Decided on October 30, 2020

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

[*1]

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, October 30, 2020

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C. (Selina Chin and David M. Gottlieb of counsel) for appellant.

Law Office of Goldstein, Flecker & Hopkins (Lawrence J. Chanice of counsel) for respondent.

Ordered that the order is reversed, with $30 costs, and defendant’s motion for, in effect, summary judgment dismissing the complaint is denied.

In this action by a corporate provider to recover assigned first-party no-fault benefits for services rendered to plaintiff’s assignor in 2009, defendant moved for, in effect, summary judgment dismissing the complaint. Defendant argued that plaintiff professional corporation could not enforce its claims because its sole shareholder had been legally disqualified from rendering professional services upon the revocation of his chiropractic license on June 28, 2010. The Civil Court granted defendant’s motion.

Initially, it is noted that defendant’s motion to dismiss the complaint pursuant to CPLR 3211 was made after issue had been joined. Generally, such a motion must be made “before service of the responsive pleading is required” (CPLR 3211 [e]), although “[w]hether or not issue [*2]has been joined, the court, after adequate notice to the parties, may treat the motion as a motion for summary judgment” (CPLR 3211 [c]). While it is uncontested that the Civil Court did not notify the parties that it was treating the motion as one for summary judgment, an exception to the notice requirement is applicable here, as defendant’s motion exclusively involved “a purely legal question rather than any issues of fact” (Mihlovan v Grozavu, 72 NY2d 506, 508 [1988]; Four Seasons Hotels v Vinnik, 127 AD2d 310, 320 [1987]; Renelique v State-Wide Ins. Co., 50 Misc 3d 137[A], 2016 NY Slip Op 50095[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]). All the relevant facts are undisputed. Consequently, as the sole issue was the application of the Business Corporation Law, it was proper for the Civil Court to, in effect, treat defendant’s motion to dismiss as one for summary judgment “without first giving notice of its intention to do so” (Four Seasons Hotels, 127 AD2d at 320).

Pursuant to Business Corporation Law §§ 1509 and 1510, when professionals lose their license, they are required to sever{**70 Misc 3d at 28} their ties with the professional service corporation. If the professional does not sever those ties, section 1509 grants the professional service corporation the authority to force the professional to do so, and failure to enforce this requirement constitutes a ground for forfeiture of the professional service corporation’s certificate of incorporation and its dissolution. Section 1510, among other things, directs the professional service corporation to repurchase the professional’s shares within six months of his disqualification. None of these requirements is self-executing.

Here, the professional has not complied with section 1509 and the professional service corporation has not repurchased his shares pursuant to section 1510, so the professional remains the corporation’s sole shareholder. No one has moved for forfeiture of plaintiff’s certificate of incorporation or its dissolution. Despite revocation of its shareholder’s professional license, plaintiff continued to exist and is entitled to wind up its affairs and seek to recover no-fault benefits for the services it rendered to its assignor prior to June 28, 2010 (see A.B. Med. Servs., PLLC v National Grange Mut. Ins. Co., 34 Misc 3d 145[A], 2012 NY Slip Op 50154[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]; Kipor Medicine, P.C. v GEICO, 28 Misc 3d 129[A], 2010 NY Slip Op 51247[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]; see e.g. A.B. Med. Servs., PLLC v Travelers Indem. Co., 26 Misc 3d 69 [App Term, 2d Dept, 9th & 10th Jud Dists 2009]).

The case of Ocean Diagnostic Imaging, P.C. v Merchants Mut. Ins. Co. (15 Misc 3d 9 [App Term, 2d Dept, 2d & 11th Jud Dists 2007]) is distinguishable. In that case, the death of the doctor who was the sole officer, director and shareholder of a professional service corporation required the dismissal of its appeal because no one remained with authority to prosecute the action. Here, however, the sole shareholder is alive and continues to have authority to act for the professional corporation as “an administrator, whose role is to preserve the value of, and prevent loss to, the [professional service corporation]” (Eastern Star Acupuncture, P.C. v Allstate Ins. Co., 36 Misc 3d 41, 43 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), rather than as a member of the profession from which he has been barred.

Section 1510 directs plaintiff to take actions that it concededly failed to do. It does not hold, however, that such a violation makes otherwise valid contracts unenforceable or that the{**70 Misc 3d at 29} corporation’s debtor should be entitled to withhold payment for services legally rendered. Consequently, there is no bar to plaintiff’s pursuit of reimbursement for services rendered to its assignor.

Accordingly, the order is reversed and defendant’s motion for, in effect, summary judgment dismissing the complaint is denied.

Aliotta, P.J., Siegal and Toussaint, JJ., concur.

[*1]

Civil Court of the City of New York, Kings County, October 29, 2020

APPEARANCES OF COUNSEL

The Rybak Firm, PLLC, Brooklyn (Oleg Rybak of counsel), for plaintiff.

The Law Offices of Perry & Frankson, North New Hyde Park (Erin L. McFadzen of counsel), for defendant.

In this no-fault action seeking reimbursement for medical services, plaintiff medical provider moves, inter alia, for an order granting summary judgment pursuant to CPLR 3212. Defendant insurer also moves, inter alia, for summary judgment pursuant to CPLR 3212.

