Civil Court of the City of New York, Kings County

317285/03

Eileen N. Nadelson, J.

This action was brought under the Regulations of the New York State Insurance Department, 11 NYCRR sec. 65-1.1 et seq., to recover first party benefits under New York’s No-Fault Insurance Law.

The two assignments that form the basis of this action involve two persons who were allegedly injured in the same motor vehicle accident. Plaintiff medical provider submitted a bill for the first assignor, Jimmy Cadet (Cadet) on March 7, 2003. This claim was denied on May 15, 2003, based on the assignor’s failure to establish proof of the claim pursuant to his Examination Under Oath (EUO). Plaintiff submitted a bill for the second assignor, Naika Gousse (Gousse) on March 4, 2003; this claim was denied on May 15, 2003, because the assignor failed to appear for her EUO.

Plaintiff has moved for summary judgment, asserting that the denials of benefits were not received within the statutorily mandated 30 days after receipt of the claims, 11 NYCRR sec. 65-3.5, 65-3.8(a).

The EUO upon which the denial of claim for Cadet was based was unsigned by the [*2]assignor and not notarized. While objections based on allegedly fraudulent accident claims survive an insurer’s failure to timely deny such claim, Cf. Central General Hospital v. Chubb Group of Ins. Cos., 90 NY2d 195, 659 N.Y.S. 2d 246 (1997), and thereby toll the 30-day statutory period, when opposing a motion for summary judgment, the defendant insurer must be able to raise triable issues of fact in admissible form. Bonetti v. Integron Nat. Ins. Co., 269 AD2d 413, 703 N.Y.S. 2d 217 (2d Dept. 2000). The EUO submitted by Defendant insurer in the instant action is not in a legally admissible form, being unsigned and unverified. Consequently, the court holds that unsigned and unverified Examinations Under Oath are insufficient to raise triable issues of fact so as to defeat a motion for summary judgment.

Section 65-3.5 of 11 NYCCR, the regulations promulgated pursuant to New York’s No Fault Law, states:

(A) Within 10 business days after receipt of the completed application for motor

vehicle no-fault benefits, the insurer shall forward to the parties required to

complete them, those prescribed verification forms it will require prior to pay-

ment of the initial claim.

(B) Subsequent to the receipt of one or more of the completed verification forms,

any additional verification shall be requested within 15 business days of receipt

of the prescribed verification forms.

In the instant case, an EUO was requested of Gousse within the ten business days after the claim was submitted, and it is uncontroverted that she did not appear on the scheduled date. However, the Regulations impose a burden on the insurer to follow-up with an additional request if the initial request for verification was incomplete or not complied with at all. In this instance, the insurer did not follow the procedures of 11 NYCRR sec. 65-3.5(B) in seeking a second date for the EUO when Gousse failed to attend the first scheduled examination. Therefore, the 30-day statutory period was not tolled because Defendant insurer failed to adhere to the provisions of the No-Fault Regulations by not attempting to schedule a second EUO.

Based on the foregoing, the court grants Plaintiff’s motion for summary judgment. Judgment for Plaintiff in the amount of $4460 plus statutory 2% per month interest and statutory 20 % attorney’s fees.

Dated: October 27, 2004

__________________________

EILEEN N. NADELSON, J.C.C.

[*1]

Civil Court of the City of New York, Kings County, October 25, 2004

APPEARANCES OF COUNSEL

Amos Weinberg for plaintiff. Bruno, Gerbino & Soriano, LLP (Robert J. Morgan of counsel), for defendant.

{**5 Misc 3d at 786} OPINION OF THE COURT

Eileen N. Nadelson, J.

This action arises pursuant to the provisions of New York’s No-Fault Insurance Law.

The assignments of benefits that provide the basis of this claim present two discrete issues to be decided by this court. The alleged accident occurred on March 18, 2003, when the car driven by the son of the insured collided with another car. The assignors are the son and his passenger; the insured himself was not in the car nor involved in the accident. The insured’s policy covers accidents occurring while the son is driving the vehicle.

The claims for first-party benefits were submitted by plaintiff medical provider in a timely fashion. After the claims were submitted, defendant insurer requested additional verification in the form of an examination under oath (EUO) from the driver assignor. The request for the EUO was sent to the driver and the attorney representing the driver in a separate action. The address used to send the request to the driver was incorrect, and the request was never received by this assignor, although it was received by his attorney. It is noted that defendant did have the driver’s correct address, but left a significant portion of the address off [*2]the envelope. The driver assignor did not appear for the EUO. The subsequent follow-up request was also mailed to the same erroneous address, and the driver did not appear for the rescheduled EUO.

Meanwhile, defendant conducted EUOs of the passenger assignor and the insured. The passenger stated that she was picked up by the driver around 8:00 a.m., which was their usual custom, and that the accident occurred shortly thereafter. She further stated that she was removed from the vehicle by the fire department’s EMS team when they arrived on the scene. The police also were summoned.

The insured stated that he and the driver live at the same address and work at the same facility. He said that on the morning{**5 Misc 3d at 787} in question he left for work at around 6:00 a.m., which was his customary practice. He further claimed that his son, according to his belief, usually leaves for work at 7:00 a.m., and arrives at work at around 7:30 a.m., but that he and his son do not work in the same area and he does not actually see his son arrive.

