—[*1] Joseph Henig, P.C., Bellmore, N.Y., for appellant.

Stewart H. Friedman (John T. Ryan and Robert F. Horvat of counsel), for respondents.

In an action to recover no-fault insurance benefits, the plaintiff appeals from an order of the Supreme Court, Nassau County (Martin, J.), dated August 5, 2008, which granted the defendants’ motion, inter alia, to vacate a judgment of the same court entered April 10, 2008, upon the defendants’ default in appearing and answering the complaint, in favor of the plaintiff and against the defendants in the principal sum of $16,571.91.

Ordered that the order is affirmed, with costs.

A defendant seeking to vacate a judgment entered upon its default in appearing and answering the complaint must demonstrate a reasonable excuse for its delay in appearing and answering, as well as a meritorious defense to the action (see CPLR 5015 [a] [1]; Verde Elec. Corp. v Federal Ins. Co., 50 AD3d 672, 672-673 [2008]). Here, the defendants established that their employee reasonably believed that the action had been discontinued after she advised the plaintiff’s counsel’s office that no-fault benefits had been exhausted, thereby demonstrating a reasonable excuse for the short period of time in which they failed either to appear or to answer the complaint (see New York Univ. Hosp. Tisch Inst. v Merchants Mut. Ins. Co., 15 AD3d 554, 554-555 [2005]). In addition, the defendants established that the policy limits had been partially exhausted through the payment of claims for prior services (see 11 NYCRR 65-3.15; Nyack [*2]Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 301 [2007]; Montefiore Med. Ctr. v Government Empls. Ins. Co., 34 AD3d 771, 772 [2006]; New York & Presbyt. Hosp. v Allstate Ins. Co., 28 AD3d 528, 528-529 [2006]), thereby demonstrating the existence of a potentially meritorious defense to the action. Finally, the plaintiff did not demonstrate prejudice from the defendants’ relatively short delay in appearing and answering, and public policy favors the resolution of cases on the merits (see Verde Elec. Corp. v Federal Ins. Co., 50 AD3d at 673). Under these circumstances, the Supreme Court providently exercised its discretion in granting that branch of the defendants’ motion which was to vacate the judgment (see St. Vincent’s Hosp. & Med. Ctr. v Allstate Ins. Co., 42 AD3d 525 [2007]; New York & Presbyt. Hosp. v American Home Assur. Co., 28 AD3d 442, 443 [2006]; New York Univ. Hosp. Tisch Inst. v Merchants Mut. Ins. Co., 15 AD3d at 555; cf. New York Univ. Hosp. Rusk Inst. v Illinois Natl. Ins. Co., 31 AD3d 511 [2006]).

The plaintiff’s remaining contentions are without merit. Spolzino, J.P., Covello, McCarthy and Belen, JJ., concur.

[*1]

Second Department, January 20, 2009

Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 2007 NY Slip Op 34402(U), affirmed.

APPEARANCES OF COUNSEL

Stern & Montana, LLP, New York City (Richard Montana of counsel), for appellant.

Joseph Henig, P.C., Bellmore, for respondents.

{**61 AD3d at 14} OPINION OF THE COURT

Dillon, J.

We are asked to determine whether the definition of diagnosis and procedure codes adopted by the United States Department of Health and Human Services (hereinafter HHS) as part of its regulatory authority may be a proper subject for judicial notice under CPLR 4511. If so, we must also determine whether the defined diagnostic codes, in and of themselves, permit a finding that a patient’s hospital care and treatment is wholly outside the scope of no-fault automobile coverage. Until now, we are not{**61 AD3d at 15} aware of any appellate court that has addressed the issue of whether the diagnosis and procedure codes key of the United States government can be judicially noticed by courts, so that it may then be used to decipher no-fault billing forms.

I. Relevant Facts

On July 3, 2006, George Hafford was injured in an automobile accident and received treatment at the plaintiff White Plains Hospital Center (hereinafter White Plains Hospital) from [*2]the date of the accident until August 22, 2006. Hafford was insured by the defendant, Allstate Insurance Company (hereinafter Allstate), under an automobile liability insurance policy that contained a no-fault endorsement. White Plains Hospital rendered a bill for its services to Hafford in the total sum of $26,979.83. Hafford assigned to White Plains Hospital the right to seek reimbursement from Allstate for the amount billed.

On November 7, 2006, White Plains Hospital, as assignee of Hafford, mailed to Allstate by certified mail, return receipt requested, NF-5 and UB-92 forms demanding payment of the sum of $26,979.83. The UB-92 form contained code numbers to identify the diagnoses that had been made of Hafford’s conditions and the treatments provided to him in furtherance of the diagnoses. The delivery of the forms to Allstate on November 8, 2006 is not at issue. White Plains Hospital alleges that pursuant to Insurance Law § 5106 (a) and 11 NYCRR 65-3.8 (a) (1), Allstate’s payment of no-fault benefits became due on December 8, 2006, but Allstate failed to make payment or issue a denial of claim.

This action ensued. Allstate’s answer to the complaint set forth 11 affirmative defenses, including the “fourth” affirmative defense that the injuries for which Hafford received treatment did not arise out of the use or operation of an insured motor vehicle and, as such, are not covered by its policy of insurance.

The plaintiffs moved for summary judgment, submitting, in connection with the third cause of action asserted by White Plains Hospital, documentary evidence to establish the service by White Plains Hospital upon Allstate of the required billing documents for no-fault reimbursement and Allstate’s failure to either pay the claim or issue an appropriate denial. Allstate opposed the motion and, by cross motion, sought summary judgment in its favor dismissing the complaint. With respect to the third cause of action asserted by White Plains Hospital, Allstate{**61 AD3d at 16} argued that it was entitled to summary judgment on the ground that the treatment afforded to Hafford was unrelated to his motor vehicle accident. Specifically, Allstate’s counsel provided the court with the diagnosis and procedure codes key from the official Web site of HHS, Centers for Medicare and Medicaid Services. Allstate requested that the Supreme Court take judicial notice of the codes and their definitions, as public documents. According to the codes key, Hafford’s diagnoses and treatment at White Plains Hospital included rapid heart rate associated with infection, acute and chronic respiratory failure, heart damage caused by alcoholism, convulsions, potassium deficiency, blood poisoning, brain damage caused by lack of oxygen, and expectoration of blood. Allstate’s counsel argued, without a supporting affidavit from a medical expert, that these code-defined conditions could not have been related to the automobile accident or, at least, raised an issue of fact as to whether the conditions arose from the accident.

The plaintiffs opposed Allstate’s cross motion for summary judgment by raising two principal arguments in connection with the third cause of action. First, White Plains Hospital argued that the interpretation of the billing codes cannot be judicially noticed as it does not rest upon knowledge or sources widely accepted as unimpeachable. Second, White Plains Hospital argued that Allstate’s counsel was not qualified as a medical expert to render an opinion on whether the hospital’s care and treatment was, or was not, related to the underlying automobile accident.

