C. v Lancer Ins. Co., 6 Misc 3d 62 [App Term, 2d & 11th Jud Dists 2004]; see e.g. Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004] [attorney’s factual allegations, without personal knowledge of the investigation, mere unsubstantiated hearsay]; Dotzel v Allstate Ins. Co., 2003 NY Slip Op 50853[U] [App Term, 9th & 10th Jud Dists 2003]).

Similarly, defendant did not establish proper verification requests with respect to its letters which, inter alia, indicated that it intended to examine “claimants” under oath. An insurer

“may not rely on a letter, even if denominated a verification request, that merely informs a claimant that a decision on the claim is delayed pending an investigation, and without specifying a particular form of verification and the person or entity from whom the verification is sought, to toll the 30-day claim determination period” (Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d at 94; see also 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]; Ocean Diagnostic Imaging P.C. v Nationwide Mut. Ins. Co., 4 Misc 3d 142[A], 2004 NY Slip Op 51041[U] [App Term, 2d & 11th Jud Dists 2004]).

While the particular form of verification sought is stated, the persons sought to be examined are not identified, nor do the letters specify, inter alia, the time and place the examinations would take place (cf. 11 NYCRR 65-3.5 [d], [e]). As the instant letters do not conform to the requirements of a proper examination under oath verification request in substantial respects, the{**10 Misc 3d at 53} letters are ineffective to toll the 30-day claim determination period.

Therefore, defendant must first demonstrate a tolling via proof that one or more of the notice of physical examination letters of October 2, 2002 and the follow-up letters of October 29, 2002 issued, that assignor failed to appear, and that the timing of said notice(s) and nonappearance(s) established a defense to any or all claims. As the December 2, 2002 denial was timely as to the final four post-November 2, 2002 claims, namely, plaintiff A.B. Medical Services PLLC’s claims for $323.36 and $71.40, plaintiff D.A.V. Chiropractic P.C.’s claim for $168.50, [*3]and plaintiff Lvov Acupuncture P.C.’s claim for $425 defendant need only establish that the denial as to said four claims was based on a meritorious defense (cf. Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004] [“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 . . .”]). It is initially noted that defendant’s claim denial form, which invoked only the eligible injured person’s failure to attend independent medical examinations (IMEs) on October 25, 2002 and November 8, 2002, is materially defective on its face. “A proper denial of claim must include the information called for in the prescribed denial of claim form” (Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005] [“(A) denial of a claim form issued by (an insurer) . . . even if timely, (is) fatally defective (if) it omit(s) numerous items of requested information and thus (is) incomplete”]; see also 11 NYCRR 65-3.4 [c] [11]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2004] [the insurer’s “denial of claim, while timely, was nonetheless fatally defective in that it failed to include a number of basic items called for in the prescribed form,” citing Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 (2004), supra]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613, 614 [1996] [preclusion sanction imposed where the insurer “fail(ed) to establish that it issued to the (claimant) a properly completed Denial of Claim Form within the (prescribed) 30-day period”]). Here, an accurate determination as to the significance of the IME demands for plaintiffs’ recovery of no-fault benefits depends on when defendant received each claim in the series, information which, in the first instance, is the insurer’s obligation to provide in a properly executed claim denial form. Moreover, as none of the six IME letters scheduled an examination for October 25, 2002, this verification request is unproved.{**10 Misc 3d at 54}

Nevertheless, in support of its motion, plaintiffs submitted a series of defendant’s IME request letters and a letter from counsel for plaintiff’s assignor to defendant wherein he admits that assignor failed to appear for IMEs on October 16, 18, and 19, 2002 and on November 8, 15, and 22, 2002. While defendant submitted no proof of mailing of any of the IME notification letters, plaintiffs’ concessions establish receipt of the November 8, 2002 IME request and assignor’s nonappearance, the only proved basis for the claims’ denial asserted in the claim denial form. The issue is whether defendant exhausted the verification protocols with respect to said IME request, and for that matter, the remaining IME requests which, while not invoked as a basis for the claims’ denial, are established on the instant record.

The insurance regulations permit preclaim IMEs, but without consequence for the running of the 30-day claim determination period (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d & 11th Jud Dists 2004]). All postclaim IME verification requests must be made within prescribed time frames, the initial request within 10 days of the claim’s filing (to be scheduled within 30 days of the claim’s receipt) and a “follow-up” request within 10 days of a subject’s nonappearance at the initially-scheduled IME (11 NYCRR 65-3.5 [a], [d]; 65-3.6 [b]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584-585 [2002]). “Any attempt by the insurer to deny the claim prior to exhausting the verification protocols is premature and of no effect” (King’s Med. Supply Inc. v Allstate Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50451[U], *2 [App Term, 9th & 10th Jud Dists 2005]; see New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570[*4][2004]; King’s Med. Supply Inc. v New York Cent. Mut. Fire Ins. Co., 5 Misc 3d 136[A], 2004 NY Slip Op 51550[U] [App Term, 2d & 11th Jud Dists 2004]). The request for the November 8, 2002 IME issued within 10 days only of plaintiff A.B. Medical Services PLLC’s claim for $71.06 and absent a follow-up IME request the claim determination period lapsed as to this claim. Further, said request predated receipt only of plaintiff A.B. Medical Services PLLC’s claims for $323.36 and $71.40, plaintiff Lvov Acupuncture P.C.’s claim for $425, and plaintiff D.A.V. Chiropractic P.C.’s claim for $168.50, and as an unattended preclaim IME, as to those claims, summary judgment was properly denied (cf. Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [2004], supra). In any event, there was no follow-up IME request after the assignor{**10 Misc 3d at 55} failed to appear on November 8, 2002, and the December 2, 2002 claim denial preserved no meritorious defense as to any claim filed prior to the November 8, 2002 IME demand (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d at 44).