The insured said that he was called about the accident by the passenger, and arrived at the scene between 10:00 and 10:30 a.m., at which time he saw the passenger standing outside the car. He said he did not believe that she had been in the car.

The claims were ultimately denied by defendant insurer. The denial of benefits for the driver assignor’s treatment was dated August 8, 2003, the claim having been received on May 15, 2003; the denial of benefits for the passenger assignor’s treatment was dated August 20, 2003, the claim having been received on May 16, 2003.

Defendant stated that the denial of benefits for the driver assignor was based on his failing to attend scheduled examinations under oath, and the denial of benefits for the passenger assignor was based on defendant’s determination that the injuries complained of did not result from the alleged accident.

Plaintiff has moved for summary judgment, asserting that the denial of benefits for the driver assignor’s treatments was not received within the statutorily mandated 30 days after receipt of the claims (11 NYCRR 65-3.5, 65-3.8 [a]), and that the denial of benefits for the passenger assignor’s treatments is based on unsubstantiated hypotheses. Defendant maintains that its requests for verification of the claim tolled that statutory period pursuant to 11 NYCRR 65-3.5, and that the two conflicting EUOs of the passenger and the insured raise triable issues of fraud in presenting the claim.

The first issue required to be determined by this court is whether a request for an examination under oath to an injured party’s attorney is sufficient notification to the injured party under New York’s No-Fault Law and regulations? This is an issue of first impression under the regulations.

The regulations promulgated under New York’s No-Fault Law, appearing under part [*3]65 of title 11 of the New York Code, Rules and Regulations, prescribe the manner in which requests for verification must be made. However, the regulations only deal specifically with time limits for making requests and scheduling EUOs; only tangentially do they indicate how notice is to be sent.{**5 Misc 3d at 788}

11 NYCRR 65-3.5 (b) states that requests for verification “need not be made [in] any prescribed [manner] or . . . form.” Section 65-3.5 (e) states, in pertinent part, that the “insurer shall inform the applicant at the time the examination is scheduled that the applicant will be reimbursed for any loss of earnings and reasonable transportation expenses . . . .”

11 NYCRR 65-3.6 (b) states:

“[I]f any requested verifications [sic] has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested . . . At the same time the insurer shall inform the applicant and such person’s attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested.” (Emphasis added.)

A legally valid basis for denying a first-party benefit claim would be the provider’s assignor failing to comply with requests for verification. (See generally, Lopedote v General Assur. Co., 4 Misc 3d 1001[A], 2004 NY Slip Op 50593[U] [Kings County 2004].) However, the sine qua non of any legal request for information is that the party required to provide such information be given adequate and appropriate notice. (See generally, BHNJ Realty Corp. v Rivera, 144 Misc 2d 241 [NY County 1989].)

Neither the No-Fault Insurance Law nor the regulations promulgated thereunder specify the manner in which a request or notice be given. Therefore, in deciding whether notice to an assignor’s attorney, who is not representing the medical provider claimant, is sufficient notice to the assignor of the request for verification, the court must look to other statutes’ notice requirements to insure that the mandates of due process are met.

Section 308 (2) of the CPLR, concerning service of process, states that if a person is not personally served, service may be effectuated by serving a person of suitable age and discretion at the dwelling, place of business or abode of the person to be served and mailing a copy of the pleadings to that person’s last known address. Service may also be perfected by affixing a copy of the pleadings to the door of the dwelling of the person to be served and mailing a copy of the pleadings to that address. These are dual requirements, and both serving the suitable person or affixing the papers and mailing the pleadings must be completed {**5 Misc 3d at 789}before service is deemed satisfied. If the pleadings are mailed to the wrong address, service is deemed incomplete. (Schurr v Fillebrown, 146 AD2d 623 [2d Dept 1989].) Further, under section 312-a of the CPLR, personal service may be effectuated by mail, with proof of mailing and [*4]acknowledgment of receipt. However, in all instances, the mailing must be made to the person’s correct last known address. (See generally, Zaretski v Tutunjian, 133 AD2d 928 [3d Dept 1987]; Smith Carpet v Walter Arnold, Inc., 94 AD2d 643 [1st Dept 1983].)

Similarly, service under the provisions of Real Property Actions and Proceedings Law § 735 specifies a dual requirement of both serving a person of suitable age and discretion or affixing the pleadings to the door of the subject premises and mailing a copy of the pleadings to the person to be served. The failure to comply with these requirements, even when the person being served admits receipt, is deemed to be fatal. (Palumbo v Clark’s Estate, 94 Misc 2d 1 [Bronx County 1978].)

According to the provisions of the No-Fault Law, requests for additional verification must be made to the injured party or that party’s assignee. (11 NYCRR 65-3.5 [b]; Inwood Hill Med. P.C. v Allstate Ins. Co., 3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U] [NY County 2004].) In the instant case, it is undisputed that plaintiff, the assignee, did not receive the request for verification, and so the tolling of the 30-day period must stand or fall on the appropriateness of the request to the injured assignor.

The no-fault regulations consistently state that requests are to be made to the injured party or the claimant. In the case at bar, the claimant provider was not notified of the request for an EUO, and the request to the injured party was mailed to the wrong address. The only time the regulations mention an attorney is when it requires a request for additional verification to be sent both to the applicant and his attorney. The court views this notice requirement for an additional verification as a dual requirement, as with service under the CPLR and RPAPL, meaning that the failure to notify the claimant in a proper manner negates the effect of the request. Because the notices were never sent to the driver assignor’s correct address, the court finds that defendant failed to make a legally valid request for verification within the time period prescribed by the regulations, and therefore the 30-day requirement was not tolled and the denial was untimely.