In the order appealed from dated November 15, 2007, the Supreme Court held, with respect to the third cause of action, that White Plains Hospital established its demand upon proper forms that Allstate pay the sum of $26,979.83, and that Allstate failed to pay the claim or issue a denial of claim within the required 30 days thereafter (2007 NY Slip Op 34402[U]). With respect to Allstate’s opposition and the cross motion, the Supreme Court implicitly took judicial notice of the HHS codes key and held that counsel’s affirmation, which argued that invoiced treatment was unrelated to the automobile accident, was medically insufficient. The Supreme Court, inter alia, granted that branch of the plaintiffs’ motion which was for summary judgment on the third cause of action asserted by White [*3]Plains Hospital. For the reasons set forth below, we affirm the order insofar as appealed from.{**61 AD3d at 17}

II. The Payment of First-Party Benefits Under Insurance Law § 5106

Article 51 of the Insurance Law is known as the “Comprehensive Motor Vehicle Insurance Reparations Act” and is commonly referred to as the “No-Fault Law.” The purpose and objective of this statute is to ” ‘assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them’ ” (New York Hosp. Med. Ctr. of Queens v Motor Veh. Acc. Indem. Corp., 12 AD3d 429, 430 [2004], quoting Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225 [1986]).

Section 5106 of article 51 is entitled “Fair claims settlement” and provides, in pertinent part, that

“(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month. If a valid claim or portion was overdue, the claimant shall also be entitled to recover his attorney’s reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations.”

Pursuant to the statutory and regulatory framework governing the payment of no-fault benefits, insurance companies are required either to pay or deny a claim for first-party benefits within 30 days of receipt of the claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; [c]; Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008]; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 569 [2004]). Within 10 business days after receipt of the claim notice, the insurer may send an initial request for verification of the claim (see 11 NYCRR 65-3.5 [a]). After receipt of verification, any additional verification required by the insurer to establish proof of claim shall be requested within 15 business days of receipt (see 11 NYCRR 65-3.5 [b]). The 30-day period in which to either pay or deny a claim is{**61 AD3d at 18} extended where the insurer makes a request for additional verification within the requisite 15-day time period (see Montefiore Med. Ctr. v Government Empls. Ins. Co., 34 AD3d 771 [2006]; New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512 [2006]). Thus, a timely additional verification request tolls the insurer’s time within which to pay or deny a claim (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d at 563; New York & Presbyt. Hosp. v Countrywide Ins. Co., 44 AD3d 729, 730 [2007]).

Eleven years ago, the New York Court of Appeals carved out a narrow exception to the requirement that an insurer must pay or deny a claim within the 30-day period prescribed by the No-Fault Law. The Court of Appeals held that an insurer “may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d at 563). The Court stressed, however, that the lack of coverage “exceptional exemption” does not apply where the insurer claims that the hospital treatments were medically excessive, since the defense of medical excessiveness seeks to excuse only part, but not all, of the no-fault benefits (90 NY2d at 199, 202). Thus, where an insurer alleges excessive treatment as a basis for denying coverage, a denial of claim must be served within the [*4]time-sensitive deadline of the No-Fault Law, at least as to the portion of the demand that is deemed excessive.

Two years later in Mount Sinai Hosp. v Triboro Coach (263 AD2d 11 [1999]), this Court applied the Central General Hospital rationale and, in so doing, explained that the insurer who asserts entitlement to the “exceptional exemption” must “come forward with proof in admissible form to establish ‘the fact’ or the evidentiary ‘found[ation for its] belief’ that the patient’s treated condition was unrelated to his or her automobile accident” (id. at 19-20). This Court determined that in applying Central General Hospital, “the question of whether an injury was entirely preexisting (i.e., not covered) or was in whole or in part the result of an insured accident (i.e., covered) is hybrid in nature, and cannot be resolved without recourse to the medical facts” (id. at 19 [emphasis added]).

This Court further emphasized that the underlying purpose of the No-Fault Law would be undermined if a plaintiff hospital were required to prove as a threshold matter that a patient’s{**61 AD3d at 19} condition was caused by the accident and unrelated to his or her entire medical history. Under such circumstances, “insurers would be motivated to refrain from issuing timely disclaimers in order to impose such an onerous threshold burden upon claimants” (id. at 20). The burden of proving the lack of a nexus between an accident and medical treatment therefore falls upon the insurer seeking to deny payment (id. at 19-20).

Against this backdrop, the judicially noticed admissibility of the proffered diagnosis and procedure codes key published by HHS, and whether the deciphered codes, if admitted, establish that medical diagnosis and treatment was or was not related in whole or in part to Hafford’s automobile accident, assumes dispositive significance to the resolution of this appeal.

III. Judicial Notice

CPLR 4511 (b) provides that upon request of a party, a court may take judicial notice of federal, state, and foreign government acts, resolutions, ordinances, and regulations, including those of their officers, agencies, and governmental subdivisions. While the concept of judicial notice is elastic (see Richardson, Evidence § 52 [Prince 10th ed]) and applicable to a wide range of subject matter, official promulgations of government appear to be particularly appropriate for judicial notice, given the manner that CPLR 4511 expressly singles them out for such treatment.

Judicial notice has never been strictly limited to the constitutions, resolutions, ordinances, and regulations of government, but has been applied by case law to other public documents that are generated in a manner which assures their reliability. Thus, the concept has been applied to census data (see Affronti v Crosson, 95 NY2d 713, 720 [2001]; Buffalo Retired Teachers 91-94 Alliance v Board of Educ. for City School Dist. of City of Buffalo, 261 AD2d 824, 827 [1999]; Mackston v State of New York, 126 AD2d 710 [1987]), agency policies (see Matter of Albano v Kirby, 36 NY2d 526, 532 [1975]), certificates of corporate dissolution maintained by the Secretary of State (see Brandes Meat Corp. v Cromer, 146 AD2d 666, 667 [1989]), the resignation of public officials (see Matter of Soronen v Comptroller of State of N.Y., 248 AD2d 789, 791 [1998]; Matter of Maidman, 42 AD2d 44, 47 [1973]), legislative proceedings (see Outlet Embroidery Co. v Derwent Mills, 254 NY 179, 183 [1930]), legislative journals (see Browne v City of New York, 213 App Div 206, 233 [1925]), the consumer price index (see Sommers v Sommers, 203{**61 AD3d at 20} AD2d 975, 976 [1994]; City of Hope v Fisk Bldg. Assoc., 63 AD2d 946, 947 [1978]), the location of real property recorded with a clerk (see Andy Assoc. v Bankers Trust Co., 49 NY2d 13, 23-24 [1979]), death certificates maintained by the Department of Health (see Matter of Reinhardt, 202 Misc 424, 426 [1952]), and undisputed court records and files (see e.g. Perez v New York City Hous. Auth., 47 AD3d 505 [2008]; Walker v City of New York, 46 AD3d 278, 282 [2007]; Matter of Khatibi v Weill, 8 AD3d 485 [2004]; Matter of Allen v Strough, 301 AD2d 11, 18 [2002]). Even material derived from official government Web sites may be the subject of judicial notice (see Munaron v Munaron, 21 Misc 3d 295 [Sup Ct, Westchester County 2008]; Parrino v Russo, 19 Misc 3d 1127[A], 2008 NY Slip Op 50925[U] [Civ Ct, Kings County 2008]; Nairne v Perkins, 14 Misc 3d 1237[A], 2007 NY Slip Op 50336[U] [Civ Ct, Kings County 2007]; Proscan Radiology of Buffalo v Progressive Cas. Ins. Co., 12 Misc 3d 1176[A], 2006 NY Slip Op 51242[U] [Buffalo City Ct 2006]).

