[*1]

Civil Court of the City of New York, Bronx County, June 15, 2020

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville, for defendant.

Law Offices of Chris McCollum P.C., Brooklyn, for plaintiff.

The plaintiff filed the instant action against the defendant seeking to recover assigned no-fault insurance benefits. The amount in dispute is $5,503.90.

The defendant now moves pursuant to CPLR 3212 for an order granting summary judgment in favor of the defendant on the grounds that (1) the plaintiff lacks standing to receive no-fault reimbursement because it is not properly owned and controlled by licensed medical professionals as required by 11 NYCRR 65-3.16 (a) (12) and State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]); (2) the defendant timely and properly denied the claim as the medical treatment was not medically necessary; and (3) the defendant properly paid and denied the remainder of the claims pursuant to the New York State Workers’ Compensation Fee Schedule.

The plaintiff opposes and cross-moves for an order of summary judgment in favor of the plaintiff. The plaintiff also moves for an order deeming certain facts established pursuant to [*2]CPLR 3212 (g), as to its prima facie case.

Standard of Review

On a motion for summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law by advancing sufficient evidentiary proof in admissible form to demonstrate the absence of any material issues of fact. (See Zuckerman v City of New York, 49 NY2d 557 [1980].) Summary judgment is inappropriate where there are material issues of fact in dispute or where more than one conclusion may be drawn from the facts. (See Friends of Thayer Lake LLC v Brown, 27 NY3d 1039 [2016].) In considering a motion for summary judgment, the court must view the evidence in a light most favorable to the party opposing the motion and must give that party the benefit of every favorable inference. (See Negri v Stop & Shop, 65 NY2d 625 [1985].)

{**68 Misc 3d at 559}Once a movant meets its burden, the burden is shifted to the opposing party to come forward with proof, again in evidentiary form, to show the existence of genuine triable issues of fact. (See Piccolo v De Carlo, 90 AD2d 609 [3d Dept 1982].)

Discussion

Defendant’s Motion for Summary Judgment as to a Mallela Defense

Pursuant to 11 NYCRR 65-3.16 (a) (12), an insurer may withhold payment for medical services that a professional corporation provides, where there is a “willful and material failure to abide by” licensing and incorporation statutes, even if the services were provided by licensed health care providers. (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 321 [2005].) A party may support a finding that a provider is not eligible for reimbursement under 11 NYCRR 65-3.16 (a) (12) without meeting the traditional elements of common-law fraud. (Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 33 NY3d 389, 405 [2019].) But in order to withhold payment, the violations of incorporation and licensing statutes must be “more than merely technical and ‘rise to the level of’ a grave violation such as fraud.” (Id. at 405-406, citing Mallela at 322.)

Although Mallela is typically a defense mounted at trial, the defendant is free to use Mallela as a mechanism to keep claims open. (High Definition MRI, P.C. v Countrywide Ins. Co., 2019 NY Slip Op 32009[U] [Sup Ct, NY County 2019].) In deciding a motion for summary judgment, the court must draw all reasonable inferences in favor of the nonmoving party and deny summary judgment if there is any doubt as to the existence of a material issue of fact. (Branham v Loews Orpheum Cinemas, Inc., 8 NY3d 931, 932 [2007].) Where different conclusions may be reasonably drawn from the evidence, the motion should be denied. (Sommer v Federal Signal Corp., 79 NY2d 540, 555 [1992].)

Defendant argues that plaintiff is not properly owned and controlled by licensed medical professionals, which is required by 11 NYCRR 65-3.16 (a) (12). In support of its argument, defendant offers the affidavit of James Glampe, a special investigator in its SIU department. Glampe contends that in the examinations under oath on March 3, 2015, and August 16, 2016, Dr. Harvey “admitted” that he owns 97% of Harvey Family Chiro PT & Acup, PLLC, with a physical therapist owning 2% and an acupuncturist owning the remaining 1% of the{**68 Misc 3d at 560} PLLC. Dr. [*3]Harvey testified in March 2015 that “he was responsible for the day to day management of the company, and that the physical therapists and acupuncturist do not have general management responsibilities.” Dr. Harvey testified in August 2016 that profits are distributed in accordance with the ownership shares. Defendant argues that this allows Dr. Harvey to receive a disproportionate share of the income from professions he is not licensed to perform. Dr. Harvey testified in August 2016 that 70% of the practice is chiropractic treatment, 20-25% is physical therapy, and 10% is acupuncture.

