SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal by plaintiff from so much of an order of the District Court, Nassau County (S. Pardes, J.), entered on November 3, 2003, as denied its motion for summary judgment.

Order insofar as appealed from unanimously affirmed with $10 costs.

In this action to recover 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 the statutory claim form, setting forth the fact and the amount of the loss sustained (see Insurance Law § 5106 [a]; New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; 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 failed to pay or deny the claim within the 30-day claim determination period (11 NYCRR 65.15 [g] [3]), 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 collision was in furtherance of an insurance fraud scheme, despite the untimely denial of plaintiff’s claim (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). The affidavit submitted by defendant’s special investigator was sufficient to demonstrate that defendant’s denial was based upon a “founded belief that the alleged injur[ies] do[] not arise out of an [*2]insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). 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: November 19, 2004

—[*1]

Appeal from an order of the Supreme Court, Erie County (Donna M. Siwek, J.), entered June 17, 2003. The order granted the petition to vacate an arbitration award and denied respondent’s petition to confirm the award.

It is hereby ordered that the order so appealed from be and the same hereby is affirmed without costs.

Memorandum: Supreme Court properly granted the petition seeking to vacate the arbitration award directing petitioner to pay additional personal injury protection (APIP) benefits to respondent. Respondent was injured in an automobile accident on February 20, 1999 while operating a vehicle that belonged to a relative. That vehicle was insured by State Farm Insurance Company (State Farm), and respondent received no-fault insurance benefits from State Farm. On February 3, 2000, respondent, through an attorney whom she had recently retained, gave petitioner written notice of her claim for APIP benefits. Petitioner denied the claim because respondent failed to give notice within 90 days of the accident as required by respondent’s policy with petitioner. The parties proceeded to arbitration and the arbitrator determined that it was impossible for respondent to have given notice within 90 days because she was unaware of the seriousness of her condition until February 2000. That determination was upheld by the master arbitrator. Petitioner sought to have the award vacated and respondent petitioned for confirmation of the award.

As a preliminary matter, the court properly determined that it could not disturb the award on the ground that it was based upon an error of law, as urged by petitioner, but only on the ground that it lacked a rational basis (see Matter of Allen [New York State], 53 NY2d 694, 696 [1981]; see also CPLR 7511 [b] [1]). The policy required respondent to give notice “as soon as reasonably practicable, but in no event more than 90 days after the date of the accident, unless the eligible injured person submits written proof that it was impossible to comply with such time limitation due to specific circumstances beyond such person’s control.” We note that this notice requirement is more stringent than notice requirements for supplemental underinsured motorist benefits, which typically require notice as soon as practicable (see e.g. Medina v State Farm Mut. [*2]Auto. Ins. Co., 303 AD2d 987, 988 [2003]; see generally Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 494-495 [1999]). Even assuming, arguendo, that respondent was not aware of the seriousness of her injuries until February 2000, the record establishes that respondent sought medical treatment for her injuries two days after the accident and, because her symptoms continued to worsen, she was referred to a specialist, who, among other things, ordered an MRI within the 90-day period. That physician thereafter referred respondent to a neurosurgeon who ultimately advised respondent that surgery was required. Thus, we conclude that there is no rational basis for the arbitrator’s finding that it was impossible for respondent to provide notice to petitioner within the 90-day period because of circumstances beyond her control, as required by the policy.

All concur except Pine, J.P., and Lawton, J., who dissent and vote to reverse in accordance with the following memorandum.

Pine, J.P., and Lawton, J. (dissenting). We respectfully dissent. We concur with the majority that Supreme Court properly determined that it could not disturb the arbitrator’s award on the ground that it was based upon an error of law. We differ only with the majority’s holding that “there is no rational basis for the arbitrator’s finding that it was impossible for respondent to provide notice to petitioner within the 90-day period.” Because the finding of the arbitrator was based upon the weighing of factual matters and the record supports that determination, the court is powerless to substitute its determination for that of the arbitrator (see Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, 83 [2003]; Matter of New York State Correctional Officers & Police Benevolent Assn. v State of New York, 94 NY2d 321, 326 [1999]; Matter of Singleton [Fireman’s Fund Ins. Co.], 247 AD2d 868 [1998]). We would therefore reverse the order, deny petitioner’s petition, grant respondent’s petition and confirm the arbitrator’s award. Present—Pine, J.P., Scudder, Kehoe, Martoche and Lawton, JJ.

—[*1]Appeal from an order of the Supreme Court, Erie County (Donna M. Siwek, J.), entered May 14, 2003. The order granted the petition for a permanent stay of arbitration.

It is hereby ordered that the order so appealed from be and the same hereby is affirmed without costs for reasons stated in decision at Supreme Court.

All concur except Gorski, J., who dissents and votes to reverse in accordance with the following memorandum.

Gorski, J. (dissenting). I respectfully disagree with the position taken by the majority. I conclude that it was error to grant the petition to stay arbitration of this insurance dispute.

In its decision, Supreme Court acknowledged that, on January 3, 2002, respondent, a pedestrian, was struck by an unidentified car driven by an unidentified driver and sustained personal injuries. The court also acknowledged that petitioner issued a motor vehicle liability policy with a supplementary uninsured motorists (SUM) endorsement to respondent that was in effect on January 3, 2002. The court concluded that respondent’s November 6, 2002 notice to petitioner that respondent intended to seek SUM benefits under his policy was untimely.