White Plains Hospital argues that the codes key available on the HHS Web site does not qualify for judicial notice by relying upon the language of this Court in Ptasznik v Schultz (247 AD2d 197 [1998]). In Ptasznik, then-Justice Albert Rosenblatt defined the test for judicial notice as “whether the fact rests upon knowledge or sources so widely accepted and unimpeachable that it need not be evidentiarily proven” (id. at 198, citing Hunter v New York, Ontario & W. R.R. Co., 116 NY 615 [1889]). White Plains Hospital maintains that code numbers which require deciphering do not constitute general information widely accepted by the average layperson. However, Ptasznik discusses specifically, and the universe of case law recognizes generally, two disjunctive circumstances where information may be judicially noticed. The first is when information “rests upon knowledge . . . [that is] widely accepted” (Ptasznik v Schultz, 247 AD2d at 198 [emphasis added]) such as calendar dates, geographical locations, and sunrise times (id. at 199). The second “rests upon . . . sources [that are] widely accepted and unimpeachable” (id. at 198 [emphasis added]), such as reliable uncontested governmental records.

Here, the diagnosis and procedure codes key maintained by the United States Government on its HHS Web site is of sufficient authenticity and reliability that it may be given judicial notice. The accuracy of the codes key is not contested by White Plains Hospital, and is not subject to courtroom fact-finding (see{**61 AD3d at 21} Affronti v Crosson, 95 NY2d at 720). The fact that the code system might not be readily understood by the lay public is of no significance, as the information is proffered for judicial notice not on the basis of being generally understood by the public, but rather, on the basis of its reliable source.

We hold, therefore, that the diagnosis and procedure codes key published by the United States Government on its HHS Web site may properly be given judicial notice (see CPLR 4511 [b]), as the key is reliably sourced and its accuracy not contested.

Using the codes key in evidence, the appellant, Allstate, accurately deciphered for the Supreme Court the medical diagnoses and treatments administered by White Plains Hospital to Hafford during the course of Hafford’s hospital stay.

IV. The Medical Evidentiary Value of the Deciphered Codes

The plaintiffs established their prima facie entitlement to summary judgment on the third cause of action asserted by White Plains Hospital to recover no-fault benefits on behalf of its assignor, Hafford (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]), by submitting the prescribed statutory billing forms, the affidavit of its biller, the certified mail receipt, and the signed return receipt card referencing the patient and the forms (see Westchester Med. Ctr. v Allstate Ins. Co., 53 AD3d 481 [2008]; Westchester Med. Ctr. v Countrywide Ins. Co., 45 AD3d 676 [2007]; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d at 904; New York & Presbyt. Hosp. v Travelers Prop. Cas. Ins. Co., 37 AD3d 683, 683-684 [2007]). Unlike negligence actions where plaintiffs must prove causation, plaintiffs seeking to recover first party no-fault payments bear no such initial burden, as causation is presumed (see Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 20; Bronx Radiology, P.C. v New York Cent. Mut. Fire Ins. Co., 17 Misc 3d 97, 99 [2007]).

In opposition, Allstate relies upon the judicially-noticed diagnosis and procedure codes key published by HHS to argue, via an attorney’s affirmation, that care and treatment rendered to Hafford by White Plains Hospital was causally unrelated to Hafford’s automobile accident. [*5]

Allstate has failed to come forward with proof in admissible form, as is its burden in opposing summary judgment (see Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067 [1979]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 19{**61 AD3d at 22}-20), to raise a triable issue as to ” ‘the fact or founded belief that the alleged injury does not arise out of an insured incident’ ” (Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 19, quoting Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997] [emphasis omitted]; see New York & Presbyt. Hosp. v Selective Ins. Co. of Am., 43 AD3d 1019, 1020 [2007]). While the existence of the diagnostic codes and the clinical definitions of Hafford’s treated medical conditions may not be in dispute, the question of whether such conditions were wholly unrelated to his automobile accident or not exacerbated by the accident “cannot be resolved without recourse to the medical facts” (Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 19). Here, Allstate’s counsel, in his affirmation, failed to set forth any basis on which to conclude that he was a medical expert qualified to render an opinion on causality (see Contacare, Inc. v CIBA-Geigy Corp., 49 AD3d 1215 [2008]; Hofmann v Toys “R” Us, NY Ltd. Partnership, 272 AD2d 296 [2000]). No physician or other medical expert affidavit was included in Allstate’s submissions to explain the codes, the diagnoses and, most importantly, the causation or exacerbation, or lack of causation or exacerbation of conditions, in relation to the subject automobile accident. The mere deciphered codes, in and of themselves, are insufficient.

We acknowledge that there are rare but recognized instances where medical issues can be resolved by a trier of fact without resort to expert opinion. A classic example is if a surgeon leaves a foreign object inside a patient’s body, the absence of the surgeon’s proper exercise of care and skill speaks for itself without the need for an expert (see Kambat v St. Francis Hosp., 89 NY2d 489, 496 [1997]). Here, Allstate argues that no medical expert affidavit is required (see St. Luke’s Roosevelt Hosp. v Allstate Ins. Co., 303 AD2d 743, 744 [2003]) as “the codes speak for themselves and merely require the application of simple logic.” We do not agree. The deciphered codes identify Hafford’s diagnoses and treatments but do not address causality. Certain of the deciphered codes such as infection, acute respiratory failure, convulsions, and expectoration of blood are not necessarily conditions unrelated to an automobile accident. An expert’s affidavit is required for a court to conclude the absence of proximate causality as to these conditions (see Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 19) or to at least find a nonspeculative question of fact as to causality (see State Farm Mut. Auto. Ins. Co. v Stack, 55 AD3d 594 [2008]; New York & Presbyt. Hosp. v Selective Ins. Co. of Am., 43 AD3d at 1020).{**61 AD3d at 23} The remaining coded conditions, which on their face might appear unrelated to an automobile accident, could conceivably represent exacerbations of preexisting conditions in the absence of expert medical opinion attesting otherwise. Exacerbations of preexisting conditions are covered by the No-Fault Law (see Wolf v Holyoke Mut. Ins. Co., 3 AD3d 660, 660-661 [2004]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 18).

Allstate’s submissions therefore suffer from an inescapable paradox. If the diagnostic codes pertain to conditions unrelated to Hafford’s accident, Allstate was required to submit an affidavit from a medical expert (see Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 19). If, on the other hand, the diagnostic codes represent conditions related to the accident, then Allstate was required to either pay the no-fault claim, or deny payment on other grounds, within 30 days of receiving the demand (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d at 563; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d at 903; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d at 569). Either way, Allstate failed to raise a triable issue of fact in admissible evidentiary form sufficient to warrant denial of summary judgment in favor of White Plains Hospital on the third cause of action.

Based upon the foregoing, we conclude that the Supreme Court properly granted that branch of the plaintiffs’ motion which was for summary judgment on the third cause of action [*6]asserted by White Plains Hospital.

To the extent that Allstate argues that the branch of its cross motion which was for summary judgment dismissing the third cause of action should have been granted, this contention is not properly before this Court as Allstate’s notice of appeal limited the scope of the appeal to that part of the Supreme Court’s order which awarded summary judgment to White Plains Hospital on the third cause of action (see CPLR 5515 [1]; Spencer v Crothall Healthcare, Inc., 38 AD3d 527, 528 [2007]; Yannotti v Four Bros. Homes at Heartland Condominium I, 24 AD3d 659, 660-661 [2005]).