Plaintiff argues that the conduct at issue in Mallela and Carothers is easily distinguishable from the ownership structure and services provided at Harvey Family. Plaintiff argues that defendant merely objects to the ownership split at Harvey Family, but that fee splitting alone is not sufficient to mount a Mallela defense. In addition, plaintiff contends that such a fee split is permissible under article 15 of the Business Corporation Law.

[1] The court now denies defendant’s motion on the Mallela defense. Although Dr. Harvey owns a sizeable majority of plaintiff and receives income from services provided by professionals operating under different licenses, impermissible fee splitting alone is not a violation of a licensing requirement as required by Mallela. (See H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co., 47 Misc 3d 1075, 1079 [Civ Ct, Queens County 2015].) In Mallela and Carothers, the Court was deeply concerned with the corporate practice of medicine by nonphysicians. Both cases involve physicians that essentially rented out their license to nonphysicians, who ran the day-to-day operations of the medical practices and received the bulk of the profits. Here, all owners are licensed to provide medical care. Nor does it appear that Dr. Harvey provides, supervises, or otherwise interferes with services that he is not licensed to render. However, the extreme equity distribution in the PLLC raises issues of fact for trial as to the level of control exerted by Dr. Harvey over services outside the scope of his license.

Defendant’s Motion for Summary Judgment as to Lack of Medical Necessity

The claim form itself gives rise to a presumption of medical necessity. (See Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d Dept, 2d & 11th Jud Dists 2004].) The insurer may rebut the inference of medical{**68 Misc 3d at 561} necessity by proof in admissible form establishing that the health benefits were not medically necessary. (See A. Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2007].) The proof must provide a factual basis and medical rationale that the services were not medically necessary. (See Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009].) Once a defendant submits evidence establishing a lack of medical necessity for the services rendered, the burden shifts to the plaintiff to rebut the defendant’s evidence. (See Foster Diagnostic Imaging, P.C. v Clarendon Natl. Ins. Co., 33 Misc 3d 138[A], 2011 NY Slip Op 52074[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011].)

The court finds that the defendant proved that it timely mailed the denial through the affidavit of its litigation examiner, Tara Piontek. Ms. Piontek’s affidavit established that the defendant timely mailed its denial of claim form based upon standard office practice or procedure, designed to ensure that items are properly addressed and mailed. (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001].)

The court finds that the defendant met its burden in establishing that the treatment was not medically necessary through the affidavits and reports of Daniel Sposta, D.C., L.Ac., and Sathish Modugu, M.D., CIME. Dr. Sposta’s affidavit and affirmed report state that he is a licensed chiropractor and acupuncturist, and that he conducted an independent chiropractic and acupuncture examination of the assignor. Dr. Sposta’s report states that he reviewed various medical records, including records from plaintiff, Jacobi Medical Center, and Stand-Up MRI of Yonkers. These records were annexed to defendant’s motion. Dr. Sposta determined that continued chiropractic and acupuncture services in relation to assignor’s motor vehicle accident were not medically justified and that treatment should have been discontinued. Dr. Sposta reported the assignor’s complaints of pain, but noted that several test results were negative for pain. Dr. Modugu’s affidavit and report state that he is a licensed physician and that he conducted an independent medical examination of the assignor. Dr. Modugu’s report states that he reviewed various medical records and diagnostic studies, including records from plaintiff, claim forms, and Dr. Sposta’s independent medical{**68 Misc 3d at 562} evaluation. These records were annexed to defendant’s motion. Dr. Modugu determined that continued physical therapy in relation to the accident was not necessary, as the assignor had received extensive treatment already. However, Dr. Modugu’s physical examination noted that the assignor’s range of motion was lower than normal. Dr. Modugu also reported the assignor’s complaints of pain and suggested that follow up with pain management may be appropriate.

[2] The court finds that the plaintiff met its burden rebutting the defendant’s evidence through the affidavit of Richard Harvey, D.C., a licensed chiropractor and majority owner of plaintiff. Dr. Harvey’s affidavit reviews the assignor’s medical records, detailing the assignor’s complaints of neck, back, shoulder, and knee pain, as well as headaches, muscle spasms, and spinal subluxations. These records were annexed to plaintiff’s cross motion. The assignor’s medical records reflect abnormal moderate pain, muscle spasms, and significant myalgia in the lumbar region of the back. Dr. Harvey contends that based off these complaints and medical issues, “conservative care was continued.” Dr. Harvey also notes that “there are no specific guidelines delineating the absolute structured path for treatment to be universally prescribed to all patients,” such that “[g]reat deference should be given to the treating provider charged with the responsibility to examine, diagnose and treat” patients. Dr. Harvey’s affidavit puts into question whether assignor’s condition had been resolved, such that continued medical services were not necessary.