Plaintiff Square Synagogue Transportation Inc. concedes in appellants’ brief that it is not entitled to the relief sought upon the motion to the court below. Therefore, the appeal as taken by it is dismissed.

Accordingly, plaintiffs’ motion for summary judgment is granted as to plaintiff A.B. Medical Services PLLC’s claims for $182.37, $230.10, $604.24, $751.83, $218.35, $360, $1,972.08, $1,999.12, $376.32, and $71.06, plaintiff D.A.V. Chiropractic, P.C.’s claim for $391.74 and $202.20, and plaintiff Lvov Acupuncture, P.C.’s claims for $1,180.56 and $510, and as to those sums, the matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder, and for all further proceedings on said plaintiffs’ remaining claims.

Golia, J., concurs in part and dissents in part, and votes to dismiss the appeal insofar as taken by Square Synagogue Transportation Inc. and to modify the order, insofar as appealed from, by denying the motion of plaintiffs A.B. Medical Services PLLC, D.A.V. Chiropractic P.C. and Lvov Acupuncture P.C. for summary judgment and, upon searching the record, granting defendant’s cross motion for summary judgment dismissing the complaint as to said plaintiffs in the following memorandum: I concur with the majority in their dismissal of the appeal by Square Synagogue Transportation Inc.

However, contrary to the holding of the majority, I find that the papers submitted by the defendant in opposition to the plaintiffs’ motion for summary judgment were sufficient to raise an issue of fact as to whether the defense of fraud 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]), i.e., as to whether it was a “staged” accident.

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]), I find that the unsworn statements, when submitted in opposition to a motion for summary judgment and accompanied by an affidavit which makes reference to such reports, are sufficient for the purpose of raising a triable issue{**10 Misc 3d at 56} of fact (see also Levbarg v City of New York, 282 AD2d 239, 241 [2001]). This court must, when deciding a motion for summary judgment, interpret the evidence in the light most favorable to the nonmovant (see Weiss v Garfield, 21 AD2d 156 [1964]). This is especially true where there [*5]is an allegation of fraud.

I further find that it is uncontroverted that the defendant insurer sent notices to the plaintiff’s assignor to appear for independent medical examinations (IMEs) on October 16, 18 and 19, 2002 and, upon her failure to appear, gave her an additional opportunity to appear on November 8, 15 and 22, 2002. We know this is true because the plaintiff submitted a letter written by the assignor’s attorney dated January 21, 2003 acknowledging receipt of those notices as well as acknowledging the fact that assignor, Ms. Abbott, did not appear. The letter goes on to state that Ms. Abbott is a single mother and requests, through her attorney, to have all her IMEs held in one location and on the same date which must be a Saturday. In support of this demand, Ms. Abbott’s attorney admonished the insurance carrier that “[t]he no-fault regulations clearly state that all medical examinations requested by the insurer shall be held at [a] time and place reasonably convenient to the applicant.”

It is interesting to note that one of the IMEs was scheduled for Saturday, October 19, 2002 and the assignor still failed to appear. It is even more interesting to note that her claimed medical treatments consisted of 12 separate dates including several visits in a single week and only one visit claimed fell on a Saturday, and that was for transportation unconnected to any claimed medical treatment.

It should be observed that the provision of the no-fault regulation addressed by the assignor’s attorney is 11 NYCRR 65-3.5 (e), which is part of the postclaim verification protocols.

As the majority of the appellate court stated in Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co. (7 Misc 3d 18, 20 [App Term, 2d & 11th Jud Dists 2004]):

“The insurance regulations provide, in the mandatory personal injury protection endorsement, which is independent of the verification protocols, that ‘[t]he eligible injured person shall submit to medical examination . . . when, and as often as, the Company may reasonably require‘ (11 NYCRR 65-12 [e], now 11 NYCRR 65-1.1 [d]) . . . and because this provision is included in the mandatory endorsement and not in the verification protocols, there appears{**10 Misc 3d at 57} to be no reason to preclude an insurer” (emphasis added).

To be clear, I filed a dissenting opinion in Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co. (7 Misc 3d 18 [2004], supra) and do not agree with reading the no-fault regulations as a fragmented collection of rules and regulations. It is for this reason that I believe that both requirements should be read together. Therefore, all eligible injured persons must submit to medical examinations when and as often as the company may reasonably require, and the company shall hold such examinations at a place and time reasonably convenient to the eligible injured person. [*6]

In the matter at hand, I find that the “company” fully complied with the regulations. It was the plaintiff’s assignor who clearly and intentionally chose not to submit to any independent medical examinations. The letter from the assignor’s attorney sent only after she failed to appear at any of the first noticed three IMEs (one of which was a Saturday) or any of the second noticed IMEs was merely a “red herring” meant solely to excuse her failures and not to comply with the regulations. Specifically, she had found the time on Wednesday, September 10, 2002, to attend a consultation ($230.10) with Dr. Schwartz and submit to SSEP testing ($604.24) with the same doctor, undergo physical therapy ($751.83) with Dr. Pegarum, and be treated ($391.74) by Dr. Konn, a chiropractor, all on the same day. Then on the following day, Thursday, September 11, 2002, she underwent substantial acupuncture treatment ($1,180.56) and analysis with Dr. Yuen. Indeed, she went for treatment on 11 separate days during the middle of the week.