The court emphasizes that the attorney who received the request represents the assignor in his own personal action for damages, {**5 Misc 3d at 790}and does not represent the assignor with respect to plaintiff’s claim for first-party benefits. Therefore, since the representation involves separate claims and lawsuits, the court cannot assume that mailing requests to this lawyer is appropriate in this matter, since the assignor might retain different counsel for the claim under scrutiny. It has been held that mailing pleadings to a party’s attorney did not constitute valid service when there was no evidence that the party authorized the attorney to accept such pleadings. (Broman v Stern, 172 AD2d 475 [2d Dept 1991].)

The second issue to be decided by the court is whether a denial of first-party benefits under the No-Fault Law may be based on statements and suppositions made by a person who lacks personal knowledge of the situation.

Defendant denied the claim for the passenger’s treatments because of a discrepancy [*5]between the passenger’s statements under oath and the statements under oath of the insured. However, as the transcript clearly indicates, the insured had absolutely no personal knowledge of the facts, not having been on the scene when the driver started the vehicle nor at the scene of the alleged accident. His statements are conclusions he reached based on what he saw after the fact. The statements he made regarding what he viewed at the scene when he arrived are not inconsistent with the statements of the passenger.

Unsubstantiated hypotheses and suppositions are insufficient to raise a triable issue of an assignor’s fraud, and summary judgment should be granted if the medical provider evidences properly submitted claims. (A.B. Med. Servs. PLLC v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept 2003].) Defendant’s submission of the EUO of the insured who has no personal knowledge of the facts does not constitute evidentiary proof in admissible form. (S & M Supply, Inc. v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 2d Dept 2004].)

Based on the foregoing, the court grants plaintiff’s motion for summary judgment.

—[*1]

In an action pursuant to Insurance Law § 5106, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Jonas, J.), dated December 15, 2003, as denied its motion for summary judgment on the complaint.

Ordered that the order is reversed insofar as appealed from, on the law, with costs, and the motion is granted.

On March 11, 2003, and March 18, 2003, respectively, the plaintiff submitted two claims to the defendant to recover no-fault medical payments. On or about April 14, 2003, the defendant responded with a standard denial of claim which failed, inter alia, to supply the information listed in items 23 through 30 of the prescribed form, including the name of the health services provider, the date and amount of the claims being denied, and the date it received those claims. Subsequent correspondence dated June 13, 2003, from the defendant’s claim representative to the plaintiff supplied most of the previously-omitted information. The plaintiff then commenced this action against the defendant seeking payment of both claims, and moved for summary judgment on the ground that the April 14, 2003, denial of claim was fatally defective. The Supreme Court denied the motion and the plaintiff appeals.

Pursuant to 11 NYCRR 65-3.8 (c), the defendant was required either to pay or deny [*2]the plaintiff’s claims “[w]ithin 30 calendar days after proof of claim [was] received.” A proper denial of claim must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]) and must “promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated” (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]; accord Halali v Evanston Ins. Co., 8 AD3d 431 [2004]; Hereford Ins. Co. v Mohammod, 7 AD3d 490 [2004]). “An insurer which fails to properly deny a claim within 30 days as required by these statutory provisions may be precluded from interposing a defense to the plaintiff’s lawsuit” (Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 16 [1999]; see e.g. Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 283 [1997] [hereinafter Presbyterian I]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584 [2002]; New York & Presbyt. Hosp. v Empire Ins. Co., 286 AD2d 322 [2001]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613 [1996] [hereinafter Presbyterian II]). Moreover, “[a] timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [2004]).

Applying these principles, we find that the defendant’s April 14, 2003, 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 (see 11 NYCRR 65-3.4 [c] [11]; Presbyterian II, supra; Amaze Med. Supply v Allstate Ins. Co., supra). The defendant’s contention that it supplied the missing information on June 13, 2003, is without merit, as the defective claim form could not be corrected, nunc pro tunc, through information supplied after the regulatory 30-day period expired. Indeed, the statutory goal of ensuring the prompt payment or denial of claims would be materially frustrated if insurers were permitted to file timely but factually defective denial of claim forms, to be supplemented only after the expiration of the 30-day period prescribed by 11 NYCRR 65-3.8. Under these circumstances, the remedy of preclusion was appropriate, and the plaintiff’s motion should have been granted (cf. Presbyterian I, supra at 283-284). Florio, J.P., Smith, Rivera and Fisher, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiff from an order of the Civil Court, Kings County (J. Sullivan, J.), entered on December 2, 2002, which denied its motion for summary judgment.

Order unanimously affirmed without costs.
In this action to recover assigned no-fault benefits, defendant’s submissions in opposition to plaintiff’s motion for summary judgment consisting of, inter alia, the affidavit of its special investigator supported by examinations under oath taken of [*2]
plaintiff’s assignor and other persons involved in the accident, are sufficient to raise a triable issue of fact as to whether the collision was part of a fraudulent insurance scheme. Accordingly, plaintiff’s motion for summary judgment was properly denied.
Decision Date: October 21, 2004

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 (H. Miller, J.), entered on September 8, 2003, as denied its motion for summary judgment.

