—[*1]

Appeal from an order of the Supreme Court, Niagara County (Amy J. Fricano, J.), entered May 7, 2003. The order granted the application of petitioner for a permanent stay of arbitration.

It is hereby ordered that the order so appealed from be and the same hereby is unanimously reversed on the law with costs and the application is denied.

Memorandum: Petitioner commenced this proceeding pursuant to CPLR article 75, seeking a permanent stay of arbitration of respondents’ claim for supplementary uninsured motorist (SUM) benefits based on the failure of respondents to provide the requisite written notice of their claim “[a]s soon as practicable,” in accordance with the automobile policy issued by petitioner to respondents. We previously reversed an order of Supreme Court (Joslin, J.) referring petitioner’s application for a stay of arbitration to an arbitrator, and we remitted the matter to Supreme Court for a hearing to determine whether respondents provided timely notice (Matter of New York Cent. Mut. Fire Ins. Co. [Guarino], 283 AD2d 982 [2001]). Respondents appeal from an order of Supreme Court (Fricano, J.) that, following the hearing, granted petitioner’s application for a permanent stay of arbitration based on respondents’ failure to provide timely notice. We reverse.

Respondent Sue Guarino (claimant) was injured in a rear-end motor vehicle accident on March 8, 1997. Although claimant immediately consulted with various medical providers for treatment of her back and neck injuries, all indications at the time were that claimant had not sustained a serious injury as defined by Insurance Law § 5102 (d). A report of an MRI performed in October 1997 recited that claimant had a “minimal right C5-6 disc bulge causing no apparent compromise” to the nerve and that claimant’s cervical spine was “otherwise normal.” Moreover, according to the report of a neurologist who performed an independent medical evaluation (IME) of claimant on March 17, 1998 on behalf of petitioner, claimant did not sustain a herniated disc in her neck or a cervical radiculopathy as a result of the accident. Instead, the IME physician concluded that claimant had sustained only cervical and lumbar strains, which are “soft tissue injuries [that] would be expected to heal in a matter of weeks to months,” and in any event the IME physician could not “clearly relate her ongoing discomforts to the motor vehicle [*2]accident.” On the basis of that IME report, petitioner in March 1998 denied claimant’s application for no-fault benefits. We note that it is both inconsistent and inequitable, in light of that denial of no-fault benefits, for petitioner now to contend that claimant was then on notice that she had a viable claim for SUM benefits.

The record establishes that it was not until mid-July 1998, at the earliest, that claimant was on notice that she had sustained a serious injury as a result of the accident. At that time, claimant received the report of her orthopedic surgeon, who indicated that the October 1997 MRI might have been misread and might in fact show a disc herniation at C5-6. Claimant was referred for another MRI that, according to a second report of the surgeon issued one month later, showed “a right-sided paracentral herniation at C5-6 with extrusion” as well as a “bulging of the annulus fibrosis at L5-S1 . . . [that] may be due to an annular tear.” Within six weeks of the issuance of that second report, respondents gave petitioner written notice of the SUM claim.

Based on the foregoing, we conclude that the court erred in determining that respondents did not give timely notice of the claim and in granting petitioner’s application to stay arbitration on that ground. We conclude that claimant acted with due diligence in ascertaining the medical facts underlying her SUM claim, and that respondents established that the overall 19-month delay in notifying petitioner of the SUM claim was reasonable (see Medina v State Farm Mut. Auto. Ins. Co., 303 AD2d 987, 988-989 [2003]; Matter of Nationwide Ins. Co. [Bellreng], 288 AD2d 925 [2001]; Matter of Allstate Ins. Co. [Earl], 284 AD2d 1002, 1004 [2001]; Matter of Nationwide Ins. Enter. [Leavy], 268 AD2d 661, 662-663 [2000]; see also Matter of Travelers Ins. Co. [DeLosh], 249 AD2d 924, 925-926 [1998]). Present—Green, J.P., Kehoe, Martoche and Hayes, JJ.

Civil Court of the City of New York, Kings County

41116/2004

Peter P. Sweeney, J.

In this action pursuant to Insurance Law § 5101 et seq to recover first-party no-fault benefits, plaintiff moves to strike defendant’s seventh, eighth and tenth affirmative defenses on the ground that they were not pleaded with the specificity required by CPLR 3016(b). For the reasons stated below, the motion is denied in part and granted in part.

