April 12, 2012
Tarnoff Chiropractic, P.C. v GEICO Ins. Co. (2012 NY Slip Op 50670(U))
Reported in New York Official Reports at Tarnoff Chiropractic, P.C. v GEICO Ins. Co. (2012 NY Slip Op 50670(U))
|Tarnoff Chiropractic, P.C. v GEICO Ins. Co.
|2012 NY Slip Op 50670(U) [35 Misc 3d 1213(A)]
|Decided on April 12, 2012
|District Court Of Nassau County, First District
|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|This opinion is uncorrected and will not be published in the printed Official Reports.
District Court of Nassau County, First District
Tarnoff Chiropractic, P.C., Plaintiff,
GEICO Insurance Company, Defendant.
Friedman, Harfenist, Kraut & Perlstein
Short & Billy, P.C.
Fred J. Hirsh, J.
The following named papers numbered 1 – 4
submitted on this motion on February 17, 2012 Papers NumberedNotice of Motion and Affidavits Annexed1-2
Order to Show Cause and Affidavits Annexed
Affirmation in Opposition3
The only issue in this motion for summary judgment is what must a no-fault insurer prove to establish it has an objective basis and an objective justification for requesting an Examination Under Oath (“EUO”) when the insurer suspects the incident was a staged accident.
Dykwan Gallop (“Gallop”) and several other people claim to have sustained injuries in a motor vehicle accident that occurred on January 11, 2009 at approximately 11 p.m. in front of 295 Gates Avenue, Brooklyn, New York.
A 1994 Jeep owned by Sephida Artis (“Artis”) and operated by Dion Williams (“Williams”) was pulling out of a parking space when it collided with a 1996 Lexus owned by Jason Anderson (“Anderson”) and operated by Gallop.
Both vehicles were insured by Geico.
Kevin Quarles (Quarles”) was a passenger in the vehicle operated by Williams. Geronimo Wilbert (“Wilbert”) and Lauren Lazare (“Lazare”) were passengers in the vehicle operated by Gallop. [*2]
Because both vehicles were insured by Geico, Geico referred this matter to its Special Investigations Unit (“SIU”) to investigate the possibility that this was a staged accident.
Geico’s SIU investigator attempted to interview the operators and owners of both vehicles and the passengers in both vehicles. He was able to interview only Williams and Lazare.
Lazare’s statement to Geico’s SIU investigator reflects she was a passenger in the front seat of the vehicle being operated by a person she knew as Quan (Gallop). She believed the vehicle was owned by Quan’s cousin. Quan was driving her home when the accident occurred. Wilbert was a passenger in the back seat. She told the SIU investigator she did not actual see the other vehicle before the accident because she was looking at her cell phone and speaking with Wilbert vehicle when the impact occurred. She described the impact between the vehicles as minor. The impact to the vehicle in which she was a passenger was on the passenger side. She told the SIU investigator she did not know the driver or passenger in the other vehicle.
Since the vehicle in which she was a passenger was operational after the accident, Quan drove her home.
Because she had pain in her low back and knee after the accident, she went to see Dr. Boris Kleyman at Flatlands Medical P.C. ( Flatlands”). She received acupuncture, physical therapy and chiropractic treatment for about 4 weeks. She refused neuro-diagnostic testing. He stated she saw Quan and Geronimo treating at Flatlands.
The SIU investigator’s interview with Williams revealed Williams had borrowed the vehicle from a friend. He ran some errands for his parents and met Quarles at the location of the accident. After speaking with Quarles for a few minutes, he began to pull out of the parking space. He stated he looked back to his left two times before he began to pull out of the parking space. As he was pulling out of the parking space, the vehicle he was operating collided with dark colored Lexus.
Williams claims he did not know the operator or any of the passengers in the other vehicle. He told the SIU investigator the Jeep he was operating was not operational after the accident. He took car service home from the scene.
Williams received treatment for the injuries he sustained in the accident at Holistic Health Care on Ocean Avenue and Avenue I in Brooklyn.
The SIU investigator was unable to arrange to interview any of the other parties. He could never contact the owners of either vehicle.