The court finds that plaintiff established its prima facie showing of entitlement to summary judgment. It is well settled that summary judgment is appropriate when sufficient evidence in admissible form is presented to demonstrate the absence of any material issues of fact (Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Zuckerman v City of New York, 49 NY2d 557 [1980]). Here, in support of its motion, plaintiff submits the affidavit of Sean B. Diamond, D.C., the owner of Bronx Chiropractic Rehabilitation, P.C., in which he establishes that the claim forms had been timely and properly mailed to defendant (see Compas Med., P.C. v Farm Family Cas. Ins. Co., 38 Misc 3d 142[A], 2013 NY Slip Op 50254[U] [App Term, 2d Dept, 11th & 13th Jud Dists 2013]). Accordingly, plaintiff established its prima facie entitlement to summary judgment and the burden shifted to defendant to raise a triable issue of fact (Alvarez v Prospect Hosp., 68 NY2d [*2]320 [1986]).

The court finds that defendant failed to raise a triable issue of fact in opposition to plaintiff’s motion and to establish their own entitlement to summary judgment pursuant to CPLR 3212. Defendant asserts that they properly denied plaintiff’s claims for failure to provide a requested verification within 120 days of the initial request and that plaintiff’s case must be dismissed as premature. However, defendant fails to submit adequate evidence in support of their requests for verification. Defendant relies on attached copies of the verification request letters as well as the affidavit of their litigation representative, Joseph M. Andre, who establishes mailing of the letters. In the verification request letters at issue, defendant states that they requested that the assignor provide a recorded statement via a scheduled phone call. Defendant claims that the assignor failed to respond to the calls they scheduled in all three verification request letters.^[FN*] Accordingly, defendant asserts that dismissal {**70 Misc 3d at 363}of plaintiff’s case is appropriate based on outstanding verification.

However, based on the language contained in the verification request letters, defendant was required to call the assignor on a certain date, at a certain time, to a certain telephone number in order to obtain the requested information: “In order to determine your eligibility for benefits, all benefits remain delayed pending your cooperation with our request for a recorded statement. You will be contacted at the number below to provide a statement on the date and time indicated.” (Emphasis added.)

Although defendant established that the verification requests were mailed, they failed to establish that a representative placed the phone call which they claim the assignor failed to answer on each of the scheduled dates. As a result, the verification requests are incomplete.

In a similar Appellate Term case, Dilon Med. Supply Corp. v State Farm Mut. Auto. Ins. Co., the defendant insurer also denied the plaintiff’s claim based on outstanding verification (13 Misc 3d 141[A], 2006 NY Slip Op 52266[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2006]). The Appellate Term found that the defendant insurer failed to submit adequate proof to support their claim of mailing the verification requests. As a result of this evidentiary deficiency, the Appellate Term found that the defendant’s time to pay or deny the claim was not tolled and their denials were untimely.

Although there is no case that addresses the specific issue herein, the reasoning in Dilon is applicable to the issue of inadequate proof of verification. Here, while defendant establishes the mailing of the verification requests, they do not establish the substantive portion of the verification inquiry. Thus, the incomplete verification requests did not toll defendant’s time to pay or deny the claim and defendant is “precluded from raising most defenses as a result of its untimely denial” (Dilon Med. Supply Corp. v State Farm Mut. Auto. Ins. Co., 13 Misc 3d 141[A], 2006 NY Slip Op 52266[U], *2). Accordingly, defendant both fails to meet their own prima facie burden for summary judgment and raise an issue of fact in opposition to plaintiff’s motion based on its outstanding verification argument (see Zuckerman v City of New York, 49 NY2d 557 [1980];{**70 Misc 3d at 364} St. Anna Wellcare, P.C. v GEICO Ins. Co., 56 Misc 3d 133[A], 2017 NY Slip Op 50948[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]).

Based on the foregoing, plaintiff’s motion for summary judgment pursuant to CPLR 3212 is granted. Defendant’s motion for summary judgment pursuant to CPLR 3212 to dismiss plaintiff’s case as premature is denied.

Footnotes

Footnote *:In the first verification letter, the recorded phone statement was scheduled to take place on May 16, 2016, at 10:00 a.m. On May 17, 2016, defendant mailed a second verification request letter scheduling a recorded phone statement to take place on May 30, 2016, at 10:00 a.m. On May 31, 2016, defendant mailed a third verification request scheduling a recorded phone statement to take place at 10:00 a.m. on June 10, 2016.

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Goldberg, Miller & Rubin, P.C., New York (Eli Shmulik of counsel), for appellant.

The Rybak Firm, PLLC, Brooklyn (Maksim Leyvi of counsel), for respondents.

Order, Supreme Court, New York County (Lynn R. Kotler, J.), entered on or about December 10, 2019, which denied as premature plaintiff’s motion for summary judgment declaring that it is not obligated to reimburse defendants-respondents for no-fault claims submitted in connection with a motor vehicle accident, unanimously affirmed, without costs.