Factual Background

Plaintiff Carepluss Medical Supply Inc. a/a/o Edme Aenor commenced this action by the service of a summons and complaint, alleging that the defendant State Farm Mutual Automobile Insurance Company wrongfully denied a claim for first-party no-fault benefits. The claim was in [*2]the amount of $757.00 for medical supplies provided to its assignor Edme Aenor in connection with injuries arising out of a September 2, 2002 motor vehicle accident. In its denial dated April 9, 2003, the defendant acknowledged receipt of the clain on December 4, 2002 and denied the claim solely on the ground that Mr. Aenor failed to appear for two scheduled examinations under oath.

In its answer, defendant denied all the material allegations alleged in plaintiff’s complaint and asserted twelve affirmative defenses. Defendant’s seventh, eighth and tenth affirmative defenses provide as follows:

SEVENTH: That Plaintiff has engaged in fraudulent conduct in connection with the operation of its business and the submission of the claim to State Farm by intentionally paying substantially more for the items at issue for which reimbursement is sought, than the price that is readily available in the relevant marketplace, with the intent to deceive State Farm, and to inflate the charges that were submitted to State Farm.

EIGHTH: That Plaintiff has fraudulently and materially misrepresented to State Farm that the cost that was incurred and upon which the charges for the items at issue were based, were necessary and/or required costs, when In fact, the Plaintiff intentionally paid more for the items at issue than the price that is readily available in the relevant marketplace, with the intent to deceive State Farm and to inflate the charges that were submitted to State Farm.

TENTH: That the medical supplies fo which reimbursement is sought were not related to the accident in question and/or were never actually provided.

Plaintiff maintains that since these defenses are premised upon allegations of fraud and misrepresentation, they must be dismissed because they were not pleaded with the specificity required by CPLR 3016(b), which in pertinent part, provides: “[w]here a * * * defense is based upon misrepresentation [or] fraud * * * the circumstances constituting the wrong shall be stated in detail.”

Discussion

Plaintiff’s motion is granted, but only to the extent that defendant’s seventh and eighth affirmative defenses and that portion of defendant’s tenth affirmative defense alleging that “the medical supplies fo which reimbursement is sought were * * * were never actually provided” are stricken. These defenses are being stricken, not because of defendant’s non-compliance with CPLR 3016(b), but because defendant’s admitted failure to pay or reject the claims within 30 days of receipt precluded it from raising them (see Presbyterian Hosp. in City of NY v. Maryland Cas. Co., 90 NY2d 274; Central General Hosp. v. Chubb Group of Ins. Companies, 90 NY2d 195).

In the court’s view, the defendant complied with CPLR 3016(b) which “requires only that [*3]the misconduct complained of be set forth in sufficient detail to clearly inform a [plaintiff] with respect to the incidents complained of and is not to be interpreted so strictly as to prevent an otherwise valid cause of action in situations where it may be ‘impossible to state in detail the circumstances constituting a fraud'” (Lanzi v. Brooks, 43 NY2d 778, 780, quoting Jered Contr. Corp. v. New York City Tr. Auth., 22 NY2d 187, 194). Defendant’s seventh, eighth and tenth affirmative defenses pass muster under this analysis, especially since the facts and circumstances underlying these defenses are most likely within the exclusive knowledge of the plaintiff. It would seem to be impossible for the defendant to be any more specific at this stage of the proceedings.

The court is cognizant that in some instances, a defense premised upon fraud may be asserted even when a denial is issued beyond the 30 day period set forth in Insurance law § 5106[a]. Such instances, however, are limited to situations were the fraud, if proven, would establish that there was no coverage at all for the claim (Central General Hosp., 90 NY2d at 199). Thus, where a fraud defense is premised upon allegations that the collision underlying the claim was a staged event in furtherance of an insurance fraud scheme, the defense survives an untimely denial since a fabricated accident does not trigger coverage under the no-fault endorsement (see e.g. Mount Sinai Hospital v. Triboro Coach Inc ., 263 AD2d 11,19, citing Central General Hospital, supra ., Inwood Hill Medical P.C. v. Allstate Insurance Company, 2004 WL 1381082).

On the other hand, where fraud defenses are premised upon allegations of excessive or fraudulent billing, as is the case here, the defenses do not survive an untimely denial since the defenses, even if established, would not result in a finding that there was ” no coverage at all” for the claim (Melbourne Medical, P.C. v. Utica Mut. Ins. Co., 2004 WL 1431320, 2, citing Central Gen. Hosp., 90 NY2d at 199, 659 NYS2d 246, 681 NE2d 413; Presbyterian Hosp. in City of NY, 90 NY2d at 285).