The SIU investigator’s report reflects he went to the address listed as Anderson’s residence on one occasion at approximately 1:25 p.m. on a Wednesday. The premises were a 4 story apartment building. There were no names on the door bells on the exterior of the building and no names on mail boxes in the foyer. The SIU investigator could not gain access to the building to speak with any of the residents of the building to confirm whether Anderson resided in the building. The SIU investigator’s notes reflect he did not make any additional attempts to locate or contact Anderson.
The SIU investigator attempted to call Artis but was unable to reach her. His first call was unanswered and the phone did not have voice mail. When he called a second time, the telephone number was no longer in service.
The SIU investigator made one trip to the address listed as Artis residence address [*3]at 1 p.m. on a Wednesday. The building was a four story apartment building. No names were listed on the mailboxes or door bells of the building. He gained access to the building and knocked on the door of the apartment in which was listed as Artis apartment in Geico’s records. No one answered. He left a letter requesting Artis contact him. Artis did not respond to this letter. He was unable to speak with anyone in the building to confirm whether Artis resided in the building. He made no other attempts to contact Artis or to confirm she actually resided at that location.
The SIU investigator went to Wilbert’s home and met his mother and sister. He left them his business card and asked them to have Wilbert call him. Wilbert never called. The SIU investigator called Wilbert. They made an appointment to meet for an interview on March 12, 2009 at 11 a.m. at Wilbert’s girlfriend’s apartment. Wilbert called the SIU investigator about an hour before the scheduled meeting and cancelled the appointment because he had to attend a funeral. They agreed to meet on March 16, 2009 at 11 a.m. at Wilbert’s mother’s apartment. The SIU investigator called to confirm the appointment about a half an hour before the meeting was to take place. The SIU investigator was advised by Wilbert’s mother Wilbert was not there and was not expected. The SIU investigator asked Wilbert’s mother to have Wilbert call him. Wilbert never called. The SIU investigator made no further attempts to contact or interview Wilbert.
At one point, Gallop was represented by the Law Offices of Barry Richard Feldman (“Feldman”). Geico’s SIU investigator attempted to arrange an interview with Gallop through Feldman. Feldman’s office scheduled an interview of Gallop for March 3, 2009 at Feldman’s office. The interview was cancelled due to an illness in Feldman’s family. On March 11, 2009, the SIU investigator called Feldman’s office to schedule another appointment to interview Gallop. Feldman’s office told Geico’s investigator Gallop had terminated treatment and Feldman’s office was discontinuing its representation of Gallop.
After the SIU investigator was advised by Feldman’s office that Feldman was no longer representing Gallop, the SIU investigator made one trip to Gallop’s residence on a
Monday at about noon in an attempt to interview Gallop. Gallop was not home. The SIU investigator left his card with Gallop’s sister and requested that she give the card to Gallop. He asked Gallop’s sister to ask Gallop to call him. Gallop never called. The SIU investigator made no further attempts to contact Gallop to arrange an interview.
Serge Petroff, Esq. initially represented Quarles. Geico’s investigator had arranged to interview Quarles at Petroff’s office on March 12, 2009. Quarles did not appear for the scheduled interview.
Because Geico’s investigator was unable to interview Gallop, Quarles, Wilbert and Artis and/or Anderson, he recommended Geico conduct EUO’s of Gallop, Quarles, Wilbert, Artis and Anderson.
The record does not reflect whether Geico sent EUO demands to Quarles, Wilbert, Artis and/or Anderson and if it did, whether any of these individuals appeared for the EUO. Transcripts of their EUO’s, if they were held, are not attached to the papers.
The Law Offices of Teresa M. Spina sent a letter dated April 15, 2009 by certified mail, return receipt requested to Feldman and Gallop requesting he appear for an EUO on May 8, 2009 at the offices of a court reporting service located on Court Street in Brooklyn. Gallop did not appear for the EUO. The letter was sent to Feldman even though Geico’s SIU investigator’s notes indicate he was advised by Feldman’s office on March 11, 2009, [*4]Feldman was terminating his representation of Gallop.
