December 21, 2006

Andrew Carothers, M.D., P.C. v Progressive Ins. Co. (2006 NY Slip Op 52479(U))


The main issue in this case was whether the plaintiff had properly established a prima facie entitlement to payment of no-fault benefits, and whether the defendant had provided a proper denial of the claim. The court found that the plaintiff had established a prima facie entitlement through the timely submission of the claim, but the defendant's denial was untimely, factually insufficient, conclusory, and vague. The court also found that the defendant's witness did not provide sufficient evidence to establish a standard office procedure regarding mailing, and that this lack of evidence was fatal to the defendant's case. Therefore, judgment was entered for the plaintiff in the amount of $879.73, plus interest and attorneys' fees.

Reported in New York Official Reports at Andrew Carothers, M.D., P.C. v Progressive Ins. Co. (2006 NY Slip Op 52479(U))

Andrew Carothers, M.D., P.C. v Progressive Ins. Co. (2006 NY Slip Op 52479(U)) [*1]
Andrew Carothers, M.D., P.C. v Progressive Ins. Co.
2006 NY Slip Op 52479(U) [14 Misc 3d 1210(A)]
Decided on December 21, 2006
Civil Court Of The City Of New York, Kings County
Gold, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.
Decided on December 21, 2006

Civil Court of the City of New York, Kings County

Andrew Carothers, M.D., P.C. A/A/O WAYNE LOVELL, Plaintiff,


Progressive Insurance Company, Defendant.

89030 KCV 2005

Lila P. Gold, J.

Plaintiff commenced this action under the No-Fault provisions of the Insurance Law to recover fees in the amount of $879.73 for medical services provided to its assignor.

Plaintiff proceeded to offer evidence via the presentation of documents and testimony of Octavio Rodriguez, a billing manager for Advanced Heathcare Solutions, L.L.C., formerly known as Medtrx, L.L.C. in order to establish a prima facie entitlement for payment of the no-fault benefits.

To establish a prima facie case, a plaintiff is required to submit proof that it timely sent its claim for no-fault benefits to the defendant, that defendant received the claim and that defendant failed to pay or deny the claim within thirty days. (See Amaze Medical Supply Inc. v. Allstate Insurance Company, 3 Misc 3d 133A [App Term 2nd & 11th Jud Dists 2003]).

Mr. Rodriguez testified that it was his duty to generate bills (NF-3) from information sent over a secure internet website from Andrew Carothers, M.D. P.C. Additionally his duties included preparing the envelope with the appropriate label and postage, placing the required documents necessary to process a claim into the envelope, sealing the envelope and bringing it to the post office, where he would receive a proof of mailing which was then scanned into the computer system upon his return to the billing office from the post office.

Plaintiff offered the claim form (NF-3), the signed Assignment of Benefits form (NF-AOB), proof of mailing, together with a copy of the treating doctor’s referral and the MRI narrative into evidence.

Plaintiff further strengthened its prima facie case by having Defendant’s denial form (NF-10) admitted into evidence for the limited purpose of showing that the claim was received timely by the Defendant.(See A.B. Med. Serv., P.L.L.C. v. New York Central Mut. Fire Ins. Co., 3 Misc 3d 136(A); see also Kings Medical Supply, Inc. v. Country-Wide Ins. Co., 5 Misc 3d 767).

At this point Plaintiff rested and Defendant made a motion for a directed verdict as, in his opinion, Plaintiff did not establish a prima facie entitlement to the no-fault benefits. Defendant’s position was that Plaintiff did not lay the proper foundation to have its documents admitted into evidence.

