Burke 2 Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co. PIP/BI Claims (2026 NY Slip Op 51806(U))

Reported in New York Official Reports at Burke 2 Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co. PIP/BI Claims (2026 NY Slip Op 51806(U))

Civil Court of the City of New York, Kings County

Decided on October 26, 2026

Index No. CV- 735106/19

Sandra Elena Roper, J.

Upon the foregoing cited papers and after oral argument, Defendant’s Motion for Summary Judgment, Plaintiff’s Cross-Motion for Summary Judgment, Plaintiff’s Amended Cross-Motion and Plaintiff’s Motion to Dismiss Affirmative Defenses are determined as follows:

Defendant’s Motion is GRANTED and Plaintiff’s Cross-Motion and Motion to Dismiss Affirmative Defenses are DENIED as moot. Plaintiff’s Amended Cross-Moton was served 18 months after Defendant served its Opposition and Reply, therefore, is not being considered. Arguendo, even where Plaintiff’s Amended Cross-Motion and amended affidavits were to be considered, they would be found insufficient to raise a triable issue of fact to defeat Defendant’s Motion for Summary Judgment. This Court finds that Defendant demonstrated Plaintiff failed to comply with the timely verification requests issued pursuant to 11 NYCRR § 65-3.5 (o) within 120 days, thus satisfying its prima facie burden for judgment as a matter of law in the first instance. Upon the shifting of the burden to rebut to Plaintiff, it failed to demonstrate that it provided the requested verification or set forth a reasonable justification for the failure to respond to Defendant’s verification requests, as required pursuant to 11 NYCRR § 65-3.5 (o). Thus, Plaintiff failed to meet its burden to rebut Defendants prima facie judgment as a matter of law.

Defendant submitted admissible evidence that it had not received the requested documentary verification from Plaintiff. In Plaintiff’s affidavit in opposition submitted, document number 22 on NYSCEF, the affidavit of Plaintiff’s owner merely states he mailed the requested verification to the address designated by Defendant on the verification requests “to the extent such response was proper and, in [his] possession,” and without appending documentary proof of responsive compliance with the verification requests the affidavit is insufficient to meet Plaintiff’s shifted burden to rebut (see NY St Cts Elec Filing [NYSCEF] Doc No. 22, plaintiff’s owner aff at 5, 7). This affidavit is insufficient to raise a triable issue of fact as it failed to demonstrate that it had provided the requested verification nor did it set forth a reasonable justification for the failure to comply with Defendant’s verification requests (see Burke Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co., 75 Misc 3d 143[A], 2022 NY Slip Op 50623[U] [App Term 2022]). Further, Plaintiff’s owner affidavit contradictorily states that he mailed the requested verification “to the address designated by the defendant on the verification requests” then in paragraph 7 states “to Defendant, State Farm Claims, at P.O. Box 52257, Phoenix, AZ 85072-2257” (NY St Cts Elec Filing [NYSCEF] Doc No. 22, ¶ 5 & 7). Whereas Defendant’s verification letters state that all requested documentation should be sent to “claims specialist, Doug Babin at State Farm Insurance 1 State Farm Drive Concordville, PA 19339-9300,” such internal factual inconsistency within Plaintiff’s affidavit without unimpeachable corroborating documentary proof of mailing vitiates its probative value to establish a finding of a triable issue of fact (see Burke 2 Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co., 85 Misc 3d 132[A], 2025 NY Slip Op 50306[U] [App Term 2025] [Second Department decision on this exact address issue was decided]). In further internal contradictions, Plaintiff also proffered 197 pages of correspondence submitted to Defendant objecting to the verification requested information and unilaterally on its own volition deeming Defendant’s verification request a nullity to the very same verification requests it contradictorily simultaneously contends were indeed responded to in its affidavit. Further, it has been held, “[c]ontrary to plaintiff’s further contention, it was not improper for defendant to seek, during the claim verification stage, information – such as management agreements, W-2 forms, business-related bank records and lease agreements — for the purpose of determining whether plaintiff was ineligible to collect no-fault benefits due to a failure to meet licensing requirements” (Burke 2 Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co., 85 Misc 3d 130[A], 2025 NY Slip Op 50195[U] [App Term 2025], citing 11 NYCRR § 65-3.16 [2] [12]; see also State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). Moreover, the Court further held, “[a]s plaintiff objected to the verification requests claiming they were nullities, the record establishes that plaintiff did not ‘provide within 120 calendar days from the date of the initial request either all such verification under [plaintiff’s] control or possession or written proof providing reasonable justification for the failure to comply’. Consequently, the arguments raised on appeal lack merit” (id. at [*3] [*4], citing 11 NYCRR 65-3.5 [o]).

