July 7, 2011

Matter of Countrywide Ins. Co. v DHD Med., P.C. (2011 NY Slip Op 05864)

Headnote

The court considered whether a medical services provider, DHD Medical, P.C., was fraudulently incorporated and therefore ineligible for reimbursement of no-fault insurance benefits, and precluded from demanding arbitration. The main issue was whether the defense of fraudulent incorporation was for the arbitrator and not the courts. The court held that the defense of fraudulent incorporation is for the arbitrator and not the courts, and has been the subject of numerous arbitration proceedings. Therefore, the court affirmed the order denying the petition to stay arbitration of claims for no-fault insurance benefits and granting respondent's cross motion to dismiss the proceeding.

Reported in New York Official Reports at Matter of Countrywide Ins. Co. v DHD Med., P.C. (2011 NY Slip Op 05864)

Matter of Countrywide Ins. Co. v DHD Med., P.C.

2011 NY Slip Op 05864 [86 AD3d 431]

July 7, 2011

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, August 31, 2011

In the Matter of Countrywide Insurance Company, Appellant,
v
DHD Medical, P.C., Respondent.

—[*1] Thomas Torto, New York, for appellant.

Ruskin Moscou Faltischek, P.C., Uniondale (Matthew F. Didora of counsel), for respondent.

Order, Supreme Court, New York County (Marylin G. Diamond, J.), entered November 30, 2010, which denied the petition to stay arbitration of claims for no-fault insurance benefits and granted respondent’s cross motion to dismiss the proceeding, unanimously affirmed, with costs.

Petitioner argues that respondent is a fraudulently incorporated medical services provider and therefore is not only ineligible for reimbursement of no-fault payments (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) but is also precluded from demanding arbitration pursuant to Insurance Law § 5106 (b) (and the no-fault policy issued by petitioner). Contrary to this argument, the defense of fraudulent incorporation is “for the arbitrator and not for the courts” (see Matter of Nassau Ins. Co. v McMorris, 41 NY2d 701, 701 [1977]; Matter of MVAIC v Interboro Med. Care & Diagnostic PC, 73 AD3d 667 [2010]). Indeed, it has been the subject of numerous arbitration proceedings (see e.g. State Farm Mut. Auto. Ins. Co. v Kissena Med. Imaging, P.C., 25 Misc 3d 1214[A], 2009 NY Slip Op 52094[U] [2009]; Uptodate Med. Serv., P.C. v State Farm Mut. Auto. Ins. Co., 22 Misc 3d 128[A], 2009 NY Slip Op 50046[U], *2 [2009]).

We have considered plaintiff’s remaining contentions and find them unavailing. Concur—Andrias, J.P., Sweeny, Renwick, Freedman and Manzanet-Daniels, JJ.