This motion was denied. The court finds that Plaintiff did in fact lay the proper [*2]foundation to submit the documents into evidence, via the testimony of Mr. Rodriguez. “Where an entity routinely relies upon the business records of another entity in the performance of its own business and fully incorporates said information into the records made in the regular course of its business, the subsequent record is admissible notwithstanding that the preparer lacked personal knowledge of the information’s accuracy.” (See Pine Hollow Medical P.C. v. Progressive Casualty Insurance Co., 2006 NY Slip Op 51870U) Since Advance Healthcare Solutions L.L.C. is a billing company whose regular business is to produce bills based on information imparted to them by Plaintiff and maintained these records in the regular course of its business, the proper business record foundation was established to admit the documents into evidence (CPLR 4518[a]). (See Plymouth Rock Fuel Corp. v. Leucadia Inc., 117A.D. 2d 727; see also West Valley Fire District No. 1 v. Village of Springville,264 AD2d 949)

Once Plaintiff established its prima facie entitlement, the burden shifted to the Defendant to substantiate their basis for denying the claim. The Defendant contended that the services provided lacked medical necessity and therefore Defendant was not obligated to pay the claim.

However, the Court finds that before the issue of medical necessity is reached, the Defendant must overcome the fatal defects contained in the NF-10. Namely, the NF-10 was untimely on its face, as it denied the claim on May 2, 2005 after receiving the bill on March 14, 2005. Additionally, the NF-10 is factually insufficient, conclusory and vague in explaining the reason for denial of benefits. (See Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 779 NYS2d 715) The claim was denied for failure to establish medical necessity and the denial failed to set forth with sufficient particularity the factual basis and medical rationale for its denial based on lack of medical necessity. (See A.B. Med. Servs. P.L.L.C. v. GEICO Cas. Ins. Co., 2006 NY Slip Op 26133)

To overcome these defects, Defendant called Ms. Michelle Cusano, a Litigation Team Leader for the Defendant, Progressive Insurance Company. She testified that her duties were to review claim files in preparation for litigation. It was her testimony that the NF-10 was timely since a verification request was sent thereby tolling the deadline for the denial. It was her contention that the verification was answered on April 12, 2005 and therefore the NF-10, sent on May 2, 2005, was timely.

She further testified that the NF-10 was not factually insufficient, conclusory or vague in explaining the reason for the denial since it was accompanied by a peer review report which set forth the reason for denial with sufficient particularity and medical rationale. It was her testimony that since she saw the NF-10 and the peer review report in the file and under the general office procedure of mailing, it would have been placed in the claims file contemporaneously with their mailing. Therefore, she deduced that it was mailed together.

Ms. Cusano testified that although she was not the person who was responsible to mail the verification request and it was not even her duty to ensure that the request was sent, she knew that it was sent because she had previously worked in the processing department in the late 1990’s and at that time it was her responsibility to generate the verification requests. She described the procedure she would take in detail; attempting to establish the mailing of the [*3]verification request.

On cross examination, Ms. Cusano stated that the person in the processing department would print three copies of a verification request. One copy was sent to the mail room to be mailed to the person whom they needed verification from; the second copy was placed in a 30-day box, which would be used to monitor whether or not an answer to the request was received; and the third copy was placed in the claim file. It was that third copy, coupled with the fact that the verification request was answered, which led Ms. Cusano to the conclusion that the verification request was properly mailed.

When asked of whom the verification was requested, Ms. Cusano told the court that it was Dr. Kleyman. Plaintiff maintained that if three copies are printed; one copy to Dr. Kleyman, the second copy placed in the 30-day box, and the third copy in the claims file, then the Plaintiff, Andrew Carothers M.D. P.C. was not mailed a verification request. Only then did Ms. Cusano state that sometimes a forth copy is printed.

Plaintiff then asked Ms. Cusano if at the time of her employment in the processing department and now relating to the general office practice, whether she would fill in all the relevent boxes on the NF-10; she answered, “yes.” When asked if a verification request was sent and received, would those boxes be filled in on the NF-10; again she answered, “yes.” When shown that boxes No.28 (Date final verification requested) & #

29 (Date final verification received) on the NF-10 were blank she responded that the boxes were obviously left blank in error.