It is apparent from the record, however, that, on January 10, 2002, just one week after the accident, respondent gave a recorded statement to an independent insurance adjusting company at petitioner’s request. That recorded statement was reduced to a written transcript and signed by respondent on January 21, 2002. It indicated that the vehicle that struck him could not be identified because it left the scene. The statement also indicated that respondent did not see the vehicle that struck him and could not identify the make or model of the vehicle because he was struck from behind. The statement further set forth the extent and nature of the injuries suffered by respondent. It is undisputed that respondent timely submitted a claim for no-fault benefits to petitioner.

By letter dated November 6, 2002, respondent’s attorney placed petitioner on notice of a potential SUM claim. On November 19, petitioner denied SUM coverage on the ground of late [*2]notice. On December 12, petitioner received a demand for arbitration, and subsequently brought the instant petition to stay the arbitration. As noted above, the court granted the petition and permanently stayed the arbitration, holding that respondent failed to timely notify petitioner of his claim for SUM benefits under his policy. The court determined that respondent did not give notice of his SUM claim “as soon as practicable,” a condition of SUM coverage set forth in the policy.

Respondent, who suffered a fractured arm that required surgery, received no-fault benefits from petitioner. He could only have received those benefits pursuant to Insurance Law § 5103 (a) (2), which requires insurers to provide coverage to their policyholders “for loss arising out of the use or operation of . . . an uninsured motor vehicle.”

I therefore believe that the requirement that respondent provide his insurer with notice of his claim “as soon as practicable” was met by the recorded statement given to the insurer one week after the accident, fully detailing the claim. “Construing the notice liberally in [respondent’s] favor, [respondent] provided [his] insurer with sufficient notice of a claim for uninsured motorist coverage” (Matter of Merchants Mut. Ins. Co. v Falisi, 99 NY2d 568, 569 [2003], rearg denied 100 NY2d 535 [2003]). I believe that it is “inconsistent and inequitable” for petitioner to contend that it did not have timely notice of respondent’s claim for SUM benefits after petitioner took a recorded, signed statement of respondent 10 months earlier containing all of the essential elements of such claim (Matter of New York Cent. Mut. Fire Ins. Co. [Guarino], 11 AD3d 909, 910 [2004]).

I would therefore reverse the order and deny the petition. Present—Pigott, Jr., P.J., Gorski, Martoche and Hayes, JJ.

Civil Court of the City of New York, Kings County

323338/03

Sylvia Hinds-Radix, J.

Plaintiffs commenced this action to recover first-party no-fault benefits for medical services rendered to their assignor, pursuant to Insurance Law § 5101 et. seq., as well as statutory interest and attorney’s fees. Thereafter, plaintiffs moved for summary judgment on their claims in the amount of $14,628.06, on the ground that defendant failed to pay or to deny their claims within the statutory 30-day period as required by Insurance Law section 5106 [a] ( Amaze Med. Supply Inc.v. Eagle Ins. Co., NYLJ, Dec. 29, 2003, at 21 Col 1 [App Term, 2d &11th Jud Dists]).

1. SUMMARY JUDGMENT STANDARD

The rule governing summary judgment requires the proponent of a summary judgment motion to make a prima facie showing of entitlement to judgment as a matter of law, tending admissible evidence to eliminate any material issues of fact from the case ( Winegrad v. New York University Medical Center, 64 NY2d 851 [1985]; Torterello v. Carlin, 260 AD2d 201 [1st Dept. 1999]). The burden of production as well as the burden of persuasion always rests on the proponent of the motion (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]).

If the moving party satisfies those standards, the burden shifts to the opponent to rebut [*2]that prima facie showing by presenting evidence in admissible form establishing the existence of triable issues of fact ( see, CPLR 3212, subd [b]; Zuckerman v. City of New York, 49, NY2d 557 [1980]; Davenport v. County of Nassau, 279, AD2d 497 [2001]; Pragano v. Kingsburg, 182 AD2d 270 [2nd Dept.1992]; Kaufman v. Silver, 90 NY2d 204, 208 [1997]). It is well settled that Summary judgment should be denied if there is any doubt as to the existence of a triable issue of fact ( Freese v. Schwartz, 203 AD2d 513 [2nd Dept. 1984]).

When deciding a motion for summary judgment, the court must review the evidence in the light most favorable to the non-moving party, and must give that party all of the reasonable inferences that can be drawn from the evidence ( Louniakov v. M.R.O.R. Realty Corp., 282 AD2d 657 [2nd Dept. 2001]; SSBSS Realty Corp. v. Public Service Mut. Ins. Co., 253 AD2d 583, 584-585 [1st Dept. 1998]).

11. COVERAGE OF MEDICAL EXPENSES PURSUANT TO INSURANCE LAW 5106 (a)

Pursuant to both the Insurance Law and the regulations promulgated by the Superintendent of Insurance, within (30) thirty days after a claimant submits proof of the facts and the amount of loss sustained, an insurer is required to either pay or deny a claim for insurance coverage of medical expenses arising from a motor vehicle accident (see, 11 NYCRR § 65.15 (g) (3); Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 NY2d 195, 200 [1997]; Mount Sinai Hosp., v. Triboro Coach, 263 AD2d 11, 16 [2nd Dept. 1999]; New York Med. Center of Queens v. Country-Wide Ins. Co., 295 AD2d 583 [2nd Dept. 2002]).

The 30 day period may be extended by a request for verification pursuant to 11NYCRR

65.15 (d) (1) (2). (See, New York Hosp. Med. Ctr. of Queens v. Country Wide Ins. Co., 295 AD2d 584 [2nd Dept. 2002]; Presbyterian Hosp. In the City New York v. Maryland Cas. Co., 90 NY2d 279 [1997]).