The Law Offices of Teresa M. Spina sent a follow-up EUO letter dated May 15, 2009 by certified mail, return receipt requested to Feldman and Gallop requesting Gallop appear for an EUO on May 27, 2009 at the offices of a court reporting service located on Court Street in Brooklyn. Gallop did not appear for this EUO.
Although the EUO letters indicated they were mailed to Gallop and Feldman by certified mail, return receipt requested, Geico did not attach the green return receipt cards reflecting whether the EUO letters mailed to Gallop or Feldman were delivered or the original envelopes containing notations the Postal Service attempted delivery and delivery was refused, delivery was attempted and the letter was unclaimed or the letter was returned as undeliverable as addressed.
Geico denied all of the claims submitted by Tarnoff Chiropractic, P.C. on the grounds Gallop failed to appear for an EUO.
Plaintiff sued to recover the unpaid no-fault benefits. Defendant answered and now moves for summary judgment dismissing the action on the grounds it timely denied the claim on the grounds Gallop failed to appear of an EUO.
The purpose of the no-fault law and regulations [Insurance Law §5101, et. seq and 11 NYCRR Part 65] is to insure prompt payment of medical claims for medical treatment provide to people injured in automobile vehicle accidents regardless of fault. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 556 (2008); Hospital for Joint Diseases v. Travelers Property Casualty Ins. Co., 9 NY3d 312 (2007); and Presbyterian Hosp. in City of NY v. Maryland Cas. Co., 90 NY2d 274, rearg. denied 90 NY2d 937 (1997).
To meet this purpose, the no-fault regulations provide that insurers should not treat applicants for no-fault benefits as adversaries and should not demand verification unless there is a good reason to do so. 11 NYCRR 65-3.2(b)(c).
Claims must be paid or denied in whole or in part within 30 calendar days of receipt or receipt of properly and timely requested verification. 11 NYCRR 65-3.8(a).Insurers are precluded from asserting at the trial of an action to obtain payment of first party no-fault benefits any precludable defense not asserted in a timely denial. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., supra; and Hospital for Joint Diseases v. Travelers Property Casualty Ins. Co., supra; and Presbyterian Hosp. in City of NY v. Maryland Cas. Co., supra.
Despite this stated purpose, the Civil Court in the City of New York and the civil parts Nassau County District Court are inundated with action being brought to recover first party no-fault benefits.[FN1]
The requirement that insurers promptly pay claims often provides an insurer with an insufficient amount of time to investigate the claim to determine whether medical treatment [*5]in question is medically necessary, whether the claim is fraudulent, whether the provider was properly licensed and formed, whether the injury or treatment is related to the accident, whether the incident in question was a staged accident.
Insurers who need additional time to investigate the validity of a claim can extend their time to pay or deny a claim by timely requesting verification of a claim. Nyack Hosp. v. General Motors Acceptance Corp., 8 NY3d 294 (2007); Hospital for Joint Disease v. New York Central Mutual Fire Ins. Co., 44 AD3d 903 (2nd Dept. 2007); and 11 NYCRR 65-3.5. A claim does not have to be paid or denied until all timely and properly requested verification has been received. St. Barnabas Hosp. v. American Transit Ins. Co., 57 AD3d 517 (2nd Dept. 2008); and New York & Presbyterian Hosp. v. Allstate Ins. Co., 31 AD3d 512 (2nd Dept. 2006).
An EUO is a hybrid between a condition precedent to coverage and verification. Case law treats appearance at an EUO is a condition precedent to coverage. Richmond Radiology, P.C. v. American Transit Ins. Co., 33 Misc 3d 135(A) (App.Term 2nd, 11th & 13th Jud. Dists. 2011); LDE Medical Services, P.C. v. Encompass Ins., 29 Misc 3d 130(A) (App.Term 2nd, 11th & 13th Jud. Dists. 2010); Crotona Heights Medical, P.C. v Farm Family Cas. Ins. Co., 27 Misc 3d 134(a) (App.Term 2nd, 11th & 13th Jud. Dists. 2010); and 11 NYCRR 65-1.1. If a person fails to appear for a properly requested EUO, the insurer may deny a claim retroactive to the date of loss even if the carrier does not issue a timely denial. Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, P.C., 82 AD3d 559 (1st Dept. 2011).
