Corona Hgts. Med., P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 52185(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Dolores L. Waltrous, J.), entered May 3, 2007. The order, insofar as appealed from as limited by the brief, denied plaintiff’s motion for a protective order and granted defendant’s cross motion to strike the complaint or, in the alternative, to compel discovery, to the extent of directing plaintiff to comply with all outstanding discovery demands and to appear for an examination before trial.

Order, insofar as appealed from, modified by providing that defendant’s cross motion is granted only to the extent of compelling plaintiff to produce the documents requested in the first, eighth through fourteenth, sixteenth and eighteenth numbered paragraphs of defendant’s demand for discovery and inspection within 60 days of the date of the order entered hereon and that, within 30 days after such production, plaintiff shall appear for an examination before trial; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant served plaintiff with combined discovery demands, including a demand for discovery and inspection and a notice of examination before trial (EBT). Subsequently, plaintiff moved, inter alia, for a protective order, and defendant cross-moved to strike the complaint or, in the alternative, to compel plaintiff to appear for an EBT and to produce the documents requested in its demand for discovery and inspection. The court below denied plaintiff’s motion for a [*2]protective order and granted defendant’s cross motion to the extent of directing plaintiff to comply with all outstanding discovery demands and to appear for an EBT. This appeal by plaintiff ensued.

Since plaintiff failed to challenge the propriety of defendant’s demand for discovery and inspection within the time prescribed by CPLR 3122, it is obligated to produce the information sought therein except as to matters which are privileged or palpably improper (see Fausto v County of Nassau, 17 AD3d 520 [2005]; Garcia v Jomber Realty, 264 AD2d 809 [1999]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]; A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d & 11th Jud Dists 2006]). In the absence of any claim of privilege, the only issue for this court’s review is whether defendant’s requests for documents in said demand were palpably improper (see Saratoga Harness Racing v Roemer, 274 AD2d 887 [2000]).

Where a discovery demand concerns matters relating to a defense which a defendant is precluded from raising, it is palpably improper, notwithstanding the fact that the plaintiff did not specifically object thereto (see A.B. Med. Servs. PLLC, 11 Misc 3d 71). As defendant did not establish that it timely denied plaintiff’s claims, to the extent defendant seeks discovery in support of its defense of lack of medical necessity, discovery of such precluded matter is palpably improper (see id.).

In State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]), the Court of Appeals held that an insurer may withhold payment to a medical services provider if the provider is fraudulently incorporated, without regard to whether the medical services were unnecessary or improper. In the instant case, the record reveals that defendant set forth detailed and specific reasons for believing that plaintiff may be ineligible to recover no-fault benefits as a fraudulently incorporated professional service corporation, a defense which is not precluded (see Midborough Acupuncture, P.C. v State Farm Ins. Co., Misc 3d , 2008 NY Slip Op 28291 [App Term, 2d & 11th Jud Dists 2008]). To the extent that defendant seeks production of, inter alia, plaintiff’s certificate of incorporation, management documents, and medical licenses of plaintiff’s shareholders, such discovery is material and necessary to defendant’s contention that plaintiff is ineligible for reimbursement of no-fault benefits (see CPLR 3101 [a]; One Beacon Ins. Group, LLC v Midland Med. Care, P.C., AD3d [2d Dept, Sept. 9, 2008]; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]). Accordingly, defendant is entitled to production of the documents sought in paragraphs 1, 8 through 14, 16 and 18 of defendant’s demand for discovery and inspection.

With respect to that portion of the order which directed plaintiff to appear for an EBT, plaintiff has failed to assert any viable reason for its contention that said EBT should not be held. Since defendant’s defense to this action is based upon plaintiff’s alleged ineligibility to recover reimbursement of assigned no-fault benefits (see Mallela, 4 NY3d 313), it is entitled to such EBT (see CPLR 3101 [a]).

Pesce, P.J., Weston Patterson and Rios, JJ., concur.
Decision Date: November 05, 2008