August 11, 2017

Clinton Place Med., P.C. v USAA Cas. Ins. Co. (2017 NY Slip Op 51012(U))

https://www.beynensonlaw.com/case-law/clinton-place-med-p-c-v-usaa-cas-ins-co-2017-ny-slip-op51012u/

Court: Appellate Term, Second Department
Decided: August 11, 2017
Citation: 2017 NY Slip Op 51012(U)
Posture: Other motion
Outcome: Insurer prevailed
Issues: Discovery and procedure
Legal questions: Mallela defense: preclusion and discovery (see the maps)

Cite as

Clinton Place Med., P.C. v USAA Cas. Ins. Co., 2017 NY Slip Op 51012(U) (App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017)

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.

A provider that fails to object timely to discovery demands must respond except as to privileged or palpably improper matters. The provider missed the objection deadlines under CPLR 3122 (a) and CPLR 3133 (a). Demands concerning precluded defenses may be palpably improper despite untimely objections, but the requested financial and business records were not palpably improper under Mallela. The insurer was also entitled to depose the provider's owner under CPLR 3101 (a). Because discovery remained outstanding, the provider's summary judgment cross motion was premature under CPLR 3212 (f). The Appellate Term, Second Department, affirmed the order, insofar as appealed from, compelling discovery and the owner's deposition and denying the provider's cross motion.

Reported in New York Official Reports at Clinton Place Med., P.C. v USAA Cas. Ins. Co. (2017 NY Slip Op 51012(U))

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Clinton Place Medical, P.C., as Assignee of Araujo Carmencita, Appellant,
against
USAA Casualty Ins. Co., Respondent.

Korsunskiy Legal Group, P.C. (Michael Hoenig, Esq.), for appellant. McDonnell & Adels, P.C. (Linda A. Mule, Esq.), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Wavny Toussaint, J.), entered September 5, 2013. The order, insofar as appealed from, granted defendant’s motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, to compel plaintiff to respond to defendant’s discovery demands, to the extent of compelling plaintiff to respond to defendant’s discovery demands and to produce plaintiff’s owner for an examination before trial, and denied plaintiff’s cross motion for summary judgment.

ORDERED that the order, insofar as appealed from, is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from so much of an order of the Civil Court as denied plaintiff’s cross motion for summary judgment and granted defendant’s motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, to compel plaintiff to respond to defendant’s notice for discovery and inspection, and its “demand for verified written interrogatories,” to the extent of compelling plaintiff to provide defendant with, among other things, verified responses to defendant’s discovery demands, including “W-2(s), 1099(s) & 941 tax forms; office records, bank records, management, billing & rental agreements; annual salary of owner and employee; [and] proof of payment regarding use of office space,” and to produce plaintiff’s owner for an examination before trial.

Plaintiff argues that defendant is not entitled to the discovery ordered by the Civil Court. However, inasmuch as plaintiff failed to timely challenge the propriety of defendant’s notice for discovery and inspection (see CPLR 3122 [a]) or timely object to defendant’s “demand for verified written interrogatories” (see CPLR 3133 [a]), plaintiff is obligated to produce the information sought except as to matters which are privileged or palpably improper (see Fausto v City of New York, 17 AD3d 520 [2005]; Marino v County of Nassau, 16 AD3d 628 [2005]; Midborough Acupuncture, P.C. v State Farm Ins. Co., 21 Misc 3d 10 [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d [*2]136[A], 2008 NY Slip Op 51529[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d Dept, 2d & 11th Jud Dists 2006]). While discovery demands which concern matters relating to defenses which a defendant is precluded from raising are considered palpably improper and may not be discoverable, notwithstanding the fact that plaintiff did not specifically object thereto (see Midborough Acupuncture, P.C., 21 Misc 3d 10; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]; A.B. Med. Servs. PLLC, 11 Misc 3d 71), upon a review of the record, we find that the discovery at issue is not palpably improper (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; All Boro Psychological Servs., P.C. v Allstate Ins. Co., 39 Misc 3d 9 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). In addition, defendant is entitled to an examination before trial of plaintiff’s owner (see CPLR 3101 [a]; Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]).

In view of the foregoing, plaintiff’s contention that it is entitled to summary judgment lacks merit because, as the Civil Court noted, plaintiff’s motion is premature (see CPLR 3212 [f]; All Boro Psychological Servs., 39 Misc 3d 9).

Accordingly, the order, insofar as appealed from, is affirmed.

PESCE, P.J., ALIOTTA and SOLOMON, JJ., concur.

ENTER:
Paul Kenny
Chief Clerk
Decision Date: August 11, 2017

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

Held the insurer's demands for tax forms, bank records, management and rental agreements and an examination of the provider's owner were not palpably improper, rendering the provider's summary judgment motion premature.

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

Of the 136 decisions on this question in the Second Department courts and the Court of Appeals, 112 (this one included) are in the same category.

Cited in this decision

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

Midborough Acupuncture, P.C. v State Farm Ins. Co. (2008 NY Slip Op 28291)The insurer established grounds for discovery concerning the provider's possible fraudulent incorporation, including corporate tax information.
Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51529(U)) FollowedThe insurer established entitlement to corporate eligibility discovery, but failed to justify disclosure of the owner's personal tax returns.
A.B. Med. Servs. PLLC v Utica Mut. Ins. Co. (2006 NY Slip Op 26068)A defense of fraudulent corporate licensure is not precluded by an insurer's failure to timely deny no-fault claims.
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).
All Boro Psychological Servs., P.C. v Allstate Ins. Co. (2013 NY Slip Op 23043) FollowedThe insurer established a basis for Mallela discovery, defeating the provider's summary judgment motion.
Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co. (2008 NY Slip Op 52468(U)) FollowedThe insurer established grounds for corporate eligibility discovery, but failed to justify disclosure of the provider owner's personal tax returns.

Cited by

Arthur Ave. Med. Servs., PC v GEICO Ins. Co. (2021 NY Slip Op 21108)An insurer's post-EUO verification requests concerning fraudulent incorporation are subject to judicial review for reasonableness.

Similar decisions

J.K.M. Med. Care, P.C. v USAA Gen. Indem. Co. (2018 NY Slip Op 50818(U))A provider that fails to timely object to discovery demands must respond unless the demands are privileged or palpably improper.
Dana Chiropractic, P.C. v USAA Cas. Ins. Co. (2017 NY Slip Op 50944(U))An order continuing a summary judgment motion pending discovery is not appealable as of right.
All Boro Psychological Services, P.C. v Auto One Ins. Co. (2012 NY Slip Op 50777(U))A provider that misses discovery objection deadlines must respond except as to privileged or palpably improper demands.
Professional Health Imaging, P.C. v State Farm Mut. Auto. Ins. Co. (2016 NY Slip Op 50997(U))The provider failed to show a timely objection to EUO requests and could not challenge their reasonableness in litigation.
RLC Med., P.C. v Allstate Ins. Co. (2010 NY Slip Op 50642(U))The insurer established a need for discovery of facts in the provider's possession concerning alleged fraudulent incorporation.