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

Plaintiff, a health care provider, established its prima facie entitlement to summary judgment on its claim for first-party no-fault benefits for services rendered to its assignor by evidence of submission of a complete proof of claim, its receipt
by defendant, and defendant’s failure to pay or deny the claim within the prescribed 30-day period (see Insurance Law § 5106 [a]; 11 NYCRR 65.15 [g] [3]; 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]). Defendant’s requests for examinations under oath did not toll the 30-day period, since the insurance [*2]regulations in effect at the time plaintiff’s claims were submitted did not contain a provision requiring a claimant to appear for an examination under oath (see A.B. Med. Servs. v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 9th & 10th Jud Dists 2003]).

While defendant is thus precluded from asserting most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), it
is not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite the untimely denial of the claims (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 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.), plaintiff’s motion for summary judgment was properly denied.
Decision Date: October 20, 2004

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 October 10, 2003, as denied its motion for summary judgment.

Order insofar as appealed from unanimously affirmed without costs.

In this action to recover first-party no-fault benefits for medical equipment provided its assignors, plaintiff established its entitlement to summary judgment prima
facie by proof it submitted properly executed claim forms setting forth the fact and amount of the loss sustained (A.B. Med. Servs. v Eagle Ins. Co., 3 Misc 3d 8, 9 [App Term, 9th & 10th Jud Dists 2003]; Damadian MRI in Garden City v Liberty Mut. Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51702 [U] [App Term, 9th & 10th Jud Dists]). As defendant concededly failed to pay or deny the claims within 30 days of receipt (Insurance Law § 5106 [a];11 NYCRR 65.15 [g] [3]), defendant cannot avoid the consequence of the untimely denials (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]), namely the preclusion of its defense based on the assignors’ failures to attend examinations under oath (EUOs). In any event, defendant failed to prove that the EUO requests were timely (11 NYCRR 65.15 [d] [1]), or that when [*2]plaintiff filed the claims the insurance regulations provided for such a procedure (A.B. Med. Servs. v Eagle Ins. Co., 3 Misc 3d at 10; see also Ocean Diagnostic Imaging v Geico Ins., ___ Misc 3d ___ [A], [2004 NY Slip Op 50511 [U] [App Term, 9th & 10th Jud Dists]). However, the preclusion rule is inapplicable to a claim that the underlying traffic incident was a deliberate event staged in furtherance of a scheme to defraud (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 752 [2002]) which claim, if substantiated, constitutes a complete defense to the action (Matter of Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522 [2003]). In our view, defendant’s [*3]
submissions sufficed to demonstrate a “founded belief that the alleged injury d[id] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d at 199).
Decision Date: October 20, 2004

[*1]

Civil Court of the City of New York, Kings County, October 19, 2004

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for plaintiff. Jaffe & Nohaicki, New York City, for defendant.

{**5 Misc 3d at 768} OPINION OF THE COURT

Ann Elizabeth O’Shea, J.

This is an action to recover first-party no-fault benefits, attorney’s fees and costs pursuant to New York’s Insurance Law and no-fault regulations. The cause of action allegedly arose out of an automobile accident on June 24, 2002, in which Robert Nieves, plaintiff’s assignor, was injured. Plaintiff, a medical equipment supplier, allegedly provided Mr. Nieves with medical supplies for which it submitted a claim for $705 to defendant insurer. Defendant denied plaintiff’s claim on the ground that the supplies were not medically necessary. Plaintiff now moves for summary judgment, arguing that defendant’s denial was untimely and without any evidentiary support. Defendant, in opposition, asserts that plaintiff has not established its prima facie entitlement to summary judgment with admissible evidence, including evidence as to the documented cost of the supplies provided. For the following reasons, plaintiff’s motion is granted in all respects.

Under the No-Fault Insurance Law and regulations, a medical equipment supplier must submit a properly completed proof of claim^[FN1] to the insurer within 180 days after the supplies have [*2]been provided under the “old regulations” in effect prior to April 4, 2002 (11 NYCRR 65.12) or 45 days after the supplies have been provided under the “new regulations” in effect on April 4, 2002 and thereafter (11 NYCRR 65-1.1 [h]). The insurer then has 30 days from the date the claim is received to pay or deny the claim under both the old and new regulations (11 NYCRR 65.15 [g] [1] [i]; 65-3.8 [a] [1]). If the insurer has any objections to or questions about the claim, including, among other things, the necessity for the supplies provided, the amount of the claim, or the adequacy of the claim form,^[FN2] it may request that the claimant provide further information to verify the claim (11 NYCRR 65.15 [d] [1] [old regulations]; 11 NYCRR 65-3.5 [b] [new regulations]; see Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U], *2 [App Term, 2d Dept 2003] [“a properly completed claim form, which suffices on its face to establish the particulars of the nature and extent of the injuries and (health benefits) received and contemplated . . {**5 Misc 3d at 769}. and the proof of the fact and amount of the loss sustained . . . is all that is necessary at the claim stage . . .” (internal quotation marks and citations omitted)]; see also Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224 [1986] [“to receive payment, (a claimant) need only file a ‘proof of claim’ (which) the insurers are obliged to honor . . . promptly or suffer the statutory penalties” (citations omitted)]; Damadian MRI in Elmhurst v Liberty Mut. Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U] [App Term, 2d Dept 2003]). A request for verification must be made by the insurer within 10 business days after the claim has been received under the old regulations (11 NYCRR 65.15 [d] [1]) and within 15 business days under the new regulations (11 NYCRR 65-3.5 [b]). The 30-day clock in which to pay or deny the claim is then stopped until the requested information is provided by the claimant (see Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2d Dept 2004]; Liberty Queens Med., P.C. v Liberty Mut. Ins. Co., 2002 NY Slip Op 40420[U] [App Term, 2d & 11th Jud Dists 2002]). An insurer who fails to pay or deny the claim—or seek verification of the particulars of the claim—within the applicable time periods is thereafter precluded from raising any defenses to the claim, other than lack of coverage or fraud (Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997]; Presbyterian Hosp. v Aetna Cas. & Sur. Co., 233 AD2d 433 [2d Dept 1996]; Central Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999]). The Court of Appeals has explained the principles and policies that prompted the adoption of this comprehensive regulatory scheme for the resolution of no-fault claims:

