February 18, 2014

Professional Health Imaging, P.C. v Old Republic Ins. Co. (2014 NY Slip Op 50200(U))


The court considered the facts surrounding a federal court's dismissal of a personal injury claim by the plaintiff's assignor, Barbara Harvey, against Ryder Truck Rental, Inc. Defendant, Old Republic Insurance Company, argued that the federal court's ruling collaterally estopped the plaintiff from seeking no-fault benefits for services provided to Ms. Harvey after the accident. However, the court noted that the federal court never ruled definitively on whether the Ryder truck was involved in the accident, and the decision granted summary judgment to Ryder based on a lack of evidence. The court also considered previous appellate term decisions regarding collateral estoppel claims by no-fault insurers in cases where the provider had not been given an opportunity to be heard. The holding of the case was that plaintiff was not collaterally estopped from pursuing its independent no-fault claim against the defendant insurer, and defendant's motion was denied.

Reported in New York Official Reports at Professional Health Imaging, P.C. v Old Republic Ins. Co. (2014 NY Slip Op 50200(U))

Professional Health Imaging, P.C. v Old Republic Ins. Co. (2014 NY Slip Op 50200(U)) [*1]
Professional Health Imaging, P.C. v Old Republic Ins. Co.
2014 NY Slip Op 50200(U) [42 Misc 3d 1226(A)]
Decided on February 18, 2014
District Court Of Nassau County, First District
Ciaffa, 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This opinion is uncorrected and will not be published in the printed Official Reports.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 February 18, 2014

District Court of Nassau County, First District

Professional Health Imaging, P.C. a/a/o BARBARA HARVEY, Plaintiff(s),


Old Republic Insurance Company, Defendant(s).


Law Offices of Gabriel & Shapiro, LLC, Attorneys for Plaintiff, 3361 Park Avenue, Suite 1000, Wantagh, New York,11793, 516-308-7373; Wilson, Bave, Conboy, Cozza & Couzens, P.C, Two William Street, White Plains, New York, 10601, 941-686-9010

Michael A. Ciaffa, J.

The following papers have been considered by the Court

on this motion: submitted January 30, 2014

_________________________________________________________ _______________

Papers Numbered

_____________________________________________________________ ___________

Notice of Motion, Affirmation & Exhibits Annexed………………………1 – 2

Affirmation in Opposition…………………………………………………………..3

Reply Affirmation……………………………………………………………………..4

In this action for no-fault benefits, defendant moves for an order dismissing plaintiff’s complaint, or granting defendant summary judgment, based upon a ruling by a federal judge dismissing a related personal injury claim by plaintiff’s assignor. Conflicting appellate term decisions complicate this Court’s resolution of the motion.

According to proof submitted with defendant’s motion, plaintiff’s assignor, Barbara Harvey, alleged in a federal court personal injury action that a vehicle owned by Ryder Truck Rental, Inc. (“Ryder”) ran over her left leg on January 1, 2011. Ryder moved for summary judgment on the ground that Ms. Harvey “cannot establish with any admissible evidence that [Ryder] owned the vehicle involved in [Ms. Harvey’s] accident.”Magistrate Judge Gold granted Ryder’s motion and dismissed the action. In so ruling, he noted the existence of a police report containing hearsay evidence linking the Ryder truck to the accident. The police report identified a woman who was able to provide the licence plate number of the Ryder truck. However, that woman apparently obtained her information from an unidentified male witness. [*2]

Ryder’s federal court motion included an affidavit from the vehicle’s lessee, claiming that the truck was parked and locked outside the lessee’s business throughout the date of the accident. In the face of such proof, and in the absence of submission of contrary “admissible evidence” raising “a genuine issue of material fact,” Ms. Harvey’s allegations were deemed “insufficient” to defeat Ryder’s Rule 56 motion. Harvey v John Doe and Ryder Truck Rental, Inc., 11-CV-5185, Memorandum & Order dated August 12, 2012 (EDNY).