Finally, plaintiff has not established a basis for striking that portion of defendant’s tenth affirmative defense which alleges that “the medical supplies for which reimbursement is sought were not related to the accident.” Even where there is an untimely denial, an insurer may raise a lack of coverage defense “premised on the fact or founded belief that an alleged injury does not arise out of an insured incident.” (Central General Hospital , 90 NY2d at 199). Such a defense does not necessarily have to be premised upon fraud and may be raised in situations where the insurer is claiming that the injuries at issue arose out of an uninsured accident (see e.g. Central General Hosp. , supra [allegation that injuries arose out of a separate work-related accident and not a motor vehicle accident]. In such circumstances, the specificity requirements of CPLR 3016(b) do not apply.

This constitutes the decision and order of the court.

Dated: September 29, 2004

_____________________________

PETER P. SWEENEY [*4]

Civil Court Judge

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiffs from so much of an order of the Civil Court, Kings County

(D. Silber, J.), entered on September 19, 2003, as denied their cross motion for summary judgment.

Order insofar as appealed from unanimously affirmed without costs.

Plaintiffs health care providers established their prima facie entitlement to summary judgment for assigned no-fault benefits by the submission of evidentiary proof that the statutory claims forms were mailed to defendant and that defendant failed to pay or deny the claims 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]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51701 [U] [App Term, 2d & 11th Jud Dists]). Moreover, defendant’s requests for examinations under oath did not toll the 30-day period in the [*2]absence of provisions in the applicable insurance regulations requiring a claimant to submit to examinations under oath (see Melbourne Med., P.C. v Utica Mut. Ins. Co., ___ Misc 3d ___, 2004 NY Slip Op 24221 [U] [App Term, 2d & 11th Jud Dists]; S & M Supply v Nationwide Mut. Ins. Co., 3 Misc 3d 138 [A], 2004 NY Slip Op 50557 [U] [App Term, 2d & 11th Jud Dists]; A.B. Med. Servs. v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 9th & 10th Jud Dists 2003]).

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 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.), plaintiffs’ motion for summary judgment was properly denied.
Decision Date: September 29, 2004

District Court of Nassau County, Third District

1587/04

Alden Banniettis, Esq., attorney for plaintiff; Samuel K. Rubin, attorney for defendant.

Randy Sue Marber, J.

Plaintiff assignee moves for an order pursuant to CPLR 3212, awarding summary judgment in its favor. The defendant opposes the plaintiff’s motion.

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering evidence to demonstrate the absence of any material issues of fact. Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Alvarez v. Prospect Hospital, 68 NY2d 320 [NY 1986]; Winegard v. New York University Medical Center, 64 NY2d 851 [NY 1985]) and even in the absence of opposing papers. A motion for summary judgment shall be supported by an “affidavit by a person having personal knowledge of the facts”, shall recite all the material facts and it shall show that there is no defense to the cause of action or that the defenses have no merit (CPLR 3212[b]). If the moving party meets his burden, the burden then shifts to the non-moving party to allege such evidentiary facts that raise a genuine and material controversy as to the issue(s) before the Court. Where the opposing party fails to meet his burden and the Court finds no triable issues, the motion will be granted (Iandoli v. Lange, 35 AD2d 793 [NYAD 1st Dept 1970]). Where the Court determines that a triable issue of fact exists, denial of the motion is the proper course of action (Moskowitz v. Garlock, 23 AD2d 943 [NYAD3d Dept 1965]). [*2]

“A plaintiff establishes a prima facie case … by showing … that insurance coverage existed; that a facially valid claim was presented; and that the claim was not timely denied” (Vinings Spinal Diagnostic, P.C. v. Liberty Mut. Ins. Co., 186 Misc 2d 287, 291 [NY Dist Ct Nassau 2000]). Plaintiff’s proof upon its instant motion consists of an affirmation of counsel and an unverified complaint (both having no probative value as to the relevant facts the Court is searching). It is also supported by a short affidavit of “Ernest Horowitz MD”, who asserts that he is an officer of the plaintiff/assignee. In his affidavit, he declares that the “assertions in his counsel’s affirmation are true and correct”. He states that his knowledge of the facts comes from his “business records, maintained as a matter of practice, by [him], in [his] practice”. The Court does not accept the attempted incorporation by reference by affiant Horowitz (whose burden it is to prove relevant facts upon personal knowledge) of factual allegations contained in plaintiff’s counsel’s affirmation where counsel’s allegations are based upon counsel’s “interview of (unnamed) corporate affiants and defendant’s business records … “. Horowitz’s affidavit does not show upon first-hand knowledge the dates each of the plaintiff’s six purported claim forms were sent to or received by defendant. Although plaintiff’s application contains proofs of six mailings of something, Dr. Horowitz’s affidavit does not prove what was mailed and that same were mailed by him. Dr. Horowitz does not state that no payments have been made by the Defendant within thirty days of the submission of those bills … nor does he show that the defendant did not properly seek additional verification. The Court notes that the plaintiff has not demonstrated the untimeliness of the defendant’s denial. Although the affiant indicates that his file contains certain documents, the affirmation fails to make specific reference to any pertinent exhibits which it may have derived from his file. Dr. Horowitz appears to be a complete “stranger” to the treatment and claim submission in this matter.