“[T]he primary purpose underlying the No-Fault Law [is] to assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them . . . To implement this legislative aim of curtailing delay and reducing expense in the adjustment of motor vehicle accident claims, the regulations . . . are written to encourage prompt payment of claims, to discourage investigation by insurers, and to penalize delays.”

(Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225 [1986] [citations omitted].)

Those principles and policies have also informed court decisions limiting the proof required by medical providers and the defenses available to insurers on motions for summary judgment{**5 Misc 3d at 770} and at trial. To establish a prima facie case, a plaintiff medical supplier must submit proof that it timely transmitted its claim for no-fault benefits, that the defendant insurer received the claim but failed to pay or validly deny the claim within the permissible 30 days or to request verification within the applicable 10 or 15 business days after it received the claim (Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U], *2 [App Term, 2d Dept 2003] [“courts have declined to distinguish a proper proof of claim under the insurance regulations from the quantum of proof necessary to prevail on a motion for summary judgment in an ensuing action on the claim”]; see also Ocean Diagnostic Imaging PC v State Farm Mut. Auto. Ins. Co., 5 Misc 3d 53 [App Term, 2d Dept 2004]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2d Dept 2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d Dept 2003]). Once the plaintiff has established its prima facie case, the burden shifts to the defendant to come forward with admissible evidence refuting plaintiff’s evidence and demonstrating the existence of a material issue of fact (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]).

In support of its motion for summary judgment, plaintiff submitted a copy of its NF-3 proof of claim form, accompanied by an affidavit of its billing manager attesting on personal knowledge to the issuance of the claim, and a copy of defendant’s denial form (NF-10), indicating defendant received the claim on August 28, 2002, and denied it on November 21, 2002.^[FN3] In this case, the NF-10 denial form, which is admissible as an admission by defendant, is sufficient to establish plaintiff’s prima facie entitlement to summary judgment, i.e., that the claim was transmitted, that defendant received it, and that defendant failed to pay or deny the claim within 30 days of receipt^[FN4] (see A.B. Med. Servs., PLLC v New York Cent. Mut. Fire Ins. Co., 3 Misc {**5 Misc 3d at 771}3d 136[A], 2004 NY Slip Op 50507[U] [2d Dept 2004]). Nothing more is required.^[FN5] [*3]

Defendant offers nothing in response to plaintiff’s motion other than a generic attorney’s affirmation in opposition and a generic memorandum of law with little but a passing connection to the claims in issue here. In any event, construing defendant’s opposition in the most favorable light possible, defendant fails to overcome plaintiff’s prima facie case for several reasons.

First, the denial is untimely, and, therefore, defendant is precluded from asserting any defense other than fraud or lack of coverage (Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997]; Presbyterian Hosp. v Aetna Cas. & Sur. Co., 233 AD2d 433 [2d Dept 1996]; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999]).

Second, the stated reason for the denial in defendant’s NF-10 is that “an extended delay between the motor vehicle accident and the beginning of treatment suggest not medically necessary and raises issue of casualty [sic].” It is by now firmly established that the burden is on the insurer to prove that the medical services or supplies in question were medically unnecessary (see, e.g., A.B. Med. Servs. v GEICO Ins., 2 Misc 3d 26 [App Term, 2d Dept 2003], and cases cited therein). In addition, a denial premised on lack of medical necessity must be supported by evidence such as an independent medical examination, peer review, or examination under oath “setting forth a sufficiently detailed factual basis and medical rationale for the claim’s rejection” (Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701, *1 [App Term, 2d Dept 2003]; see also Rockaway Blvd. Med. P.C. v Travelers Prop. Cas. Corp., 2003 NY Slip Op 50842[U] [App Term, 2d & 11th Dists 2003]; see also 11 NYCRR 65-3.8 [b] [4]; Choicenet Chiropractic P.C. v Travelers Prop. Cas. Corp., 2003 NY Slip Op 50697[U] [App Term, 2d & 11th Jud Dists 2003]; Rockaway Blvd. Med. P.C. v Allstate Ins. Co., 2003 NY Slip Op 50681[U] [App Term, 2d & 11th Jud Dists 2003]). {**5 Misc 3d at 772}Defendant’s conclusory, unsupported statement in its denial form is wholly inadequate to defeat plaintiff’s motion for summary judgment.