The defendant in this no-fault case, Old Republic Insurance Company (“Old Republic”), insured Ryder respecting no-fault claims. It maintains that the federal court’s ruling collaterally estops plaintiff from seeking no-fault benefits for services provided to Ms. Harvey after the accident. Its argument proceeds on the premise that the federal court “has already ruled as a matter of law that the subject Ryder truck was not involved in the alleged January 1, 2011 automobile accident.”

Contrary to defendant’s contention, the federal court never ruled that the subject Ryder truck “was not involved” in Ms. Harvey’s accident. Rather, in a narrowly drawn decision applying federal procedural law, the court concluded that plaintiff lacked sufficient “admissible evidence” to rebut allegations made in Ryder’s Rule 56 motion. Consequently, without definitively determining whether Ms. Harvey had been struck by the Ryder truck, the court summarily dismissed her personal injury claim against Ryder under Fed.R.Civ.P. 56(a).

Nevertheless, the federal court’s decision granting summary judgment to Ryder constitutes a determination on the merits of Ms. Harvey’s claim. See Siegel, NY Practice, § 287. Merits-based summary judgment determinations, like the decision made in the federal court case, will often collaterally estop a party from pursuing related claims made in a subsequent lawsuit “based on the same foundation facts.” See, e.g. Eidelberg v. Zellermayer, 5 AD2d 658, 663 (1st Dept 1958), affd. 6 NY2d 815 (1959).

Upon closer examination, defendant’s collateral estoppel motion cannot be decided easily under these general formulations. As Judge Katherine Levine reiterated in Psychology YM, PC v Travelers Property Cas. Ins. Co., 2011 NY Slip Op 51744 (Civ Ct Kings Co.), “[t]he equitable doctrine of collateral estoppel is grounded in the facts and realities of particular litigation, rather than rigid rules.” Id., quoting Buechel v Bain, 97 NY2d 295, 303 (2001).

Psychology YM, like this case, involved a provider who had taken a no-fault assignment from a woman who was allegedly injured in an auto accident. The defendant insurer, Travelers, moved for summary judgment on grounds of collateral estoppel, based upon an earlier ruling in a trial between a different provider and Travelers. In the other action, the trial judge granted a directed verdict to defendant based upon witness testimony which established, to the trial judge’s satisfaction, that the claimant’s injuries did not arise as a result of a motor vehicle accident. Notwithstanding that verdict, Judge Levine concluded that the prior finding did not preclude plaintiff from taking its no-fault claim to trial. After expressing “grave doubts” whether any privity exists between the medical provider plaintiffs in the two actions, she noted that “the instant plaintiff had no [*3]opportunity, much less a full and fair opportunity, to appear and defend itself” in the other action. Judge Levine accordingly concluded that the plaintiff “should not be deprived of its right to litigate all issues in the instant matter, including mounting a vigorous defense to defendant’s contention that the assignee was not involved in a covered accident.”

The facts at bar are somewhat distinguishable. In Psychology YM, the two actions involved different providers who were each successors to different assigned no-fault claims from their common assignor. Here, the prior action at issue was brought by plaintiff’s assignor, herself. Nevertheless, Judge Levine’s decision sets forth a sound conceptual framework for analyzing defendant’s collateral estoppel claim, under well settled Court of Appeals precedents.

As a starting point, the Court’s decision in Psychology YM observes that collateral estoppel generally precludes the relitigation of an issue which was “actually and necessarily previously decided in a prior proceeding” against “those in privity” with a party, “regardless of whether the tribunals or causes of action are the same.” Id. (citations omitted). However, under applicable Court of Appeals precedent, “[c]ollateral estoppel is an elastic doctrine’ and the fundamental inquiry’ must be whether relitigation should be permitted in a particular case in light of what are often competing policy considerations, including fairness to the parties and the conservation of resources.” Id., quoting Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 152 (1988). Toward that end, “a court must analyze whether the party sought to be bound and the party against whom the litigated issue was decided have a relationship that would justify preclusion, and whether preclusion, with its severe consequences, would be fair under the particular circumstances. Doubts should be resolved against imposing preclusion to ensure that the party to be bound can be considered to have had a full and fair opportunity to litigate.” Id. quoting Buechel v Bain, supra, 97 NY2d at 304-5.