Most of the provisions of the no-fault regulations relating to EUO’s are contained in the provisions of the no-fault regulations relating to verification. See, 11 NYCRR 65-3.5. When an insurer demands an EUO “…the verification is deemed to have been received by the insurer on the day the examination was performed.” 11 NYCRR 65-3.8(a)(1). Stated differently, an insurer that conducts an EUO has 30 days from the date the EUO is conducted to pay or deny the claim.
An insurer does not have an unfettered right to request as EUO. An insurer must have an objective basis and an objective justification for requesting an EUO. 11 NYCRR 65-3-5(e).
The stated reason for wanting to conduct an EUO of Gallop was to investigate whether this was a staged accident.
In order to obtain summary judgment on the grounds Gallop defaulted in appearing for an EUO, Geico must substantiate its basis for requesting the EUO. Crescent Radiology, P.C. v. American Transit Ins. Co., 31 Misc 3d 134(A) (App.Term 9th & 10th Jud. Dists. 2011). To substantiate its basis for requesting an EUO where the stated reason for conducting is the incident might be a staged accident, the insurer must demonstrate some fact exists or the insurer has founded belief the incident was staged accident. Webster Diagnostic Medicine, P.C. v. State Farm Ins. Co., 15 Misc 3d 97 (App. Term 9th & 10th Jud. Dists 2007); and Ocean Acupuncture, P.C. v. State Farm Mutual Automobile Ins. Co., 23 Misc 3d 1104(A) (Civil Ct. NY Co. 2009). Defendant must demonstrate more than unsubstantiated hypothesis or supposition that the incident was a staged accident. Webster Diagnostic Medicine, P.C. v. State Farm Ins. Co., supra; and Manhattan Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., 20 Misc 3d 1144(A) (Civil Ct. Richmond Co. 2008). [*6]
In determining whether the Geico had a factual basis or a founded belief the incident involved a staged accident, the court must consider factors such as whether their were multiple accidents involving the same vehicle or vehicles shortly after the policy was issued; whether the policy was cancelled for failure to pay premiums shortly after the accident occurred; were the parties involved in a “ring” that stages accidents to defraud insurers; was the claim reported by an attorney rather than the claimant; did the same claimants make multiple no-fault claims for similar injuries arising from different accidents; the age and condition of the vehicles involved in the accident; the manner in which the accidents occurred; the damage to the vehicles involved in the accident; was the damage to the vehicles consistent with the speed and directions of the vehicles; did statements taken from those involved in the accident contain significant inconsistent or significant differences or do they contain only minor inconsistencies; were the parties uncooperative in the investigation of the matter; did all the claimants receive the same or similar medical treatment for the same injuries from the same medical provider or providers; the lapse in time between the date of the accident and the date the claimant first seeks treatment; are the injuries for which treatment was obtained consistent with the type of incident and the speed and directions of the vehicles at the time of impact; was the treatment excessive taking into account the nature and extent of the injuries. See, Webster Diagnostic Medicine, P.C. v. State Farm Ins. Co., supra; Comprehensive Mental v. Allstate Ins. Co., 14 Misc 3d 130(A) (App. Term 9th & 10th Jud Dists. 2007); A.B. Med. Servs. PLLC v. State Farm Mut. Auto. Ins. Co., 12 Misc 3d 129(A) (App.Term 2nd & 11th Jud. Dists. 2006); A.B. Med. Servs., PLLC v. Eagle Ins. Co., 3 Misc 3d 8 (App Term 2nd Dept. 2003); Manhattan Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., supra; JSI Expert Service v. Liberty Mutual Ins. Co., 7 Misc 3d 1009(A) (Civil Ct. Kings Co. 2005); and A.B. Medical Services PLLC v. State Farm Mutual Auto. Ins. Co., 7 Misc 3d 822 (Civil Ct. Kings Co. 2005). In determining whether there is factual basis or founded belief the incident was a staged accident, the court must consider the existence and/or non-existence of each factor and the weight to be given each factor.