Accordingly, we affirm the order insofar as appealed from.

Fisher, J.P., Miller and Eng, JJ., concur.

Ordered that the order is affirmed insofar as appealed from, with costs.

—[*1] Bruno, Gerbino & Soriano, LLP, Melville, N.Y. (Charles W. Benton of counsel), for appellant.

Joseph Henig, P.C., Bellmore, N.Y., for respondents.

In an action to recover no-fault medical benefits under two insurance contracts, the defendant appeals from an order of the Supreme Court, Nassau County (McCarty, J.), dated February 28, 2008, which denied its motion pursuant to CPLR 5015 (a) (1) to vacate a judgment of the same court dated September 18, 2007, entered upon its default in appearing or answering the complaint, which was in favor of the plaintiffs and against it in the principal sum of $43,030.53.

Ordered that the order is affirmed, with costs.

The Supreme Court providently exercised its discretion in denying the defendant’s motion pursuant to CPLR 5015 (a) (1) to vacate a judgment entered upon its default in appearing or answering the complaint since it failed to demonstrate a reasonable excuse for the default (see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Giovanelli v Rivera, 23 AD3d 616 [2005]). The plaintiffs established that they effectuated service upon the defendant through delivery of the summons and complaint upon the Assistant Deputy Superintendent and Chief of Insurance (see Insurance Law § 1212; Hospital for Joint Diseases v Lincoln Gen. Ins. Co., 55 AD3d 543 [2008]; New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 968 [2006]; Kaperonis v Aetna Cas. & Sur. Co., 254 AD2d 334 [1998]; see also CPLR 311 [a] [1]). The defendant did not contend that the address on file with the Superintendent of Insurance was incorrect, and the mere denial of receipt of the summons and complaint was insufficient to rebut the presumption of proper service created by the affidavit of service (see Commissioners of State Ins. Fund v Nobre, Inc., 29 AD3d 511 [2006]; [*2]Carrenard v Mass, 11 AD3d 501 [2004]; Truscello v Olympia Constr., 294 AD2d 350, 351 [2002]). Even if the defendant’s motion were treated as one made pursuant to CPLR 317 (see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 143 [1986]; Mann-Tell Realty Corp. v Cappadora Realty Corp., 184 AD2d 497, 498 [1992]), the defendant failed to meet its burden of showing that it did not receive actual notice of the summons in time to defend the action (see General Motors Acceptance Corp. v Grade A Auto Body, Inc., 21 AD3d 447 [2005]; cf. Hospital for Joint Diseases v Lincoln Gen. Ins. Co., 55 AD3d 543 [2008]). Skelos, J.P., Dillon, Carni and Leventhal, JJ., concur.

[*1]

Second Department, December 30, 2008

Globe Surgical Supply v GEICO Ins. Co., 12 Misc 3d 1185(A), 2006 NY Slip Op 51446(U), appeal dismissed.

APPEARANCES OF COUNSEL

Locks Law Firm, PLLC, New York City (Seth R. Lesser and Andrew P. Bell of counsel), and Manoussos & Associates, Garden City, for appellant (one brief filed).

O’Melveny & Myers, LLP, New York City (Ralph P. DeSanto, Paul R. Koepff and Benjamin B. Bianco of counsel), for respondent.

{**59 AD3d at 130} OPINION OF THE COURT

Dickerson, J.

These appeals require us to address whether it is appropriate to certify a class action challenging the validity, under regulations in effect prior to October 6, 2004, of a no-fault insurer’s use of the prevailing geographic rate or the reasonable and customary rate for health care services in calculating first-party benefits due to a claimant or health-care provider.

In 2004 the plaintiff, Globe Surgical Supply (hereinafter Globe), as assignee of Remy Gallant, commenced the instant class action alleging, inter alia, that the defendant, GEICO Insurance Company (hereinafter GEICO), violated the regulations promulgated by the New York State Insurance Department (hereinafter the Insurance Department) pursuant to the no-fault provisions of the Insurance Law, by systematically reducing its reimbursement for medical equipment and supplies, specifically, durable medical equipment (hereinafter DME), based on what it deemed to be “the prevailing rate in the geographic location of the provider,” or “the reasonable and customary rate for the item billed.” Specifically, Globe alleges that GEICO wrongfully adjusted or reduced reimbursement payments of claims for DME subject to former part E (11{**59 AD3d at 131} NYCRR Appendix 17-C) (hereinafter former Part E) of the 23rd Amendment to Insurance Department Regulation 83 (11 NYCRR part 68), to an amount less than the amount charged in the proof of claim.

[*2]No-Fault Statutory and Regulatory Scheme

The Comprehensive Motor Vehicle Reparations Act (Insurance Law §§ 5101-5109 [hereinafter the No-Fault Law]) provides for the payment of first-party benefits to persons injured in automobile accidents involving New York State residents and/or vehicles registered in the state (see Insurance Law § 5103 [a]). “First party benefits” are defined as “payments to reimburse a person for basic economic loss” (Insurance Law § 5102 [b]). “Basic economic loss” includes “all necessary expenses incurred for . . . medical, hospital . . . and prosthetic services,” such as DME (Insurance Law § 5102 [a] [1]). “Payments hereunder for necessary medical expenses shall be subject to the limitations and requirements of section 5108 of the New York Insurance Law” (11 NYCRR 65-1.1 [d]). Insurance Law § 5108 authorizes the Superintendent of Insurance (hereinafter the Superintendent) to establish a fee schedule for DME, which had been, at all times relevant to this appeal, set forth in former Part E. Former Part E regulated and set the amount of reimbursement to providers of DME as follows: “[f]or medical equipment and supplies (e.g., TENS units, soft cervical collars) provided by a physician or medical equipment supplier, the maximum permissible charge is 150 percent of the documented cost of the equipment to the provider.”^[FN1]

Regulation 68

The Superintendent also promulgated Regulation 68, codified at 11 NYCRR part 65, to provide the specific procedural details for the payment of benefits. Under Regulation 68, the injured party is required to notify the insurer and to submit a written proof of claim for medical treatment no later than 45 days after services are rendered. Typically, as is the case here, the insured party orders DME from the supplier (e.g. Globe) and the supplier is assigned the right to claim reimbursement. Upon receipt of proof of claim, an insurer has 15 business days within which{**59 AD3d at 132} to request “any additional verification required by the insurer to establish proof of claim” (11 NYCRR 65-3.5 [b]). An insurance company must pay or deny the claim within 30 calendar days after receipt of the proof of claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). “In the event any person making a claim for first-party benefits and the Company do not agree regarding any matter relating to the claim, such person shall have the option of submitting such disagreement to arbitration” (11 NYCRR 65-1.1 [d]).

The Litigation

In a complaint dated July 19, 2004, Globe alleged that GEICO

“[a]t some point in time . . . ceased paying claims in accordance with the terms of the [no-fault] regulations and . . . instituted a systematic pattern and practice of reviewing claims for reimbursement against what it deemed to be the ‘prevailing rate in the geographic location of the provider,’ ‘the reasonable and customary rate for [the] item billed,’ or similar rationales . . . There is nothing in [former] Part E which permits an insurer to reduce reimbursements for [DME] by such factors as reasonable and customary charges or geographically prevailing rates. Yet, that is precisely what defendant GEICO is doing and has been doing.”

