January 31, 2007

Vista Surgical Supplies, Inc. v State Farm Mut. Ins. Co. (2007 NY Slip Op 50163(U))

Headnote

The relevant facts considered by the court in the case of Vista Surgical Supplies, Inc. v State Farm Mut. Ins. Co. included a dispute over first-party no-fault benefits, with the insurance company denying the claims. The main issue decided was whether the insurance company had timely denied the claims, as required by the 30-day prescribed period. The holding of the court was that the insurance company was precluded from raising most defenses, including lack of medical necessity, fraudulent billing, and excessive fees, due to its failure to pay or deny the claims within the prescribed period. However, the insurance company was not precluded from asserting its defense of an insurance fraud scheme, as it raised a triable issue of fact as to whether there was a lack of coverage. As a result, the lower court's denial of the plaintiff's motion for summary judgment was affirmed by the appellate court.

Reported in New York Official Reports at Vista Surgical Supplies, Inc. v State Farm Mut. Ins. Co. (2007 NY Slip Op 50163(U))

Vista Surgical Supplies, Inc. v State Farm Mut. Ins. Co. (2007 NY Slip Op 50163(U)) [*1]

Vista Surgical Supplies, Inc. v State Farm Mut. Ins. Co.

2007 NY Slip Op 50163(U) [14 Misc 3d 135(A)]

Decided on January 31, 2007

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This opinion is uncorrected and will not be published in the printed Official Reports.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 January 31, 2007

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

PRESENT:: PESCE, P.J., RIOS and BELEN, JJ
2005-1963 K C.

Vista Surgical Supplies, Inc. as assignee of Pascuala Garcia, Appellant,
against
State Farm Mutual Insurance Company, Respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Milagros A. Matos, J.), entered October 27, 2005. The order, insofar as appealed from, denied plaintiff’s motion for summary judgment.

Order, insofar as appealed from, affirmed without costs.

In this action to recover assigned first-party no-fault benefits, we do not pass on the propriety of the determination of the court below that plaintiff established its prima facie case, as defendant raises no issue with respect thereto.

Defendant’s assertion that it timely denied the claims lacks merit because the
record does not contain an affidavit from a person with personal knowledge either stating that the denial of claim forms were mailed or setting forth “a sufficiently detailed description of standard office mailing procedure so as to give rise to the presumption of mailing” (S&M Supply Inc. v Progressive Ins. Co., 8 Misc 3d 138[A], 2005 NY Slip Op 51312[U] [App Term, 2d & 11th Jud Dists]). Since defendant failed to establish that it paid or denied the claims within the 30-day prescribed period (11 NYCRR 65-3.8 [c]), it is precluded from raising most defenses including its defense of lack of medical necessity (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]) and its defenses of fraudulent billing and excessive fees (see Careplus Med. Supply Inc. v State-Wide Ins. Co., 11 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2005]).

However, defendant was not precluded from asserting its defense that the collision was in furtherance of an insurance fraud scheme, despite the untimely denial of the claims (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). We find that the affidavit of defendant’s investigator was sufficient to demonstrate that the defense was based upon a [*2]“founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). Since defendant raised a triable issue of fact as to whether there was a lack of coverage, the lower court properly denied plaintiff’s motion for summary judgment (see id.; Zuckerman v City of New York, 49 NY2d 557 [1980]).

Pesce, P.J., Rios and Belen, JJ., concur.