None of these factors other than the unsworn statement of Lazare that she observed Gallop and Wilbert receiving treatment at Flatlands is present in this case and the difficulty SIU investigator encountered in attempting to interview Gallop, Wilbert, Artis, Anderson and Quarles are present in this case.
There is a question of whether the SIU investigator made a good faith effort to locate and interview Anderson or Artis.
He did not have a telephone number for Anderson. He made one trip to Anderson’s residence mid-day on a weekday and was unable to confirm whether Anderson resided at that address.[FN2] He made no further attempt to locate or contact Anderson.
He made one telephone call to Artis and could not reach her. When he called a [*7]second time, the telephone was disconnected. He made one trip to her residence mid-day on a weekday in an effort to locate her. He could not confirm whether she actually resided as that location.
The SIU investigator made no effort to ascertain whether Anderson or Artis were employed.
The reasons Geico found this incident suspicious was because of the location of the accident, the age of vehicles and the fact it involved two vehicles that were insured by Geico.
Since Geico one of the largest if not the largest automobile insurer in the State of New York [ See, New York State Department of Financial Services 2011 Annual Ranking of Automobile Insurance Complaints], accidents involving two vehicles insured by Geico must occur with some degree of frequency.
Contrary to directive contained in the no-fault regulations [11 NYCRR 65-3.2(b)], Geico appears to have treated this matter as an adversarial situation from the time they received this claim. The SIU investigator’s report states the only basis for referring this matter for investigation as a staged accident was because it involved two Geico insureds.
All no-fault claims in connection with this accident would have been submitted to Geico. Despite this, Geico offers no evidence that anyone other than Gallop received treatment from Tarnoff Chiropractic, P.C. or that any of the people involved in this accident actually received treatment from the same medical providers. Williams and Lazare received treatment from different medical providers at different facilities in different neighborhoods of Brooklyn.[FN3]
Geico offers no evidence that Gallop received treatment that was inconsistent with the type of injuries one would have sustained in a this type of accident or that the treatment was excessive.
The statements the SIU investigator took from Williams and Lazare are consistent regarding the manner in which the accident occurred.
The SIU investigator’s opinion Williams was a poor witness is not a basis for concluding this was a staged accident. This opinion was premised upon Williams inability to identify the owner of the vehicle he was operating or to provide the SIU investigator with the name and address of his employer.[FN4] Williams description of the accident is consistent with the description of the accident provided by Lazare and is consistent with the description of the accident contained in the police report.
Geico provided no proof regarding when the policies were issued to Artis or Anderson, when those policies were cancelled or the reasons for their termination or whether any other no-fault claims were made on those policies. [*8]
Geico provided no proof that either of these vehicles had ever been involved in any other accidents. The SIU report indicates Artis had two prior claims with other insurance companies. The report states both claims involved property damage only. No personal injury claims were filed in connection with either claim. The report does not indicate whether these claims involved the same vehicle that was involved in this incident.
The SIU report states Anderson had no prior claims with Geico or any other insurance company.
The unfound belief that this accident involves a staged accident appears to be based upon what could be characterized as insurance racial profiling. The accident occurred in the Bedford-Stuyvesant section of Brooklyn. Anderson, Gallop and Artis residence address are in Bedford-Stuyvesant. Quarles, Lazare and Wilbert residence addresses are in Brownsville. Williams residence address is in Canarsie. The court takes judicial notice that these are sections of Brooklyn which the population is overwhelmingly if not almost exclusively minority. Both vehicles involved in the accident were old. Williams was operating a 1994 Jeep, Gallop was operating a 1996 Lexus. One questions whether Geico would have undertaken a similar investigation had a similar accident involving two Geico insureds occurred in a different neighborhood involving newer models of the same vehicles.The SIU investigator’s own report states based upon his investigation he was unable to determine if this was a staged accident.
The court also questions the need to conduct an EUO in cases such as this where the defense the insurance company is investigating is non-precludable. Central General Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195 (1997)]; and Allstate Ins. Co. v. Massre, 14 AD3d 610 (2nd Dept. 2005).