Specifically, Globe alleged that its assignor, Remy Gallant, was injured in an accident on February 10, 2001, with a GEICO policyholder. According to the complaint, Gallant purchased a transcutaneous electrical nerve stimulator (hereinafter the TENS unit) from Globe, which cost $340. Globe submitted the claim to GEICO, as assignee of Gallant, in the amount of $510 (representing [*3]150% of the actual cost). On May 23, 2001, GEICO denied the claim for that amount and only reimbursed Globe in the amount of $200. As noted on Gallant’s claim form, GEICO partially denied the claim because the cost submitted was “far in excess of the industry average which is $107.82 . . . Based on this, a reasonable reimbursement is 150% over this amount which is $161.73. However, in consideration of the potential range, $200.00 will be reimbursed.”

Globe sought injunctive relief and asserted four causes of action sounding in (1) violation of the No-Fault Law, (2) breach of contract, (3) violation of General Business Law § 349, and (4) unjust enrichment. The Supreme Court granted that branch of GEICO’s motion which was to dismiss the first cause of action{**59 AD3d at 133} for failure to state a cause of action, and those branches of GEICO’s motion which were to dismiss the third and fourth causes of action for lack of standing. In denying that branch of GEICO’s motion which was to dismiss the second cause of action alleging breach of contract, the Supreme Court noted that the

“plaintiff’s claim is based upon Insurance Department Regulations, which are part of the policy as a matter of law (see Insurance Law § 5103 [h]) and which are specifically set forth in plaintiff’s complaint . . . Insurance policies covering other members of the proposed class need not be identified at this stage of the action.”

Globe purportedly commenced this action on behalf of itself and all members of a class “consisting of all persons who had reimbursement payments of claims for medical equipment and supplies subject to [former] Part E of the Twenty-Third Amendment to Regulation No. 83 (11 NYCRR 68) (‘Part E Reimbursements’) adjusted or reduced by Geico.”

GEICO answered the complaint and set forth numerous affirmative defenses and counterclaims alleging fraud and unjust enrichment against Globe and the class. In particular, GEICO asserted that Globe and other prospective class members committed fraud by

“engag[ing] in a scheme to exploit the payment formula . . . in order to collect fraudulent charges for [DME] purportedly provided to individuals who were injured in automobile accidents . . . Among other things, Globe . . . charged grossly inflated prices for the supplies it purportedly sold . . . and submitted false ‘documentation’ of its costs . . . GEICO [seeks] to recover the money that Globe . . . has stolen from the GEICO Companies (and if this case is certified as a class action, that other members of the purported class have stolen) by submitting thousands of fraudulent charges for DME.”

Prior to the submission of the motion at issue on this appeal, the parties conducted discovery, which included the depositions of Globe’s principal, Jean M. Francois, and a supervisor at GEICO, Valerie Coffey. Francois testified that he owned Globe, which dispenses DME to patients. Francois acknowledged that P.Z.F. Management Company, Inc., was the actual name of the company doing business as Globe. During his deposition, Francois invoked the Fifth Amendment to the United States Constitution{**59 AD3d at 134} when asked questions about shareholders’ meetings, tax preparation, his arrest for insurance fraud,^[FN2] and his knowledge of other supply companies. Francois stated that, during the normal course of business, he paid for DME by check. Repeatedly throughout his deposition, [*4]Francois was shown documents that had the same invoice number and dates but represented the purchase of two different items of DME. Francois was also shown documents from Allstate Insurance Company representing the same invoice numbers submitted for various DME items. Francois had no explanation as to why he submitted the same invoice number numerous times to GEICO, representing the purchase of different items of DME. When asked to explain why the same invoice for the purchase of one lumbosacral support custom fabric was submitted 15 times to both GEICO and Allstate, Francois responded: “since that’s what I pay for it and I stick with that one invoice and send it out . . . it wasn’t required or specifically by any insurance company to ask me to send that specific invoice that matches the claim.”

Valerie Coffey averred that she was the personal injury protection manager and supervisor at GEICO’s Woodbury office, which processed no-fault claims during the relevant time period. Coffey testified that state guidelines required receipt of proof of claim. She acknowledged that, once received, GEICO had 30 days to deny or pay the bill. Coffey testified that it was her understanding that the 150% reimbursement for DME supplies should be based on reasonable cost, which she defined as a “bona fide arm’s length transaction.” Coffey stated that in cases where GEICO saw inflated pricing for DME supplies, it performed a survey of multiple vendors and wholesalers and provided reimbursement based on the amount determined by the market survey, rather than 150% of the amount set forth on the submitted invoice. The first survey applied to the TENS unit and the second survey covered cervical collars, pillows, back massagers, lumbosacral support, and thermophore. Coffey{**59 AD3d at 135} explained that, based on the survey, the average price for a TENS unit was in the $160 range. Coffey stated that, to be on the “fair side,” GEICO decided to reimburse them at the rate of $200 per unit, but that GEICO did not reimburse up to 150% of the amount set forth on the invoice.

Coffey stated that there were more than 10 DME suppliers who submitted claims to GEICO for reimbursement. When asked if the suppliers who submitted claims for reimbursement numbered more than 100, Coffey responded “once you get to a hundred, I’d be speculating.”

On March 3, 2006, Globe moved, inter alia, pursuant to CPLR 901 and 902 for class certification on behalf of a class of all persons who had reimbursement payments of claims for medical equipment and supplies subject to former Part E adjusted or reduced by GEICO to an amount less than the amount charged in the proof of claim,^[FN3] specifically to a “reasonable reimbursement of 150%” of either the “industry average” or “of the average retail price.” GEICO opposed the motion. The Supreme Court denied the motion and, upon granting that branch of Globe’s subsequent motion which was for leave to reargue, adhered to the original determination.

Class Certification: Burden of Proof and Liberal Construction

Article 9 of the CPLR is to be “liberally construed” (Beller v William Penn Life Ins. Co. of N.Y., 37 AD3d 747, 748 [2007]; Wilder v May Dept. Stores Co., 23 AD3d 646, 649 [2005]; Jacobs v Macy’s E., Inc., 17 AD3d 318, 319 [2005]; Kidd v Delta Funding Corp., 289 AD2d 203 [2001]; Friar v Vanguard Holding Corp., 78 AD2d 83, 91 [1980]; see generally 3 Weinstein-Korn-Miller, NY Civ Prac ¶¶ 901.04, 901.05, 901.20 [2d ed]) in favor of the granting of class certification if all of the prerequisites of CPLR 901 (a) (1)-(5) (see Matter of Colt Indus. Shareholder Litig., 77 NY2d 185, 194 [1991]; Klein v Robert’s Am. Gourmet Food, Inc., 28 AD3d 63, 69 [2006]; Ackerman v Price Waterhouse, 252 AD2d 179, 191 [1998]; Friar v Vanguard Holding Corp., 78 AD2d at 90-91) and CPLR [*5]902 (1)-(5) (see Ackerman v Price Waterhouse, 252 AD2d at 191) are met.

The prerequisites articulated in CPLR 901 (a) include proof that the proposed class is so numerous that joinder of all members is impracticable, that common questions of law and{**59 AD3d at 136} fact applicable to the class predominate over questions affecting only individual members, that claims or defenses of the representative parties are typical of the claims or defenses of the class, and that the class action is superior to other available methods for the fair and efficient adjudication of the controversy.