Clearly, if it was reasonable for the assignor to attend all of her scheduled medical treatments during the work week, it was certainly not unreasonably inconvenient for her to attend the scheduled or rescheduled IMEs.

Accordingly, I would modify the order of the lower court insofar as appealed from and deny the plaintiffs’ motion for summary judgment and, upon searching the record, I would dismiss the complaint for the reasons set forth in my dissent in the case of Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co. (7 Misc 3d 18 [2004], supra).

Pesce, P.J., and Patterson, J., concur; Golia, J., concurs in part and dissents in part in a separate memorandum.

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 (Francis D. Ricigliano, J.), entered October 1, 2004. The order, insofar as appealed from, granted plaintiff’s motion for summary judgment and denied defendant’s cross motion for summary judgment.

Order unanimously modified by denying plaintiff’s motion for summary judgment; as so modified, affirmed with $10 costs.

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff health care provider established its 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]). Inasmuch as defendant herein failed to pay or deny the claim 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]). Defendant was not, however, precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite the untimely denial of the claim (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). Contrary to the finding of the [*2]court below, the affidavit of defendant’s special investigator, which, inter alia, revealed numerous discrepancies in the examinations under oath of plaintiff’s assignor and defendant’s insured as to the circumstances surrounding the accident, was sufficient to demonstrate that said defense 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, since defendant raised a triable issue of fact as to whether there was a lack of coverage (see Zuckerman v City of New York, 49 NY2d 557 [1980]), the court below erred in granting plaintiff’s motion for summary judgment.
Decision Date: October 20, 2005

—[*1]

In a proceeding to stay an uninsured motorist arbitration, the petitioner appeals from an order of the Supreme Court, Suffolk County (Mullen, J.), dated December 20, 2004, which denied the petition and dismissed the proceeding.

Ordered that the order is reversed, on the law and as a matter of discretion, with costs to the petitioner payable by Suffolk County Fleet Services, and the matter is remitted to the Supreme Court, Suffolk County, for a framed issue hearing in accordance herewith, and for a new determination of the petition thereafter.

As correctly conceded by the proposed additional respondent, Suffolk County Fleet Services (hereinafter Suffolk), a self-insured municipality is required to provide mandatory uninsured motorist benefits to employees who operate municipal motor vehicles (see Matter of State Farm Mut. Auto. Ins. Co. v Amato, 72 NY2d 288, 293-294 [1988]; Matter of Country-Wide Ins. Co. [Manning], 96 AD2d 471 [1983], affd 62 NY2d 748 [1984]; see also Insurance Law § 3420 [f] [1]). Contrary to Suffolk’s contention, however, a statutory arbitration proceeding to resolve a coverage dispute concerning an uninsured motorist claim is not a claim founded upon a tort, requiring the service of a notice of claim as a condition precedent to the commencement of an action within the meaning of General Municipal Law § 50-e (1) (a) (see County Law § 52; General Municipal Law § 50-i; cf. Matter of City of Syracuse v Utica Mut. Ins. Co., 61 NY2d 691 [1984]; Matter of Manhattan & Bronx Surface Tr. Operating Auth. v Evans, 95 AD2d 470 [1983]). Accordingly, the Supreme Court erred in dismissing the petition for failure to comply with General Municipal Law § 50-e. Although the appellant’s contention that a notice of claim was not a condition precedent is raised for the first time on appeal, we nevertheless reach it as a matter of discretion since it involves a question of law that appears on the face of the record and, if brought to the attention of the Supreme Court, could not have been avoided (see Weiner v MKVII-Westchester, LLC, 292 AD2d 597, 598 [2002]).

Because the court never reached the issue we remit the matter to the Supreme Court, Suffolk County, for a framed issue hearing to determine whether Suffolk received notice given by or on behalf of the injured person as soon as was reasonably practicable (cf. 11 NYCRR 65.11 [m] [2]; Insurance Law § 3420 [a] [3] and [4]; Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487 [1999]; Matter of State Farm Mut. Auto. Ins. Co. [Fuccio], 288 AD2d 46 [2001]).

The appellant’s remaining argument is academic in light of our determination. Florio, J.P., Crane, Fisher and Dillon, JJ., concur.

Civil Court of the City of New York, Bronx County

32861/2005

Julia I. Rodriguez, J.

The actions at issue were commenced by plaintiff/medical providers seeking a money judgment against defendant/insurance carrier for recovery of no-fault medical benefits rendered to its assignor, plus statutory interest and attorneys’ fees. [Insurance Law §5106 et seq; 11 N.Y.C.R.R.R. §65-1.1 et seq.; §65.15[h][1] and §65.17[b][6][v]].

*******

After service of the respective summonses and complaints defendant interposed an Answer alleging numerous affirmative defenses. The defenses relevant to the instant motion(s) included:

(1) Plaintiff has materially misrepresented that a licensed physician was the owner of the plaintiff’s practice with the purpose and intent of inducing Defendant to make payments for medical services which the true owners would not be entitled to receive under the no-fault endorsement of the applicable policies.