Although not pertinent to the Court’s above determination, the Court notes that the lateness of a denial or the absence of a required denial does not prohibit the insurer from raising the defense of lack of coverage based upon the fact or founded belief that the alleged injury did not arise out of an insured incident; in this case an alleged fraud on the part of the assignor (Metro Medical Diagnostics, PC v. Eagle Insurance Co., 293 AD2d 751 [NYAD 2d Dept 751, 2002]; Valley Psychological PC v. Liberty Mutual Insurance Co., 195 Misc 2d 540 [City Ct, Albany 2002]). “The Court of Appeals did not intend the issue of fraud to escape the notice of the court simply because of a late denial” (Valley Psychological PC v. Liberty Mutual Insurance Co., supra at 542). Although there is no application presently before the Court to amend the answer, the unpled defense of fraud is available to a defendant in resisting plaintiff’s summary judgment motion (Rizzi v. Sussman, 9 AD2d 961 [NYAD 2d Dept 1959]).

In addition, the No-Fault Verification of Treatment furnished by plaintiff’s counsel to the Court differs from what was apparently sent to the defendant upon submission of the claim. Furthermore, any deficiencies in the moving papers cannot be remedied on reply as attempted herein. [*3]

Plaintiff’s instant motion seeking summary judgment in its favor is, in all respects, denied. Defendant is awarded costs on this motion.

Dated: ____________

ENTER:

____________________________________

Randy Sue Marber, District Court Judge

cc: Alden Banniettis, Esq.

Samuel K. Rubin, Esq.

Civil Court, Kings County

87097KCV2004

Eileen N. Nadelson, J.

This matter involves the disputed billing of $1,791.73 for MRIs which was denied by the arbitrator based upon the grounds of lack of documented medical necessity. Petitioner appealed the arbitrator’s award to a Master Arbitrator, alleging that the arbitrator’s decision was arbitrary, capricious, irrational and without a plausible basis in fact. Based on that argument, Petitioner asked the Master Arbitrator to vacate the award pursuant to CPLR section 7511(b)(1). The Master Arbitrator, however, affirmed the arbitrator’s award.

Petitioner, pursuant to CPLR 7511, now moves this court to vacate the decision of the Master Arbitrator as arbitrary and capricious.

In presenting its claim to the arbitrator, Petitioner evidenced that it submitted its claim, a valid assignment of first party benefits, and that Respondent insurer failed to pay or deny the claim within thirty days of receiving the claim. The arbitrator found that Respondent failed to [*2]pay or deny the claim in a timely manner; however, the arbitrator also found that the MRIs billed for were not medically necessary. Based on this finding, the arbitrator denied the claim, stating that Petitioner failed to meet its burden of proof with respect to the medical necessity of the MRIs. The Master Arbitrator, in affirming the award, found that the arbitrator’s conclusion was based on sufficient evidence to support the award.

CPLR section 7511((b)(iii) provides that an arbitrator’s award may be vacated if it is found that the arbitrator exceeded his power or imperfectly executed it. In Petrofsky v. Allstate Insurance Company, 54 N.Y. 2d 207, 445 N.Y.S. 2d 77 (1981), the Court of Appeals held that the role of a master arbitrator in insurance cases is to assure that the arbitrator reached a decision in a rational manner, that the decision was not arbitrary and capricious, incorrect as a matter of law, or in excess of policy limits or in conflict with other designated no-fault arbitration proceedings. Therefore, the question to be decided by this court is whether the decision of the arbitrator, as confirmed by the Master Arbitrator, was arbitrary, capricious, or incorrect as a matter of law.

