March 19, 2008

Northern Med. P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 50753(U))


The court considered the plaintiff’s claim to recover no-fault benefits for medical services rendered to the insured, Jose Rodriguez, after a motor vehicle accident, which the defendant insurance company denied coverage for, alleging it was a staged, intentional collision. The main issue was whether the accident was a covered event under no-fault insurance, and the holding was that the defendant failed to meet its burden of proof in rebutting the plaintiff’s prima facie case of providing medical services. The court also emphasized that under the Fair Price decision, the extent to which the medical services billed for were actually rendered was not the ultimate issue for the court to decide, and regretfully awarded judgment to the plaintiff based on the lack of coverage defense raised by the defendant. The court expressed regret in having to make an award in the event there was provider fraud, but was constrained by higher authority.

Reported in New York Official Reports at Northern Med. P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 50753(U))

Northern Med. P.C. v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 50753(U)) [*1]
Northern Med. P.C. v State Farm Mut. Auto. Ins. Co.
2008 NY Slip Op 50753(U) [19 Misc 3d 1117(A)]
Decided on March 19, 2008
Civil Court Of The City Of New York, Queens County
Viscovich, 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This opinion is uncorrected and will not be published in the printed Official Reports.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 March 19, 2008

Civil Court of the City of New York, Queens County

Northern Medical P.C., a/a/o Jose Rodriguez, Plaintiff,


State Farm Mutual Automobile Insurance Company, Defendant.

37719 QCV2007

Attorneys for plaintiff:

Baker, Sanders, Barshay, Grossman, Fass,

Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

( By: Todd Muhlstock, Esq.)

Attorneys for defendant:

Nicolini, Paradise, Ferretti & Sabella

114 Old Country Road, Ste. 500

Mineola, NY 11501

( By: Mitchell Lustig, Esq.)

William A. Viscovich, J.

Plaintiff health care provider brought the within No-Fault action against defendant insurer to recover for services rendered on August 15, 2002 to the insured, Jose Rodriguez, as assignor, relating to injuries allegedly arising out of a motor vehicle accident involving a vehicle owned and operated by Rodriguez on July 31, 2002. The parties stipulated as to the timely and proper submission by plaintiff to defendant of the underlying NF-3 proof of claim, that said claim is unpaid and as to the assignment of benefits from Rodriguez to plaintiff. Hence, plaintiff’s prima facie case was proven and the plaintiff rested.While acknowledging that there was no timely denial in this matter, defendant asserted the affirmative defense of lack of coverage, premised on its contention that the alleged loss did not arise out of a covered accident. Instead, the defendant premises its defense upon the argument that the accident in question was a [*2]staged, intentional collision. A staged, deliberate collision is not a covered accident under no-fault (see Liberty Mutual Insurance Company -v- Goddard, 29 AD 3rd 698 [ 2nd Dept. 2006]; Eagle Insurance Company -v- Davis, 22 AD 3rd 846 [ 2nd Dept. 2005]; State Farm Mutual Automobile Insurance Company -v- Laguerre, 305 AD 2nd 490 [ 2nd Dept. 2003]). Moreover, the Appellate Division, Second Department has held that the basic issue in such case is whether the loss arose from a deliberate occurrence outside the scope of coverage. (GEICO -v- Shaulskaya, 302 AD 2nd 522 [ 2nd Dept. 2003]; see also Fair Price Medical Supply v. Travelers Indemnity Company, 42 AD3rd 277 [ 2nd Dept. 2007]. As such, defendant would not be bound by the 30 day rule for issuance of denials normally mandated by Insurance Law § 5106(a) and the applicable No-fault regulations (Central General Hospital -v- Chubb Group of Insurance Companies, 90 NY 2nd 195 [1997]).

In support of its affirmative defense, the defendant called as witnesses both the assignor, Jose Rodriguez, and an investigator in its Special Investigations Unit.

The investigator testified that he had only reviewed this file for the first time a few weeks before the trial and, in fact, was not totally prepared to testify. In sum and substance, his investigation consisted of running a prior claim history on Mr. Rodriguez, but he could not recall the amount of dollars that Mr. Rodriguez had allegedly made claims for in the past. In addition, he testified that he himself had not made the final determination as to the possibility of fraud in this matter but instead a “committee” organized by the defendant had determined that it was not a meritorious claim.

Ironically, it was Mr. Rodriguez’s testimony itself that had the potential to prove that the accident in question had been staged. He not only testified as to the accident itself, but also as to both a previous and subsequent accident in which he was involved, occurring respectively on September 18, 2000 and August 5, 2002.

When defense counsel attempted to question Rodriguez as to the specifics of the treatment received from plaintiff provider following the underlying alleged accident of July 31, 2002, plaintiff objected, citing Fair Price, supra, arguing that evidence of non-treatment could not be used to prove a staged accident. This court reserved its decision on the objection and permitted Mr. Rodriguez to answer this line of questioning subject to a later ruling on the issue, which is the primary subject of this decision, along with other commentary.