Plaintiff no-fault insurer failed to provide the injured claimant’s assignees with the “specific objective justification” for its request that the injured claimant submit to an examination under oath (EUO) to establish proof of claim (11 NYCRR 65-3.5 [e]; see American Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441 [1st Dept 2015]). As the criteria by which plaintiff determined that an EUO was required constitute facts unavailable to defendants for use in opposing plaintiff’s motion, the motion was premature (CPLR 3212 [f]). Moreover, as the court noted, plaintiff moved for summary judgment before any depositions had been conducted (see e.g. Blech v West Park Presbyt. Church, 97 AD3d 443 [1st Dept 2012]).

We have considered plaintiff’s remaining contentions and find them unavailing. Concur—Renwick, J.P., Gesmer, Kern, Singh, JJ.

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Civil Court of the City of New York, Kings County, October 20, 2020

APPEARANCES OF COUNSEL

Erin O’Neil and Melanie J. Rosen, Garden City, for defendant.

The Rybak Firm, PLLC, Brooklyn (Oleg Rybak of counsel), for plaintiff.

In this action by plaintiff medical provider to recover no-fault benefits, defendant insurer moves for dismissal of the complaint on grounds that the plaintiff’s claims are barred by a declaratory judgment in Supreme Court. Plaintiff opposes the motion and cross-moves for summary judgment.

Relying on the recently decided Quality Health Supply Corp. v Hertz Co. (68 Misc 3d 131[A], 2020 NY Slip Op 50996[U] [2020]), plaintiff argues that the Supreme Court declaratory judgment issued in Progressive Max Ins. Co. v Mykia Black (Sup Ct, Nassau County, Sept. 28, 2017, Parga, J., index No. 003809/16) does not apply to or otherwise bar this action under the doctrine of res judicata or collateral estoppel because the defendant herein is Progressive Insurance Company not Progressive Max Insurance Company. In the Supreme Court action, which named Essie Bryant (assignor herein), Mykia E. Black (the insured) and Bronx Chiropractic Rehabilitation, P.C. among the defendants, the Honorable Anthony Parga declared the policy null and void as to the December 2, 2015 incident.

In Quality Health Supply Corp. v Hertz Co., a declaratory judgment action brought on by Hertz Vehicles, LLC against Quality Health and its assignor was granted on default. Thereafter, Hertz Co. sought to amend the caption of the civil court case to name Hertz Vehicles, LLC as the proper party and to dismiss the action against it pursuant to the declaratory judgment. The Appellate Term found that the defendant had failed to submit evidence that plaintiff had sued the wrong party and therefor it couldn’t show that there had been a final adjudication of the civil court claims on the merits by the declaratory judgment.

In this case, however, defendant proffered the affidavit of Christina Plante, a Senior Medical Claims Representative{**69 Misc 3d at 1073} employed by Progressive Casualty Insurance Company, who averred that the declaration page lists Progressive Max Insurance Company as the insuring entity for Mykia E. Black under her policy number 907911812. Defendant also attached to its motion papers a certified copy of the declaration page which lists Progressive Max as the insurance company underwriting the policy at issue. Thus, the court finds that the proper insurer has always been Progressive Max Insurance Company, not Progressive Insurance Company as plaintiff erroneously named herein. Accordingly, plaintiff’s action is barred by the doctrine of res judicata. The declaratory judgment issued by the Honorable Anthony Parga collaterally estops this civil court action.

While it would have been better practice for defendant herein to have also moved to amend the caption to name Progressive Max the proper party, the failure to do so does not affect a substantial right of the plaintiff and it is sua sponte granted herein. It is noted that the declaration page of the policy at issue gave notice to the plaintiff that Progressive Max was the entity insuring the driver Mykia E. Black. Plaintiff’s mistake in not naming Progressive Max should not be to the detriment of defendant.

The caption shall be amended as follows:

Accordingly, the caption is amended to name Progressive Max Insurance Company as the correct defendant and the action is dismissed with prejudice pursuant to the declaratory judgment issued by the Honorable Anthony Parga as noted herein.

[*1]

The Law Office Jason Tenenbaum, P.C., Garden City (Jason Tenenbaum of counsel), for appellant.

The Law Office of Melissa Betancourt, P.C., Brooklyn (Jamin Koo of counsel), for Longevity Medical Supply Inc., respondent.

Kopelevich & Feldsherova, P.C., Brooklyn (David Landfair of counsel), for Jamaica Wellness Medical, P.C., and LVOV Acupuncture, P.C., respondents.

Order, Supreme Court, Bronx County (Wilma Guzman, J.), entered on or about September 30, 2019, which, to the extent appealed from as limited by the briefs, denied plaintiff’s motion to renew its motion for summary judgment declaring in its favor against defendants Longevity Medical Supply, Inc., Jamaica Wellness Medical, P.C., United Wellness Chiropractic, P.C., and Lvov Acupuncture, P.C., unanimously reversed, on the law, without costs, the motion for renewal granted and, upon renewal, the motion for summary judgment granted. The Clerk is directed to enter judgment declaring that plaintiff owes no coverage to said defendants.

Plaintiff provided a policy of insurance to VIP Limousine & Tuxedo, Inc. (VIP) that included a no-fault endorsement to an insured or eligible person for necessary expenses resulting from a motor vehicle accident. In April 2014, one of VIP’s limousines was hit in the rear by another car. Thereafter, the driver and passengers of the limousine (the individual defendants) filed claims as eligible persons under the policy issued by plaintiff, and later assigned their rights to the no-fault benefits to various medical providers (medical provider defendants).