Historically, the courts held that the applicable test for review of no-fault arbitrations where error of law is in issue is essentially similar to that utilized for review of quasi-legislative determinations- whether any reasonable hypothesis can be found to support the questioned interpretation. Shand v. Aetna Insurance Company, 74 A.D. 2d 442, 428 N.Y.S. 2d 462 (2d Dept. 1980). Under this theory, a court, in reviewing an arbitrator’s award, should not set it aside for errors of law or fact unless the award is so irrational as to require vacatur. Hanover Insurance Company v. State Farm Mutual Insurance Co., 226 A.D. 2d 533, 641 N.Y.S. 2d 547 (2d Dept. 1996). Even as recently as 1997, the courts in this department upheld arbitrator’s decisions, even if the arbitrator misconstrued the law, provided that the arbitrator’s conclusion was neither irrational nor arbitrary and capricious so as to justify vacating the award. Gravenese v. Allstate Insurance Company, 245 A.D. 2d 507, 666 N.Y.S. 2d 710 (2d Dept. 1997). However, more recently the courts in the second department have taken a different approach when called upon to review arbitral decisions.

In Park Radiology, P.C. v Allstate Insurance Company, 2 Misc. 3d 621, 769 N.Y.S. 2d 870 (Richmond County 2003), a case involving the claim for first party no-fault benefits, the arbitrator, as in the instant case, found that the insurer failed to pay or deny the claim within the prescribed thirty day period. Nevertheless, the arbitrator found that the medical provider failed to establish a prima facie case that the tests performed were medically necessary and so denied the claim. In affirming the award, the master arbitrator cited the Petrofsky case as limiting his ability to vacate an award that is neither arbitrary nor capricious. However, the Civil Court vacated the master arbitrator’s decision and found for the medical provider, asserting that the arbitrator and master arbitrator misconstrued the law.

The law with respect to the burden of proof in first party no-fault claims was established by the court in Bonetti v. Integron National Insurance , 269 A.D. 2d 413, 703 N.Y.S. 2d 217 (2d Dept. 2000). The Bonetti court stated that, with limited exception, an insurer is precluded from [*3]denying a no-fault claim if it fails to timely deny it. Further, an insurer is precluded from challenging the adequacy of a claimant’s proof of medical necessity if it fails to timely deny the claim for no-fault benefits. Vinings Spinal Diagnostic, P.C. v Liberty Mutual Insurance Company, 186 Misc. 2d 287, 717 N.Y.S. 2d 466 (Nassau County 2000). This is true despite a contrary position taken by the New York Department of Insurance.

In an informal opinion letter entitled “No-Fault Burden of Proof,” January 11, 2000, the Department of Insurance indicated that, even if a claim is not timely denied, the claimant may still have to substantiate that the treatment for which reimbursement is sought was medically necessary. This approach has been taken by the arbitrators in no-fault arbitration, but has not been followed by the courts. Das/N.Y. Medical Rehab P.C. v. Allstate Insurance Company, 297 A.D. 2d 321, 746 N.Y.S. 2d 262 (2d Dept 2002).

This court finds that the overwhelming weight of judicial authority in this matter holds that an insurer is precluded from raising any defense, other than lack of coverage, when it fails to comply with the rule requiring it to deny a claim within thirty days of receipt of the claim. Insurance law section 5106(a); New York Medical Center of Queens v. Country-Wide Insurance Company, 295 A.D. 2d 583, 744 N.Y.S .2d 201 (2d Dept. 2002); New York & Presbyterian Hospital v. American Transit Insurance Company, 287 A.D. 2d 699, 733 N.Y.S. 2d 80 (2d Dept. 2001).

Consequently, the court concludes that petitioner met its burden of proof when it presented its claim and proof that Respondent failed to deny the claim within thirty days. Based on the decision in Park Radiology, P.C. , supra, the court holds that the arbitrator’s and Master Arbitrator’s award did not have a rational basis since it is contrary to the state of legal precedent.

The court vacates the decision of the Master Arbitrator and finds for Petitioner in the amount of $1,791.73, with statutory interest and fees as established iin section 5106(a) of the Insurance Law.

Dated: September 27, 2004

__________________________

EILEEN N. NADELSON, J.C.C.

[*1]

Civil Court of the City of New York, Kings County, September 24, 2004

APPEARANCES OF COUNSEL

Amos Weinberg for plaintiff. Melli, Guerin & Melli (Matthew J. Smith of counsel), for defendant.

OPINION OF THE COURT

Eileen N. Nadelson, J.

Plaintiff, a medical provider that is seeking first-party benefits pursuant to New York’s No-Fault Insurance Law, has moved for summary judgment based on defendant insurer’s failure to pay or deny plaintiff’s claim within the statutory 30-day period following submission of said claim.

