AA Acupuncture Serv., P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51066(U))

Civil Court of the City of New York, New York County

2765/08

For plaintiffs:

Edward Shapiro. P.C.

Wantagh, NY

For defendant:

McDonnell and Adels, P.C.

Garden City, NY

Arlene P. Bluth, J.

Upon the foregoing cited papers and after argument, defendant moves for summary judgment pursuant to CPLR §3212 dismissing the complaint or, in the alternative, for an order pursuant to CPLR 3124 compelling plaintiffs to respond to its discovery demands on Mallella issues. For the following reasons, the branch of the motion for summary judgment is denied and the branch of the motion compelling discovery is granted to the extent set forth below.

In this action, plaintiffs seek to recover first-party No-Fault benefits in the amount of $3,937.33, plus statutory, interest, costs, and attorneys’ fees, for medical services allegedly rendered to their assignor, Marie Boucicaut, following an alleged automobile [*2]accident on April 4, 2003.

Summary Judgment

Defendant contends that the underlying incident was an intentionally caused loss which is not covered by defendant’s insurance policy and seeks summary judgment dismissing the complaint. In support thereof, defendant submits the affidavit of Christopher Howard, an investigator in its Special Investigation Unit who was personally involved in the investigation. Mr. Howard sets forth detailed results of his investigation, all of which certainly tend to show that the underlying incident was staged, and thus not covered by the policy. In opposition, the plaintiff has failed to contradict any of Mr. Howard’s sworn statements or any of the voluminous documents annexed thereto.

Although there are many cases where a court has found that the investigator’s affidavit either is or is not sufficient to defeat a plaintiff’s motion for summary judgment, defendant has failed to cite a single case where summary judgment was granted to a defendant based upon a lack of coverage/staged accident defense supported by an investigator’s affidavit. From the uncontradicted, overwhelming circumstantial evidence in this record, this Court believes that if there were cases where summary judgment could be granted to the defendant, this would be one of those cases; the only evidence more convincing than the circumstantial evidence presented here would be if the driver and passengers admitted under oath that they fabricated their stories and withdrew their claims with prejudice. Unfortunately, this Court is constrained to deny defendant’s motion for summary judgment because it appears that summary judgment is simply unavailable to a defendant denying a claim on the grounds that it involved a staged accident.

Indeed, even when the defendant’s testimony is sufficient to convince the Appellate Term that the defendant’s refusal to pay the claim was based upon its founded belief that the injuries did not arise out of an insured incident, such a finding is only sufficient to create an issue of fact; it is not a basis for granting summary judgment. The Appellate Term, Second Department has spoken on this point in A.M. Medical Services, P.C. v. Nationwide Mut. Ins. Co., 12 Misc 3d 143(A), 824 NYS2d 760 (App Term 2d Dept 2006). There, even though the evidence was compelling in defendant’s favor, that is, the driver and passenger admitted under oath that they faked the accident and withdrew their claims with prejudice, the Appellate Term reversed the trial court’s grant of summary judgment to the defendant.

In A.M. Medical Services, the EUO transcripts showed that when the assignor and [*3]driver were confronted with suspicious facts about their multiple “accidents,” they withdrew their claims with prejudice. The Appellate Term held:

[N]evertheless, the foregoing facts were sufficient to demonstrate that defendant’s refusal to pay the claim 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]; GPM Chiropractic, P.C. v State Farm Mut. Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op 50861[U] [App Term, 2d & 11th Jud Dists] ). This presented an issue of fact as to whether there was a lack of coverage. Consequently, plaintiff’s motion for summary judgment was properly denied and defendant’s cross motion for summary judgment should have been denied.

Even when the court found the defendant’s evidence convincing and that it was absolutely right to deny the claim based upon a founded belief of a staged accident, the Appellate Term still reversed trial court’s grant of summary judgment on those grounds.