(2) The Plaintiff is not a properly licensed facility according to the Business Corporation Law and the Public Health Law, and thus has engaged in the unlawful practice of medicine.

(3) The plaintiff lacks standing to bring the within action as it was controlled, owned, managed and supervised by persons who are not licensed or authorized to own a professional service corporation or authorized to practice medicine in violation of the Business Corporation, Education and Insurance Laws.

(4) Plaintiff is engaged in the unlawful practice of fee splitting in violation of 10 N.Y.C.R.R. §600.9 and the Education Law and Public Law §4500 and therefore is not entitled to recover no-fault benefits.^[FN1]

In accompaniment of each Answer, defendant also served a Demand for Verified Written Interrogatories, a Combined Demand and Notice of Examination Before Trial of the

plaintiff, the agents, servants or employees of said parties having knowledge of the subject matter concerning all of the relevant facts and circumstances in connection with the issues alleged in the plaintiff’s verified complaint.

The Combined Demand sought discovery and inspection of various documents, including but not limited to

the assignment, assignor’s application, bills, copies of all checks and other evidence demonstrating payment received from defendant, complete office notes, all sign-in sheets, plaintiff’s curriculum vitae, plaintiff’s Certificate of Incorporation, and the resume and curriculum vitae of each expert upon whose testimony you will rely upon at the time of trial concerning the subject lawsuit.

Plaintiff’s first response to the Demand for Interrogatories was rejected by defendant as “insufficient and nonresponsive.” Simultaneously with this rejection defendant served a Supplemental Demand for Verified Written Interrogatories and Amended Notice of Examination Before Trial. The amended EBT demand specified two individuals to be deposed: (1) Dr. Dipak Nandi – owner/operator, and (2) Ying-Li – medical provider/acupuncturist.

Thereafter, plaintiffs provided defendant with discovery indicating that Dipak Nandi is a licensed physician and certified acupuncturist, and that he is also sole shareholder in each of the plaintiff/medical corporations. After motion practice to dismiss plaintiffs’ actions for lack of disclosure or to compel plaintiffs to comply with defendant’s discovery demands, said motions were resolved by stipulations which read, in pertinent part:

Plaintiff shall provide responses to defendant’s written discovery demands and supplemental demands pertaining to standing within 60 days, to the extent not already provided: and

Defendant to advise plaintiff in writing within 45 days of receipt of plaintiff’s written discovery responses of a deposition of plaintiff’s alleged owner, Dr. Nandi is required.

Plaintiff reserves the right to move for a protective order regarding Dr. Nandi’s deposition.

********

Before the instant court are nine motions where defendant, Travelers Insurance Company, seeks an order pursuant to §3126 dismissing the actions for plaintiffs’ failure to provide Court-ordered discovery, or in the alternative, for an Order compelling plaintiffs to provide all outstanding discovery and produce Dr. Nandi and Ying-Li to ascertain evidence of the entities’ corporate structure and method of payment and sum of salaries.

The court sua sponte hereby consolidates the motions and respective cross-motions for protective orders in the nine above-reference actions solely for purposes of disposition herewith.

********.

In opposition, plaintiffs present that Dr. Nandi was neither the treating acupuncturist or the individual who submitted the bills in these cases. Plaintiffs submit that they have already provided defendant with incorporation documents, licenses, payroll information and complete responses to defendant’s discovery demands, including plaintiffs’ lease agreements. Plaintiffs contend that the discovery establishes that (1) Dr. Nandi is a licensed medical doctor and that both he and the treating acupuncturists are State-certified; (2) that the plaintiff/medical facilities are lawfully incorporated entities; and (3) that Dr. Nandi owns and operates the plaintiff [*3]corporations and other acupuncture clinics which he is qualified to do under State law.

In its Repl[ies] defendant does not dispute that it has received the relevant corporate documents, medical and acupuncturists’ licenses. However, defendant argues that still outstanding are Dr. Nandi’s and plaintiff/corporations’ tax returns, salary records for Dr. Nandi and his employees, and facility lease agreements between the medical providers and other entities, presumably, management companies. Defendant further argues that the deposition of Dr. Nandi:

. . . is material and necessary to the defense of this action and goes to the heart of the issue in this case, which is whether [the medical providers were] fraudulently incorporated and thus not entitled to no-fault benefits. The information sought is relevant to resolve the issue of whether the ]plaintiffs are] properly licensed to the New York State Business Corporation Law and Education Law as the plaintiff[s] will not be able to collect benefits under the no-fault law if they cannot establish standing [¶8 of Reply].

***********

Before consideration of whether medical providers were fraudulently incorporated and thus not entitled to no-fault benefits, the first issues for the court are whether defendant preserved a defense premised on fraud in any of its denials, and if it did not so, whether the fraud alleged falls within the category of defenses which are not waived by the insurer despite failure to raise it in a timely denial.