EUO’s would have been of little value in preparing a staged accident defense. The testimony taken at the EUO would not have been admissible in evidence at trial. JSI Expert Services v. Liberty Mutual Ins. Co., supra. The action was commenced even though Tarnoff knew the claim had been denied on the grounds Gallop had failed to appear for an EUO.
Taking all of these factors into account, the court finds Geico had an unfounded hypothesis and suspicion that this was a staged accident. Therefore, the request for an EUO was improper. Since the request for an EUO was improper, it cannot serve as a basis for summary judgment.
The court also notes Geico has failed to establish whether the EUO notices mailed to Gallop by certified mail return receipt requested were delivered, returned as undeliverable as addressed or returned as unclaimed. One of the reasons to use certified mail is to confirm delivery or attempted delivery of the item. If the person to whom a letter is mailed is mailed by certified mail, return receipt requested and is delivered, the person sending the mail will receive the green return receipt by return mail. If delivery is attempted and no one is available to sign for the letter, a slip will be left by the letter carrier advising the individual to whom the letter is addressed to contact the post office to pick up the letter or to make arrangements for having the letter delivered on another date. If the person does respond to the notice left by the letter carrier, the Postal Service will make several attempts to delivery the letter. If the letter is not claimed by the addressee, the letter is returned to the sender with a notation, delivery attempted, unclaimed. The envelope will have a stamp indicated the dates delivery was attempted. See, Temple B’nai Shalom of [*9]Great Neck v. Village of Great Neck Estates, 32 AD3d 391 (2nd Dept. 2006); lv. dnd. 8 NY3d 813 (2007); cert. dnd. – U.S. -, 128 S.Ct. 1241 (2008). If the addressee does not reside at the address to which the letter is addressed, it will either be forwarded to the addressee at his or her new address provided one is on file with the Postal Service or returned to the sender with a notation, undeliverable as addressed.
While St. Vincent’s Hosp. of Richmond v. Government Employees Ins. Co., 50 AD3d 1123 (2nd Dept. 2008) established an insurer can prove mailing by establishing it has a practice and procedure in place designed to ensure timely and proper mailing, when an item is mailed by certified mail, the insurer has or should have actual proof of mailing and actual proof of delivery or proof the reason the mail was not delivered or received by the addressee. When such proof is available, it should be provided to the court as proof of actual mailing. See generally, “Return to Sender? Presumption of Receipt in Certified Mail Cases” by Michael C. Rosenberger and Jason Moroff, NYLJ 3/4/10, p.4 col. 1;
see generally, Harner v. County of Tioga, 5 NY3d 136 (2005); and L & J Plumbing & Heating Co., Inc. v. Gateway Demolition Corp., 176 Misc 2d 277 (Sup.Ct. Queens Co. 1998).
For the foregoing reasons, defendant’s motion for summary judgment is denied. `
Hon. Fred J. Hirsh
District Court Judge
Dated: April 12, 2012
Footnote 1:Over 50% of the cases that appeared on the calendar in Civil Part 3 of the District Court Nassau County in the past month involve actions to recover first party no-fault benefits. Over 40% of the civil appeals decided by the Appellate Term, Second Department in 2012 involve actions commenced to recover first party no-fault benefits.
Footnote 2:The court notes that in the SIU investigator’s report he makes reference to the person he was attempting to located and interview as Jason Alexander. The SIU investigator would have trouble locating Jason Alexander at that location since the person he was attempting to locate and interview was Jason Anderson. Jason Alexander is an actor who played the character George Costanza on Seinfeld.
Footnote 3:Tarnoff Chiropractic, P.C.’s office is located in the Brownsville section of Brooklyn. Holistic Health Care, where Williams received treatment, is located in the Midwood section of Brooklyn. Flatlands Medical, Dr. Kleyman, where Lazare received treatment, is located in the Flatlands section of Brooklyn.
Footnote 4:Williams told Geico’s SIU investigator he borrowed the vehicle earlier on the day of the accident from John Williams and not Artis.