July 20, 2009

Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co. (2009 NY Slip Op 51591(U))

https://www.beynensonlaw.com/case-law/sharma-med-servs-p-c-v-progressive-cas-ins-co-2009-ny-slip-op51591u/

Court: Appellate Term, Second Department
Decided: July 20, 2009
Citation: 2009 NY Slip Op 51591(U) · 24 Misc 3d 139(A)
Posture: Other motion
Outcome: Insurer prevailed
Later treatment: Followed in 2 later decisions (see Cited by)
Issues: Discovery and procedure Fraudulent incorporation (Mallela)
Legal questions: Mallela defense: preclusion and discovery (see the maps)

Cite as

Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co., 24 Misc 3d 139(A), 2009 NY Slip Op 51591(U) (App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009)

Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.

Summary

Editorial summary by Beynenson Law, not part of the court’s decision.

The insurer's detailed reasons to suspect fraudulent incorporation entitled it to depose the provider's owner. The provider opposed the insurer's CPLR 3126 motion to dismiss for inadequate discovery responses and failure to produce its owner, and sought a protective order. The Appellate Term, Second Department, reversed the order denying the insurer's motion and granting protection. The insurer had supplied detailed, specific reasons to believe the provider might be ineligible for reimbursement under Mallela, supporting disclosure under CPLR 3101 (a). The court denied the protective order and granted the insurer's motion only to the extent of directing the owner's deposition within 60 days of the appellate order or on an agreed date.

Reported in New York Official Reports at Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co. (2009 NY Slip Op 51591(U))

[*1]

Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co.

2009 NY Slip Op 51591(U) [24 Misc 3d 139(A)]

Decided on July 20, 2009

Appellate Term, Second Department

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This opinion is uncorrected and will not be published in the printed Official Reports.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 July 20, 2009

SUPREME COURT OF THE STATE OF NEW YORK

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

PRESENT: : WESTON, J.P., RIOS and STEINHARDT, JJ
2008-668 K C.

Sharma Medical Services, P.C. as assignee of JANELLA ADAMS, MARA ALPIN, RAMON BRAVO, COLIN CAMPBELL and JOSEPH D’AMBROSIO, Respondent,
against
Progressive Casualty Insurance Company, Appellant.

Appeal from an order of the Civil Court of the City of New York, Kings County (Lila Gold, J.), entered January 10, 2008. The order denied defendant’s motion to dismiss the complaint and granted plaintiff’s cross motion for a protective order.

Order reversed without costs, plaintiff’s cross motion for a protective order denied and defendant’s motion to dismiss the complaint granted to the extent of directing plaintiff to produce its owner, Perumunda K. Sharma, for a deposition within
60 days of the date of the order entered hereon, or on such other date to which the parties shall agree.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved to dismiss the complaint pursuant to CPLR 3126 due to plaintiff’s inadequate response to defendant’s discovery demands and plaintiff’s failure to produce its owner, Perumunda K. Sharma (Sharma), for a deposition. Plaintiff opposed the motion and cross-moved for a protective order. The Civil Court denied defendant’s motion, finding that defendant had failed to submit sufficient factual evidence to establish its entitlement to an order compelling the deposition of Sharma, and granted plaintiff’s cross motion for a protective order. This appeal by defendant ensued.

The record reveals that defendant set forth detailed and specific reasons for believing that plaintiff may be ineligible to recover no-fault benefits as a fraudulently incorporated professional service corporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). Consequently, defendant is entitled to a deposition of Sharma, plaintiff’s owner (see CPLR 3101 [a]; see also Midwood Acupuncture, P.C. v State Farm Fire and Casualty Company, 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [App Term, 2d & 11th Jud Dists 2008]). Accordingly, plaintiff’s cross motion for a
protective order is denied and defendant’s motion to dismiss the complaint pursuant to CPLR [*2]3126 is granted to the extent of directing plaintiff to produce its owner, Sharma, for an examination before trial.
Weston, J.P., Rios and Steinhardt, JJ., concur.
Decision Date: July 20, 2009

Legal questions

A question of no-fault law this decision rules on, from our Legal Questions pages. Bars count the decisions on the question by year and court, coloured by category; circles are this decision and the decisions on the question it cites or that cite it. Point at a bar or circle for details. The categories and summaries are Beynenson Law’s classification, made by a language model and checked by a second reading.