If the requested verification has not been supplied to the insurer within 30 calendar days, after the original request, the insurer shall issue a follow-up request within 10 calendar days of the insured failure to respond. See, 11 NYCRR 65.15 (e) (2), now 15 days 11NYCRR 65-3.5 (b). S&M Supply v. Allstate Insurance Co., 2003 NY SLIP Op 51191 [U] [App Term, 2d & 11thJud Dists]. “An insurer shall not issue a denial of claim form . . . prior to its receipt of verification of all of the relevant information requested . . . “(New York Hosp. Med. Ctr. Of Queens v. Country-Wide Ins. Co., 295 AD2d 583, 585 [2002]; Glassman D.C., PC v. State Farm Mut. Auto. Ins. Co., 192 Misc2d 264, 265 [App Term, 2nd & 11 Jud Dists. 2002]).

If the additional verification required by the insurer is a medical examination, the insurer shall schedule the examination to be held within 30 calendar days from the date of receipt of the prescribed verification forms (see, 11 NYCRR 65.15 [d] [3]).

The only exception to the 30 day rule is where a carrier’s untimely denial is based upon the defense of lack of coverage, or a medical condition for which the patient was treated was not “related to the accident” (Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 NY2d 195 [1997]). To withstand a motion based on this defense, the insurer has the burden to come forward with proof in admissible form to establish “the fact” or the evidentiary foundation for its belief that the patient’s treatment was unrelated to the accident (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). [*3]

Failure to pay or deny a claim within the 30- day period requirement, absent a request for additional verification, renders benefits “overdue,” and precludes the insurer from disclaiming liability based on a breach of a policy condition or a statutory exclusion defense (St. Clare’s Hosp. v. Allicity Ins. Co., 201 AD2d 720 [2nd Dept. 1994]). All overdue payments bear interest at a rate of 2% per month, and the claimant is entitled to recover attorney’s fees where a “valid claim or portion” was denied or overdue (see, Insurance Law 5106 (a); Presbyterian Hosp. in the City of New York v. Maryland Cas. Co., 90 NY2d 274 [1997]).

III. PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

In support of its motion for summary judgment in this action, plaintiffs submitted the affidavit of David Safir, who states in his affidavit that he is the billing manager for the plaintiffs. Mr. Safir avers that he personally mailed all of the claim forms for no-fault medical services to the defendant, and defendant failed to pay or deny the claims within thirty days of receipt of the claims.

A review of plaintiffs’ motion papers indicates that plaintiffs established their prima facie entitlement to judgment by submitting proof that the statutory claim forms were mailed and received, and that defendant did not pay or deny the claims within the prescribed statutory 30-day period (Amaze Med. Supply Inc., v. Eagle Ins. Co., NYLJ, Dec. 29, 2003 [App Term, 2d & 11th Jud Dists]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]). The burden then shifted to the defendant to demonstrate the existence of a triable issue of fact requiring a trial on the action ( Alvarez v. Prospect Hosp., 68 NY2d 320, 324 [1986]; St. Luke’s Roosevelt Hosp., v. American Tr. Ins. Co., 274 AD2d 511 [2nd Dept. 2000]).

IV. DEFENDANT’S OPPOSITION

Defendant, in its opposition to plaintiffs’ motion, admits to receipt of plaintiffs’ claims but contends that it denied the claims based on multiple grounds of (1) failure of plaintiffs’ assignor to appear for Scheduled Independent Medical Examinations (2) fees for medical supplies purchased were excessive as per the Workers’ Compensation Schedule (3) injury causation and (4) medical necessity.

(a) Failure to Appear for Scheduled Independent Medical Examinations

Defendant alleges that plaintiffs’ assignor violated a policy condition of the insurance policy by failing to appear for scheduled independent medical examinations (IMEs), thus precluding any recovery of benefits thereunder. In support of its allegation, defendant relies on the affidavit of Dan Ross, an employee of Alliance Health Medical, P.C., which is an outside entity that provides services for the defendant.

Mr. Ross states in his affidavit that his review of the file, and records pertinent to plaintiffs’ assignor, revealed that, defendant forwarded IME scheduling letters dated June 10, 2003 to plaintiffs’ assignor, requesting her to attend IMEs scheduled for June 26, 2003, and June 30, 2003. Mr. Ross further states that on July 2, 2003, Alliance Health Medical notified the defendant, that plaintiffs’ assignor failed to appear for the scheduled IMEs. In its opposition papers, defendant attached two copies of IME letters addressed to plaintiffs’ assignor, requesting the assignor to attend IME’s scheduled for June 26, 2003 and June 30, 2003. The letters were each dated June 10, 2003.

This court finds that defendant fail to comply with the follow-up procedures and timetable for verification set out in the governing regulations of 11NYCRR 65-3.5 (b), by [*4]following up with an additional request for verification, or by notifying plaintiffs’ assignor of her right to follow up procedures and timetable for verifications ( S&M Supply v. Allstate Insurance Co., 2003 NY SLIP Op 51191 [U] [App Term, 2d & 11thJud Dists]; Presbyterian Hosp. in the City of New York v. Aetna Cas,. & Sur. Co., 233 AD2d 432; Metro Med. Diagnostics v. Lumbermens Ins. Co., 189 Misc2d 597 (2001) [App Term 2d and 11th Jud Dists]).

Furthermore, no probative evidence was submitted by the defendant to establish that the IME letters were ever sent to plaintiff’s assignor. Mr. Ross states that a review of the file and records reveal that defendant forwarded IME request letters to plaintiff’s assignor, without averring that he mailed the request himself. He did not state in his affidavit that he had personal knowledge that the letters were mailed to plaintiffs’ assignor ( Rue v Stokes, 191 AD2d 245 [1993]; LI First Aid Medical Supply Inc., v. Progressive Cas Inc. Co., 196 Misc2d 258, nor has he created a presumption of mailing by relying on defendant’s business records or by describing the standard office practice or procedure used by the defendant to ensure that its requests are properly mailed ( see, CPLR section 4518 (a); Residential Holding Corp., v. Scottsdale Ins. Co., 286 AD2d 679 [2nd Dept. 2001]).