Defendant is opposing the motion for summary judgment by asserting that it is not subject to the provisions of 11 NYCRR 65-3.4 because plaintiff’s assignor, the person allegedly injured in the motor vehicle accident, failed to submit to several requests for an examination under oath (EUO), and that the loss is not a covered loss because the accident was staged, thereby rendering plaintiff’s assignor a noneligible party pursuant to New York’s No-Fault Regulation 68 (11 NYCRR part 65).

In reply to defendant’s opposition to this motion, plaintiff avers that the basis for denial [*2]stemming from its assignor’s failure to submit to EUOs is inapplicable because the statute authorizing such basis did not go into effect until after the incident in question. Further, plaintiff maintains that any accusation of fraud with respect to the claim made by defendant has been made against the other individuals involved in the incident but not against its assignor.

The basic facts are not in dispute. The insurance policy in question was issued by defendant on March 3, 2002. The alleged accident occurred on March 20, 2002. Plaintiff’s claim was received by defendant on May 16, 2002. After submission of the claim defendant requested an examination under oath of plaintiff’s assignor. Plaintiff’s assignor failed to appear and a second EUO was scheduled, which she also did not attend. On December 13, 2002, defendant issued its denial of benefits to plaintiff.

The regulation that forms the basis of this motion, Regulation 68-A, 11 NYCRR 65-1.1, was enacted in September of 2001. The regulation applies to all new and first renewal insurance policies effective on or after September 1, 2001. (11 NYCRR 65-1.1 [b] [1], [2].) The effective date of the regulation is April 5, 2002. The import of this regulation to the case at bar is that it is the operative legislative authority for an insurer to deny first-party benefits to medical providers whose assignors fail to attend EUOs.

Plaintiff’s argument rests on the fact that the effective date of the regulation is subsequent to the date of the alleged accident and injury, and therefore is inoperative to the instant action. In support of this contention, plaintiff relies on Bronx Med. Servs., P.C. v Lumbermans Mut. Cas. Co. (2003 NY Slip Op 51022[U], *3 [App Term, 1st Dept 2003]), which states that “[t]he revised regulations cannot be applied retroactively to cover plaintiff’s September 2000 no-fault claim.” However, the facts in this cited decision are clearly distinguishable from the case at bar.

In Bronx Med. Servs., the insurer was basing its denial on a provision of the issued insurance policy in question. The court stated that “[t]he no-fault protection created by statute and implementing regulations cannot be qualified by the inapplicable conditions and exclusions of the liability portion of the policy.” (At *3 [internal quotation marks omitted], quoting Utica Mut. Ins. Co. v Timms, 293 AD2d 669 [2002].) In other words, the statute would prevail over a contrary provision in a private contract of insurance. Because the regulation in question was not enacted until after the subject accident, the court found the plaintiff’s reasoning specious that the change in the regulation should give effect to its insurance policy provision. It was in the context of refuting this argument that the court correctly stated that the regulation could not be given retroactive effect.

This court notes that the accident and claim for benefits in the Bronx Med. Servs. case both occurred in the year 2000.

In the instant case, the regulation applies to the insurance policy issued by defendant in March of 2002. The only question to be decided by this court is whether the regulation applies to [*3]claims filed after its effective date relating to accidents occurring before its effective date.

Few decisions have been rendered on this issue, and none on this specific point. In Ocean Diagnostic Imaging P.C. v GEICO Ins. (3 Misc 3d 137[A], 2004 NY Slip Op 50511[U] [2d Dept 2004]), the court found that Regulation 68-A did not apply because it was not in effect on the date of the accident or of the claim, which was received on August 15, 2001. In King’s Med. Supply Inc. v Progressive Ins. (3 Misc 3d 126[A], 2004 NY Slip Op 50311[U], *2 [2d Dept 2004]), the court also found for the provider because “at the time plaintiff’s claims were filed, EUOs were not available as a form of verification.” (Emphasis added.) Finally, in A.B. Med. Servs. PLLC v Eagle Ins. Co. (3 Misc 3d 8, 10 [2d Dept 2003]), the court held that the subject regulation was inapplicable with respect to denying claims based on the provider’s assignor failing to attend EUOs because “at the time plaintiffs filed the instant claims there was no provision in the insurance regulations for such a procedure.” (Emphasis added.)