Finally, to the extent defendant’s defense to the summary judgment motion is that plaintiff did not document the cost of the supplies provided as part of its claim, the defense is without merit. It is true that, under the regulations, no-fault benefits available for medical supplies are limited to 150% of their “documented cost” (see 11 NYCRR Appendix 17-C, part E [b] [1]). However, in this court’s view, “documented cost” is not an element of plaintiff’s prima facie case. As is the case with issues of medical necessity, any questions about the amount claimed for medical supplies can and should be asked through a request for verification and, if possible, resolved at the claim stage, not by a court on a motion for summary judgment or at trial. Defendant had the opportunity to ask plaintiff to document the costs of the supplies when it received the claim. Because defendant failed to do so within the time permitted by the regulations, defendant is precluded from raising it now as a defense to plaintiff’s summary judgment motion.^[FN6] [*4]

For the foregoing reasons, plaintiff’s motion is granted in all respects. Judgment shall be entered in favor of plaintiff for $705 plus statutory interest and attorney’s fees plus costs.

Footnotes

Footnote 1: Or “substantially equivalent written notice” (11 NYCRR 65-3.5 [a]).

Footnote 2: For example, lack of authentication or other defect in the assignment of benefits (see, e.g., Elm Med., P.C. v American Home Assur. Co., 2003 NY Slip Op 51357[U]; but see A.B. Med. Servs. PLLC v Highlands Ins. Co., NYLJ, May 27, 2003, at 21, col 3 [Civ Ct, NY County]).

Footnote 3: Also annexed to the moving papers is a copy of an unsworn “Letter of Medical Necessity” concerning the assignor. This document is not considered by the court as it is not in admissible form.

Footnote 4: The court notes that the mailing log, date stamped by the Postal Service, also submitted in support of plaintiff’s motion, standing alone without any accompanying affidavit made on personal knowledge that the proof of claim was transmitted in accordance with plaintiff’s regular business procedures, would not be sufficient, for summary judgment purposes, to establish that the claim was transmitted to defendant.

Footnote 5: The additional documents submitted by plaintiff—a receipt for medical equipment and an assignment of benefits form signed by the assignor; a prescription for the medical equipment; invoices from Collona Distributors, Inc.; a copy of a cancelled check to Collona Distributors, Inc. for the full amount of the invoices—were not required as part of plaintiff’s prima facie burden of proof on its summary judgment motion, although they may have been instructive as a response to a timely request for verification of the claim by defendant.

Footnote 6: To the extent this decision is at odds with King’s Med. Supply v Travelers Prop. Cas. Corp. (194 Misc 2d 667 [Civ Ct, Kings County 2003]), which was decided before the development of the Appellate Term case law, this court respectfully declines to follow it.

Supreme Court, Kings County

25595/03

Ira Harkavy, J.

defendant Country-Wide Insurance Company (Countrywide) moves, pursuant to CPLR 3212, for an order granting summary judgment dismissing the complaint of plaintiff Ketly Lavaud as Assignee of the Rights of Don N. Nixon a/k/a Donnon N. Nixon (plaintiff). Plaintiff cross-moves for an order awarding her summary judgment against Countrywide on her complaint.

The Underlying Accident

On November 13, 1995, plaintiff and non-party Martha Domfe (Ms. Domfe) were pedestrians crossing Caton Avenue, at its intersection with Flatbush Avenue, in Brooklyn. When they started crossing the street, Don N. Nixon (Mr. Nixon) was stopped for a red light at the intersection in a vehicle insured by Countrywide under a liability policy with limits of $10,000 per person/$20,000 [*2]per accident. Before plaintiff and Ms. Domfe finished crossing the street, the light turned green and Mr. Nixon proceeded toward the intersection and struck plaintiff and Ms. Domfe in the cross-walk. As a result of this accident, plaintiff sustained various injuries including a fractured patella and a torn lateral and medial meniscus.

The Domfe Action

On or about February 6, 1996, Ms. Domfe commenced an action against Mr. Nixon in Kings County Supreme Court. On September 4, 1996, Mr. Nixon appeared for an examination before trial and testified that his vehicle struck both plaintiff and Ms. Domfe and that he did not see these pedestrians before contact was made. In a letter dated October 21, 1996, Ms. Domfe demanded that Countrywide tender its full policy limits. In a letter dated January 23, 1997, Ms. Domfe’s counsel notified Countrywide that his client was prepared to settle the case for the policy limits and that he would consider Countrywide’s failure to accept this offer to be in bad faith. On February 14, 1997, Ms. Domfe filed a note of issue and certificate of readiness. In or about September, 1997, the Domfe action was settled for $9,500.00.

Plaintiff’s Action

By letter dated January 10, 1996, plaintiff’s attorney notified Countrywide of the accident. On May 22, 1996, plaintiff’s attorney provided Countrywide with a copy of the police report of the accident, as well as a medical report from the hospital that initially treated plaintiff for her injuries. On March 25, 1997, plaintiff provided Countrywide with authorizations for her MRI films and no-fault records.

On or about August 11, 1998 (11 months after the Domfe action was settled), plaintiff commenced an action against Mr. Nixon. In a letter dated August 13, 1998, plaintiff’s attorney notified Countrywide that his client was prepared to settle the action for $10,000. Plaintiff’s attorney attached various records to the letter including plaintiff’s emergency room record, two operative reports, as well as her employer’s wage verification report. Finally, plaintiff’s attorney stated:

“The offer to accept the sum of herein mentioned in full settlement of the above entitled action is made without prejudice and is to be deemed withdrawn if not accepted within ten (10) days from the date of this letter. In the event I do not receive a response from your office within said time period, and upon an excess verdict in favor of my client being rendered, your company may be held responsible for said excess as well as your insured by reason of the fact that you failed to proceed in good faith.”