By submitting copies of letters addressed to plaintiffs’ assignor without an affidavit from someone with first hand knowledge attesting how, when, or by whom the letters were mailed, does not in itself support a presumption that the letters were mailed, and received by plaintiffs’ assignor ( American Home Assur. Co., v. Choudary, 255 AD2d 346 [2nd Dept. 1998]; Residential Holding Co., v. Scottsdale Ins Co., 286 AD2d 679, 680 [2nd Dept. 2001]; Presbyterian Hosp. in the City of New York , v. Maryland Casualty Ins. Co., 226 AD2d 613 [2nd Dept. 1996]). Consequently, the affidavit of Mr. Ross was insufficient to raise a triable issue of fact as to whether the requests for independent medical examinations were timely sent to plaintiffs’ assignor.

(b) Fees for Medical Supplies Excessive as per the Workers’ Compensation Law Fee Schedule

The defendant alleges that the fees sought by plaintiffs for medical supplies purchased for their assignor, exceeded those permitted by Workers’ Compensation Law Fee Schedule. It is well settled that, based on a timely denial, an insurer is entitled to interpose the defense that certain charges were not in conformity with the charges permissible under the workers’ compensation fee schedule (Park Health Ctr., v. Prudential Prop & Cas Ins. Co., NYLJ, Dec. 14, 2001 [App Term, 2d & 11th Jud Dists]). Insurance regulation 11 NYCRR 68, Appendix 17-C, Part E (b) (1), provides:

“For medical equipment and supplies (e.g., TENS units, soft cervical collars) provided by a physician or medical equipment supplier, the maximum permissible charge is 150 percent of the documented cost of the equipment to the provider.

This section provides essentially a fee schedule for equipment provided by a medical provider or a medical equipment supplier. In the Instant action, defendant failed to submit evidentiary proof

to establish that the benefits sought for medical supplies were not in conformity with the charges permissible under the workers compensation fee schedule law (Kings Medical Supply v. Travelers Property Casualty Corp., 756 NYS2d 385 [2003]; Abraham v. County Wide Ins. Co., [*5]NYLJ, Feb. 2, 2004 [App Term, 2d &11th Jud Dists]).

Furthermore, since defendant failed to timely deny plaintiffs claim or to seek additional verification of the claims within thirty days of it receipt of the claims, defendant is precluded from raising the defense of excessive fees in its opposition to plaintiffs’ motion for summary judgment (Mt. Sinai v. Triboro Coach, 263 AD2d 11 [2nd Dept. 1999]).

( c) Injury Causation

Defendant argues that there is no casual relationship between the accident and the injury alleged by plaintiffs’ assignor. To support its argument, defendant submitted an unsworn low impact “Automotive Engineering Report”. Defendant argues that the low impact analysis “Automotive Engineering report” concluded that plaintiffs assignor’s treatment was not related to the accident.

Although, defendant is not precluded from asserting the defense that the alleged injuries were not casually related to the accident despite an untimely denial of the claims (Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 NY2d 195 [1997]; Mount Sinai Hosp., v. Triboro Coach, 263 AD2d 11, 16 [2nd Dept. 1999]), this court finds that the unsworn “Automotive Engineering Report” lacks evidentiary value and does not constitute competent proof in admissible form, and cannot be considered in opposition to plaintiffs’ motion for summary judgment (Dotez v. Allstate Ins. Co., [App Term, 9th & 10th Jud Dists.]). Additionally, defendant failed to present a sworn statement from someone with knowledge of the facts or with appropriate expertise to render an opinion (Mt. Sinai Hospital v. Triboro Coach Inc., 263 AD2d 11 [2nd Dept. 1999]).

(d) Medical Necessity

Defendant remaining argument is that the medical treatments rendered to plaintiffs’ assignor were not medically necessary. Lack of medical necessity is a valid defense to an action to recover no fault benefits if stated in a timely denial (Presbyterian Hosp. in the City of New York v. Maryland Casualty Ins. Co., 226 AD2d 613 [2nd Dept. 1996]; Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 NY2d 195 [1997]). Since defendant failed to raise the defense of medical necessity within 30 days of receipt of the plaintiffs’ claims, defendant is precluded from interposing this defense to the motion for summary judgment (New York Presbyterian Hosp., v. Empire Ins., 286, AD2d 322 [2nd Dept. 2001]). Despite the use of a multiple defenses, the defendant cannot prevail if the defenses are not raised within the statutory prescribed period.

V. CONCLUSION

Accordingly, plaintiffs’ motion for summary judgment is hereby granted in its entirety. Judgment shall be entered in favor of plaintiffs in the amount of $14,628.06, together with appropriate statutory interest and attorneys’ fees.

The court did not consider defendant’s amended affirmation in opposition in rendering its decision and order, since the amended papers were not timely served upon the plaintiffs.

This constitutes the decision and order of this court.

Dated: November 10, 2004.

Brooklyn, New York

______________________________ [*6]

SYLVIA HINDS-RADIX

J.C.C.

[*1]

Civil Court of the City of New York, Kings County, November 10, 2004

APPEARANCES OF COUNSEL

Meiselman, Denlea, Carton & Eberz, P.C. (Steven L. Barry of counsel), for defendant. Baker, Barshay & Neuwirth, LLP (Gil McLean of counsel), for plaintiff.

{**6 Misc 3d at 275} OPINION OF THE COURT

Manuel J. Mendez, J.

