June 6, 2012

Island Chiropractic Testing, P.C. v Nationwide Ins. Co. (2012 NY Slip Op 51001(U))


The court considered the defendant's application to dismiss the case as premature due to the plaintiff's failure to respond to verification requests, as well as the plaintiff's cross-motion for summary judgment. The main issues decided included whether the defendant's verification requests were timely sent and whether they sought improper and impermissible information. The court held that the defendant's affidavits did not adequately demonstrate timely mailing of verification requests, and that the requests for information on sale of shares, transfer of ownership, and lease agreements were improper and abusive. As a result, the plaintiff's cross-motion for summary judgment was granted, and the defendant was ordered to submit judgment on twenty days' notice.

Reported in New York Official Reports at Island Chiropractic Testing, P.C. v Nationwide Ins. Co. (2012 NY Slip Op 51001(U))

Island Chiropractic Testing, P.C. v Nationwide Ins. Co. (2012 NY Slip Op 51001(U)) [*1]
Island Chiropractic Testing, P.C. v Nationwide Ins. Co.
2012 NY Slip Op 51001(U) [35 Misc 3d 1235(A)]
Decided on June 6, 2012
District Court Of Suffolk County, Third District
Hackeling, 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This opinion is uncorrected and will not be published in the printed Official Reports.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 June 6, 2012

District Court of Suffolk County, Third District

Island Chiropractic Testing, P.C. A/A/O ELMER LAINEZ


Nationwide Insurance Company

HUC 2715-11

C. Stephen Hackeling, J.

The defendant’s application for an order dismissing the above captioned action as premature (upon the grounds that plaintiff did not respond to defendant’s verification and follow-up verification requests), is denied. The plaintiff’s cross-motion for summary judgment is granted. The defendant’s affidavits have not adequately demonstrated that defendant timely sent verification requests and follow-up verification requests to the plaintiff. The Court notes that the inadmissable affidavit of Eduardo Morales Carr (improperly notarized) who is positioned in Syracuse, states that he “generated and issued” such requests on certain dates. However, further affidavits indicate that such requests are electronically sent to the centralized administrative team in Harrisburg, Pennsylvania. An insufficient explanation is offered how the letters generated and properly addressed, what procedures are in place to safeguard that all generated requests are actually mailed and to the proper addresses. Further, the affidavit of James R. Snyder, Jr. attempts to describe what occurs in the mailroom, and fails to address postage issues. In sum, the affidavit of Eduardo Morales Carr does not establish by personal knowledge, his mailing of timely requests on dates certain, nor do the affidavits of the defendant, taken as a whole, contain [*2]a sufficiently detailed description of the standard office mailing procedures which give rise to the presumption of mailing. The submitted proof fails to meet even the relaxed standard of proof of mailing established by the Second Department Appellate Division. See, St. Vincents Hospital of Richmond v. Geico, 50 AD3d 1123 (N.Y.AD2d Dept. 2008).

Mallela Discovery As Part Of A Verification Of Claim

Even if defendant’s affidavits could be corrected or evidence introduced at trial to demonstrate that its verification letters were timely mailed; the defendant’s verification requests, seeking inter alia, copies of “sale of shares or transfer of ownership (and) lease agreements” are impermissible and improper requests, and cannot support the finding of a denial “toll” which would permit an award of summary judgment to defendant. Inasmuch as the defense of “fraudulent incorporation” is not subject to the preclusion rule, the defendant may raise this defense in its answer, even if not asserted in the claim denial. The defendant may request relevant written documents pertaining to same as part of post joinder written discovery, or may commence a declaratory judgment action seeking to declare the medical provider ineligible to recover benefits. See, Lexington Acupuncture, P.C. v. General Assurance Co., 2012 WL661685 (NY 2nd Dept. App.Term 11th & 13th Dists. 2012), citing to Midwood Acupuncture P.C. v. State Farm Ins. Co., 14 Misc 3d 131(A) (2d Dept. App. Term 11th & 13th Dists. 2007). Requesting this type of information by way of claim verification is abusive of the no-fault verification process. See, Concourse Chiropractic, PLLC v. State Farm Mut. Ins. Co., 2012 NY Slip Op 50676 (U) 35 Misc 3d 1213 (A) (Nassau Co.Dist. Ct, 2012);involving document discovery as part of an “EUO” demand. Tarnoff Chiropractic, PC v. Geico Ins. Co., 35 Misc 3d 1213(A) (Nassau Co. Dist. Ct. 2012); Dynamic Med. Imaging, PC v. State Farm Mut. Auto Ins. Co., 29 Misc 3d 278 (Nassau Co. Dist. Ct. 2010). It is also contrary to the stated policy of the no-fault legislation which is “to insure prompt payment of medical claims for medical treatment provided to people injured in automobile accidents, regardless of fault”. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 566 (NY 2008).

The affidavit of Eduardo Morales Carr, the claims specialist who decided to seek the additional verification in question, provides no good faith basis for seeking corporate status documents. Additionally, the affidavit of Linda Manning does not establish that the defendant had “good cause” to seek fraudulent incorporation documentation at the time the verification requests were generated. Permitting an insurer to obtain written documents such as tax returns, incorporation agreements or leases regarding a potential fraudulent incorporation “Malella” defense as part of the verification process defeats the stated policy and purpose of the no-fault law and carries with it the potential for abuse. See, State Farm Mutual Ins. Co. v. Malella, 4 NY3d 320 (NY 2003) which establishes the parameters of challenging a no-fault claim premised [*3]upon violations of NY Bus. Corp. Law Secs. 1507 and 1508 and NY Educ. Law Sec 6507 (4)(c) and NYCRR 65-3.16 (a)(12). The defendant should not be able to defeat no-fault claims by making onerous and improper non claim related document demands by way of verification.

The Court concurs with its sister Nassau County District Court determinations that “verification” demands as defined by 11NYCRR Sec. 65-3.5(c) are limited to “verifying the claim”. Concourse Chiropractic v. State Farm Ins. Co. cite supra., Judge Hirsch in the Concourse and Dynamic Med. Imaging decisions determined that couching Malella defense discovery in the form of an examination under oath is insufficient to invoke the “verification toll” which would require dismissal of the insurer complaint as premature. Extending this reasoning, Mallela discovery is also inappropriate, even in the absence of an EUO demand, or even if it only involves document production.

Plaintiff’s cross-motion for summary judgment is granted for the amount demanded in the complaint. It is undisputed that defendant received plaintiff’s claims (see affirmation of Frank Marotta, Esq.; exhibits affixed to defendant’s motion papers, affidavit of Eduardo Morales Carr) and has not issued a denial. The verification requests herein did not toll defendant’s 30 day time to deny or pay the claims, as the plaintiff timely responded to the defendant’s request objecting to the Malella discovery request and advising that it was not in possession of said documentation. Such a response meets the requirements under the Insurance Regulations. See 11 N.Y.C.R.R. Sec. 65.15, so as to run the 30 day claim pay/deny time period.

Submit judgment on twenty (20) days notice.



Dated: _________________