June 6, 2012
Island Chiropractic Testing, P.C. v Nationwide Ins. Co. (2012 NY Slip Op 51001(U))
https://www.beynensonlaw.com/case-law/island-chiropractic-testing-p-c-v-nationwide-ins-co-2012-ny-slip-op51001u/
- Judge
- Hackeling, J.
- Decided
- June 6, 2012
- Citation
- 2012 NY Slip Op 51001(U) · 35 Misc 3d 1235(A)
- Posture
- Summary judgment
- Outcome
- Provider prevailed
- Later treatment
- Followed in 3 later decisions (see Cited by)
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.
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) [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| This opinion is uncorrected and will not be published in the printed Official Reports. |
District Court of Suffolk County, Third District
Island Chiropractic
Testing, P.C. A/A/O ELMER LAINEZ
against 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.
_______________________
J.D.C.
Dated: _________________
Legal questions (3)
Questions 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.
Did a party’s evidence establish that it mailed a no-fault claim, denial, verification request or examination notice?
This decision: The insurer's proof did not establish mailing of its denial, verification request or IME/EUO notice
Held the insurer's affidavits insufficient to prove mailing of its verification and follow-up requests: one was improperly notarized, and none described how letters were addressed, safeguarded and stamped or showed personal knowledge of mailing.
Of the 1,400 decisions on this question in the Second Department courts and the Court of Appeals, 260 (this one included) are in the same category.
Did unanswered verification requests make the provider’s claim premature, or justify denying it for nonresponse?
This decision: Defense rejected because the insurer's requests or proof were deficient
Rejected the prematurity defense because the insurer did not prove it timely mailed its requests, the Mallela document demands could not toll, and the provider's objection stating it lacked the documents was a sufficient response.
Of the 385 decisions on this question in the Second Department courts and the Court of Appeals, 82 (this one included) are in the same category.
May the insurer raise and investigate a Mallela (fraudulent incorporation) defense, or is it precluded, waived or denied discovery?
This decision: Insurer may not pursue or investigate the Mallela defense here (rules on the question, but another ground decided the case)
Held that demanding share-transfer and lease documents through claim verification was improper and did not toll, as the insurer showed no good faith basis or good cause; such material belongs in post-joinder discovery or a declaratory action.
Of the 136 decisions on this question in the Second Department courts and the Court of Appeals, 24 (this one included) are in the same category.
Cited in this decision
A label shows how this decision treated the case it cites.
- St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co. (2008 NY Slip Op 04072) FollowedThe insurer raised factual issues concerning a proper timely denial and its entitlement to deny the hospital's claim.
- Concourse Chiropractic, PLLC v State Farm Mut. Ins. Co. (2012 NY Slip Op 50676(U)) FollowedAn insurer may not use an EUO request to demand corporate records concerning a Mallela defense as verification of a claim.
- Dynamic Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co. (2010 NY Slip Op 20285) FollowedAn insurer may not obtain summary judgment for EUO nonappearance based on a demand for advance production of corporate and financial records.
Cited by
A label shows how the later decision treated this one.
- Back to Back Chiropractor, P.C. v State Farm Mut. Auto. Ins. Co. (2012 NY Slip Op 51088(U)) FollowedThe provider's failure to object to improper verification demands left the payment period tolled and its claim premature.
- Arthur Ave. Med. Servs., PC v GEICO Ins. Co. (2021 NY Slip Op 21108) FollowedAn insurer's post-EUO verification requests concerning fraudulent incorporation are subject to judicial review for reasonableness.
- Burke Physical Therapy, PC v State Farm Mut. Auto. Ins. Co. (2021 NY Slip Op 50624(U)) FollowedThe provider's detailed verification objections left factual issues about compliance with the insurer's requests.
Similar decisions
- Montgomery Med., P.C. v State Farm Ins. Co. (2006 NY Slip Op 51116(U))The insurer's evidence raised a factual issue of fraudulent incorporation despite denials issued 53 days after the provider's EUO. Under 11 NYCRR 65-3.8 (a) (1), verification was received when the EUO occurred; the late denials precluded medical necessity and concurrent-care defenses.
- Cambridge Med., P.C. v Nationwide Prop. & Cas. Ins. Co. (2008 NY Slip Op 50629(U))An insurer must show good cause for corporate-eligibility verification, while litigation discovery requires materiality and necessity.
- Zwanger & Pesiri Radiology Group, LLP v Mapfre Ins. Co. (2017 NY Slip Op 50981(U))The insurer failed to establish proper mailing of verification requests and its denial, or that requested verification remained outstanding.
- A.B. Med. Servs. PLLC v GEICO Gen. Ins. Co. (2008 NY Slip Op 52641(U))The provider's conditions for attending an EUO constituted refusal to supply verification, leaving six claims premature.
- Lenox Hill Radiology v Global Liberty Ins. Co. of N.Y. (2017 NY Slip Op 50978(U))The insurer failed to prove mailing or a reasonable basis for verification demands after the provider supplied available MRI documentation.