Plaintiff moved for summary judgment, asserting that the accident was staged and therefore, none of the individual defendants or the medical provider defendants were entitled to benefits under the policy. Supreme Court denied the motion, finding that plaintiff failed to demonstrate as a matter of law that the accident was fraudulently or intentionally procured.

Plaintiff moved to renew its prior motion for summary judgment. In support of its motion to renew, plaintiff submitted additional evidence that the accident was staged in the form of a videotape confession by one of the passengers, which it had procured, after extensive motion practice, from the Police Department, Department of Financial Services, Insurance Fraud Bureau (DFS), and Kings County District Attorney’s Office. Supreme Court denied renewal on the grounds that plaintiff failed to offer any reasonable explanation as to why the videotape could not have been attached to its prior motion, and that the videotape was not properly authenticated for purposes of summary judgment.

Plaintiff appealed. We now reverse finding that renewal should have been granted in the interests of justice and substantive fairness (see Ross v Lewis, 181 AD3d 423, 424 [1st Dept 2020]; Cruz v Bronx Lebanon Hosp. Ctr., 73 AD3d 597, 598 [1st Dept 2010]; Rancho Santa Fe Assn. v Dolan-King, 36 AD3d 460, 461 [1st Dept 2007]). “Although it is true that a motion to renew should generally be based upon newly-discovered facts, this rule is not inflexible, and the court has discretion to grant renewal in the interest of justice even upon facts that were known to the movant at the time the original motion was made” (Kaszar v Cho, 160 AD3d 501, 502 [1st Dept 2018]).

Here, plaintiff demonstrated that the additional evidence it submitted in support of its motion to renew would change the prior determination and that it was required to engage in extensive motion practice to obtain the material. Plaintiff also established that it was unaware of the nature and extent of the information held by those agencies before then (CPLR 2221 [e] [2], [3]). The material, which included statements by the passengers who assigned their claims to defendants, proves that the motor vehicle accident was staged (see Matter of Global Liberty Ins. Co. of N.Y. v Eveillard, 171 AD3d 749, 750-751 [2d Dept 2019]; CPLR 2221 [e]).

Contrary to defendants’ contentions, the videotape of the confession of one of the defendants who participated in the scheme and the statements others provided to the police and DFS are admissible as party admissions (see People v Soto, 26 NY3d 455, 461 [2015]; People v Caban, 5 NY3d 143, 150-151 n [2005]). Plaintiff demonstrated the authenticity of this material by proof of the complete chain of custody (see People v Price, 29 NY3d 472, 481-482 [2017]).

Defendants failed to submit any evidence controverting plaintiff’s proof that the accident was staged. Concur—Kapnick, J.P., Singh, Kennedy, Mendez, JJ.

Hollander Legal Group , P.C. (Allan S. Hollander of counsel), for appellant. The Rybak Firm, PLLC (Damin J. Toell and Karina Barska of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Robin Kelly Sheares, J.), entered July 30, 2018. The order denied defendant’s motion for summary judgment dismissing the complaint and granted plaintiff’s cross motion for summary judgment.

ORDERED that the order is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that it had timely denied the claims based upon plaintiff’s failure to appear for duly scheduled examinations under oath (EUOs). Plaintiff opposed the motion and cross-moved for summary judgment. By order entered July 30, 2018, the Civil Court denied defendant’s motion and granted plaintiff’s cross motion.

Where, as here, no other verification request is outstanding (see Alev Med. Supply, Inc. v New York Cent. Mut. Fire Ins. Co., 38 Misc 3d 143[A], 2013 NY Slip Op 50258[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]), the 30-day period for an insurer to pay or deny a claim (see 11 NYCRR 65-3.8 [a] [1]) based upon a failure to appear for an EUO begins to run on the date of the second EUO nonappearance, when an insurer is permitted to conclude that there [*2]was a failure to comply with a condition precedent to coverage (see 11 NYCRR 65-3.8 [a] [1]; Chapa Prods. Corp. v MVAIC, 66 Misc 3d 16 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]; Veraso Med. Supply Corp. v 21st Century Ins. Co., 61 Misc 3d 146[A], 2018 NY Slip Op 51696[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]). Defendant asserted that the assignor had failed to appear on September 9, 2016, October 4, 2016, and November 1, 2016. As defendant did not deny the claims until November 14, 2016, which was more than 30 days after the second failure to appear, for the EUO scheduled for October 4, 2016, defendant is not entitled to summary judgment dismissing the complaint because defendant did not demonstrate that it is not precluded from raising its proffered defense (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2009]). Furthermore, as defendant raises no issue with respect to plaintiff’s establishment of its prima facie entitlement to summary judgment, we do not pass upon the propriety of the Civil Court’s determination with respect thereto.

Accordingly, the order is affirmed.

ALIOTTA, P.J., SIEGAL and TOUSSAINT, JJ., concur.

Law Office of Jason Tenenbaum, P.C. (Jason Tenenbaum and Shaaker Bhuiyan of counsel), for appellant. Law Office of Melissa Betancourt, P.C., for respondent (no brief filed).

