October 9, 2020

American Tr. Ins. Co. v Romero-Richiez (2020 NY Slip Op 51181(U))


The court considered the issue of whether American Transit Insurance Company had an obligation to pay no-fault insurance benefits to defendant Juan Romero-Richiez, who was involved in a vehicle collision covered by American Transit's policy. Romero-Richiez assigned the right to collect benefits to various medical providers, and American Transit denied his application for benefits. The court granted a default judgment in favor of American Transit, declaring that Romero-Richiez and the medical providers were not entitled to no-fault benefits due to his failure to appear for scheduled independent medical examinations. However, American Transit's motion for summary judgment against one of the medical providers, Right Choice, was denied. The court held that American Transit failed to establish its entitlement to summary judgment as it did not provide evidence of meeting the timeliness requirements or show that the specific IME requested was necessary to determine if the claim should be paid. The court also rejected American Transit's argument that the failure to appear for IMEs is a breach of a condition precedent to coverage and found that the 15-business-day deadline for requesting an IME applies to all IME requests, regardless of the reason for the request. Therefore, the motion for summary judgment was denied.

Reported in New York Official Reports at American Tr. Ins. Co. v Romero-Richiez (2020 NY Slip Op 51181(U))




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.

Gerald Lebovits, J.

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.


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


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]).