It is now settled that an insurer must adhere to a “timely timed process” of denial or waive defenses which are not asserted within 30 days or tolled by the verification process. Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274, 660 NYS2d 536, 683 NE2d 1 (1997). [11 N.Y.C.R.R. §§65.15 et seq, 3.5(b)(d)(e), 65-3..6(b), 65-3.8 (a)(1) et seq.] The only exceptions to the 30-day rule to deny or pay the claim are where the insurer’s basis for denying the payment is based on lack of coverage of the policy. Central General Hospital v. Chubb Group of Insurance Companies, 90 NY2d 195, 199, 681 NE2d 413, 659 NYS2d 246 (1997) (a defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident is a lack of coverage defense which is not precluded by an untimely denial). The seminal language in Chubb reads:

. . . The denial of liability based upon lack of coverage within the insurance agreement . . . is distinguishable from disclaimer attempts based on a breach of a policy condition [cites omitted] . . . Strict compliance with the time requirements of both the statute and regulations may be obviated and the preclusion remedy rendered unavailable when denial of claims is premised on a lack of coverage . . . We would not . . . extend this exceptional exemption to excuse [defendant insurer’s] untimely defense in relation to the treatment being deemed excessive by the insurer. That would not ordinarily implicate a coverage matter and, therefore, failure to comply with the Insurance Law time restriction might properly preclude the insurer from a belated rejection of the billing on that basis.

Central General Hospital v. Chubb Group, supra , 90 NY2d 195 at 199.

In this case, none of the denials issued by defendant prior to commencement of these actions alleged a staged accident or lack of coverage, or any scintilla sounding in fraud. Indeed, [*4]the bulk of the denials herein merely stated:

Per New York State Law Regulation 68, “Upon request by the Company, the eligible injured person or someone on his behalf shall:

(a) execute a written proof of claim under oath;

(b) provide authorization that will enable the Company to obtain medical records; and

(c) provide any other pertinent information, your entire claim No-Fault Benefits is denied.

[sic] DUE TO: FAILURE TO SUBMIT ALL REQUESTED INFORMATION IN A REASONABLE TIME FRAME, LACK OF VERIFICATION AND NON-COOPERATION. THEREFORE, YOUR BILLS [sic] ARE DENIED.^[FN2]

At this juncture of the analysis, defendant is not entitled to depose Dr. Nandi or the treating acupuncturists for the purposes it proposes, because defendant failed to preserve any defense sounding in fee splitting, improper incorporation or licensing in its denial. However, the next inquiry is whether any of these defenses falls within the narrow exception(s) of defenses which are not waived by an untimely denial.

*******

Defendant argues that it is entitled to depose Dr. Nandi because now “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law.” State Farm Mutual Automobile Co. v. Mallela, et al, 4 NY3d 313, 321, 827 NE2d 758, 794 NYS2d 700 (2005).

Mallela concerned a lawsuit filed by State Farm insurance company in the United States [*5]District Court for the Eastern District of New York seeking a judgment declaring that

it need not reimburse defendants – fraudulently incorporated medical corporations – for assigned claims submitted under no-fault. . . . According to the complaint, the unlicensed defendants paid physicians to use their names on paperwork filed with the State to establish medical service corporations. Once the medical service corporations were established under the facially valid cover of the nominal physician owners, the nonphysicians actually operated the companies. To maintain the appearance that the physicians owned the entities, the nonphysicians caused the corporations to hire management companies (owned by the nonphysicians), which billed the medical corporations inflated rates for routine services. In this manner, the actual profits did not go to the nominal owners but were channeled to the nonphysicians who owned the management companies.

The claim was that the medical providers in Mallela were in violation of §§1504 and 1508 of the Business Corporation Law (BCL). BCL §1504(a) states, in pertinent part, that “no professional service corporation may render professional services except through individuals authorized by law to render such professional services as individuals.” The Superintendent of Insurance had determined that insurance carriers may withhold payment of no-fault claims which had been assigned to those medical providers which were owned or controlled by non-physicians. The Superintendent’s regulation is found in Section 65-3.16(a)(12) of 11 N.Y.C.R.R, which reads:.

Measurement of no-fault benefits. (a) Medical expenses.

(12) A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.

One contention by the medical providers in Mallela was that even if they were not in compliance with corporate licensing requirements, they were entitled to payment because all personnel who actually treated the patients rendered their services within the scope of their licensed specialties, and therefore, this extent of licensing compliance was “within the regulatory framework for reimbursement.” 4 NY3d at 321.

The Mallela Court found the Superintendent’s Regulation [§65-3.16(a)(12)] valid and that it was undermined by the claim that the individual practitioners who treated the patients were properly licensed within their fields:

Where, as here, the Superintendent has properly crafted a rule within the scope of his authority, that rule has the force of law and represents the policy choice of this State.

4 NY3d at 321.

Based upon Mallela, this court holds that the defenses of fraudulent incorporation and unlawful fee splitting are proper exceptions to the 30-day rule because said conduct is specifically barred by statute. Mallella, supra (insurance carriers may withhold payment of claims to medical corporations which are in violation of specific statutes concerning [*6]incorporation and fee splitting with non physicians). Concomitantly, these defenses are not waived or precluded by an untimely denial See also Ozone Park Medical Diagnostic Associates v. Allstate Insurance Company, 180 Misc2d 105, 109, 689 NYS2d 616, 618 (A.T. 2d Dep’t 1999) (where the specific wording a statute [Public Health Law §238-a] prohibits a financial relationship between a referring practitioner and the medical provider, then “it logically follows that the 30-day limitation . . . [rule] would not apply if the instant case fell within the ambit of [the statute]”).