Furthermore, in order for collateral estoppel to apply in the context of an assignor-assignee relationship, the proponent of collateral estoppel must demonstrate that privity “must have arisen after the event out of which the estoppel arises.” Id., quoting Gramatan Home Investors Corp v Lopez, 46 NY2d 481, 486 (1979)(“Gramatan“). Under this formulation of the Court’s “privity” doctrine, where an assignee’s succession to the rights of its assignor takes place “prior to the institution of suit against the assignor,” the assignee will not be bound by a judgment rendered in the other lawsuit. Id., quoting Gramatan.

Both before and after the decision in Psychology YM, appellate courts have applied a similar analytical framework to collateral estoppel claims by no-fault insurers. In cases where no-fault benefits are assigned before the commencement of litigation involving the health provider’s assignor, and no attempt is made to name or serve the provider in the other litigation, appellate courts in both the First and Second Department have squarely rejected arguments that the outcome of the other case should be deemed [*4]binding upon the provider. See, e.g. Ideal Med. Supply v Mercury Cas. Ins. Co., 39 Misc 3d 15 (App Term 1st Dept, 2013); Magic Recovery Med. & Surg. Supply Inc. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 67 (App Term 2d Dept, 2010).

In Ideal Med. Supply, for example, a medical provider’s assignor was named a party to a prior declaratory judgment action which “resulted in a declaration that defendant [insurer] was entitled to deny all no-fault claims arising from injuries allegedly sustained by plaintiff’s assignor.” Following entry of that declaratory judgment, the insurer moved for summary judgment dismissing a plaintiff medical provider’s no-fault claim on grounds of collateral estoppel. The Appellate Term affirmed an order denying the motion. Its decision explained: “Since the plaintiff medical provider was not a party to the declaratory judgment action it is not bound by the Supreme Court’s determination, as it did not have a full and fair opportunity to contest the issues in that proceeding.” 39 Misc 3d at 16, citing Gilberg v Barbieri, 53 NY2d 285, 291 (1981). Furthermore, “[a]lthough plaintiff’s assignor was a named party in the prior action, plaintiff cannot be deemed to be in privity with its assignor, since the declaratory judgment action was commenced after the assignment.” Id., citing Gramatan.

Similarly, Magic Recovery involved assigned claims for no-fault benefits by a medical supply company which had provided medical equipment to its assignors following two automobile collisions. Nearly two years after plaintiff had submitted its no-fault claims, defendant obtained declaratory judgments, on default, against plaintiff’s assignors, upon “proof that the incidents were staged to defraud defendant.” 27 Misc 3d at 68. Notwithstanding the entry of these default judgments against plaintiff’s assignors, a majority of the Appellate Term, Second Department, denied the insurer’s motion for summary judgment on grounds of collateral estoppel.

Over the dissent of Justice Golia, the majority explained: “Plaintiff herein was neither named nor served in the declaratory judgment actions nor, at the time, was it in privity with someone who was, and plaintiff otherwise had no full and fair opportunity to appear and defend its interests in those proceedings. Accordingly, the judgments do not collaterally estop plaintiff from recovering in this action.” 27 Misc 3d at 69, citing inter alia Gramatan.

In contrast to these rulings, in at least one recent decision the Appellate Term, Second Department, dismissed a medical provider’s claim for no-fault benefits based on a verdict rendered in a lawsuit by plaintiff’s assignor. Triboro Quality Med. Supply, Inc v State Farm Mut-Auto Inc. Co., 2012 NY Slip Op 51289 (App Term, 2d Dept). The jury’s verdict in that lawsuit “determined that the vehicle of defendant’s insured never made contact’ with plaintiff’s assignor.” According to the Appellate Term’s decision, the issue decided by the jury in the earlier personal injury action was “identical” to the issue in the [*5]no-fault case of whether the assignor’s injuries arose “out of an insured incident.” Thus, the earlier determination demonstrated that plaintiff “was ineligible to receive reimbursement of no-fault benefits because the assignor’s injuries did not result from an insured incident.”