But the Appellate Term’s decision does not stop there. The Court sua sponte ordered a sanctions hearing against the plaintiff’s attorney, and criticized him for pursuing an appeal frivolously:

Despite being advised of [the evidence of withdrawals], and being provided with background information which led to the “withdrawals,” plaintiff’s counsel submitted a reply affirmation wherein he continued to seek summary judgment in favor of his client, After having been unsuccessful [below], and despite being faced with the facts which clearly support a founded belief of fraud, plaintiff’s counsel took an appeal…

Therefore, the Appellate Term refused to affirm summary judgment even though it clearly thought that the plaintiff should not have pursued its claim when faced with the same evidence. If the Appellate Term thought the evidence of a staged accident was strong enough to consider sanctions against the plaintiff’s attorney for pursuing the claim but still refused to grant summary judgment to the defendant, then the only explanation is that there is a per se rule against summary judgment dismissing a claim based on staged accident. Absent a contrary decision in this Department, this Court, following A.M. Medical Services, denies defendant’s motion for summary judgment. Mountain View Coach Lines v Storms, 102 AD2d 663, 664, 476 NYS2d 918 (2d Dept 1984); People v Brisotti, 169 Misc 2d 672, 673, 652 NYS2d 206, 207 (App Term 1st Dept 1966); 545 West Co. v Schachter, 16 Misc 3d 431, 837 NYS2d 549 (Civ Ct, NY Cty, 2007).

Compelling Discovery

Defendant also seeks the alternative relief, pursuant to CPLR 3124, of an order compelling plaintiffs to respond to defendant’s discovery demands. Nowhere in the seven pages of opposition does plaintiff oppose this relief, nor have either of the plaintiffs ever moved for a protective order. The outstanding discovery includes a notice to take the depositions of Deepak Sachdev, M.D., Stella Ilyaev, M.D., Sanford Yu, L.Ac. and Karen Cinquemandi, D.C. Defendant has set forth uncontradicted documentary evidence that Dr. Sachdev is listed the owner of close to a dozen medical facilities, and has also annexed documents showing that he been arrested for selling prescriptions from one of his facilities in the Bronx as part of a multi-million dollar medicaid fraud ring. (His case is currently pending). The defendant has annexed proof that Dr. Sachdev is also listed on at least two of the bills sued upon herein as the employee of plaintiff Right Care Medical who actually performed the medical services for the assignor.

Plaintiff chose to bring this action, and civil litigants are obligated to abide by the CPLR. According to the CPLR, the defendant has the right to depose the plaintiff. Here, Dr. Sachdev, as the owner of the facility and the practitioner who actually rendered the services, must appear for his deposition. Furthermore, he must bring with him to the deposition the documents he may need to refer to in answering the questions relating to plaintiff’s corporate structure; if he does not bring the documents and he cannot answer the questions, then defendant may bring on a motion for further relief. In addition to the plethora of uncontradicted reasons submitted by the defendant tending to show that plaintiffs may be fraudulently incorporated and thus not entitled to insurance payment, the Court notes that Dr. Sachdev may be unaware of his corporation’s billing practices inasmuch as the bills annexed to the defendant’s motion show the each NF3 for services allegedly provided by Dr. Sachdev state that Dr. Sachdev is a “nerologist;” he is no more a “nerologist” than his counsel is an “attor-knee.” A person who worked so hard to become a neurologist would know how to spell it.

Accordingly, defendant’s motion to compel discovery is granted to the extent of ordering the deposition of Deepak Sachdev, M.D. on or before August 1, 2008 at the offices of defendant’s attorneys. The Court is allowing the deposition outside New York City because it appears that Dr. Sachdev resides in Franklin Square, Nassau County, where defendant’s offices are located. If Dr. Sachdev shows proof (which proof must be shown before July 1, 2008) that he does not reside in Nassau County, then the deposition will be held at the Courthouse, 111 Centre Street, New York, New York on or before August 1, 2008 or at another location within New York City, agreeable to the parties. If Dr. Sachdev fails to appear for the Court-ordered deposition, then the plaintiff Right Care [*4]Medical, P.C. will be precluded from offering any evidence at the trial or upon a motion for summary judgment.

With respect to plaintiff AA Acupuncture Services, P.C., defendant has not shown that Dr. Sachdev is involved in that professional corporation and has not submitted any bills relating thereto. Although the documents annexed to defendant’s papers show that Mr. Yu is a principal in AA Acupuncture Service, P.C., there are no allegations that his corporation may be fraudulently incorporated, nor are there bills to show he performed any of the services billed for herein. In addition, there are no specifics alleged regarding the other two individuals listed in the deposition notice, Stella Ilyaev, M.D. and Karen Cinquemandi, D.C. Accordingly, this Court does not have a basis to order any other depositions at this time.

This is the Decision and Order of the Court.

Dated: May 30, 2008

New York, New York

Arlene P. Bluth

Judge, Civil Court