Urban Radiology, P.C. v American Tr. Ins. Co. (2009 NY Slip Op 51734(U))

SUPREME COURT OF THE STATE OF NEW YORK

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

Appeal from an order of the Civil Court of the City of New York, Kings County (Lila Gold, J.), entered December 14, 2007. The order denied defendant’s motion to vacate a default judgment and compel plaintiff to accept its late answer.

Order modified by providing that defendant’s motion is granted to the extent of vacating the default judgment with respect to plaintiff’s $2,322.73 claim for services rendered to assignor Patrick Seraphin and compelling plaintiff to accept defendant’s late answer with respect to said claim; as so modified, affirmed without costs.

In this action to recover assigned first-party no-fault benefits, defendant moved to vacate a default judgment and to compel plaintiff to accept its late answer. The Civil Court denied defendant’s motion, and the instant appeal by defendant ensued.

It is well settled that in order to vacate a default judgment, the defendant must demonstrate both a reasonable excuse for its delay in appearing and answering the complaint as well as a meritorious defense to the action (see CLR 5015 [a] [1]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Sound Shore Med. Ctr. v Lumbermens Mut. Cas. Co., 31 AD3d 743 [2006]). In the case at bar, defendant’s no-fault supervisor, who was also the claims representative who handled the instant claims, submitted an affidavit in which he stated that defendant had lost the file containing the summons and complaint and had not found out about the default until June 25, 2007. The record also indicates that defendant’s attorney initiated the instant motion to vacate the default judgment promptly in July 2007. On these facts, defendant’s failure to answer the complaint was excusable (see e.g. Perez v Travco Ins. Co., 44 AD3d 738 [2007]; Sound Shore Med. Ctr. v Lumbermens Mut. Cas. Co., 31 AD3d at 743; Dodge v Commander, 18 AD3d 943, 946 [2005]; Triangle Transp. Inc. v Markel Ins. Co., 18 [*2]AD3d 229 [2005]; Allstate Ins. Co. v Progressive Cas. Ins. Co., 20 Misc 3d 139[A], 2008 NY Slip Op 51567[U] [App Term, 2d & 11th Jud Dists 2008]).

A review of the record indicates that defendant demonstrated a potentially meritorious defense to plaintiff’s $2,322.73 claim for the services it rendered to assignor Patrick Seraphin. The affidavits of defendant’s claims representative and mail room supervisor show that defendant timely denied said claim within the 30-day statutory time period as required by Insurance Department Regulations (11 NYCRR) § 65-3.8 (c) (see also Insurance Law § 5106 [a]), based upon, inter alia, a peer review report concluding that there was no medical necessity for the services rendered to Seraphin. In regard to the claims for the services plaintiff rendered to assignor Guy Louis, defendant argued that it did not have to pay or deny these claims because plaintiff had failed to respond to its verification requests and, thus, the 30-day statutory time period within which it had to respond to the claims had been tolled. However, defendant failed to demonstrate merit to said defense since the affidavits did not show that defendant’s requests for additional verification were timely (see Insurance Department Regulations [11 NYCRR] § 65-3.5 [b]) and, consequently, the action with respect to said claims was not premature.

In view of the fact that defendant has shown a reasonable excuse for its default and a meritorious defense as to the claim for services rendered to assignor Patrick Seraphin, we find that the Civil Court improvidently exercised its discretion in denying that part of defendant’s motion which sought to vacate the default judgment and compel plaintiff to accept a late answer with respect to plaintiff’s $2,322.73 claim (see New York Univ. Hosp. Rusk Inst. v Illinois Natl. Ins. Co., 31 AD3d 511, 512 [2006]).

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: July 31, 2009