All of the above-cited decisions are clear on one point: Regulation 68-A does not apply retroactively to claims filed before its effective date. By contrast, the claim for benefits in the instant case was filed more than a month after the regulation came into effect, and the insurance policy upon which the claim is based is subject to the regulation because it was issued and effective after September 1, 2001. Therefore, the court holds that Regulation 68-A applies to claims filed after its effective date and, consequently, the court denies plaintiff’s motion for summary judgment.

Although now moot, the court also finds that defendant’s argument that plaintiff’s assignor is not a covered person because of alleged fraud to be without merit. Defendant asserts correctly that the preclusion rule (denying an insurer the ability to raise any defense to a claim not paid or denied within 30 days of receipt or 30 days after verification) does not apply to a defense based on a claim that the incident was not an accident but a deliberate event staged in furtherance of a scheme to defraud the insurer (A.B. Med. Servs. PLLC v Eagle Ins. Co., supra). However, defendant has failed to provide any evidence of fraud with respect to plaintiff’s assignor. All assertions of fraud are made against the other parties to the incident, and therefore are not relevant to the assignor in question.

Plaintiff’s motion for summary judgment is denied for the reasons stated above.

Civil Court of the City of New York, Kings County

80154/03

David M. Steiner, Esq. of Isreal, Isreal & Purdy of Great Neck, NY appeared for plaintiff; Jeanne M. Valentine, Esq. of Cluasen, Miller P.C. of New York, New York appeared for Defendant.

Ann Elizabeth O’Shea, J.

Upon the foregoing cited papers, the decision and order on defendant’s motion to vacate a default judgment and to dismiss the complaint, is as follows:

Plaintiffs Aurora Chiropractic PC, Dragon Acupuncture PLLC, Latortue Medical Services, PC and S & B Neurocare, PC, instituted this action to recover first-party, no-fault benefits for medical services rendered to their assignor, Kathleen Marsh, who was injured in an automobile accident on February 16, 2001. Plaintiffs provided medical services to Ms. Marsh between March 14, 2001, and February 8, 2002. Each of the plaintiffs made several claims for payment. Upon the purported failure of defendant to pay or deny the claims within thirty days, plaintiffs instituted this action.

The summons and complaint were served on defendant on June 25, 2003. An extension of time to file an answer was requested and granted, giving counsel until August 15, 2003, to answer the complaint. On defendant’s failure to answer, a clerk’s judgment was entered, without any judicial intervention, in the amount of $31,287.65.

Defendant now seeks an order opening the default and setting aside the judgment entered [*2]against it. Defendant also seeks an order dismissing the complaint on the grounds that after August 31, 2001, it had no further obligation to pay No Fault benefits. Plaintiff submitted papers in opposition. Oral argument was heard on May 19, 2004, subsequent to which the matter was submitted for decision.

As a general rule, a default judgment will be vacated and a late answer will be permitted when a defendant can show that there was some reasonable excuse for its delay in answering and there is some merit to its defense (see Spencer v. Sanko Holding USA, 247 AD2d 532 [2d Dept 1998]). A defendant is not required to establish its defense as a matter of law; it need only set forth sufficient facts to make out a prima facie showing of a meritorious defense (see Quis v. Bolden, 298 A.D.2d 375 (2d Dept 2002).

In support of its claim to have a reasonable excuse for its delay in answering, defendant states that it intended to file an answer to the complaint, but ultimately could not do so without an index number, which plaintiff failed to provide. Although defendant allegedly attempted independently to ascertain the index number, by sending its law clerk on September 25, 2003, directly to the Court, its law clerk allegedly was told that there was no index number assigned to the matter. When defendant’s law clerk subsequently sought the information directly from plaintiff’s counsel by telephone, he purportedly was informed that plaintiff’s counsel was “not aware of” the index number, a telephone conversation which plaintiff’s counsel denies ever occurred. No claim is made that any further attempts to serve or file its answer were made. Because it was plaintiffs’ duty to provide defendant with an index number, defendant asks the court to excuse defendant from having taken no further action between the date on which it made inquiry of the Civil Court, and the date on which the default judgment was entered.

Despite defendant’s failure to follow up on the case during the five months which passed between the date it first sought an index number incident to filing an answer, and the date the default judgment was entered, it seems evident that there was no intention on the part of defendant to default in answering. Viewed in light of the strong public policy of this State which favors the resolution of cases on the merits (see Scagnelli v. Pavone, 178 AD2d 590 [2d Dept 1991]), and considering the fact that defendant moved promptly to open the default (see A.B. Med. Servs. Pllc v. Americar & Truck Rental Inc.., 2003 NY Slip Op 51394U [App. Term. 2003]), defendant’s excuse is deemed adequate.