However, in this case defendant fails to demonstrate by “fact or founded belief” that the medical corporations were not properly licensed either at their inception or thereafter, that non-physicians are practicing medicine at plaintiffs’ facilities and/or that the physicians billing for services rendered are not properly licensed in their respective fields. Notably, defendant is in receipt of the Certificate(s) of Incorporation, copies of medical licenses and registrations, and copies of lease and management agreements for several of the plaintiffs herein.^[FN3] Significantly, defendant does not dispute the validity of any corporate registrations and/or medical licenses provided by plaintiff(s), or present legal authority prohibiting Dr. Nandi from owning more than one medical facility. There is no submission by an individual with personal knowledge that any investigation has been conducted at the New York State Department of Education and/or Secretary of State, or other source, which contradicts the corporate and licensing data provided by plaintiffs. Rather, via an affidavit by Kathy Aplin, a manager employed by defendant in its Special Investigative Unit, defendant states it is its “contention” that the 10 [ten] professional medical corporations, including plaintiffs herein, allegedly owned by Dr. Dipak Nandi, a licensed acupuncturist, are in fact owned by non-medical personnel. Ms. Aplin states that evidence collected to date indicates that Dr. Nandi’s facilities are managed, controlled and operated by unlicensed individuals who ultimately profit from these medical facilities in direct violation of the Business Corporations Law and Educational Law of the State of New York. However, Ms. Aplin fails to submit “the evidence collected to date” applicable to the actual medical providers named in the captions herein.

In addition, Ms. Aplin offers information which is unrelated to the plaintiffs before the court. For example, Ms. Aplin alleges that Dr. Nandi was not certified to practice acupuncture in January 2001 when Universal Acupuncture was incorporated. The court deems this information irrelevant because Universal Acupuncture is not a named plaintiff herein, it is undisputed that Dr. Nandi obtained certification to practice acupuncture in 2001 after January 2001, and all claims in the various complaints are for services rendered after 2001.

Ms. Aplin attaches numerous lease agreements between parties that are not related to this lawsuit. As to those lease agreements which involve one of the parties named in the actions before the court, those lease agreements expired in either 2001 or 2002; there is no allegation that said agreements were renewed and their relevance to the no-fault claims at issue. [*7]

Ms. Aplin refers to documents obtained from a lawsuit against Dr. Nandi, but fails to identify the date said lawsuit was commenced, the caption and index number, the court in which it appeared, and the disposition, if any.

Ms. Aplin states that Travelers “became concerned” that many of the bills submitted by plaintiffs were for unnecessary treatment which “was motivated by interests other than the best interests of the patients” [¶24]. However, she cites no specific findings of patients being rendered unnecessary treatment, and none of the denials herein stated medical non-necessity as a ground for denial of plaintiffs’ claims. Cf. A.B. Medical Services PLLC v. State Farm Mutual Automobile Insurance Company, 4 Misc 3d 83, 84, 781 NYS2d 822, 823 (9th & 10th Jud. Dists. 2004) (examinations of the assignors under oath revealed significant discrepancies and raised questions of fact as to whether medical services were rendered after symptoms abated).

Clearly, Ms. Aplin’s affidavit is replete with hearsay, conjecture and speculation and, therefore, insufficient to raise an issue of fact as to plaintiffs’ fraudulent corporation or other specific fraudulent conduct.

This court holds that Mallela did not open a valve authorizing full disclosure into corporate licensing matters absent good cause and/or reasonable foundation in no-fault medical provider actions. Significantly, Mallella referred to the role of Superintendent of the Insurance in investigating claims of regulatory breaches, and implied that the insurance carrier would conduct its investigation within the confines of the statutory verification process. Consider, Mallela offered the caveat that the no-fault regulatory scheme

does not permit abuse of the truth-seeking opportunity that 11 N.Y.C.R.R. 65-3.16(a)(12) authorized. Indeed, the Superintendent’s regulations themselves provide for the agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause (see 11 N.Y.C.R.R. 65-3.2[c]. In the licensing context, carriers will be unable to show ‘good cause’ unless they can demonstrate behavior tantamount to fraud.”

The Mallella Court cited to and presumed that carriers follow the “practice principles” enunciated in §65-3.2[c]:

Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.

Consequently, Mallela did not alter the settled rules that (1) an insurer’s lack of coverage defense must be premised on fact or founded belief [General Hospital v. Chubb Group, supra ,], (2) that an insurer must stand or fall upon those defenses raised in a timely denial preserved with tolling mandates [Presbyterian Hospital v. City of New York, supra ; Inwood Hill Medical P.C. v. Allstate Insurance Company, 3 Misc 3d 1110(A), 787 NYS2d 678, 2004 {3 Misc 3d 1110(A)} WL 1381082 (Div. Ct. NY Co. 2004)], (3) that discovery in no-fault actions is tailored by the grounds asserted in the denial [Metropolitan Radiological Imaging, PC v. State Farm Mutual Automobile Insurance Company, 7 Misc 3d 675, 790 NYS2d 373 {7 Misc 3d 675} (Civ. Ct. [*8]Qns. Co. 2005) ; and (4) Mallella did not define, expand or restrict the meaning of “fraud.”^[FN4]

However, while the Mallela Court did not define fraud, it defined “good cause:”

In the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do.

