Ocean Diagnostic Imaging P.C. v New York Cent. Mut. Fire Ins. Co. (2006 NY Slip Op 51424(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an amended order of the Civil Court of the City of New York, Kings County (Alice Fisher Rubin, J.), entered September 8, 2005. The order, insofar as appealed from as limited by the brief, denied plaintiff’s motion for summary judgment.

Order, insofar as appealed from, affirmed without costs.

On the court’s own motion, counsel for the respective parties are directed to show cause why an order should or should not be made and entered imposing such sanctions and costs, if any, against Marylou A. Paolucci, counsel for the plaintiff, pursuant to Rules of the Chief Administrator (22 NYCRR) § 130-1.1 (c) as this court may deem appropriate, by appearing before this court, at 141 Livingston Street, 15th Floor, in the County of Kings, on September 5, 2006, at 2:00 P.M., for a hearing at which Ms. Paolucci is directed to personally appear. The Acting Chief Clerk of the court, or her designee, is directed to serve counsel for the respective parties with a copy of this decision and the order entered hereon by regular mail.

In this action to recover first-party no-fault benefits for medical services rendered to its assignor, plaintiff health care provider established a prima facie entitlement to summary judgment by proof that it submitted the claim forms, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue
(see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). Defendant failed to pay or deny the claim within the 30-day prescribed period (11 NYCRR 65-3.8 [c]). As a result, defendant was precluded from raising [*2]most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). However, defendant was not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite the untimely denial of the claim (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]).

The affidavit submitted by defendant’s special investigator was sufficient to demonstrate that defendant’s denial was based upon a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; see also Amaze Med. Supply Inc. v AIU Ins.
Co., 5 Misc 3d 139[A], 2004 NY Slip Op 51629[U] [App Term, 9th & 10th Jud Dists]). It set forth, inter alia, that the insured vehicle, a 1990 Toyota Camry, was involved in five accidents within seven months under two different insurance policies written by defendant. In the subject accident, the driver of the vehicle was Pedro Fernandez, the husband of the insured, Victoria Fernandez. In a subsequent accident involving the same 1990 Toyota, the driver was again Pedro Fernandez and the adverse driver was Gilberto Rivas. Thereafter, ownership of the 1990 Toyota was transferred to Gilberto Rivas and he too was involved in an automobile accident while operating this vehicle. The Fernandezes and Mr. Rivas claim not to know each other. In view of the foregoing, as well as additional facts set forth in said affidavit, an issue of fact exists as to whether there was a lack of coverage. Consequently, plaintiff’s motion for summary judgment was properly denied.

We are aware that plaintiff’s counsel, Marylou A. Paolucci, was substituted as counsel for plaintiff after plaintiff’s appellate briefs were served by outgoing counsel. Nevertheless, as noted above, despite being faced with facts which clearly support a founded belief of fraud on the part of plaintiff’s assignor, Ms. Paolucci continued in the prosecution of the appeal from so much of the order as denied plaintiff’s motion for summary judgment.

In Matter of Wecker v D’Ambrosio (6 AD3d 452, 453 [2004]), the Appellate Division, Second Department, stated the following:

“Conduct during a litigation, including on an appeal, is frivolous and subject to sanction and/or the award of costs when it is completely without merit in law or fact and cannot be supported by a reasonable argument for the extension, modification, or reversal of existing law; it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another, or it asserts material factual statements that are false (see 22 NYCRR 130-1.1). At the least, it must have a good faith basis (see Kamruddin v Desmond, 293 AD2d 714 [2002]; see also 22 NYCRR 130.1.1a [b]; Matter of Laing v Laing, 261 AD2d 622 [1999]; Levy v Carol Mgt. Corp., 260 AD2d 27 [1999]).”

Accordingly, counsel is directed to appear before this court for a hearing to address whether the prosecution of so much of the appeal as sought summary judgment in favor of plaintiff constituted “conduct [which] was continued when its lack of [*3]
legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel …” (Rules of the Chief Administrator [22 NYCRR] § 130-1.1[c]; see also Matter of Wecker, 6 AD3d 452, supra).

Pesce, P.J., and Belen, J., concur.

Rios, J., taking no part.
Decision Date: July 14, 2006