{**6 Misc 3d at 276}Defendant moves for an order disqualifying the firm of Baker, Barshay & Neuwirth, LLP from continuing to represent the plaintiff in this action. Defendant alleges that [*2]the firm is in violation of Code of Professional Responsibility DR 5-102 (22 NYCRR 1200.21) and must be disqualified from representing the plaintiff because one of its members ought to be called as a witness in the proceeding.

Facts

Plaintiff, a medical services provider, provides medical services to individuals and bills the insurance carriers under the state No-Fault Law. Following rendition of the services, plaintiff prepares and generates a bill which is subsequently mailed by the firm to the defendant insurer. The bills are mailed by a “mailroom employee” and are accompanied by a letter, on the firm’s letterhead which states the following:

“Please be advised that this office has been retained by the above referenced medical provider concerning the attached claim. We hereby submit herewith the bill for payment and the claimant’s application for No-Fault benefits (NF-2) as applicable. Accordingly, please forward all future correspondence to our attention.

“Pursuant to New York State Insurance Law, you are required to pay this bill within 30 days of receipt. Please make this payment payable to the above referenced provider, c/o this office.

“All correspondence including payment, EOB’s, verification requests, etc. must be mailed directly to this office. Failure to do so may result in unnecessary litigation.” (Emphasis added.)

The letter is unsigned.

Defendant maintains that the firm engages in the crucial activities of preparing the mailing, effectuating the mailing, maintaining records of the mailing, maintaining records and requests for verification and all other essential facets of “processing” the claim. The only witnesses who can offer testimony sufficient to establish a prima facie case in this matter are from the firm.

The firm counters that the fact that a nonattorney member may be called to testify on plaintiff’s behalf is not a violation of the disciplinary rules disqualifying it from representing plaintiff.

Legal Analysis

DR 5-102, codified as 22 NYCRR 1200.21, reads as follows:{**6 Misc 3d at 277}

“(a) A lawyer shall not act, or accept employment that contemplates the lawyer’s acting, as an advocate on issues of fact before any tribunal if the lawyer knows or it is obvious that the lawyer ought to be called as a witness on a significant issue on behalf of the client, [*3]except that the lawyer may act as an advocate and also testify:

“(1) If the testimony will relate solely to an uncontested issue.

“(2) If the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony.

“(3) If the testimony will relate solely to the nature and value of legal services rendered in the case by the lawyer or the lawyer’s firm to the client.

“(4) As to any matter, if disqualification as an advocate would work a substantial hardship on the client because of the distinctive value of the lawyer as counsel in the particular case.

“(b) Neither a lawyer nor the lawyer’s firm shall accept employment in contemplated or pending litigation if the lawyer knows or it is obvious that the lawyer or another lawyer in the lawyer’s firm may be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony would or might be prejudicial to the client.

“(c) If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer ought to be called as a witness on a significant issue on behalf of the client, the lawyer shall not serve as an advocate on issues of fact before the tribunal, except that the lawyer may continue as an advocate on issues of fact and may testify in the circumstances enumerated in paragraphs (a)(1) through (4) of this section.

“(d) If after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer or a lawyer in his or her firm may be called as a witness on a significant issue other than on behalf of the client, the lawyer may continue the representation until it is apparent that the testimony is or may be prejudicial to the client at which point the lawyer and the firm must withdraw {**6 Misc 3d at 278}acting as an advocate before the tribunal.” (Emphasis added.)

The advocate-witness disqualification rules contained in the Code of Professional Responsibility provide guidance, not binding authority, for courts in determining whether a party’s law firm, at its adversary’s instance should be disqualified during litigation. Courts must consider such factors as the party’s valued right to choose its own counsel, and the fairness and effect in the particular factual setting granting disqualification or continuing representation (see S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d 437 [1987]). Disqualification may be required only when it is likely that the testimony to be given by the witness is necessary (J. P. Foley & Co. v Vanderbilt, 523 F2d 1357 [2d Cir 1975]), and where the party seeking disqualification clearly shows that the opposing counsel’s projected testimony will be adverse to the client (Toren v Anderson, Kill & Olick, 185 Misc 2d 23 [2000]; S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., supra; Broadwhite Assoc. v Truong, 237 [*4]AD2d 162 [1st Dept 1997]).

Courts must apply the factors enumerated in the disciplinary rule on a case-by-case basis to determine if disqualification is warranted. Thus, courts have denied disqualification when an attorney’s projected testimony was not shown to be “sufficiently” adverse to the factual assertions or account of events offered on behalf of the client (Freeman v Kulicke & Soffa Indus., Inc., 449 F Supp 974, 977 [1978], affd 591 F2d 1334 [3d Cir 1979]; Ocean-Clear, Inc. v Continental Cas. Co., 94 AD2d 717 [2d Dept 1983]). Courts have granted disqualification when a member of the law firm representing the defendant will be called to testify at trial concerning the timely rendering of proof of loss and evidence will be offered in opposition to that testimony (Solomon v New York Prop. Ins. Underwriting Assn., 118 AD2d 695 [1986]); when the attorney may be called as a witness by the petitioner and her testimony “may be” prejudicial to her client (Matter of Stober v Gaba & Stober, 259 AD2d 554, 554-555 [2d Dept 1999]); and in an action to recover a real estate commission when plaintiff’s counsel would likely be called to testify with respect to his revival of a contract which was central to plaintiff’s theory of recovery (Bridges v Alcan Constr. Corp., 134 AD2d 316 [2d Dept 1987]).