The proposed class action must also meet the prerequisites of CPLR 902 (1)-(5). The relevant factors articulated in CPLR 902 (1) (“[t]he interest of members of the class in individually controlling the prosecution or defense of separate actions”), CPLR 902 (2) (“[t]he impracticability or inefficiency of prosecuting or defending separate actions”) and CPLR 902 (3) (“[t]he extent and nature of any litigation concerning the controversy already commenced by or against members of the class”) may, under the circumstances of this case, be subsumed under the prerequisite of superiority (see CPLR 901 [a] [5]). CPLR 902 (4) requires consideration of “[t]he desirability or undesirability of concentrating the litigation of the claim in the particular forum.” The selected forum is Nassau County, which is appropriate given the nature of the claims asserted (see Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A], 2006 NY Slip Op 51969[U], *5 [2006], affd 50 AD3d 357 [2008] [“(T)he forum is appropriate, as the Public Works Projects were located in New York”]; Mazzocki v State Farm Fire & Cas. Co., 170 Misc 2d 70, 72 [1996] [“under the New York venue statute a class action is properly venued if at least one member of the class resides in the county where the action was brought”]) and the absence of a forum selection clause (see Boss v American Express Fin. Advisors, Inc., 6 NY3d 242, 247 [2006] [“Forum selection clauses are enforced because they provide certainty and predictability in the resolution of disputes”]; Rocco v Pension Plan of N.Y. State Teamsters Conference Pension & Retirement Fund, 5 Misc 3d 1027[A], 2004 NY Slip Op 51580[U], *2 [2004] [motion to transfer purported class action from Kings County to Onondaga County as a more convenient forum granted as “the rules of the Pension Fund mandate that any action brought against it be commenced in the County of Onondaga”]). Finally, CPLR 902 (5) requires consideration of “[t]he difficulties likely to be encountered in the management of a class action.” The determination to grant class action certification rests in the sound discretion of the trial court (see Small v Lorillard Tobacco Co., 94 NY2d 43, 52-53 [1999]; Tosner v Town of Hempstead, 12 AD3d 589, 590 [2004]; Liechtung v Tower Air, 269 AD2d 363, 364 [2000]). The primary issue on a motion for class certification{**59 AD3d at 137} is whether the claims as set forth in the complaint can be efficiently and economically managed by the court on a classwide basis. The class representative has the burden of establishing the prerequisites of certification (see Kings Choice Neckwear, Inc. v DHL Airways, Inc., 41 AD3d 117 [2007]; Beller v William Penn Life Ins. Co. of N.Y., 37 AD3d 747, 748 [2007]; Rabouin v Metropolitan Life Ins. Co., 25 AD3d 349, 350 [2006]; Rallis v City of New York, 3 AD3d 525, 526 [2004]; Liechtung v Tower Air, 269 AD2d at 364; Ackerman v Price Waterhouse, 252 AD2d 179 [1998]; Canavan v Chase Manhattan Bank, 234 AD2d 493, 494 [1996]).

Class Definition

On a motion for class certification, the court must be convinced that the proposed class is capable of being identified (see Colbert v Rank Am., 1 AD3d 393, 394-395 [2003]; Lichtman v Mount Judah Cemetery, 269 AD2d 319, 320-321 [2000]; Mitchell v Barrios-Paoli, 253 AD2d 281, 291 [1999]; Canavan v Chase Manhattan Bank, 234 AD2d at 494). Here, the class has been clearly defined as

“all persons who had reimbursement payments of claims for medical equipment and supplies subject to [former] Part E of the Twenty-Third Amendment to Regulation No. 83 (11 NYCRR 68) . . . adjusted or reduced by Geico based upon an ‘industry average’ to a ‘reasonable reimbursement of 150%’ of the ‘industry average’ or ‘of the average retail price,’ to an amount less than the amount charged in the proof of claim.”

[*6]Numerosity

CPLR 901 (a) provides that a class action may be maintained if, inter alia, “1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable.” GEICO did not challenge numerosity in its opposition to Globe’s original motion, but instead first raised the issue in its opposition to Globe’s motion for leave to reargue. As such, GEICO has waived any challenge to numerosity (cf. Friar v Vanguard Holding Corp., 78 AD2d at 96).

Nonetheless, the minimum number permissible may depend on a variety of factors. “There is no ‘mechanical test’ to determine whether . . . numerosity . . . has been met, nor is there a set rule for the number of prospective class members which must exist before a class is certified” (id. at 96 [citations{**59 AD3d at 138} omitted]). “Each case depends upon the particular circumstances surrounding the proposed class and the court should consider the reasonable inferences and commonsense assumptions from the facts before it” (id. [citations omitted]). In any event, the proposed class herein is, at a minimum, between 10 and 100 DME providers and, hence, the numerosity requirement is met (see Klakis v Nationwide Leisure Corp., 73 AD2d 521, 522 [1979] [class certification properly denied where putative class consisted of only 21 individuals]; Caesar v Chemical Bank, 118 Misc 2d 118, 119 [1983], affd 106 AD2d 353 [1984], mod 66 NY2d 698 [certified class of 39 bank employees]; Pajaczek v CEMA Constr. Corp., 18 Misc 3d 1140[A], 2008 NY Slip Op 50386[U], *3 [2008] [“Here, the numerosity requirement has been satisfied with forty class members. The class, as defined, is narrowly defined to avoid being over inclusive, but large enough that joinder is not practicable”]; Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A], 2006 NY Slip Op 51969[U], *2 [2006], quoting Dornberger v Metropolitan Life Ins. Co., 182 FRD 72, 77 [1998] [“It has, however, been held that ‘the threshold for impracticability of joinder seems to be around forty’ “]; see also Philadelphia Elec. Co. v Anaconda Am. Brass Co., 43 FRD 452 [1968] [class of 25 members certified]; Bernstein v American Family Ins. Co., 2005 WL 1613776, *2 [Ill Cir Ct 2005] [“If the class has more than forty people in it, numerosity is satisfied; if the class has less than twenty-five people in it, numerosity is probably lacking, if the class has between twenty-five and forty, there is no automatic rule and other factors . . . become relevant”]).