Based on a reading of the affidavits and reports submitted by both parties, the court finds that a material issue of fact exists as to the medical necessity of assignor’s treatment. Therefore, the defendant’s motion for summary judgment is denied.

Defendant’s Motion for Summary Judgment as to Proper Payment under the Fee Schedule

Where the insurer determines that a medical bill contravenes the applicable fee schedule, the burden then shifts to the insurer to assert a defense that the provider billed in excess of the fee schedule. (See 11 NYCRR 65-3.8 [g] [1].) Once an insurer makes a prima facie showing that the amount charged by a medical provider is in excess of the fee schedule, the burden then shifts to the provider to show that the charges involved a different interpretation of such schedules or an inadvertent miscalculation or error. (SeeCornell Med., P.C. v Mercury Cas. {**68 Misc 3d at 563}Co., 24 Misc 3d [*4]58 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009].)

[3] The defendant argues that it properly and timely paid the claims pursuant to the New York State Workers’ Compensation Fee Schedule, and that it denied the remainder as billed in excess of the fee schedule. Defendant contends that the applicable fee schedule is the New York Workers’ Compensation Medical Fee Schedule effective June 1, 2012, and that the amounts paid under the fee schedule were calculated by multiplying the relative value unit for the CPT code by the conversion factor for the region in which the provider is located. Notably, defendant did not submit an affidavit from an individual who is familiar with coding and fee schedules. The court cannot accept the attorney’s affirmation as proof that the bills were improperly coded as it is not based on personal knowledge and has no probative value in a motion for summary judgment. (See W. W. Norton & Co. v Roslyn Targ Literary Agency, 81 AD2d 798 [1st Dept 1981]; Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 133[A], 2004 NY Slip Op 50447[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2004]; see also Natural Acupuncture Health, P.C. v Praetorian Ins. Co., 30 Misc 3d 132[A], 2011 NY Slip Op 50040[U] [App Term, 1st Dept 2011].) The court finds that the defendant has not met its prima facie burden of proof showing the absence of a material issue of fact as to the amount that it paid.

Plaintiff’s Cross Motion for Summary Judgment

A medical provider seeking reimbursement from a no-fault insurer demonstrates prima facie entitlement to reimbursement by submitting evidence that payment of no-fault benefits is overdue, and proof of its claim, using the statutory billing form, was mailed to and received by the defendant insurer. (See Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 [2015].) To establish entitlement to summary judgment on overdue no-fault benefits, the medical provider is required to submit proof of mailing through evidence in admissible form. Such proof may include an affidavit from a person or entity with knowledge of the claim and how it was sent to the insurer. (See id.) The claim form itself gives rise to a presumption of medical necessity. (See Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d Dept, 2d & 11th Jud Dists 2004].)

[4] The court denies the plaintiff’s cross motion for summary judgment. Plaintiff attached some documentation of its claim,{**68 Misc 3d at 564} but did not attach documentation from one of its billers stating that a bill was generated and mailed. In addition, plaintiff did not state when the bill was mailed and failed to attach proof of said mailing.

Conclusion

Accordingly, the defendant’s motion is denied in its entirety. The plaintiff’s cross motion is also denied in its entirety.

Freiberg, Peck & Kang, LLP (Yilo Kang of counsel), for appellant. The Rybak Firm, PLLC (Damin J. Toell of counsel), for respondent.

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Sharon Bourne-Clarke, J.), entered September 21, 2018. The judgment, entered pursuant to an order of that court entered August 13, 2018 granting plaintiff’s motion for the entry of a default judgment and denying defendant’s cross motion, for, in effect, summary judgment dismissing the complaint, awarded plaintiff the principal sum of $2,190.34.

ORDERED that, on the court’s own motion, the notice of appeal from the order dated August 13, 2018 is deemed a premature notice of appeal from the judgment entered September 21, 2018 (see CPLR 5520 [c]); and it is further,

ORDERED that the judgment is reversed, with $30 costs, the order entered August 13, 2018 is vacated, plaintiff’s motion for the entry of a default judgment is denied, defendant’s cross motion for, in effect, summary judgment dismissing the complaint is granted, and the matter is remitted to the Civil Court for the entry of a judgment in favor of defendant dismissing the complaint without prejudice.