In a letter dated November 5, 1998, Countrywide advised plaintiff’s attorney that it was in receipt of his August 13, 1998 letter. Countrywide also advised plaintiff’s attorney that it was missing plaintiff’s no-fault file and asked that a copy of this file be sent to it in order to “expedite settlement” of plaintiff’s claim. Finally, Countrywide stated that it was “ready, willing, and able to discuss all claims,” but first needed to review the missing no-fault file. Following the exchange of these letters, the case proceeded through the discovery process. Although plaintiff’s counsel claims that he attempted to negotiate a settlement during this period, the only firm settlement offer made by plaintiff during the pendency of her action was set forth in the August 13, 1998 letter, which, by its own terms, expired on August 23, 1998. [*3]

On December 13, 2001, at the commencement of jury selection, Countrywide tendered its first settlement offer in the amount of $8,000 and plaintiff rejected this offer. The following day, Countrywide tendered a settlement offer in the amount of $10,000, the full policy limit. Plaintiff also rejected this offer. After a trial on liability and damages, the jury found Mr. Nixon 70% responsible for the accident, and plaintiff 30% responsible. The jury awarded plaintiff $750,000 for past pain and suffering and $250,000 for future pain and suffering. On appeal, the Appellate Division, Second Department upheld the jury’s determination on liability but reduced damages for past pain and suffering to $350,000 and future pain and suffering to $105,000. Ultimately, plaintiff entered a judgment against Mr. Nixon in the total amount of $459,796.75, inclusive of interest. On May 30, 2002, plaintiff and Mr. Nixon entered into an agreement whereby plaintiff relinquished her right to enforce the judgment against Mr. Nixon personally in exchange for an assignment of Mr. Nixon’s right to pursue a claim against Countrywide for an alleged bad faith refusal to accept plaintiff’s settlement offer.

The Instant Bad-Faith Action

By summons and complaint dated July 10, 2003, plaintiff commenced the instant action against Countrywide alleging that it acted in bad faith and in gross disregard of the insured’s interests when it failed to accept plaintiff’s August 13, 1998 settlement offer. The instant motions are now before the court.

“To establish a prima facie case of bad faith refusal to settle, a plaintiff must demonstrate that the insurance carrier’s conduct constituted a gross disregard of the policyholder’s interests-that is, a deliberate or reckless failure to place on an equal footing its own interests and those of the policyholder when considering a settlement offer” (Vecchione v Amica Mut. Ins. Co., 274 AD2d 576, 578 [2000]). “In other words, a bad-faith plaintiff must establish that the defendant insurer engaged in a pattern of behavior evincing a conscious or knowing indifference to the probability that an insured would be held personally accountable for a large judgment if a settlement offer within the policy limits were not accepted” (Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453-454 [1993]).

“Factors that enter into the bad faith equation include the likelihood of success on the liability issue in the underlying action, the potential magnitude of damages and resulting financial burden each party may be exposed to as a result of a refusal to settle, and the information available to the insurance carrier at the time the demand for settlement is made” (Vecchione, 274 AD2d at 578-579). “Naturally, proof that a demand for settlement was made is a prerequisite to a bad-faith action for failure to settle” (Pavia, 82 NY2d at 454). Furthermore, a bad-faith plaintiff must demonstrate that, at the time such a settlement demand was offered, “all serious doubts about the insured’s liability were removed” (id. at 454).

It is clear from the record before the court that Countrywide’s conduct in this matter was hardly a model of diligence. For example, Countrywide has failed to offer a satisfactory excuse for waiting some three months before responding to plaintiff’s August 13, 1998 settlement offer. However, the fact of the matter is, the only settlement demand that plaintiff made in this case was contained in the August 13, 1998 letter. Thus, plaintiff’s entire case rests upon a settlement demand that was only open for ten days and was made a mere two days after she commenced the underlying [*4]action. In Pavia, the Court of Appeals expressed strong disapproval of such time-limited settlement offers on public policy grounds. Specifically, the Court noted that:

“[p]ermitting an injured plaintiff’s chosen timetable for settlement to govern the bad-faith inquiry would promote the customary manufacturing of bad-faith claims, especially in cases where an insured of meager means is covered by a policy of insurance which would finance only a fraction of the damages in a serious personal injury case. Indeed, insurers would be bombarded with settlement offers imposing arbitrary deadlines and would be encouraged to prematurely settle their insureds’ claims at the earliest possible opportunity in contravention of their contractual right and obligation of thorough investigation.”^[FN1] (Pavia, 82 NY2d at 455).

Besides the public policy concerns which are implicated with plaintiff’s time-limited settlement offer, there are other factors which weigh against plaintiff’s bad faith claim. As the court noted above, plaintiff’s settlement offer was made nearly simultaneously with the filing of the underlying complaint. While it is true that Countrywide was on notice as to the circumstances of the accident given its involvement in the Domfe action, it had no opportunity to conduct an independent medical exam or to depose plaintiff regarding her injuries. Finally, plaintiff’s claim that all serious doubts about Mr. Nixon’s liability were removed at the time of the settlement offer is belied by the jury’s finding that plaintiff was 30% responsible for the accident.

Accordingly, Countrywide’s motion for summary judgment dismissing plaintiff’s complaint is granted and the action is hereby dismissed. Plaintiff’s cross motion for summary judgment against Countrywide is denied.