Common Questions of Law or Fact

CPLR 901 (a) (2) provides that there must be “questions of law or fact common to the class which predominate over any questions affecting only individual members.” Since the enactment of CPLR article 9 in 1975, there has been some reluctance on the part of New York courts to certify some types of class actions, e.g., (1) physical injury and property damage mass tort class actions (see Catalano v Heraeus Kulzer, Inc., 305 AD2d 356 [2003]; Lieberman v 293 Mediterranean Mkt. Corp., 303 AD2d 560 [2003]; Aprea v Hazeltine Corp., 247 AD2d 564 [1998]; cf. Osarczuk v Associated Univs., Inc., 36 AD3d 872 [2007]; Fleming v Barnwell Nursing Home & Health Facilities, 309 AD2d 1132 [2003]; Godwin Realty Assoc. v CATV Enters., 275 AD2d 269 [2000]; Matter of Arroyo v State of New York, 12 Misc 3d 1197[A], 2006 NY Slip Op 51606[U] [2006]; Cunningham v{**59 AD3d at 139} American Home Prods. Corp., NYLJ, Sept. 21, 1999, at 26, col 5), (2) class actions challenging governmental operations (see Mahoney v Pataki, 98 NY2d 45 [2002]; Jamie B. v Hernandez, 274 AD2d 335 [2000]; Davis v Croft, 237 AD2d 163 [1997]; cf. New York City Coalition to End Lead Poisoning v Giuliani, 245 AD2d 49 [1997]; Chalfin v Sabol, 247 AD2d 309 [1998]; Yusuf v City of New York, 309 AD2d 721 [2003]; Matter of Holcomb v O’Rourke, 255 AD2d 383 [1998]; Watts v Wing, 308 AD2d 391 [2003]), and (3) class actions seeking a penalty or minimum recovery, which are prohibited by CPLR 901 (b), including class actions commenced under General Business Law § 340 (the Donnelly Antitrust Act) (see Sperry v Crompton Corp., 8 NY3d 204 [2007]) and the Federal Telephone Consumer Protection Act of 1991 (47 USC § 227) (see e.g. J. A. Weitzman, Inc. v Lerner, Cumbo & Assoc., Inc., 46 AD3d 755 [2007]; Giovanniello v Carolina Wholesale Off. Mach. Co., Inc., 29 AD3d 737 [2006]; Rudgayzer & Gratt v Cape Canaveral Tour & Travel, Inc., 22 AD3d 148 [2005]). As [*7]to the third category of actions, however, if only actual damages are sought, a court may certify a class in actions asserting a violation of General Business Law § 349 (see e.g., Cox v Microsoft Corp., 8 AD3d 39, 40 [2004]; Ridge Meadows Homeowners’ Assn. v Tara Dev. Co., 242 AD2d 947 [1997]; Super Glue Corp. v Avis Rent A Car Sys., 132 AD2d 604, 606 [1987]; Lawlor v Cablevision Sys. Corp., 15 Misc 3d 1111[A], 2007 NY Slip Op 50580[U] [2007]) and the Federal Telephone Consumer Protection Act of 1991 (see e.g. J. A. Weitzman, Inc. v Lerner, Cumbo & Assoc., Inc., 46 AD3d 755, 756 [2007]). Nonetheless, the courts have uniformly certified breach of contract class actions, notwithstanding differing individual damages (see discussion below on damages within the context of the requirements of CPLR 901 [a] [2]), where, as here, there is uniformity in contractual agreements and/or statutorily imposed obligations (see Beller v William Penn Life Ins. Co. of N.Y., 37 AD3d 747, 748 [2007]; Wilder v May Dept. Stores Co., 23 AD3d 646, 649 [2005]; Jacobs v Macy’s E., Inc., 17 AD3d 318, 320 [2005]; Cherry v Resource Am., Inc., 15 AD3d 1013 [2005]; Freeman v Great Lakes Energy Partners, L.L.C., 12 AD3d 1170, 1171 [2004]; Englade v HarperCollins Publs., 289 AD2d 159, 160 [2001]; Broder v MBNA Corp., 281 AD2d 369, 371 [2001]; Colbert v Rank Am., 295 AD2d 302 [2002]; Makastchian v Oxford Health Plans, 270 AD2d 25, 26 [2000]; Liechtung v Tower Air, 269 AD2d at 364; Taylor v American Bankers Ins. Group, 267 AD2d 178 [1999]; Hoerger v Board of Educ. of Great Neck Union{**59 AD3d at 140} Free School Dist., 98 AD2d 274, 283 [1983]; Gross v Ticketmaster, 5 Misc 3d 1005[A], 2004 NY Slip Op 51199[U] [2004]; Amalfitano v Sprint Corp., 4 Misc 3d 1027[A], 2004 NY Slip Op 51076[U] [2004]; Gilman v Merrill Lynch, Pierce, Fenner & Smith, 93 Misc 2d 941, 944 [1978]; Guadagno v Diamond Tours & Travel, 89 Misc 2d 697, 699 [1976]; Feldman v Quick Quality Rests., Inc., NYLJ, July 22, 1983, at 12, col 5).

Predominance of Common Questions

This Court held, in Friar v Vanguard Holding Corp. (78 AD2d at 97), that the determination of whether there is a common predominating issue of fact or law should be based on “whether the use of a class action would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated” (internal quotation marks omitted).

GEICO contends that the following individual issues predominate over any common questions of law or fact: (1) whether GEICO had individual defenses to the various claims of putative class members, based on the timeliness of its coverage determinations or lack of coverage in the first instance, (2) whether the DME claims arose from a fraudulent accident, (3) whether the DME class member can prove its “documented costs,” and (4) individual damages.

The Supreme Court found that “the timeliness of GEICO’s denial of all or part of a class member’s claim must be considered in order to determine whether defenses other than lack of coverage can be raised.” (12 Misc 3d 1185[A], 2006 NY Slip Op 51446[U], *2 [2006].) However, Globe contends that GEICO is precluded from raising any affirmative defenses because it failed to do so within the statutory time period. Also, Globe argues that GEICO waived any lack of coverage claim because GEICO never raised the claim in its answer or counterclaims, and, in any event, the claim is based on unsupported conclusions and speculations. GEICO counters that all defenses relating to lack of coverage are not subject to the waiver rule.

Recently, the Court of Appeals reviewed the fundamental principles embodied in the No-Fault Law (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]). In that case, the Court addressed whether the plaintiff’s failure to offer a validly-executed assignment equated to a “lack of coverage” defense which is not subject to the “30-day rule” (id. at 317).{**59 AD3d at 141}

The Court stated:

“[A] carrier that fails to deny a claim within the 30-day period is generally precluded from asserting a defense against payment of the claim. This Court has recognized a narrow exception to this preclusion remedy for situations where an insurance company raises a defense for lack of coverage. In such cases, an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the [*8]insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed” (id. at 318 [citations and internal quotation marks omitted]; see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]).

The majority in Hospital for Joint Diseases rejected the insurer’s argument that any deficiency of the assignment implicated a lack of coverage defense warranting exemption from the preclusion rule. The Court reiterated that the “tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices” (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d at 320).

Similarly, this Court, in Fair Price Med. Supply Corp. v Travelers Indem. Co. (42 AD3d 277 [2007], affd 10 NY3d 556 [2008]), addressed the preclusion rule and the lack of coverage exception. In Fair Price, the insurer failed to comply with the 30-day rule and attempted to equate a “failure to furnish services” (id. at 284) defense with the lack of coverage defense. This Court found that the defense was precluded because “[t]he defendant’s allegation, i.e., that the plaintiff billed for supplies it never furnished, is more akin to a claim of overbilling (albeit an extreme form thereof)” (id. at 283). The Court stated that while the insurer “was entitled to contest the plaintiff’s claim as fraudulent, it was required to do so within the rules of the no-fault system” (id. at 286).

Thus, contrary to GEICO’s contention, it follows that, in the instant case, GEICO would not be able to present a defense based on fraudulent billing or the inability of the class members{**59 AD3d at 142} to establish “documented costs.” In the proposed class action it is clear that the factor common to all potential class members is that the DME claims were denied because GEICO found them to be in excess of the industry average. As this Court and the Court of Appeals have made clear, overbilling and invoice recycling do not give rise to a lack of coverage defense. GEICO’s failure to claim the fraud defenses within the required 30-day period thus precludes it from raising it in the class action (see e.g. Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]).