4 NY3d at 322. Thus, a new question is what constitutes “behavior tantamount to fraud?” While this court does not venture to offer an example, defendant’s submission in this case lacks a reliable foundation to infer that the medical providers are engaging in behavior that can be described as “tantamount to fraud.” Consequently, defendant does not demonstrate that it is entitled to the depositions it seeks, since it is axiomatic that Article 31 of the CPLR [Civil Practice Law and Rules] is not to be utilized for ‘fishing expeditions.’

It remains that after Mallela the distinction between denials based on lack of coverage and all others, made in Chubb, supra , is still the prevailing law. Fair Price Medical Supply Corp. v. Travelers Indemnity Company, __ Misc 3d __, __ {9 Misc 3d 76} NYS2d. __, 2005 WL 1994132, 2005 NY Slip O. 25343. (A.T. 2d & 11th Jud. Dists. 2005). In Fair Price the Appellate Term first found that the insurer did not deny the claim within 30 days, and then considered whether the insurer’s claim of fraud was precluded by the untimely denial. Specifically, the insurer claimed that it was not required to pay the medical provider’s claim because the eligible injured person, the assignor, stated he never received the medical supplies. The Appellate Term adhered to Chubb, supra , and held in favor of the medical provider, stating that a:

defense based on a provider’s fraudulent scheme to obtain no-fault benefits [was] precluded by defendant’s untimely claim denial. . . . we are bound by the majority’s unequivocal construction [in Chubb] of the No-Fault Law which limits an insurer’s ability to resist ‘ill-founded, illegitimate and fraudulent claims’ submitted by providers of medical services or medical equipment to the ‘strict, short-leasehed contestable period’ set forth in the verification protocols [cites omitted]. The clear implication is that a defense based on a provider’s alleged fraudulent claim for no-fault benefits is precluded by an insurer’s failure effectively to invoke its remedies in the ‘contestable period,’ one of the ‘tradeoff[s] of the no-fault reform’ which the Legislature recognized as the cost of providing ‘prompt uncontested’ first-party insurance benefits.

After Mallela insurance carriers are still required to make a showing that the defense of fraud is well-founded and in good faith. See KC Ocean Diagnostic Imaging PC v. Utica Mutual Insurance Company, __ Misc 3d ___, N.Y.L.J. 7/18/05, p.37, col. 4 (A.T. 2nd & 12th Jud. Dists.) (“defendant [insurer] is not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite its untimely denial of the claim” and evidence was sufficient to sustain defense]; cf., Medical Services PLLC, Somun Acupuncture, PC, Square Synogogue Transportation Inc. V. GEICO Casualty Insurance Co., __ Misc 3d __, N.Y.L.J. May 5, 2005, p.31, col.2 (A.T. 2nd & 12th Jud. Dists.) (although defendant/insurer not “precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme” in an untimely denial, defendant’s evidence “was insufficient to demonstrate that the defense was based upon a “‘founded belief that the alleged injur[ies] did not arise out of an insured incident” [cites omitted]; AB Medical Services PLLC v. Eagle Insurance Co, 3 Misc 3d 8, 9, (A.T. 2nd & 11th Jud. Dists. 2003) (an insurer’s “founded belief” that an accident was staged cannot be based upon “unsubstantiated hypothesis and supposition”).

Cf. Metroscan Imaging PC v. GEICO Insurance Company, 8 Misc 3d 829, 797 NYS2d 737 {8 Misc 3d 829} (Civ. Ct. Qns. Co. 2005), where the court consolidated sixty (60) actions for purposes of permitting amendment of the insurer’s answers to include a defense of fraudulent incorporation, and scheduled a framed hearing on that issue. Apparently, the insurer in Metroscan presented that the doctor and owner of the professional corporations “sold his medical license to [another medical group identified by name] to maintain the appearance that the companies were owned by a physician [also identified] [w]hen in actuality the corporate entities were owned, controlled and operated by non-physicians.” Id. 8 Misc 3d at 831, 797 NYS2d at 739. By contrast, defendant herein does not identify one non-licensed individual who either owns, controls or operates the medical corporations owned by Dr. Nandi, even though defendant has been provided with management agreements and income tax information for certain employees.

For the foregoing reasons, defendant’s motion(s) to dismiss the complaint(s) or, in the alternative, to compel the deposition of Dr. Nandi and Ying Li and/or other treating acupuncturists are denied in their entirety; and plaintiffs’ cross-motion(s) for protective order are granted.

In light of the foregoing, the court declines to address plaintiffs’ further argument that Mallela is limited to claims arising on or after April 4, 2002, deferring that discussion to when that is the pertinent issue before the court. See Multiquest PLLC v. Allstate Insurance Co., __ {9 Misc 3d 76} NYS2d __, 2005 WL 2085966, 2005 NY Slip Op. 25356 (Civ. Ct. NY 2005) (the intent of the Mallela III Court is that payment may be withheld to claims arising prior to April 4, 2002 where the medical providers were incorporated unlawfully).

Dated: Bronx, New York

October 6, 2005

________________________________

Julia I. Rodriguez, Judge of the Civil Ct.

Footnotes

Footnote 1: In the matter of Maple Medical Acupuncture, a/a/o Cathy Mayo, Index 079563/2004, the Verified Answer did not allege any defense related to corporate structure and ownership, licensing or fee splitting.

