Medical Polis, P.C. v Progressive Specialty Ins. Co. (2012 NY Slip Op 50342(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Queens County (William A. Viscovich, J.), entered May 10, 2010. The order, insofar as appealed from, granted the branches of defendant’s motion seeking to compel disclosure and thereafter to produce plaintiff’s owner, Nikolai Lagoduke, for an examination before trial, and denied plaintiff’s cross motion for a protective order.

ORDERED that the order, insofar as appealed from, is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from so much of an order as granted the branches of defendant’s motion seeking to compel disclosure and thereafter to produce plaintiff’s owner, Nikolai Lagoduke, for an examination before trial, and denied plaintiff’s cross motion for a protective order. At issue on this appeal is whether defendant’s failure to assert a defense pursuant to State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]) precludes it from seeking discovery related to that defense. We conclude that, based on the record before us, defendant made sufficient allegations of fraudulent incorporation to warrant disclosure.

It is well settled that a party is entitled to full disclosure of all matter that is “material and necessary in the prosecution or defense of an action” (CPLR 3101 [a]). What is “material and necessary” is left to the sound discretion of the court and includes “any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason” (Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968]; Young v Tierney, 271 AD2d 603 [2000]). Where, as here, an insurer requests discovery concerning a Mallela defense, the request should be granted as long as there are sufficient allegations supporting such a defense (see e.g. Kipor Medicine, P.C. v GEICO, 28 Misc 3d 129[A], 2010 NY Slip Op 51247[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Midborough Acupuncture P.C. v State Farm Ins. Co., 13 Misc 3d 58 [App Term, 2d & 11th Jud Dists 2006]; Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90 [App Term, 2d & 11th Jud Dists 2006]). A Mallela defense is nonwaivable and may be asserted at any time notwithstanding the absence of a timely denial (see Midwood Acupuncture, P.C. v State Farm [*2]Auto. Ins. Co., 14 Misc 3d 131[A], 2007 NY Slip Op 50052[U] [App Term, 2d & 11th Jud Dists 2007]).

Here, although defendant never moved to amend its answer to assert a defense based on fraudulent incorporation, it did submit an affidavit containing sufficient allegations of fraudulent incorporation. Defendant included an affidavit from its Senior Special Investigator, who set forth, in detail, plaintiff’s close connection with another medical provider whose owner was convicted of, among other things, fraud and falsifying business records. Since defendant made adequate allegations of fraudulent incorporation, the Civil Court did not abuse its discretion in granting those branches of defendant’s motion seeking to compel disclosure on that issue, and in denying plaintiff’s cross motion for a protective order (see Kipor Medicine, P.C. v GEICO, 28 Misc 3d 129[A], 2010 NY Slip Op 51247[U]).

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

Rios, J.P., and Weston, J., concur.

Golia, J., concurs in a separate memorandum.

Golia, J., concurs in the following memorandum:

I concur for the reasons stated in my concurrence in Lexington Acupuncture, P.C. v General Assur. Co. (___ Misc 3d ___, 2012 NY Slip Op ______ [Appeal No. 2010-165 K C], decided herewith). While there exist certain differing factual elements in these two matters, those facts have no significance here, and consequently play no part in the legal issues in controversy.

Additionally, the failure of the defendant in this matter to assert every affirmative defense asserted in Lexington Acupuncture, P.C. is of no consequence. The inclusion of any one satisfactory affirmative defense would be sufficient. Furthermore, and just as importantly, as stated in my Lexington Acupuncture, P.C. concurrence, a Mallela claim is non-precludable and can be raised at any time (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).
Decision Date: February 21, 2012