Appeal from an order of the Civil Court of the City of New York, Kings County (Sharon Bourne-Clarke, J.), entered June 15, 2018. The order denied defendant’s motion to, in effect, open its default in appearing for a calendar call and, upon opening the default, dismiss the complaint.

ORDERED that the order is reversed, with $30 costs, and defendant’s motion to, in effect, open its default in appearing for a calendar call and, upon opening the default, dismiss the complaint is granted.

After issue was joined in this action by a provider to recover assigned first-party no-fault benefits arising from an accident that occurred on October 19, 2011, defendant defaulted in appearing for a scheduled court date. Defendant moved to, in effect, open its default and dismiss the complaint on the ground that, by amended order and judgment dated August 1, 2016, the Supreme Court, Bronx County, had declared, insofar as is relevant here, that defendant has no obligation to pay plaintiff for claims arising out of the accident underlying this claim. Defendant appeals from an order of the Civil Court entered June 15, 2018 denying defendant’s motion to, in effect, open its default and, upon opening the default, dismiss the complaint.

In our view, the Civil Court improvidently exercised its discretion in denying defendant’s motion when this action is barred by the August 1, 2016 order and judgment of the Supreme Court (cf. e.g. Vital Meridian Acupuncture, P.C. v Republic W. Ins. Co., 46 Misc 3d 147[A], 2015 NY Slip Op 50222[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]). Under the circumstances, defendant’s motion should have been granted “for sufficient reason and in the interests of substantial justice” (Woodson v Mendon Leasing Corp., 100 NY2d 62, 68 [2003]).

Accordingly, the order entered June 15, 2018 is reversed and defendant’s motion to, in effect, open its default in appearing for a calendar call and, upon opening the default, dismiss the complaint is granted.

ALIOTTA, P.J., WESTON and TOUSSAINT, JJ., concur.

Index No. 650138/2019

Larkin Farrell LLC, New York, NY (William Larkin of counsel), for plaintiff.

Law Offices of Viktoriya Litvenko P.C. (Viktoriya Litvenko of counsel), for defendant Right Choice Supply, Inc.

This motion concerns the potential obligation to pay no-fault insurance benefits of [*2]plaintiff American Transit Insurance Company. Defendant Juan Romero-Richiez was in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by American Transit. Romero-Richiez assigned the right to collect no-fault benefits under that policy to various treating medical providers, including defendant Right Choice Supply Inc. Romero-Richiez himself applied for no-fault benefits, which American Transit denied.

American Transit brought this action for a declaratory judgment that it is not required to pay no-fault benefits to Romero-Richiez or to the other defendants (all medical-provider assignees of his). Romero-Richiez and several of the medical-provider defendants did not appear. American Transit moved for default judgment under CPLR 3215 against Romero-Richiez and the other non-appearing defendants.

This court granted the default-judgment motion without opposition. In October 2019 the court issued a declaration that Romero-Richiez and the non-appearing providers “are not entitled to no-fault benefits as a result of a motor vehicle accident involving Juan Romero-Richiez . . . due to Romero-Richiez’s failure to appear for duly scheduled independent medical examinations.” (NYSCEF No. 30 at 2 [capitalization omitted].)

American Transit now moves for summary judgment under CPLR 3212 against Right Choice.^[FN1] The motion is denied.

DISCUSSION

This action is the latest in a series of cases before this court, each brought by American Transit, on what evidentiary showing is required for a no-fault insurer to obtain a declaration of no-coverage based upon the injured party’s failure to appear for an independent medical examination (IME) or examination under oath (EUO).

American Transit has consistently taken the position in these cases that all it need show to obtain summary judgment is proof that (i) after receiving the injured-person assignor’s NF-2 application for no-fault benefits, American Transit properly mailed the injured person two requests to appear for an IME or EUO; (ii) the injured person twice failed to appear as requested (or to seek rescheduling of the IME or EUO); and (iii) American Transit sought and obtained a default judgment of no-coverage against the injured-person assignor for failure to appear for the duly scheduled IME or EUO.

This court has consistently rejected this position. (See, e.g., American Transit Ins. Co. v Martinez, 2020 NY Slip Op 50930[U] [Sup Ct, NY County Aug. 21, 2020]; American Transit Ins. Co. v. Reynoso, 2020 WL 5524771 [Sup Ct, NY County Sept. 11, 2020].) Instead, this court has held that under the decisions of the Appellate Division, First Department, in American Transit Ins. Co. v Longevity Med. Supply, Inc. (131 AD3d 841, 841 [1st Dept 2015]), and [*3]Mapfre Ins. Co. of NY v Manoo (140 AD3d 468, 469 [1st Dept 2016]), American Transit also must satisfy one of two additional elements to show its entitlement to summary judgment.

First, American Transit could establish that it has met the timeliness requirements of 11 NYCRR § 65-3.5 (b) and (d) through evidence that it requested an IME or EUO within 15 business days of receiving claimant’s NF-3 verification forms or bills submitted by the injured person’s medical providers (see 11 NYCRR § 65-3.5 [b]), and (in the case of an IME) scheduled the IME to be held within 30 calendar days of receipt of those forms. (See Longevity Medical Supply, 131 AD3d at 841.) Second, American Transit could establish that it did not need to satisfy these requirements because it had requested an IME or EUO prior to receiving an NF-3 form or a provider bill. (See Manoo, 140 AD3d at 469.)