In this action by a provider to recover assigned first-party no-fault benefits, the affidavit of service alleges that the summons and complaint were served by mail pursuant to CPLR 312-a. In support of plaintiff’s motion for a default judgment, its counsel stated that defendant’s time to answer had expired. However, plaintiff’s papers do not contain an acknowledgment of service. Defendant cross-moved for, in effect, summary judgment dismissing the complaint on the ground that plaintiff had failed to serve a summons and complaint within 120 days of the commencement of the action (see CCA 411). By order entered August 13, 2018, the Civil Court granted plaintiff’s motion and denied defendant’s cross motion. A judgment was subsequently entered on September 21, 2018 awarding plaintiff the principal sum of $2,190.34. We deem [*2]defendant’s notice of appeal from the order to be a premature notice of appeal from the judgment (see CPLR 5520 [c]).

“Proof that a defendant was properly served with process is a prerequisite to the entry of a default judgment against that defendant (see CPLR 3215 [f]; Cordero v Barreiro-Cordero, 129 AD3d 899 [2015]). ‘Service of the summons [is] complete . . . in the case of service pursuant to CPLR 312-a, by filing the acknowledgment of receipt, which constitutes proof of service (CPLR 312-a [b] [1]; 306 [d])’ ” (Active Care Med. Supply Corp. v Kemper Ins. Co., 63 Misc 3d 163[A], 2019 NY Slip Op 50923[U], *2[App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019], quoting Richard A. Hellander, M.D., P.C. v Metlife Auto & Home Ins. Co., 48 Misc 3d 59, 61-62 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]). Here, the record fails to demonstrate that a signed acknowledgment of receipt was returned to plaintiff (see CPLR 312-a [d]). As a result, plaintiff failed to acquire personal jurisdiction over defendant (see CPLR 312-a [b]; Krasa v Dial 7 Car & Limousine Serv., Inc., 147 AD3d 744, 745 [2017]; Castillo v JFK Medport, Inc.,116 AD3d 899, 900 [2014]; Klein v Educational Loan Servicing, LLC,71 AD3d 957, 958 [2010]; Bennett v Acosta, 68 AD3d 910, 911 [2009]; Horseman Antiques, Inc. v Huch,50 AD3d 963, 964 [2008]). Consequently, defendant’s cross motion should have been granted.

Accordingly, the judgment is reversed, the order entered August 13, 2018 is vacated, plaintiff’s motion for the entry of a default judgment is denied, defendant’s cross motion for, in effect, summary judgment dismissing the complaint is granted, and the matter is remitted to the Civil Court for the entry of a judgment in favor of defendant dismissing the complaint without prejudice.

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

Decided on June 12, 2020

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

Law Office of David O’Connor, LLC (David O’Connor of counsel), for appellant. Rivkin Radler, LLP (Stuart M. Bodoff and J’naia Boyd of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Queens County (Phillip Hom, J.), entered May 31, 2018. The order granted the branch of defendant’s motion seeking to dismiss the complaint on the ground of laches.

ORDERED that the order is reversed, without costs, the branch of defendant’s motion seeking to dismiss the complaint on the ground of laches is denied, and the matter is remitted to the Civil Court for a determination of the remaining branches of defendant’s motion.

Insofar as is relevant to this appeal in this action by a provider to recover assigned first-party no-fault benefits, defendant moved to, among other things, dismiss the complaint on the ground of laches, based on plaintiff’s delay in prosecuting the action. The Civil Court granted this branch of defendant’s motion and found that the remaining branches of the motion were moot.

Laches is not a proper basis to dismiss the complaint in this action (see Arroyo v Board of Educ. of City of NY, 110 AD3d 17 [2013]; see also Montalvo v Mumpus Restorations, Inc., 110 AD3d 1045 [2013]; General Assur. Co. v Lachmenar, 45 Misc 3d 134[A], 2014 NY Slip Op 51722[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]). Accordingly, the order is reversed, the branch of defendant’s motion seeking to dismiss the complaint on the ground of laches is denied, and the matter is remitted to the Civil Court for a determination of the remaining branches of defendant’s motion.

WESTON, J.P., ELLIOT and SIEGAL, JJ., concur.