This constitutes the decision, order, and judgment of the court.

Dated: October 18, 2004E N T E R,

J. S. C.

Footnotes

Footnote 1:In Pavia, the settlement offer was valid for 30 days, three times longer than plaintiff’s offer.

Nassau Dist Ct

00980/04

Israel, Israel & Purdy

11 Grace Avenue, Suite 111

Great Neck, NY 11021

Law Offices of Samuel K. Rubin

PO Box 9040

Bethpage, NY 11714

Howard S. Miller, J.

Pursuant to CPLR 3212, Plaintiffs move unopposed for summary judgment on their respective claims ^[FN1] for statutory interest and attorneys’ fees on no-fault claims that Defendant allegedly paid, but paid late. Before reaching the merits of the motion, the Court ^[FN2] must resolve the question of whether Plaintiffs may properly “bundle” a series of de minimis actions that are related only by the Defendant’s allegedly common response to the claims underlying those actions.

In support of their position on that threshold issue, Plaintiffs cite a recent Kings County Supreme Court decision, Aviyon Medical Rehabilitation, P.C. v Allstate Insurance Co., 2004 NY Slip Op 50819(U) [Sup Ct, Kings County, Aug. 2, 2004]. That decision, however, involved only one Plaintiff, and as such it is distinguishable. The instant action more closely resembles Bender v Underwood, 93 AD2d 747 [1st Dept. 1983], a case that was distinguished by the Court in Aviyon, supra.

Analysis begins with CPLR 1002, which permits joinder of plaintiffs who assert a right to relief arising out of “the same transaction, occurrence, or series of transactions or occurrences.” The question thus is whether the Defendant’s allegedly common response to a series of otherwise unrelated claims can be considered to create a “series of transactions” within the meaning of CPLR 1002. On that question, the Second Department has most recently held that the answer is no. (See, Mount Sinai Hospital et al. v MVAIC, 291 AD2d 536, 738 NYS2d 247 [2d Dept 2002]; cf., Hempstead Gen. Hosp. v Liberty Mutual, 134 AD2d 569 [2d Dept 1987]). Therefore, this action would not survive a motion to sever, if the Defendant had made one.

The remaining question is whether the Court should nevertheless grant summary judgment because the Defendant has not opposed the instant motion and has made no motion to sever. On that question, some authority appears in the holding of the Nassau County Supreme Court in St. Luke’s Roosevelt Hospital, et al., v Allstate Insurance Company, Sup Ct, Nassau County, Jan. 8, 2003, McCarty, J., Index No. 3936/02. In that decision, Justice McCarty denied a summary judgment motion by a similarly-bundled group of plaintiffs, on the ground that the practice of bundling enabled plaintiffs to gain access to the court system at a discounted rate, thereby depriving the courts of needed revenue. On the question of whether the added fee revenue, from splitting this action into four actions, would make up for the costs of the additional burden to the court system thereby caused, the undersigned will defer to the judgment of Justice McCarty. Justice McCarty in any event believes that the Court system has a financial interest in its own right in denying motions such as the instant one.

The undersigned is more concerned about the de minimis aspect of each of the bundled claims. Each of the claims individually, with one possible exception, is not worthy of the expenditure of public resources involved in a full civil action. The de minimis principle is a [*2]matter of public policy. The Court should not allow the policy to be circumvented by bundling a series of essentially unrelated trivial claims. A large box of trifles is still a trifling matter. In the end, each cause of action has to be adjudicated individually by the trier of fact, and if each cause of action is de minimis, the trier of fact is wasting public resources even if there might be a few economies of scale in trying a large group at once.

The Court also notes in passing that, in the event that the Defendant had raised a triable issue of fact, there probably could not be a joint trial of the claims in this action even if CPLR 1002 allowed it. That is because the Defendant’s actions in one instance would probably be inadmissible, in a trial of its actions on a separate occasion, because of irrelevance and possible prejudice to the jury. Thus, there would be few, if any, economies of scale in allowing claims such as these to be bundled.

In ruling as it does, the Court is mindful of the purpose of the no-fault laws. In enacting the no-fault laws, the State Legislature clearly wanted to give insurance companies an incentive to pay no-fault claims promptly. To the extent that insurance companies are allowed to procrastinate in paying claims and not suffer the statutory penalty because it is uneconomical for plaintiffs to pursue it, the statutory purpose of the no-fault laws may be frustrated.

The answer lies in a legislative or regulatory solution, however, not in a judicial solution that permits medusan lawsuits. One such legislative solution might be an amendment to the Commercial Claims provisions of Article 18-A of the Uniform District Court Act, to allow no-fault claims under a certain amount to be pursued as commercial claims. If a particular insurance company is engaged in a persistent course of such conduct, a class action might also be in order.

In the meantime, the motion for summary judgment is denied on the grounds that the action is based on a series of de minimis claims that may not be joined under CPLR 1002. The Plaintiff is given leave to move to sever all Plaintiffs except for Lyang Acupuncture, P.C., and to renew the motion for summary judgment as to that Plaintiff.

So Ordered.

Footnotes

Footnote 1:The claims respectively are $81, $76, $56, $18, $18, and $209 (the latter on behalf of Lyang Acupuncture, P.C.).

Footnote 2:as it advised Plaintiff’s counsel on the return date of the motion