Defendant advances as its “meritorious defense” a claim that the treatment rendered by plaintiffs was not medically necessary. Lack of medical necessity is a defense to an action to recover no-fault benefits, which an insurer may assert pursuant to a timely denial, based on a medical examination or a sufficiently detailed peer review report (see Amaze Med. Supply, Inc. v. Eagle Ins. Co., 2004 NY Slip Op 50279U, 1 [App. Term 2d Dept 2004]). In this case, defendant’s claim of a lack of medical necessity is supported by the results of five independent medical examinations conducted by Dr. Weiss, an orthopedist, Dr. Weksler a clinical psychologist and certified pain specialist, Dr. Zlatnick, a neurologist, Dr. Orenstein, a chiropractor, and Dr. Iozzio, an acupuncturist. In their reports, the last dated August 21, 2001, each concludes that Ms. Marsh is fully recovered, and has no further need for medical treatment, establishing its defense.

Defendant contends that the timeliness of its denial is not in issue as it issued a blanket denial of all “future benefits” directly to Ms. Marsh, in advance of the submission of any of plaintiffs’ [*3]claims, bringing it outside of the preclusion rules set forth in Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997]. In support of this contention, defendant appends as an exhibit to its motion papers, five undated denial of claim [NF-10] forms. Each references a particular independent medical examination report and states that “future benefits are being denied” based on the specified report. Although no proof of mailing was adduced, defendant contends that the NF-10 forms, and the medical reports, were mailed to Ms. Marsh on August 31, 2001.

No-fault regulations provide that “if the insurer has information which clearly demonstrates that the applicant is no longer disabled, the insurer may discontinue the payment of benefits by forwarding to the applicant a prescribed denial of claim form” (11 NYCRR 65.15[g][2][ii]). However, that section does not absolve defendant of its responsibilities under the No-Fault law and regulations to individually consider and timely pay or deny each subsequent claim made for benefits under the No-Fault law. As was observed by the court in Atlantis Medical, P.C. v. Liberty Mutual Insurance Co., 2002 NY Slip Op 40043U, 2002 NY Misc LEXIS 202 [Dist. Ct. Nassau Co.], when the provider of medical services submits a claim as assignee of an insured, neither the statute nor the regulations contemplate the insurer simply “sitting mute and failing to act upon the claim, silently and secretly relying upon an earlier denial issued directly to the insured.” To the contrary, both the statute and the regulations contemplate the insurer responding directly to the claim within the statutorily prescribed time frame, failing which it will be precluded, pursuant to Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], from interposing such defenses as a lack of medical necessity.

Nor will a belated denial of plaintiffs’ No Fault claims be “deemed” timely on the basis of its earlier blanket disclaimer of responsibility which predated plaintiffs’ provision of services (see A&S Medical, P.C. v. Allstate Insurance Co., 196 Misc2d 322, 323 [App. Term. 1st Dept 2003], app. granted, NY App Div 2004 LEXIS 9836 [1st Dept July 5, 2004]). Thus, the additional NF- 10 forms included in defendant’s motion papers, dated January 16, 2002, responding to two claims made by plaintiff Aurora Chiropractic for $48.90 and $439.27, one claim made by plaintiff Latortue Medical Services for $812.89, and two claims made by plaintiff Dragon Acupuncture, for $1,275 and $1105, are not rendered “timely” by the mere addition of “benefits terminated on 8/31/01” as a part of the reason given for denial of the claims.

Nor do any of the January 10, 2003, NF-10 forms, standing on their own, evidence a timely denial of these five claims. For one thing, none of the NF-10 forms was sent to plaintiffs, as required by 11 NYCRR § 65.15(g)(3)(i)(“the applicant or the authorized representative”). They were all sent to plaintiffs’ assignor. Further, the forms are incomplete, lacking among other things the date on which the specified claims were received, absent which the timeliness of the response cannot be determined. Finally, defendant does not list a lack of medical necessity as the reason for its denial of plaintiffs’ claims. Having failed to do so, defendant is precluded pursuant to Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], from advancing lack of medical necessity as a defense to any part of this action.

As defendant is precluded, in the absence of a timely denial, from advancing lack of medical necessity as a defense, defendant’s motion to vacate the default and set aside the judgment is denied.

This constitutes the decision and order of this Court. [*4]

Date:September 23, 2004_____________________________

Ann Elizabeth O’Shea, J.C.C.