In each of these cases, the Appellate Division has found the trial court’s decision not to be an abuse of discretion warranting reversal. In such situations, the court’s function is to take such action {**6 Misc 3d at 279}as is necessary to insure the proper representation of the parties and fairness in the conduct of the litigation (Solomon v New York Prop. Ins. Underwriting Assn., supra; Renault, Inc. v Auto Imports, 19 AD2d 814 [1963]), and to avoid placing the attorney in the awkward position of testifying on his client’s behalf and arguing the credibility of his own testimony at trial (Skiff-Murray v Murray, 3 AD3d 610 [3d Dept 2004]).

However, a law firm may continue representing a client even if one of its attorneys ought to be called as a witness (Talvy v American Red Cross in Greater N.Y., 205 AD2d 143 [1994], affd 87 NY2d 826 [1995]). There is nothing in defendant’s moving papers to identify which of the attorneys of the firm would be called to testify or to support the conclusion that any attorney of the firm ought to be called to testify. If such conclusion were to be supported and an attorney identified, that alone would not warrant the court’s granting disqualification. There are other attorneys in the firm that can act as advocates and whose testimony would not be necessary, precluding disqualification of the firm (Matter of Owen & Mandolfo, Inc. v Davidoff of Geneva, Inc., 197 AD2d 370 [1993]; Kaplan v Maytex Mills, 187 AD2d 565 [1992]; Mulhern v Calder, 196 Misc 2d 818 [2003]).

The moving papers make no reference to an attorney of the firm testifying. They only refer to the testimony of an “employee” of the firm whose testimony would be necessary in establishing the elements of plaintiff’s prima facie case.{**6 Misc 3d at 280} This firm employee will testify consistent with plaintiff’s position, not contrary to it (see Toren v Anderson, Kill & Olick, supra; S & S Hotel Ventures Ltd. [*5]Partnership v 777 S. H. Corp., supra; Broadwhite Assoc. v Truong, supra).

Furthermore, a strict reading of DR 5-102 shows that the rule refers to lawyers and not to “lawyers, their agents, servants, or employees.” From this, we may infer that the disqualification rules governing lawyers do not apply to “nonlawyer” employees of a law firm (Mulhern v Calder, 196 Misc 2d at 823, supra).

Conclusion

A clerk employed by the law firm in its mailroom, in charge of the mailing of plaintiff’s bills and proof of claim, will not cause the law firm to be disqualified from representing the plaintiff simply because the clerk’s testimony is necessary in establishing the elements of plaintiff’s prima facie case.

Accordingly, defendant’s motion for an order disqualifying the law firm of Baker, Barshay & Neuwirth, LLP from representing the plaintiff is denied in every respect.

—[*1]

Order, Supreme Court, Bronx County (Janice L. Bowman, J.), entered September 18, 2003, which, in an action to recover on 68 claims for no-fault insurance benefits assigned to plaintiff by 68 different assignors, granted defendant’s motion to sever the claim of each assignor into a separate action, unanimously affirmed, without costs.

The IAS court properly exercised its discretion under CPLR 603 in granting defendant’s motion to sever plaintiff’s 68 assigned claims for no-fault insurance benefits into separate actions. It is undisputed that the claims arise from 68 different accidents, and have been assigned to plaintiff, a vendor of medical services, by 68 different assignors. Even if it is assumed that the insurance policies of the 68 assignors are identical in all relevant respects—a matter addressed neither in the complaint nor in plaintiff’s papers opposing the motion—each claim will raise unique legal and factual issues. In this regard, we note that defendant’s answer places at issue, inter alia, the validity of the assignments, the necessity and reasonableness of plaintiff’s services in light of each assignor’s medical condition, defendant’s receipt of bills from plaintiff, and the sufficiency of the no-fault forms that have been submitted. The viability of these defenses will depend, in the case of each assignor’s claim, on the particular facts relating to that claim. At the same time, the claims are likely to raise few, if any, common issues of law or fact, even if the assignors’ insurance policies are identical. That all of the claims are for services provided by the same vendor, and are being asserted against the same insurance company, does not change the fact that individual issues are likely to predominate in the resolution of each claim.

Under the circumstances, to try all 68 claims together would be unwieldy and would create a substantial risk of confusing the trier of fact. Accordingly, the interests of convenience and avoidance of prejudice are best served by severing the claims (see Mount Sinai Hosp. v Motor Veh. Acc. Indem. Corp., 291 AD2d 536 [2002]; Bender v Underwood, 93 AD2d 747, 748 [1983]; Reid v Haher, 88 AD2d 873, 873-874 [1982]; Schneph v New York Times Co., 21 AD2d 599, 600-601 [1964]).

We note that our decision is consistent with a recent federal decision in a remarkably similar case (Boston Post Rd. Med. Imaging, P.C. v Allstate Ins. Co., 2004 WL 1586429, 2004 US Dist LEXIS 13243 [US Dist [*2]Ct, SD NY, July 15, 2004]). The plaintiff in Boston Post Road was a medical services provider that sued the same insurance company on no-fault claims arising from 59 different accidents, which had been assigned to the plaintiff by 59 different patients. In granting the insurance company’s motion to sever the claims, the Boston Post Road court stated, among other things, that the claims “arise out of distinct automobile accidents which led to different injuries to different individuals who underwent distinct medical services, payment for which was denied for varying reasons” (2004 WL at *1, 2004 US Dist LEXIS at *5). The court further noted that “[e]ven if the assignors’ insurance contracts are identical, the legal and factual issues involved in these claims are not,” since the defendant’s “answer pleaded different defenses that will apply to some claims and not to others,” meaning that “different provisions of the policies will be relevant to different claims” (2004 WL at *2, 2004 US Dist LEXIS at *5-6). These observations are equally applicable here.

