September 14, 2007

AVA Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 51756(U))

https://www.beynensonlaw.com/case-law/ava-acupuncture-p-c-v-state-farm-mut-auto-ins-co-2007-ny-slip-op-51756u/

Court: Appellate Term, Second Department
Decided: September 14, 2007
Citation: 2007 NY Slip Op 51756(U) · 16 Misc 3d 138(A)
Posture: Other motion
Outcome: Insurer prevailed
Later treatment: Followed in 1 later decision (see Cited by)
Issues: Discovery and procedure Fraudulent incorporation (Mallela)
Legal questions: Mallela defense: preclusion and discovery (see the maps)

Cite as

AVA Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 16 Misc 3d 138(A), 2007 NY Slip Op 51756(U) (App Term, 2d Dept, 2d & 11th Jud Dists 2007)

Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.

Summary

Editorial summary by Beynenson Law, not part of the court’s decision.

The provider's failure to answer discovery or oppose the insurer's motion supported striking its complaint under CPLR 3126 (3). The insurer demonstrated possible reimbursement ineligibility under Mallela and that the requested discovery was material and necessary to its defense under CPLR 3101. The Appellate Term, Second Department, inferred willful and contumacious conduct from the provider's failure to respond to the demands and to submit written opposition to the motion. It reversed the order denying the insurer's unopposed motion and granted the motion to strike the complaint for assigned no-fault benefits.

Reported in New York Official Reports at AVA Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 51756(U))

[*1]

AVA Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co.

2007 NY Slip Op 51756(U) [16 Misc 3d 138(A)]

Decided on September 14, 2007

Appellate Term, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected in part through November 4, 2011; it will not be published in the printed Official Reports.

Decided on September 14, 2007

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

PRESENT: : PESCE, P.J., RIOS and BELEN, JJ
2006-927 K C.

AVA Acupuncture, P.C. a/a/o Carlton Edwards, Respondent,
against
State Farm Mutual Automobile Ins. Co., Appellant.

Appeal from an order of the Civil Court of the City of New York, Kings County (Robin S. Garson, J.), entered March 23, 2006. The order denied defendant’s unopposed motion, pursuant to CPLR 3126, seeking an order striking the complaint due to plaintiff’s failure to provide discovery or, in the alternative, compelling plaintiff to provide discovery.

Order reversed without costs and defendant’s motion to strike plaintiff’s complaint granted.

Plaintiff commenced the instant action to recover assigned first-party no-fault benefits. After issue was joined, defendant served various discovery demands.
Subsequently, defendant moved to strike plaintiff’s complaint pursuant to CPLR 3126 (3) due to plaintiff’s failure to respond to defendant’s discovery demands or, in the alternative, for an order compelling plaintiff to comply with the discovery demands. Although plaintiff failed to oppose the motion, the court nevertheless denied defendant’s motion and this appeal by defendant ensued.

Defendant’s motion papers were sufficient to demonstrate that plaintiff may be ineligible to receive reimbursement for no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) and that the discovery sought was material and necessary to defendant’s defense of this action (CPLR 3101; see also Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 15 Misc 3d 110 [App Term, 2d & 11th Jud Dists 2007]; Midwood Acupuncture, P.C. v State Farm Ins. Co., 14 Misc 3d 131[A], 2007 NY Slip Op 50052[U] [App Term, 2d & 11th Jud Dists]; North Acupuncture, P.C. v State Farm Ins. Co., 14 Misc 3d 130[A], 2006 NY Slip Op 52523[U] [App Term, 2d & 11th Jud Dists]; North Acupuncture, P.C. v State Farm Ins. Co., 14 Misc 3d 129[A], 2006 NY Slip Op 52512[U] [App Term, 2d & 11th Jud Dists]; First Help Acupuncture P.C. v State Farm Ins. Co., 12 Misc 3d 130[A], 2006 NY Slip Op 51043[U] [App Term, 2d & 11th Jud Dists]). “Although dismissing a complaint pursuant to CPLR 3126 is [*2]a drastic remedy, it is warranted where a party’s conduct is shown to be willful, contumacious, or in bad faith (see Beneficial Mtge. Corp. v Lawrence, 5 AD3d 339 [2004], lv denied 3 NY3d 602 [2004]; Frias v Fortini, 240 AD2d 467 [1997])” (Rowell v Joyce, 10 AD3d 601, 601 [2004]). In this case, the willful and contumacious character of plaintiff’s conduct can be inferred from its failure to respond to defendant’s discovery demands and its failure to submit written opposition to defendant’s motion to strike the complaint (see Devito v J & J Towing, Inc., 17 AD3d 624 [2005]; Rowell v Joyce, 10 AD3d 601, supra). Consequently, under these circumstances, defendant’s motion to strike the complaint pursuant to CPLR 3126 (3) should have been granted.