The decision in Triboro cannot be readily reconciled with the decisions in Magic Recovery and Ideal Med. Supply. In the latter cases, the appellate courts’ decisions conclude that the provider and its assignor were not in sufficient “privity” with each other, and that the provider had not been afforded a full and fair opportunity to contest the issue presented in the prior action. However, in Triboro, the court assumes sufficient privity between the provider and its assignor by virtue of the assignment. The decision in Triboro also includes an implicit finding that the provider failed to meet its “burden of establishing the absence of a full and fair opportunity to litigate” whether the insured vehicle made contact with its assignor.

Viewed realistically, Triboro may signal an inclination to follow the views expressed by Justice Golia in his dissent in Magic Recovery . In Justice Golia’s opinion, concepts of privity, as applied in Court of Appeals decisions (e.g. Gramatan), have little relevance to no-fault claims. 27 Misc 3d at 72-3. Furthermore, given the statutory and regulatory scheme closely tying the rights of a person injured in an accident to the rights of a provider seeking payment for medical services pursuant to an assignment from that person, Justice Golia contended that “the medical provider and the eligible injured person are so inextricably connected to each other and to the creation of the claim at issue, that the actions of one must be referable to the legal position of the other.” 27 Misc 3d at 75.

Since the decision in Triboro, however, the Appellate Term, Second Department has continued to cite and follow Magic Recovery without citing or mentioning its contrary Triboro ruling. See, e.g. Smooth Dental, PLLC v Preferred Mutual Ins. Co., 37 Misc 3d 67 (App Term 2d Dept, 2012). On the other hand, Triboro has not been cited by any court. And while Justice Golia’s dissent in Magic Recovery was referenced in the concurring opinion of Justice Schoenfeld in Ideal Med. Supply, that concurring opinion concluded that the court was “compelled to adhere to the rule set forth in Gramatan without a signal to the contrary from a higher appellate authority.” 39 Misc 3d at 17.

In these circumstances, the decision in Triboro, considered together with Justice Golia’s dissent in Magic Recovery, certainly warrant careful consideration. However, absent clarification from the Appellate Term, Second Department, the majority opinion in Magic Recovery still controls this Court’s analysis. On balance, based upon this Court’s reading of the leading Court of Appeals decisions, and the careful analytical framework outlined by Judge Levine in Psychology YM, PC v Travelers Prop. Cas. Ins. Co., this Court concludes that plaintiff’s claim in this case ought to be tried on the merits.

Notwithstanding the federal court decision dismissing the assignor’s personal [*6]injury claim against Ryder Truck Rental, this Court accordingly holds that plaintiff is not collaterally estopped by that ruling from pursuing its independent no-fault claim against the defendant insurer, Old Republic. In light of the Court of Appeals’ decision in Gramatan Home Investors Corp v Lopez, supra, the plaintiff provider in a no-fault case should not be deemed in “privity” with its assignor. Furthermore, as Justice Schoenfeld notes his concurring opinion in Ideal Med. Supply v Mercury Cas. Ins. Co., supra, “[c]onsiderations of due process prohibit binding a party to the result of an action in which that party has not been given an opportunity to be heard.” The Court therefore declines to follow Triboro, and instead adheres to the contrary rulings in Magic Recovery and Ideal Med. Supply.

Defendant’s motion is accordingly DENIED.

So Ordered:

District Court Judge

Dated: February 18, 2014

cc:Wilson, Bave, Conboy, Cozza & Couzens, PC

Law Offices of Gabriel & Shapiro, LLC