Within thirty days of receiving a claim, the insurer shall either pay or deny the claim in whole or in part (see 11 NYCRR 65.15 [g] [3]). This 30-day period may be extended by a timely demand by the insurance company for further verification of a claim (see 11 NYCRR 65.15 [d] [1]). Since the Court finds that the mailing of the verification request had not been proven, the 30-day period was not extended and therefore the denial was untimely on its face. Thus, Plaintiff demonstrated a prima facie showing of entitlement to judgment as a matter of law with evidence that their claims were neither denied nor paid within the requisite time period. (see Insurance Law § 5106 [a]; 11 NYCRR 65.15 [g] [3])

Moreover, even if Defendant timely issued the denial within 30 days of its receipt of the claim a proper denial of claim must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4[c][11]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664) The denial of claim form issued by Defendant in this action, even if timely, was fatally defective in that it omitted items of requested information, and thus was incomplete (see 11 NYCRR 65-3.4[c][11]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664; Nyack Hosp. v Metro. Prop. & Cas. Ins. Co., 16 AD3d 564).

Additionally, Ms. Cusano’s testimony relating to the general office procedure regarding mailing was vague and conclusory, lacking knowledge of the procedure designed to ensure that items are properly addressed and mailed. (See Hospital for Joint Diseases v. Nationwide Mutual Ins. Co., 284 AD2d 374; Residential Holding Corp. v. Scottsdale Ins. Co., 286A.D. 2d 679) The [*4]portion of her testimony relating to the mailing of the NF-10 strengthened Plaintiff’s prima facie case, that the bills were actually mailed, but did nothing to establish her knowledge of the actual mailing procedures. She admitted that it was not part of her duty to oversee the mailing procedures or to ensure that a peer review report was sent together with the NF-10. Furthermore, she stated that at the time that she worked in the processing department, it was not the general office procedure to mail the peer review reports together with the NF-10s.

Moreover, Defendant’s witness Ms. Cusano could not establish that the peer review report was actually sent to Plaintiff and the NF-10 did not state that a peer review report was attached, rather it merely stated that “Based on the results of an independent peer review, medical justification and/or necessity cannot be established for the services billed. Therefore, your request for reimbursement is denied.”

Although Ms. Cusano described the general office procedure in mailing the verification request and the peer review report, she based her knowledge of the actual mailing of those documents solely on the fact that they were contained in the claim file that she reviewed for litigation purposes. This was not sufficient to constitute proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed (see Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679, 729 NYS2d 776 [2001]). Nor did her testimony state that it was her duty to ensure compliance with said office procedures or that she had actual knowledge that said office procedures were complied with (see Contemp. Med. Diag. & Treatment, P.C. v Government Empls. Ins. Co., 6 Misc 3d 137A, 800 NYS2d 344, 2005 NY Slip Op 50254U [App Term, 2d & 11th Jud Dists]). Inasmuch as Defendant herein failed to establish by competent proof that the verification request was mailed and that the peer review report was mailed together with the NF-10, they did not make the requisite showing to establish that a proper denial was sent. (See Gribenko v. Allstate Ins. Co., 2005 NY Slip Op 52201U; Accessible and Advance Medical P.C. v. Allstate Ins. Co., 2006 NY Slip Op 51599U)

It is apparent to the Court that there are numerous conflicting decisions relating to proper testimony regarding the standard general office procedure of mailing. It is this Courts opinion that for the sake of judicial economy and for the sake of dispensing with the constant mailing issues arising in these cases, the Insurance Companies should produce the proper witnesses from the mailing room, who could testify that it is their duty to ensure that items are properly addressed and mailed or it is their duty to ensure compliance with said general office procedures or that they have actual knowledge that the mailing procedure, as part of the standard general office procedure, is followed.

Although the Court allowed Defendant to call Dr. Hadhoud, the author of the peer review report upon which the denial was based, to testify regarding the necessity of the services rendered, the issue of medical necessity need not have been reached.

The Court finds that, as a matter of law, even if Defendant’s doctor would persuasively testify that the medical service provided lacked medical necessity, this testimony would not cure the legal insufficiency of the proffered untimely denial.

Therefore, judgment should be entered for the plaintiff in the amount of $879.73, plus [*5]interest and attorneys’ fees as provided by the Insurance Law, together with the statutory costs and disbursements in this action.

This opinion constitutes the decision of the Court. A copy of this decision will be mailed to the parties.

Dated:December 21, 2006


Lila P. Gold, J.C.C.