Here, American Transit has not attempted to do either. Instead, it rests on the same evidentiary showing that this court has previously held insufficient. And its motion papers emphasize that numerous decisions rendered by other judges of Supreme Court, New York County, have granted it default judgment or summary judgment on that showing. (See NYSCEF No. 57 at 1-5; NYSCEF No. 58 [reproducing decisions].) These decisions, even if not binding on this court, might carry persuasive force. But American Transit does not contend that other judges have had before them the particular arguments about American Transit’s evidentiary burden that this court has found persuasive in its prior rulings—much less that other judges have considered and rejected those arguments.

That said, given the extent to which the issue has recurred, this court feels it appropriate to lay out in further detail why it finds American Transit’s position on the required evidentiary showing—and the three principal contentions supporting that position—to be without merit.

1. American Transit asserts that if an insurer obtains a default judgment against a injured-party assignor—thereby establishing prima facie that the assignor failed to comply with the requirement to appear for requested IMEs or EUOs—the assignee is bound by this judgment because the assignee has no more rights than those possessed by the assignor. (See NYSCEF No. 57 at 5-6.) But American Transit still fails to grapple with the decision of the Appellate Division, Second Department, holding that when an assignment of no-fault benefits is made prior to the institution of legal action, a decision on default against the assignor does not bar the assignee from asserting a claim to no-fault benefits. (See Lakeside Hosp. v Government Empls. Ins. Co., 70 AD2d 658, 658 [2d Dept 1979], citing Gramatan Home Inv. Corp. v Lopez, 46 NY2d 481, 486-487 [1979].) Absent a contrary decision of the Court of Appeals or Appellate Division, First Department, the holding of Lakeside Hospital is binding on this court. (See D’Alessandro v Carro, 123 AD3d 1, 6 [1st Dept 2014].) American Transit has not identified—and this court is not aware of—any such contrary decision.^[FN2]

2. American Transit argues that under the First Department’s decision in Unitrin Advantage Insurance Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011]), the failure to appear for IMEs is a breach of a condition precedent to coverage, such that the insurer cannot be precluded from denying the claim for failure to appear. (See NYSCEF No. 57 at 7-8, citing Central Gen. Hosp. v Chubb Grp. of Ins. Cos., 90 NY2d 195 [1997].) But, as this court noted in Martinez, Reynoso, and others, the rule in Bayshore does not sweep that far. Since Bayshore, the First Department has held that a plaintiff insurer’s motion for summary judgment is properly denied when the plaintiff fails to establish either that it complied with the IME-scheduling requirements of 11 NYCRR § 65-3.5, or that those requirements are inapplicable. (See, e.g., American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015] [failure to establish compliance]; Kemper Indep. Ins. Co. v Adelaida Physical Therapy, P.C., 147 AD3d 437, 438 [1st Dept 2017] [failure to establish inapplicability].)

Indeed, Longevity Medical Supply expressly distinguished Bayshore on the ground that in that case the insurer had established “that it requested IMEs in accordance with the procedures and time frames set forth in the no-fault implementing regulations.” (131 AD3d at 842, quoting Bayshore, 82 AD3d at 560 [emphasis in Longevity]; accord Adelaida Physical Therapy, 147 AD3d at 438 [construing Bayshore to require an insurer to establish either timeliness or inapplicability of the timeliness requirements].) And this makes sense: the issue before the Court of Appeals in Central General Hospital was whether an insurer is precluded in litigation from raising an otherwise-valid lack-of-coverage defense by a prior failure to timely deny the claim (see 90 NY2d at 199-201)—not whether a failure-to-appear-for-IME defense is valid absent evidence that the IME was timely requested.

3. American Transit claims that the 15-business-day deadline to request an IME after receipt of a set of verification forms, and the 30-calendar-day period for holding the IME after receipt of the set of verification forms, “only appl[y] to medical examinations that are necessary to determine if th[e] particular claim” dealt with in that set of forms “should be paid.” (NYSCEF No. 57 at 10.) American Transit points out that the no-fault insurance endorsement mandated by regulation requires “the eligible injured person” to “submit to medical examination . . . when, and as often as, the Company may reasonably require.” (11 NYSCRR § 65-1.1.) Thus, where an IME “is being scheduled” under this provision “for a more broad reason, ie to determine, generally, if the claimant needs future treatment,” the 15- and 30-day deadlines assertedly do not apply. (NYSCEF No. 57 at 11.) This court is not persuaded.

American Transit cites no authority of any kind for its position. Given the sheer number of no-fault decisions issued by New York courts at all levels, this dearth of authority is striking. And none of the eleven First Department decisions issued on timeliness of IME/EUO requests over the last five years even suggest that some requests made after the insurer has received a claim for benefits are nonetheless exempt from the timeliness requirements of § 65-3.5.^[FN3] Instead, [*4]these decisions have looked only at whether an IME/EUO request was made prior to the receipt of a claim form or provider bill (in which case the request is governed by the rule announced in Manoo), or after receipt (in which case the timeliness requirements of § 65-3.5 apply).