Through the use of an official Spanish Court Interpreter, Mr. Rodriguez testified as to the accident, how it happened, where it happened and what he did thereafter, including seeking out medical attention. Perhaps because of the difficulties of translation or because of nervousness, the witness often appeared uncertain and confused about, or unable to recall, the exact date and place of his visits to the plaintiff. Mr. Rodriguez was clear about one thing, however- he never saw a nurse or doctor and never received any medical treatment whatsoever. All he could recall was going to a doctor’s office, having the staff fill out some forms based upon an accident report that he had provided to them and then leaving because he did not think the doctor would help him since he had no money. Mr. Rodriguez was adamant that he received no care or treatment and that all he did was go home and take some Advil.

As to the substance of the plaintiff’s objection to Mr. Rodriguez’s testimony regarding a lack of treatment, the court overrules plaintiff’s objection and allows the [*3]testimony as to non-treatment to be used by the defense. The Fair Price decision, according to the plaintiff, stands for the proposition that in a case where the fraud alleged by the defendant insurer pertains to the lack of services billed for (or more specifically in the Fair Price case- the failure to provide medical supplies billed for), such fraud is “not related to the existence of coverage in the first instance” ( 42 AD 3rd, at 284) and, thus, is not an affirmative Chubb defense.

This court, however, has no intention whatsoever of determining if plaintiff is entitled to recover no-fault benefits based on the extent to which the claimed medical services were actually provided. The court agrees with the plaintiff and recognizes that, pursuant to Fair Price, the extent to which the medical services billed for in this action were actually rendered is not the ultimate issue for the court to decide – to make it so would constitute a total disregard for the unequivocal appellate law that controls this issue. Moreover, as both parties have stipulated to plaintiff’s prima facie case, plaintiff has been deemed to have met its burden as to the medical necessity of the services rendered- which burden defendant has elected neither to rebut by way of any requisite timely denial nor by the specific affirmative defense asserted. As such, this court is bound by same, notwithstanding the assignor’s testimony which is extremely credible as to the possibility that the claimed services were never provided.

Unfortunately, the only issue which this court may address under Fair Price is whether there was a lack of coverage as contended by defendant on the basis that the alleged July 31, 2002 accident was ” staged”. Any testimony by Rodriguez regarding his treatment or lack thereof is being used by the court solely as evidence as to whether the loss in question resulted from an actual “covered” accident or arose from a staged collision. Any evidence that Mr. Rodriguez was not treated as claimed by the plaintiff provider or was treated to a lesser extent than claimed, has relevance only to the extent that common sense dictates that it is less likely that the participants in such a “staged” collision would actually receive treatment than in a true accident. It also follows that the alleged victim of a “staged” accident would be less likely to actually accept the risk of real injury arising from an unnecessary course of treatment (Keep in mind that this court does concede that a real injury may arise from a staged accident, but does not believe this to be the case herein).

Given the weakness of the SIU investigator’s testimony, however, the testimony of Mr. Rodriguez as to a lack of treatment alone is not enough for defendant to meet its burden in rebutting plaintiff’s prima facie case. As one court has noted, ” [W]hile some intentional collisions are the products of insurance fraud schemes, others are not. In all such cases, it is the deliberate, non-accidental character of the incident that makes it ineligible for No-Fault coverage.”(V.S. Medical Services, P.C. -v- Allstate Insurance Company,11 Misc 3rd 334, at 338 [ Civil Court, City of New York, Kings Co. 2006]; see, also Universal Open MRI of the Bronx ,P.C. -v- State Farm Mutual Automobile Insurance, 12 Misc 3rd 1151(A) [ Civil Court, City of New York, Kings Co. 2006]). Therefore, defendant’s burden of proof is a preponderance of the credible evidence, which has not been established.

What distresses the court is that while the defendant was not able to meet its burden of proof as to a “staged accident”, there was credible evidence of provider fraud. While a full trial on that issue may reveal that there was no fraud and that services were [*4]in fact rendered. the holding in Fair Price assures that neither the court nor the defendant are able to delve further into that issue. The end result is that this court is put in the potential position of having to make an award to a possibly unethical provider.

This is exactly the concern expressed by Justice Joseph Golia in his dissent in the Appellate Term rendering of Fair Price Medical Supply Corp. a/a/o Nivelo v. Travelers Indemnity Company, 9 Misc 3rd 76 [ App. Term, 2nd & 11th Jud. Dists. 2005], in which the majority decision was upheld by the Appellate Division in the Fair Price decision that controls herein. Like Justice Golia, this court is “under the firm and unshakable belief that neither the Legislature nor the Insurance Department ever intended for an insurance carrier, or anyone else for that matter, to be forced to pay for medical equipment [or in this case, medical treatment] that was never provided “(Fair Price, supra, dissent at 82). But, alas, that is the potential outcome all but acknowledged by both the Appellate Term and Appellate Division Fair Price holdings.

As such, this court, as constrained by higher authority, regretfully awards judgment to the plaintiff in the sum of $ 899.43, plus statutory interest, statutory attorneys fees, costs and disbursements.

The foregoing constitutes the decision and order of this court.

_____March 19, 2008___________________________________DateWilliam A. Viscovich

Judge, Civil Court