Plaintiff’s reliance on the Second Department’s decision in Hempstead Gen. Hosp. v Liberty Mut. Ins. Co. (134 AD2d 569 [1987]) is unavailing. While Hempstead held that, under the particular circumstances of that case, Supreme Court had acted within its discretion in denying a motion to sever 29 assigned claims, the decision does not stand for the proposition that the granting of such a severance motion—in a case involving more than twice as many assigned claims—is an abuse of judicial discretion warranting reversal on appeal. In any event, Hempstead must be read in light of the Second Department’s much more recent decision in Mount Sinai Hosp. v Motor Veh. Acc. Indem. Corp. (supra). Mount Sinai held that Supreme Court “providently exercised its discretion” in granting a motion to sever five assigned no-fault claims that, inter alia, arose from “accidents on five different dates” and had “no relation or similarity to each other, other than the fact that the no-fault benefits were not paid” (291 AD2d at 536). Concur—Tom, J.P., Saxe, Williams, Friedman and Marlow, JJ.

[*1]

Civil Court of the City of New York, Queens County, November 4, 2004

APPEARANCES OF COUNSEL

Freiberg & Peck, New York City, for defendant. Baker & Barshay, Hauppauge, for plaintiff.

{**5 Misc 3d at 723} OPINION OF THE COURT

Augustus C. Agate, J.

{**5 Misc 3d at 724}Plaintiff brought suit to recover payment under the no-fault regulations for medical services it provided to its assignor, an insured of defendant. Defendant moved for summary judgment pursuant to CPLR 3212, arguing that plaintiff’s failure to comply with defendant’s verification requests made the commencement of this action premature. Plaintiff opposed defendant’s motion, arguing that defendant’s follow-up request was untimely, as defendant sent it 25 days after submitting the initial request.

This court finds that defendant’s verification requests were timely and proper under the no-fault regulations. The no-fault regulations require defendant to submit a follow-up verification request if it does not receive a response from plaintiff within 30 days of issuing its initial verification request. As defendant sent its follow-up request on the 25th day, it complied with the requirement of submitting its follow-up within 30 days from the date of the initial request. There is no statutory or case law that requires defendant to wait until the 30th day to issue its follow-up request. To find that defendant must wait 30 days before issuing its follow-up request serves no valid purpose under the No-Fault Law. Moreover, finding defendant’s follow-up request was untimely would be inconsistent with the purpose of the No-Fault Law and would result in unfair prejudice to defendant.

Under the no-fault regulations, an insurer must either pay or deny a claim within 30 days or it will be precluded from offering any defenses at trial. (See 11 NYCRR 65.15 [g]; Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997].) An insurer may toll the 30-day period by properly requesting verification within 15 days from the date of receipt of the bill. (11 NYCRR 65.15 [d] [1].) Upon submitting a proper verification request, an insurer must issue a follow-up request for verification if it does not receive the requested information within 30 days from the date of requesting the verification. (11 NYCRR 65.15 [e] [2].) If it does not receive the verification after its follow-up request is sent, its time to pay or deny the claim is tolled pending submission of the requested information. (11 NYCRR 65.15 [g] [1]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [2d Dept 1999].) Further, an insurer may not [*2]issue a denial while its verification request is outstanding. (See Westchester Med., supra.)

While the regulations require an insurer to submit a follow-up request within 30 days from the date of submission of the request, {**5 Misc 3d at 725}it does not mandate that the insurer wait 30 days before sending a follow-up request. Instead, this time frame is a limit to the amount of time an insurer may wait before sending a follow up request. (See Keith v Liberty Mut. Fire Ins. Co., 118 AD2d 151 [2d Dept 1986].) This determination is consistent with the case law and the goals of the No-Fault Law.

There is no case law or statutory authority for the proposition that an insurer must wait 30 days before sending its follow-up request, or it will be precluded from offering defenses at trial. While there are no cases that specifically address this issue, there are cases that address the timeliness of follow-up verification requests. In New York & Presbyt. Hosp. v American Tr. Ins. Co. (287 AD2d 699 [2d Dept 2001]), the defendant requested additional verification on October 5, 1999 and sent its follow-up letter on November 1, 1999, 27 days later. (Id. at 700.) The Court noted that both requests were timely, stating that “defendant did not sit on its rights, but rather promptly requested additional verification of the claim.” (New York & Presbyt. Hosp. v American Tr., 287 AD2d at 701; see 11 NYCRR 65.15 [d] [2]; [e] [2].)

There are also numerous cases indicating the defendants timely sent follow-up verification requests exactly 30 days after sending its initial requests. (See New York Hosp. Med. Ctr. v State Farm Mut. Auto Ins. Co., 293 AD2d 588 [2d Dept 2002]; Boro Med. & Psych Treatment Servs., P.C. v Country Wide Ins. Co., 2002 NY Slip Op 50538[U] [App Term, 2d & 11th Jud Dists 2002]; L.I. First Aid Med. Supply v Progressive Cas. Ins. Co., 196 Misc 2d 258 [Civ Ct, Queens County 2003].)

In the present case, penalizing defendant for sending a follow-up request 25 days after its initial request is inconsistent with the goals of the No-Fault Law. The purpose of the No-Fault Law is to allow swift compensation for qualified injured persons from the insurance companies. (See Presbyterian v Maryland, 90 NY2d at 284.) The regulations require insurers to act quickly in evaluating insureds’ claims and to avoid prejudicial delays. (See Dermatossian v New York City Tr. Auth., 67 NY2d 219 [1986].) The verification requirement exists in order for insurers to have the opportunity to promptly investigate and respond to legitimate claims, not to delay payment. (See id.)