Pesce, P.J., Rios and Belen, JJ., concur.
Decision Date: September 14, 2007

Legal questions

A question of no-fault law this decision rules on, from our Legal Questions pages. Bars count the decisions on the question by year and court, coloured by category; circles are this decision and the decisions on the question it cites or that cite it. Point at a bar or circle for details. The categories and summaries are Beynenson Law’s classification, made by a language model and checked by a second reading.

Mallela defense: preclusion and discovery

Open the full map

May the insurer raise and investigate a Mallela (fraudulent incorporation) defense, or is it precluded, waived or denied discovery?

This decision: Insurer may raise or investigate the Mallela defense here (rules on the question, but another ground decided the case)

Held the insurer's papers showed the provider may be ineligible for reimbursement because of how it was incorporated, so discovery on that defense was material and necessary, and struck the complaint for willful noncompliance.

Defense may be pursuedDefense barredThis decisionCites it or cited by itCited or followed

Of the 134 decisions on this question in the Second Department courts and the Court of Appeals, 111 (this one included) are in the same category.

Cited in this decision

A label shows how this decision treated the case it cites.

State Farm Mut. Auto. Ins. Co. v Mallela (2005 NY Slip Op 02416) FollowedFraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 27135)The insurer raised issues concerning the provider's actual operation and control that required discovery before summary judgment.
Midwood Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50052(U))Fraudulent licensing under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense outside the 30-day preclusion rule.
North Acupuncture, P.C. v State Farm Ins. Co. (2006 NY Slip Op 52523(U))The provider failed to establish summary judgment entitlement through competent evidence and could not cure its moving papers in reply.
First Help Acupuncture P.C. v State Farm Ins. Co. (2006 NY Slip Op 51043(U))Fraudulent licensing under 11 NYCRR 65-3.16 (a) (12) is a nonwaivable defense outside the 30-day preclusion rule.

Cited by

A label shows how the later decision treated this one.

Bay Plaza Chiropractic, P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51925(U)) FollowedDiscovery into alleged fraudulent incorporation under CPLR article 31 does not require the good-cause showing applicable to claim verification.
Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51529(U))The insurer established entitlement to corporate eligibility discovery, but failed to justify disclosure of the owner's personal tax returns.
Lexington Acupuncture, P.C. v General Assur. Co. (2012 NY Slip Op 22047)An insurer may obtain Mallela discovery on sufficient allegations of fraudulent incorporation despite not pleading that defense.

Similar decisions

Lexington Acupuncture, P.C. v State Farm Ins. Co. (2007 NY Slip Op 51758(U))The provider's inadequate discovery responses and failure to oppose the insurer's motion supported striking its complaint under CPLR 3126 (3).
Ava Acupuncture, P.C. v NY Cent. Mut. Ins. Co. (2007 NY Slip Op 50358(U))A notice of trial should be vacated when the certificate of readiness erroneously states that discovery was completed or waived.
VA Acutherapy Acupuncture, P.C. v State Farm Ins. Co. (2007 NY Slip Op 51217(U))The insurer raised factual issues concerning a staged collision and the provider's eligibility based on alleged fraudulent incorporation.
Ava Acupuncture, P.C. v NY Cent. Mut. Fire Ins. Co. (2012 NY Slip Op 50233(U))An unvacated default declaratory order barring no-fault benefits is a final determination that can preclude a provider's action under res judicata.
First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co. (2007 NY Slip Op 50354(U))The provider's failure to comply fully with ordered discovery concerning fraudulent incorporation warranted dismissal under CPLR 3126.