Moreover, on American Transit’s position, an IME request made more than 15 business days after receipt of a given claim could still be timely—as long as the request were made for reasons other than assessing the validity of that particular claim. As a corollary, therefore, a failure to appear for the timely requested IME would assertedly warrant denial of the pending claim for breach of a condition precedent to coverage. Yet in All of NY, the First Department reversed the trial court and held that failure to appear for an EUO that had been requested untimely relative to a particular benefits claim would not warrant denial of that claim. (See 158 AD3d at 449.) American Transit provides no explanation about how in practice an arbitrator or a court would be able to distinguish between an IME/EUO request that was late (because it was made more than 15 business days after receipt of a given claim or bill), or timely (because it was not intended to seek verification of any particular claim or bill).

This potential confusion points to an additional shortcoming of American Transit’s interpretive argument. The carefully drafted, intricate no-fault-benefits regulatory framework contains no language drawing the distinction about types of IME/EUO requests that American Transit finds in “the plain language of the regulation” (NYSCEF No. 57 at 10). And the regulations do not contain provisions offering guidance to arbitrators and courts on how to determine on which side of that distinction a given IME/EUO request falls.

Further, American Transit’s argument heavily emphasizes the potential utility of an IME in assessing whether an individual needs further treatment, separate and apart from any individual claim. (See NYSCEF No. 57 at 9-10.) Yet the same mandatory insurance endorsement requires the injured person or their assignee to appear for EUOs “as may reasonably be required,” just like IMEs. (11 NYSCRR § 65-1.1.) And it is much harder to see how an EUO (i.e., a deposition) would be informative in assessing an individual’s general need for treatment.

To be sure, an EUO (or an IME) might well be helpful if the insurer suspects that an individual’s claimed injuries are exaggerated, or indeed invented altogether, as in the case of a staged “accident.” Yet the insurer’s interest in using IMEs and EUOs to limit potential insurance fraud is fully accommodated by its ability either (i) to request an IME or EUO based on suspicions of fraud that arise before claims have come in, which under Manoo would not be subject to the timeliness requirements of § 65-3.5; or (ii) to request an IME or EUO consistent with § 65-3.5 because particular claims for treatment have raised questions about excessive or unnecessary treatment. American Transit does not explain why, given these options, it would [*5]also be necessary to be able to request an IME (or EUO), in effect, preemptively in order to assess the injured person’s general need for further treatment before providers have submitted claims for such further treatment.

Finally, even if this court were inclined to accept American Transit’s argument that an IME/EUO request is outside the scope of § 65-3.5 if made out of a desire to assess the injured person’s general need for treatment, American Transit has not submitted any evidence that the IME request at issue in this case was made for that general-need-for-treatment reason. Absent such evidence—and absent any evidence about when the IME request was made relative to when American Transit received verification forms or bills from providers—American Transit cannot establish its prima facie entitlement to judgment regardless.

Accordingly, for the foregoing reasons it is hereby

ORDERED that American Transit’s motion under CPLR 3212 for summary judgment in its favor is denied.

DATE: 10/9/2020

Footnotes

Footnote 1:American Transit has separately settled with several other medical-provider defendants. (See NYSCEF Nos. 24, 25, 54.)

Footnote 2:The Court of Appeals decision on which American Transit relies, New York & Presbyterian Hospital v Country-Wide Insurance Co., involved a ruling on the merits in an action brought by an assignee against an insurer, rather than a ruling about the effects of a default judgment obtained by an insurer against an assignor. (See 17 NY3d 586, 588 [2011].)

Footnote 3:See Global Liberty Ins. Co. v Evans (176 AD3d 599 [1st Dept 2019]); Hertz Vehs. LLC v Best Touch PT, P.C. (162 AD3d 617 [1st Dept 2018]); Hereford Ins. Co. v Lida’s Med. Supply, Inc. (161 AD3d 442 [1st Dept 2018]); Unitrin Advantage Ins. Co. v All of NY, Inc. (158 AD3d 449 [1st Dept 2018]); Hertz Vehs. LLC v. Significant Care, PT, P.C. (157 AD3d 600 [1st Dept 2018]); Adelaida Physical Therapy (147 AD3d 437); Manoo (140 AD3d 468); National Liability & Fire Ins. Co. v Tam Medical Supply Corp. (131 AD3d 851 [1st Dept 2015); American Transit Ins. Co. v Vance (131 AD3d 849 [1st Dept 2015]); Longevity Medical Supply (131 AD3d 841); American Transit Ins. Co. v Clark (131 AD3d 840 [1st Dept 2015]).

[*1]

Hurwitz & Fine, P.C., Buffalo (Steven E. Peiper of counsel), for respondent-appellant.

Gelber & O’Connell, LLC, Amherst (Timothy G. O’Connell of counsel), for petitioner-respondent.

Appeal from a judgment of the Supreme Court, Erie County (Catherine R. Nugent Panepinto, J.), entered February 1, 2019. The judgment awarded petitioner money damages upon an arbitration award.

It is hereby ordered that the judgment so appealed from is unanimously affirmed without costs.