In this case, defendant complied with the no-fault regulations by quickly responding to plaintiff’s claim in the form of a verification request. When it had not received plaintiff’s claim within 25 days, it promptly responded by submitting a follow-up request. {**5 Misc 3d at 726}Plaintiff has not challenged the propriety of defendant’s request, but only challenges defendant’s ability to send a follow-up request earlier than 30 days from the date of the initial request. Essentially, plaintiff seeks to penalize defendant for being too prompt, which is wholly inconsistent with defendant’s duties under the No-Fault Law.

Finally, defendant would suffer undue prejudice if its verification request was found improper. If the court were to accept plaintiff’s argument, defendant would have to pay a claim for which it complied with the regulations and sought proper verification. This result would be unduly harsh, as defendant would be precluded from asserting any defenses to plaintiff’s claim. Furthermore, defendant’s early follow-up verification request did not prejudice plaintiff in any manner, as plaintiff is not under any time frame to respond to defendant’s verification request. [*3]Therefore, the date of defendant’s submission of its follow-up request is irrelevant for the purposes of plaintiff’s response.

It is also undisputed that plaintiff never responded to defendant’s verification requests and has not challenged the propriety of defendant’s requests. Plaintiff’s sole argument is that defendant acted too promptly in seeking verification. However, defendant’s actions were not only permissible but were consistent with the goals of the No-Fault Law in seeking prompt response to insured’s claims. In this matter, plaintiff was able to respond to the verification request, but simply received follow-up notice that it had not done so earlier than the time allotted to defendant by the no-fault regulations. Plaintiff’s failure to respond had no relation to the dates defendant submitted its initial and follow-up verification.

Accordingly, as defendant complied with the letter and spirit of the no-fault regulations, and plaintiff suffered no prejudice from defendant’s expeditious response to plaintiff’s claim, defendant’s verification requests are deemed timely and proper. As plaintiff never responded to defendant’s timely and proper verification requests, defendant was under no duty to issue a denial. (See Westchester Med. Ctr. v Travelers Prop. & Cas. Ins. Co., 2001 NY Slip Op 50082[U] [Sup Ct, Nassau County 2001].) Therefore, plaintiff commenced the action prematurely. As there are no issues of fact in dispute, defendant’s motion is granted.

—[*1]

In an action to recover unpaid benefits due under the no-fault provisions of the Insurance Law, the plaintiff appeals from an order of the Supreme Court, Nassau County (Mahon, J.), dated December 11, 2003, which denied its motion for summary judgment.

Ordered that the order is affirmed, with costs.

“[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Moreover, the “[f]ailure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers” (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

The plaintiff did not sustain its prima facie burden in this case, as its submissions in support of its motion for summary judgment unequivocally demonstrated that it received payments on behalf of both of the insureds to whom it rendered medical treatment. Accordingly, the plaintiff’s papers failed to eliminate triable issues of fact regarding whether the claims at issue were the subjects of previous billings by the plaintiff which were resolved, and whether the current requests for no-fault payments constituted a resubmission of claims to which the rule of Insurance Law § 5106 (a) requiring payment or denial of claims within 30 days of receipt would not apply (see generally Hospital for Joint Diseases v Allstate Ins. Co., 5 AD3d 441 [2004]). In light of the foregoing, we [*2]need not examine the adequacy of the defendant’s papers in opposition to the motion. Santucci, J.P., Adams, Mastro and Spolzino, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by petitioner from an order of the Civil Court, Queens County (A. Agate, J.), entered August 4, 2003, denying its petition to vacate an arbitrator’s award.

Order unanimously reversed without costs, petition granted, arbitrator’s award vacated and matter remanded for arbitration.

Pursuant to the mandatory arbitration provisions of Insurance Law § 5105 et seq., petitioner State Farm Mutual Automobile Insurance Company (State Farm) filed a demand for arbitration in April 2002 seeking reimbursement of no-fault payments it made to its subrogor commencing in May 1999. Arbitration Forums, Inc. denied the claim on the ground that the three year statute of limitations had expired. State Farm commenced a special proceeding to vacate the arbitrator’s award. The court below denied the petition, finding that petitioner “did not specify the dates of the payments to the claimant or include any documentary proof. Rather, [petitioner] attached its demand for arbitration and the decision, neither of which indicate the dates of the initial payments.”

Contrary to the determination of the court below, we find that petitioner submitted documentary proof as to the payments it made to its subrogor by its submission of the affidavit of its claims representative, as well as the other documents included in Exhibit D which was attached to its petition (see CPLR 4518 [a]; People v Kennedy, 68 NY2d 569 [1968]). We [*2]further find that the arbitrator’s award dismissing the claim as barred by the statute of limitations was not based on the evidence, and it was arbitrary and capricious for the arbitrator to dismiss the claim since petitioner timely made its demand for arbitration within three years of its first no-fault payment (see CPLR 214 [2]; Matter of Motor Vehicle Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 219-220 [1996]; Matter of Budget Rent-A-Car [State Ins. Fund], 237 AD2d 153 [1997]; Empire Ins. Co. v Eagle Ins. Co., 4 Misc 3d 25 [2004] [App Term, 2d & 11th Jud Dists]; Allcity Ins. Co. v Eagle Ins. Co., 1 Misc 3d 41 [2003] [App Term, 2d & 11th Jud Dists]; Allcity Ins. Co. v GEICO, 2003 NY Slip Op 50898 [U] [App Term, 2d & 11th Jud Dists]).

Accordingly, the petition seeking to vacate the arbitrator’s award is granted and the matter is remanded for arbitration.

We note that a special proceeding should terminate in a judgment, not an order (see CPLR 411).
Decision Date: October 27, 2004