Footnote 2: In the matter of Maple Medical Acupuncture, a/a/o Cathy Mayo, Index 79563/2004, the first denial dated 5/10/02 reiterates the language noted herein. Inexplicably, there is a subsequent denial dated 7/9/02 which reads: Based on the inconsistencies in the statement obtained from Cathy Mayo, the facts of the loss were not verified. Therefore, your no fault claim is denied. The court notes the both denials omit the date of bill, period of the bill and the date the bill was received by the Insurer. In the matter of Delta Medical Acupuncture, P.C., a/a/o Basilicia Rodriguez, Index 79564/2004 the only denial attached is not dated and merely states: Due to inconsistencies in the statement given, the facts of the loss could not be verified. Therefore, the bill has been denied. In the matter of Delta Medical Acupuncture, a/a/o Kwanza Adams, Index 79565, the denial reads: In accordance with the NYS No-Fault Law, an Independent ACUPUNCTURE [sic] Medical Examination was held on 7/23/01 by Doctor Baron. After completion of exam and review of medical reports submitted, Doctor Baron indicated: THERE WAS NO FURTHER NEED OF ACUPUNCTURE TREATMENT. Therefore, all further ACUPUNCTURE benefits are denied.

Footnote 3: Plaintiff provided defendant with management agreements by Triborough Healthcare Management Corp. a non-party herein, in the matter(s) of : Statewide Medical, a/a/o Raghunandan, Index 32816/05; Continental Medical a/a/o McKenna, Index 77931/04; Continental Medical a/a/o Fernandez, Index 53514/03. Dr. Nandi is the sole owner and shareholder of Triborough Healthcare.

Footnote 4: The fact that Mallela declined to further define fraud was discussed by the court in RDK Medical v. General Assurance, 8 Misc 3d 1025(A), 2005 WL 1936342 at 4 (Civ. Ct. NY Co. 2005), which noted that as of this writing no appellate court has articulated a general “fraud” defense that is not subject to the preclusion rule [cites omitted] . . . the Court of Appeals was given the opportunity to do so in the “fraudulently incorporated enterprises” case [i.e., Mallela], but declined to do so, relying instead on a governing regulation [cites omitted].

Civil Court, Kings County

96502/04

Eileen N. Nadelson, J.

Plaintiff, a medical provider, instituted this action to recover first party No-Fault benefits from Defendant insurer. Plaintiff moved for summary judgment, alleging that Defendant neither paid nor denied the claim within the statutorily mandated thirty-day period after receipt of the claims. Ins. Law sec. 5106; Regulations sec. 65-3.8. Plaintiff further alleged that the Denial of Claim form (NF-10) was defective in that it did not indicate the reason for the denial with specificity as is required by section 65-3.4( c) of the Regulations.

Defendant, in opposition, claimed that the denials were timely and that the grounds for the denial are sufficiently specific to apprise Plaintiff as to the reasons for not paying the claim.

After argument, the court has concluded that the NF-10 form was properly mailed within the statutory time frame. Consequently, the only issue remaining for the court is whether Defendant’s reason for the denial, as stated in its Denial of Claim form, is legally sufficient to forestall Plaintiff’s motion for summary judgment. [*2]

The explanation for Defendant’s denial of the first party benefits, as stated in section 33 of its NF-10, is: “The Claim is Denied Based On An Examination Under Oath.”

In 1979, the New York Court of Appeals established the general guidelines for insurers when denying coverage. According to General Accident insurance Group v. Cirucci, 46 NY2d 862, 414 N.Y.S. 2d 512 (1979):

...the notice of disclaimer must promptly apprise the claimant with a high

degree of specificity of the ground or grounds on which the disclaimer is

predicated. Absent such specific notice, a claimant might have difficulty

assessing whether the insurer will be able to disclaim successfully. This

uncertainty could prejudice the claimant’s ability to ultimately obtain

recovery. In addition, the insurer’s responsibility to furnish notice of the

specific ground on which the disclaimer is based is not unduly burdensome,

the insurer being highly experienced and sophisticated in such matters.

Therefore, a timely denial alone does not avoid preclusion of a provider’s motion for summary judgment where said denial is factually deficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law. Nyack Hospital v. Metropolitan Property & Casualty Ins. Co., 16 AD3d 564, 791 N.Y.S. 2d 658 (2d Dept. 2005); Nyack Hospital v. State Farm Mut, Auto. Ins. Co., 11 AD3d 664, 784 N.Y.S. 2d 136 (2d Dept. 2004).

The blanket statement of Defendant on its NF-10 is too vague and ambiguous to alert Plaintiff as to the actual grounds for the denial of benefits. Stating that a denial is based on an Examination Under Oath, without indicating what about that examination merits denial of first-party benefits under No-fault law, does not set forth a factual basis on which to mount a meritorious legal defense. Park Neurological Services, P.C. v. Geico Insurance, 4 Misc 3d 95, 782 N.Y.S. 2d 507 (Sup. Ct. App. Term 2004). Therefore, because Defendant’s explanation of its reasons for denying Plaintiff’s claim on its NF-10 form was not stated with a high degree of specificity, it is insufficient to overcome Plaintiff’s summary judgment motion. All-Country Medical & Diagnostic P.C. v. Progressive Casualty Insurance Co., 8 Misc 3d 616, 795 N.Y.S. 2d 434 (Nassau County 2005).

The clerk is ordered to enter judgment in favor of Plaintiff in the amount of $1024.00, plus statutory interest, costs and attorneys’ fees.

Dated: October 3, 2005

__________________________

EILEEN N. NADELSON, J.C.C.