April 2, 2012

VE Med. Care, P.C. v Auto One Ins. Co. (2012 NY Slip Op 50571(U))

https://www.beynensonlaw.com/case-law/ve-med-care-p-c-v-auto-one-ins-co-2012-ny-slip-op-50571u/

Court: Appellate Term, Second Department
Decided: April 2, 2012
Citation: 2012 NY Slip Op 50571(U) · 35 Misc 3d 127(A)
Posture: Other motion
Outcome: Insurer prevailed
Issues: Discovery and procedure Fraudulent incorporation (Mallela)
Legal questions: Mallela defense: preclusion and discovery (see the maps)

Cite as

VE Med. Care, P.C. v Auto One Ins. Co., 35 Misc 3d 127(A), 2012 NY Slip Op 50571(U) (App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012)

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 established grounds to amend its answer to assert fraudulent incorporation and obtain the provider's tax documents. The Appellate Term, Second Department, affirmed the order, insofar as appealed from. Amendment was proper under CPLR 3025 (b): no prejudice or surprise was shown, and the proposed defense was neither meritless nor palpably insufficient. Detailed, specific reasons supported suspected licensing ineligibility under 11 NYCRR 65-3.16 (a) (12) and Mallela, and special circumstances warranted tax-document disclosure under CPLR 3101. Vacatur of the notice of trial was proper because the readiness certificate incorrectly stated discovery was complete. The order also compelled specified discovery and denied the provider's cross motion for summary judgment or a prima facie finding under CPLR 3212 (g).

Reported in New York Official Reports at VE Med. Care, P.C. v Auto One Ins. Co. (2012 NY Slip Op 50571(U))

[*1]

VE Med. Care, P.C. v Auto One Ins. Co.

2012 NY Slip Op 50571(U) [35 Misc 3d 127(A)]

Decided on April 2, 2012

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This opinion is uncorrected and will not be published in the printed Official Reports.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 April 2, 2012

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

PRESENT: : PESCE, P.J., WESTON and RIOS, JJ
2010-1081 K C.

VE Medical Care, P.C. as Assignee of FELIPE DOMINGUEZ, Appellant, – –
against
Auto One Ins. Co., Respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Kathryn E. Freed, J.), entered December 2, 2009. The order, insofar as appealed from, granted the branches of defendant’s motion seeking to vacate a notice of trial and leave to amend the answer, granted the branch of defendant’s motion seeking to compel plaintiff to respond to defendant’s discovery requests to the extent of directing plaintiff to provide specified documents, and denied plaintiff’s cross motion for summary judgment or, in the alternative, a finding, pursuant to CPLR 3212 (g), that plaintiff had established its prima facie case.

ORDERED that the order, insofar as appealed from, is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from so much of an order as granted the branches of defendant’s motion seeking to vacate a notice of trial and leave to amend its answer, granted the branch of defendant’s motion seeking to compel plaintiff to respond to defendant’s discovery requests to the extent of directing plaintiff to provide specified documents, and denied plaintiff’s cross motion for summary judgment or, in [*2]the alternative, a finding, pursuant to CPLR 3212 (g), that plaintiff had established its prima facie case.

Because the notice of trial and certificate of readiness filed by plaintiff contained the erroneous statement that discovery had been completed, the Civil Court properly granted the branch of defendant’s motion seeking to vacate the notice of trial (see Citywide Social Work & Psychological Servs., PLLC v Autoone Ins. Co., 32 Misc 3d 130[A], 2011 NY Slip Op 51308[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; Allstate Social Work & Psychological Svcs, PLLC v GEICO Gen. Ins. Co., 29 Misc 3d 142[A], 2010 NY Slip Op 52162[U] [App Term, 2d, 11th & 13th Jud Dists 2010]). In addition, the Civil Court did not improvidently exercise its discretion in granting defendant’s application for leave to amend its answer in order to interpose the affirmative defense of fraudulent incorporation, in the absence of any showing that prejudice or surprise would result therefrom (see McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp., 59 NY2d 755 [1983]; Tomasino v American Tobacco Co., 57 AD3d 652 [2008]; Mackenzie v Croce, 54 AD3d 825 [2008]), and since the proposed affirmative defense was neither devoid of merit nor palpably insufficient as a matter of law (see CPLR 3025 [b]; Lucido v Mancuso, 49 AD3d 220 [2008]; Ingrami v Rovner, 45 AD3d 806 [2007]; Hill v 2016 Realty Assoc., 42 AD3d 432 [2007]).