Mallela defense: preclusion and discovery

Open the full map

May the insurer raise and investigate a Mallela (fraudulent incorporation) defense, or is it precluded, waived or denied discovery?

This decision: Insurer may raise or investigate the Mallela defense here

Held the insurer entitled to depose the provider's owner because it set forth detailed and specific reasons for believing the provider was a fraudulently incorporated professional corporation, and denied the provider a protective order.

Defense may be pursuedDefense barredThis decisionCites it or cited by itCited or followed

Of the 136 decisions on this question in the Second Department courts and the Court of Appeals, 112 (this one included) are in the same category.

Cited in this decision

A label shows how this decision treated the case it cites.

State Farm Mut. Auto. Ins. Co. v Mallela (2005 NY Slip Op 02416) FollowedFraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co. (2008 NY Slip Op 52468(U))The insurer established grounds for corporate eligibility discovery, but failed to justify disclosure of the provider owner's personal tax returns.

Cited by

A label shows how the later decision treated this one.

Five Boro Psychological Servs., P.C. v AutoOne Ins. Co. (2010 NY Slip Op 20131) FollowedThe provider's summary judgment motion was denied because unproduced discovery could support the insurer's Mallela defense.
RLC Med., P.C. v Allstate Ins. Co. (2010 NY Slip Op 50642(U)) FollowedThe insurer established a need for discovery of facts in the provider's possession concerning alleged fraudulent incorporation.
All Boro Psychological Servs., P.C. v Allstate Ins. Co. (2013 NY Slip Op 23043)The insurer established a basis for Mallela discovery, defeating the provider's summary judgment motion.
New York Cent. Mut. Ins. v McGee (2009 NY Slip Op 52385(U))The insurer's common-ownership allegations did not justify joining all provider defendants, and its requested injunction lacked evidentiary support.
RLC Med., P.C. v Allstate Ins. Co. (2010 NY Slip Op 51962(U))The insurer established that discovery concerning the provider's alleged fraudulent incorporation was needed to oppose summary judgment.
All Boro Psychological Servs., P.C. v Allstate Ins. Co. (2013 NY Slip Op 51124(U))The insurer's SIU file was discoverable because it failed to show that the investigation began after a decision to deny the claims.
All Boro Psychological Servs., P.C. v Allstate Ins. Co. (2014 NY Slip Op 50870(U))An insurer's SIU file is discoverable unless the insurer establishes that it was prepared solely for litigation.

Similar decisions

Medical Polis, P.C. v Progressive Ins. Co. (2012 NY Slip Op 50864(U))An insurer may obtain Mallela discovery despite omitting the defense from its answer if its moving papers sufficiently allege ineligibility.
Queens-Roosevelt Med. Rehabilitation, P.C. v Response Ins. Co. (2019 NY Slip Op 50608(U))The provider's refusal to answer deposition questions about ownership warranted striking its complaint after years of discovery noncompliance.
All Boro Psychological Services, P.C. v Auto One Ins. Co. (2012 NY Slip Op 50777(U))A provider that misses discovery objection deadlines must respond except as to privileged or palpably improper demands.
Jamhil Med., P.C. v Allstate Ins. Co. (2014 NY Slip Op 51028(U))The provider's refusal to comply with court-ordered discovery without a reasonable excuse warranted dismissal under CPLR 3126.
Medical Polis, P.C. v Progressive Specialty Ins. Co. (2012 NY Slip Op 50342(U))An insurer may obtain discovery on an unpleaded Mallela defense when sufficient allegations of fraudulent incorporation support the request.