Memorandum: This case arose from a motor vehicle accident that occurred when petitioner’s vehicle was struck by a vehicle that failed to stop for a red light. Following petitioner’s recovery of damages in an underlying action against the driver of the other vehicle, petitioner submitted a supplemental uninsured/underinsured motorist (SUM) coverage claim to respondent, State Farm Mutual Automobile Insurance Company (State Farm). The matter proceeded to compulsory arbitration, and the arbitrator awarded petitioner $2,250,000, less the setoff amount of $474,771.21, for a total of $1,775,228.79. Supreme Court granted petitioner’s motion to confirm the arbitration award and denied State Farm’s cross motion to vacate the award. In appeal No. 1, State Farm appeals from a judgment that, inter alia, confirmed the arbitration award. In appeal No. 2, State Farm appeals from an order that, inter alia, granted petitioner’s motion to confirm the arbitration award and denied State Farm’s cross motion to vacate the award. In appeal No. 3, State Farm appeals from an order denying its application, pursuant to CPLR 2601 and 5519 (c), for an order permitting payment of the judgment into court.

Preliminarily, inasmuch as the order appealed from in appeal No. 2 was subsumed in the judgment appealed from in appeal No. 1, appeal No. 2 must be dismissed (see Hughes v Nussbaumer, Clarke & Velzy, 140 AD2d 988, 988 [4th Dept 1988]; see also Matter of Toussie v Coastal Dev., LLC, 161 AD3d 533, 533 [1st Dept 2018]; Deragon v Burkart, 55 AD3d 1309, 1309 [4th Dept 2008]). Furthermore, inasmuch as State Farm does not challenge any aspect of the order appealed from in appeal No. 3, we dismiss that appeal as abandoned (see Abasciano v Dandrea, 83 AD3d 1542, 1545 [4th Dept 2011]).

We reject State Farm’s contention in appeal No. 1 that the arbitration award is arbitrary and capricious, irrational and unsupported by the evidence. “It is well settled that judicial review of arbitration awards is extremely limited” (Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479 [2006], cert dismissed 548 US 940 [2006]; see Whitney v Perrotti, 164 AD3d 1601, 1602 [4th Dept 2018]). As relevant here, a court may vacate an arbitration award if it finds that the rights of a party were prejudiced when “an arbitrator . . . exceeded his [or her] power” (CPLR 7511 [b] [1] [iii]). An arbitrator exceeds his or her power where, inter alia, the award is “irrational” (Matter of New York City Tr. Auth. v Transport Workers’ Union of Am., Local 100, AFL-CIO, 6 NY3d 332, 336 [2005]). “An award is irrational if there is no proof whatever to justify the award” (Matter of Town of Scriba [Teamsters Local 317], 129 AD3d 1596, 1597 [4th Dept 2015] [internal quotation marks omitted]; see Matter of Professional, Clerical, Tech., Empls. Assn. [Board of Educ. for Buffalo City Sch. Dist.], 103 AD3d 1120, 1122 [4th Dept 2013], lv denied 21 NY3d 863 [2013]). If the arbitrator “offers even a barely colorable justification for the outcome reached, the arbitration award must be upheld” (Whitney, 164 AD3d at 1602 [internal quotation marks omitted]; see Matter of Town of Tonawanda [Town of Tonawanda Salaried Workers Assn.], 160 AD3d 1477, 1477 [4th Dept 2018], lv denied 32 NY3d 908 [2018]).

Where, as here, the parties are “subject to compulsory arbitration, the award must satisfy an additional layer of judicial scrutiny—it ‘must have evidentiary support and cannot be arbitrary and capricious’ ” (City School Dist. of the City of N.Y. v McGraham, 17 NY3d 917, 919 [2011], quoting Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). “ ’When reviewing compulsory arbitrations . . . , the court should accept the arbitrators’ credibility determinations, even where there is conflicting evidence and room for choice exists’ ” (Matter of Powell v Board of Educ. of Westbury Union Free School Dist., 91 AD3d 955, 955 [2d Dept 2012]).

Here, the record establishes that the findings of the arbitrator were rational, had evidentiary support, and were not arbitrary and capricious (see Motor Veh. Acc. Indem. Corp., 89 NY2d at 223-224; Matter of Bender [Lancaster Cent. Sch. Dist.], 175 AD3d 993, 996 [4th Dept 2019]). The arbitrator’s decision reflects his review of the parties’ submissions, the oral arguments of counsel, and the testimony of petitioner, and the arbitrator’s evaluation of the testimony and analyzation of the medical, no-fault, and property damage records. The arbitrator noted that State Farm had conceded that petitioner had no prior relevant medical history but required an extensive three-level spinal surgery at a very young age, and the arbitrator determined that the diagnosis of petitioner’s spinal surgeon that petitioner’s injuries were caused by the accident was supported by the opinions of the radiologists and other treating physicians. The arbitrator further determined that the diagnosis and opinions of petitioner’s spinal surgeon and chiropractor were supported by the objective evidence, whereas the opinions of the neurosurgeon who conducted the independent medical examination of petitioner were at odds with the opinions of the radiologists and petitioner’s surgeon regarding the severity and progression of petitioner’s injuries. We thus conclude that there is evidentiary support for the arbitrator’s conclusion that petitioner is entitled to collect the SUM benefits from State Farm.

We have considered the remaining contentions of State Farm and conclude that none warrants modification or reversal of the judgment. Present—Centra, J.P., Troutman, Winslow and Bannister, JJ.