Defendant’s moving papers set forth detailed and specific reasons for believing that plaintiff is ineligible to recover no-fault benefits because plaintiff fails to meet applicable state and local licensing requirements (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). Defendant also established that special circumstances exist which warrant disclosure of plaintiff’s tax documents at issue (see CPLR 3101; One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738 [2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]; Statewide Med. Servs., P.C. v Travelers Ins. Co., 13 Misc 3d 134[A], 2006 NY Slip Op 52014[U] [App Term, 1st Dept 2006], revg 9 Misc 3d 1124[A], 2005 NY Slip Op 51773[U] [Civ Ct, Bronx County 2005]; see also Dore v Allstate Indem. Co., 264 AD2d 804 [1999]; cf. Benfeld v Fleming Props., LLC, 44 AD3d 599, 600 [2007]; Altidor v State-Wide Ins. Co., 22 AD3d 435 [2005]).

In light of the foregoing, plaintiff’s remaining contentions lack merit. Accordingly, the order, insofar as appealed from, is affirmed.

Pesce, P.J., Weston and Rios, JJ., concur.
Decision Date: April 02, 2012

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

Upheld leave to amend the answer to add a fraudulent incorporation defense, which was not palpably insufficient, and compelled disclosure of tax documents because the insurer gave detailed, specific reasons to believe the provider failed licensing requirements.

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

Of the 134 decisions on this question in the Second Department courts and the Court of Appeals, 111 (this one included) are in the same category. One decision in other departments that cites or is cited by this one is on the full map.

Cited in this decision

Citywide Social Work & Psychological Servs., PLLC v Autoone Ins. Co. (2011 NY Slip Op 51308(U))The provider's summary judgment cross motion was premature because discovery remained outstanding.
Allstate Social Work & Psychological Svcs, PLLC v GEICO Gen. Ins. Co. (2010 NY Slip Op 52162(U))A provider that fails to timely challenge discovery demands must respond, except as to privileged or palpably improper matters.
State Farm Mut. Auto. Ins. Co. v Mallela (2005 NY Slip Op 02416)Fraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
One Beacon Ins. Group, LLC v Midland Med. Care, P.C. (2008 NY Slip Op 06813)The insurers raised a triable issue of fraudulent incorporation despite evidence of physician ownership and oversight of the provider.
Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co. (2008 NY Slip Op 51529(U))The insurer established entitlement to corporate eligibility discovery, but failed to justify disclosure of the owner's personal tax returns.
Statewide Med. Acupuncture Servs., PC v Travelers Ins. Co. (2005 NY Slip Op 51773(U))The insurer's incorporation-fraud allegations lacked a reliable foundation for compelling depositions of the providers' owner and acupuncturists.

Similar decisions

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.
Allstate Social Work & Psychological Svcs., PLLC v Auto One Ins. Co. (2011 NY Slip Op 52362(U))The insurer's motion to compel supplemental discovery was premature because the provider had no opportunity to respond to the new demands.
Queens Brooklyn Med. Rehab, P.C. v Allstate Ins. Co. (2011 NY Slip Op 52010(U))The insurer established special circumstances warranting disclosure of the provider's tax documents concerning licensing eligibility.
62-41 Woodhaven Med., P.C. v Adirondack Ins. Exch. (2011 NY Slip Op 50026(U))The insurer's specific licensing concerns established special circumstances warranting disclosure of the provider's tax records.
Q-B Jewish Med. Rehabilitation, P.C. v Allstate Ins. Co. (2012 NY Slip Op 50152(U))The insurer's specific reasons to question the provider's licensing compliance supported discovery of its financial and tax records.