The Rybak Firm, PLLC (Damin J. Toell and Karina Barska of counsel), for appellant. Bryan Cave Leighton Paisner, LLP (Amanda C. Scuder and Matthew Sarles 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 February 7, 2018. The order denied plaintiff’s motion to, in effect, vacate an order of that court entered February 27, 2017 granting, without written opposition by plaintiff, defendant’s motion for, in effect, summary judgment dismissing the complaint.

ORDERED that the order entered February 7, 2018 is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant Republic Western Insurance Company (Republic) moved for, in effect, summary judgment dismissing the complaint on the ground that this action by plaintiff TAM Medical Supply Corp. (TAM) was barred under the doctrine of res judicata, by virtue of an order of the Supreme Court, New York County, which had granted a motion by Republic for a default judgment against TAM and its assignor, declaring that Republic is not obligated to pay for no-fault benefits on behalf of the assignor. TAM submitted papers in opposition to Republic’s motion, but they were not served timely in accordance with a briefing schedule stipulation which had been executed by attorneys for both parties. By order entered February 27, 2017, the Civil Court (Robin Kelly Sheares, J.) granted Republic’s motion, declining to consider TAM’s late opposition papers. Thereafter, TAM moved, in effect, to vacate the February 27, 2017 order, arguing that it had a reasonable excuse of law office failure for submitting untimely opposition to Republic’s motion and a meritorious claim of breach of contract. Republic opposed the motion. TAM appeals from an order of the Civil Court (Robin Kelly Sheares, J.), entered February 7, 2018, denying TAM’s motion.

The record before us indicates that TAM had moved, in effect, to vacate the February 27, 2017 order and, thus, was required to demonstrate a reasonable excuse for the default and a potentially meritorious opposition to Republic’s motion (see CPLR 5015 [a]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]). However, the explanation of law office failure by TAM’s attorneys’ calendar clerk was insufficient to establish an excuse for submitting TAM’s opposition papers late. Consequently, it is unnecessary to determine whether TAM established a potentially meritorious opposition to Republic’s motion (see Rubinstein v Rubinstein, 128 AD3d 1047 [2015]). As TAM failed to demonstrate that the February 27, 2017 order should have been vacated, TAM’s motion was properly denied.

Accordingly, the order entered February 7, 2018 is affirmed.

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

Decision Date: June 12, 2020

Gullo & Associates, LLP (Cristina Carollo of counsel), for appellant. Gary Tsirelman, P.C. (David M. Gottlieb and Selina Chin of counsel), for respondent.

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Robin S. Garson, J.), entered May 31, 2018. The judgment, after a nonjury trial, awarded plaintiff the sum of $12,182.91.

ORDERED that the judgment is reversed, with $30 costs, and the matter is remitted to the Civil Court for a new trial limited to the issue of medical necessity.

Pursuant to an order entered February 17, 2017 in this action by a provider to recover assigned first-party no-fault benefits, the only issue for trial was whether the supplies at issue were medically necessary. At the nonjury trial, plaintiff’s attorney moved to preclude defendant’s expert witness on the ground that disclosure of the witness was untimely. The Civil Court granted plaintiff’s application to preclude the witness and, since defendant did not have any other witnesses, found for plaintiff. A judgment awarding plaintiff the sum of $12,182.91 was entered on May 31, 2018.

“CPLR 3101 (d) (1) (i) does not require a party to respond to a demand for expert witness information at any specific time nor does it mandate that a party be precluded from proffering expert testimony merely because of noncompliance with the statute, unless there is evidence of intentional or willful failure to disclose and a showing of prejudice by the opposing party” (Cutsogeorge v Hertz Corp., 264 AD2d 752, 753-754 [1999] [internal quotation marks omitted]). Plaintiff attempted to demonstrate prejudice before the Civil Court. However, since defendant’s witness was the doctor who had prepared the peer review reports upon which the denials of the claims were based, his name was listed as such in each of the denial of claim forms, and his report was attached to defendant’s motion for summary judgment, it is clear that plaintiff was not prejudiced (see id.). Thus, the Civil Court erred in precluding defendant’s expert from testifying (see Burbige v Siben & Ferber, 115 AD3d 632 [2014]; Market St. Surgical Ctr. v Global [*2]Liberty Ins. Co.,61 Misc 3d 155[A], 2018 NY Slip Op 51822[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]).

In view of the foregoing, this court need not reach defendant’s other argument.

Accordingly, the judgment is reversed and the matter is remitted to the Civil Court for a new trial limited to the issue of medical necessity.

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