Plaintiff errs in its reliance on the recent Court of Appeals case in Government Employees Ins. Co. Mayzenberg (45 NY3d 397 [2025]). This case clearly does not apply during the discovery/investigatory phase in the seeking of verification requests pursuant to 11 NYCRR 65-3.5 (o). In Mayzenberg, the Court of Appeals specifically answered the Second Circuit’s certified question: “If an insurer determines a healthcare provider has improperly paid others for patient referrals, in violation of [Education Law § 6350 (18)] and [8 NYCRR 29.1 (b) (3)], can [*2]the insurer deny payment for no-fault benefits on the ground that the provider ‘fail[ed] to meet’ a ‘necessary’ State or local licensing requirement under [11 NYCRR 65-3.16 (a) (12)]?” (id.). The Court of Appeals answered in the negative, holding that an insurer may not deny a provider’s claim for reimbursement based on alleged professional misconduct that falls short of ceding control of a professional services corporation to an unlicensed party (id.). However, The Court of Appeals reaffirmed that DFS regulation does authorize an insurer to deny no-fault benefit claims when a provider fails to fulfill a foundational licensing requirement necessary to perform healthcare services in any instance, and when they are effectively abdicating or ceding control to an unlicensed party (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; see Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 33 NY3d 389, 406 [2019]). Whereas “the Education Law vests the Board of Regents with ‘final authority’ concerning matters of professional discipline (Mayzenberg at 405, citing David v Biondo, 92 NY2d 318 [1998]). “The Court further explained that when a professional services corporation violates a foundational statutory requirement for licensure, that violation voids the corporation’s license regardless of when the violation is discovered or committed. By contrast, Mayzenberg’s alleged professional misconduct would not affect his license until State regulators choose, in their discretion, to impose such a penalty” (Mayzenberg at 407). Such delay is antithetical to the No-Fault law’s legislative intent of “prompt payment for basic economic loss to injured persons regardless of fault, in exchange for a limitation on litigation to cases involving serious injury” (id.).

As the Court has previously decided in Burke 2 Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co. PIP/BI Claims (___Misc 3d___, 2026 NY Slip Op 26164 [2026]):

“Mayzenberg is triggered upon an insurer’s conclusive determination of a provider’s professional misconduct, which cannot be had until the conclusion of the investigatory phase. Insurer’s verification requests are part of the investigatory phase. Where provider fails to respond to the insurer’s verification requests, as herein, it cuts off the processing of the claim at the investigatory phase depriving insurer from ever reaching any substantive conclusive determination on the merits of alleged professional misconduct. Rather, insurer’s denial is premised upon procedural grounds of provider failing to respond to verification request within 120 days, as herein.

“Investigatory verification requests determine whether there is determination of professional misconduct:

1st- Plaintiff provider failed to meet a necessary New York State or local licensing requirement;

2nd-Plaintiff provider’s offending licensing failure of professional misconduct ceded, abdicated or surrendered its control of its licensed professional services corporation to an unlicensed party or entity; Thus, where:

3rd- Defendant insurer’s finding to the second prong is in the affirmative at the conclusion of the investigatory phase of Defendant insurer’s verification requests and Plaintiff provider’s responses thereto prove professional misconduct that rises to the level of ceding, abdicating, or surrendering Plaintiff provider’s control of its licensed professional healthcare services corporation to an unlicensed party or entity, then the Defendant insurer maintains its authority to deny the claimed services as reaffirmed by The Court of [*3]Appeals in Mayzenberg (Mayzenberg at 403, citing State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; see Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 33 NY3d 389, 406 [2019]).

4th- Where the finding to the second prong is in the negative at the conclusion of the investigatory phase of Defendant insurer’s verification requests and Plaintiff provider’s responses thereto prove alleged professional misconduct of some kind, i.e. unethical referral agreements or kickbacks in violation of Education Law § 6530 (18) and attendant regulation, 8 NYCRR 29.1 (b) (3) which does not rise to the level of ceding, abdicating, or surrendering Plaintiff provider’s control of its licensed professional healthcare services corporation to an unlicensed party or entity, then the Defendant insurer cannot deny the claimed services and shall pay Plaintiff provider for those claimed services billed accordingly.^FN1 The Court of Appeals definitively vests that authority solely with the Board of Regents and divests such authority from No-Fault insurers to deny on that faction or branch of professional misconduct.^FN2

“It is reiterated; there must be a final conclusive determination of the investigatory phase in compliance with Defendant insurer’s verification requests upon Plaintiff provider’s responses thereto. Plaintiff errs in its argument that Mayzenberg’s holding is to be applied to the underlying materiality of the verification requests as circumscribed by the SIU’s investigatory reports. The SIU reports are of no moment to trigger Mayzenberg at the investigatory phase. Mayzenberg is not triggered until Defendant insurer conclusively makes a finding of professional misconduct upon which will be the basis of the denial. There can only be such a finding upon the conclusion of the investigatory phase. Even upon such a finding, the inquiry doesn’t end there. There must be further inquiry into what type or faction of professional misconduct. Whether it rises to Mallella/Caruthers’ professional misconduct which maintains authority vested in Defendant insurer to deny Plaintiff’s claims. Or, whether some other professional misconduct such as “[d]irectly or indirectly offering [and] giving . . . any fee . . . to . . . a third party for the referral of a patient or in connection with the performance of professional services” or paying kickbacks pursuant to Education Law § 6530 (18) and attendant regulation, 8 NYCRR 29.1 (b) (3), which divests authority from Defendant insurer (id.). Nevertheless, this instant matter has failed to reach the trigger point for the application of Mayzenberg. There has been no conclusive finding or determination of any professional misconduct by Defendant insurer for which Plaintiff’s claims may be denied pursuant to the Eligibility Regulation 11 NYCRR 65-3.16 (a) (12), since Plaintiff failed to respond to the verification requests which essentially cut off the investigatory phase, upon which the denial is premised. The instant claim was not denied pursuant to professional misconduct of which Mayzenberg would be controlling. Rather, the instant claim is denied for Plaintiff’s failure to respond to verification requests within 120 days pursuant to 11 NYCRR §65-3.5 (o).”

In this instant case there has been nor could there have been any conclusive finding or determination of any professional misconduct since Plaintiff failed to respond to verification requests within 120 days thereby thwarting the investigatory phase to its detriment, depriving it of a potential Mayzenberg challenge.

Therefore, Plaintiff’s Complaint is hereby DISMISSED with PREJUDICE.

This constitutes the Decision and Order of This Court.

Date: October 26, 2026

Brooklyn, New York

Judge Sandra Elena Roper, JCC