Globe correctly contends that the potential for different individual damages claims is not a valid reason for denying class action status, because damages are easily calculated based on the information contained in the denial-of-claim forms. GEICO argues that the calculation of damages is not subject to a simple formula, and that the trier of fact will have to determine if each claim is excessive or if it meets 150% of documented costs. Contrary to GEICO’s assertions, the calculation of individual damages within a breach of contract class action is not dispositive of the issue of class certification, and is clearly manageable in the instant controversy (see Englade v HarperCollins Publs., 289 AD2d 159, 160 [2001] [“That individual authors may have different levels of damages does not defeat class certification”]; Broder v MBNA Corp., 281 AD2d 369, 371 [2001] [“particular damages of each individual class member can be easily computed”]; Godwin Realty Assoc. v CATV Enters., 275 AD2d 269, 270 [2000] [“To the extent that there may be differences among the class members as to the degree in which they were damaged, the court may try the class aspects first and have the individual damage claims heard by a Special Master”]; see also Weinberg v Hertz Corp., 116 AD2d 1, 6-7 [1986], affd 69 NY2d 979 [1987]; Lamarca v Great Atl. & Pac. Tea Co., Inc., 16 Misc 3d 1115[A], 2007 NY Slip Op 51424[U], *3 [2007], affd 55 AD3d 487 [2008]; Matter of Arroyo v State of New York, 12 Misc 3d 1197[A], 2006 NY Slip Op 51606[U], *4 [2006]; Cox v Microsoft Corp., 10 Misc 3d 1055[A], 2005 NY Slip Op 51968[U], *5 [2005]; Matter of Coordinated Tit. Ins. Cases, 2 Misc 3d 1007[A], 2004 NY Slip Op 50171[U] [2004]; Gilman v Merrill Lynch, Pierce, Fenner & Smith, 93 Misc 2d 941, 944 [1978]; Guadagno v Diamond Tours & Travel, 89 Misc 2d 697, 699 [1976]).

Establishing an Individual Class Member’s Prima Facie Case [*9]

Upon reargument, the Supreme Court, although adhering to its initial determination, nonetheless did so despite rejecting its{**59 AD3d at 143} initial conclusion that each DME transaction must be examined separately to determine whether each individual class member has a prima facie case. Rather, the court found that each potential class member would not have to set forth a prima facie case proving facts, such as “documented costs,” or providing invoices or cancelled checks, but that class certification was still not warranted even if such a standard were applied.

With respect to this issue, the Supreme Court properly found, upon reargument, that a prima facie case can be easily made out by the class members and that proof of documented costs is not a requirement (see Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742-743 [2004] [“plaintiff hospitals made prima facie showing of their entitlement to judgment as a matter of law by submitting evidentiary proof that the prescribed statutory billing forms had been mailed and received, and that payment of no-fault benefits was overdue”]; King’s Med. Supply Inc. v Country-Wide Ins. Co., 5 Misc 3d 767, 770 [2004] [“to establish a prima facie case, a plaintiff medical supplier must submit proof that it timely transmitted its claim for no-fault benefits, that the defendant insurer received the claim but failed to pay or validly deny the claim within the permissible 30 days or to request verification”]). This is true, given that GEICO did not seek verification of the documented costs for the invoices submitted (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d at 320 [“(e)ven assuming that (assignment of benefits is a necessary component of the hospital’s prima facie case) (the) form stating that the patient’s signature is ‘on file’ satisfies that burden where the carrier does not timely take action to verify the existence of a valid assignment”]).

Typicality

CPLR 901 (a) (3) provides that the “claims or defenses of the representative parties are typical of the claims or defenses of the class.” Typical claims are those that arise from the same facts and circumstances as the claims of the class members (see Ackerman v Price Waterhouse, 252 AD2d at 201 [claims “arose out of the same course of conduct and are based on the same theories as the other class members, they are plainly typical of the entire class”]; Pruitt v Rockefeller Ctr. Props., 167 AD2d 14, 22 [1991]; Friar v Vanguard Holding Corp., 78 AD2d at 99; Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A], 2006 NY Slip Op 51969[U] [2006]; Cox v Microsoft Corp., 10 Misc 3d 1055[A], 2005 NY Slip Op 51968[U], *2 [2005]; Fiala v Metropolitan Life Ins. Co., NYLJ, June 2, 2006, at 22, col 1, 2006 NY Slip Op{**59 AD3d at 144} 30068[U] [2006]). Typicality can overlap with the predominance of common questions of law or fact (see CPLR 901 [a] [2]) and the adequacy of representation (see CPLR 901 [a] [4]; Matter of Coordinated Tit. Ins. Cases, 2 Misc 3d 1007[A], 2004 NY Slip Op 50171[U], *12 [2004]; 3 Weinstein-Korn-Miller, NY Civ Prac ¶ 901.24).

Adequacy of Representation

The three essential factors to consider in determining adequacy of representation are potential conflicts of interest between the representative and the class members, personal characteristics of the proposed class representative (e.g. familiarity with the lawsuit and his or her financial resources), and the quality of the class counsel (see generally Ackerman v Price Waterhouse, 252 AD2d 179 [1998]; Pruitt v Rockefeller Ctr. Props., 167 AD2d at 25-26; Matter of Coordinated Tit. Ins. Cases, 2 Misc 3d 1007[A], 2004 NY Slip Op 50171[U], *12 [2004]).

Adequacy of Class Counsel

In order to be found adequate in representing the interests of the class, class counsel should have some experience in prosecuting class actions (see Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A], 2006 NY Slip Op 51969[U], *4 [2006]; Matter of Arroyo v State of New York, 12 Misc 3d 1197[A], 2006 NY Slip Op 51606[U], *6 [2006]; Cox v Microsoft Corp., 10 Misc 3d 1055[A], 2005 NY Slip Op 51968[U], *3 [2005]; Fiala v Metropolitan Life Ins. Co., NYLJ, June 2, 2006, at 22, col 1, 2006 NY Slip Op 30068[U] [2006]). There is no question that Globe’s counsel is highly competent in prosecuting class actions.

[*10]Adequacy of Class Representative

However, Francois, the owner of Globe, was properly rejected by the Supreme Court as an adequate representative for the class. Although Globe attempts to couch Francois’s problems in terms of “amorphous and generalized suppositions,” it is clear that Francois was charged with insurance fraud for attempting to stage accidents and thereafter bill insurance companies. While he may have only pleaded guilty to disorderly conduct, he displayed his attempt to put his interest above others by invoking his Fifth Amendment rights at his deposition, although he later withdrew his invocation of the Fifth Amendment in a subsequently-filed reply affidavit. Moreover, there was adequate evidence that Francois was engaged in recycling invoices. In addition, Francois and the class are subject to a class action{**59 AD3d at 145} counterclaim which may or may not be meritorious.^[FN4] In any event, Francois’s attempt to defend himself against any such counterclaim by GEICO would preoccupy him and detract from his representation of the class.

Therefore, Globe failed to show that it is an adequate representative of the class. “Other [appellate courts] emphasize, as do we, the challenge presented by a defense unique to a class representative—the representative’s interests might not be aligned with those of the class, and the representative might devote time and effort to the defense at the expense of issues that are common and controlling for the class” (Beck v Maximus, Inc., 457 F3d 291, 297 [2006]). In other words, a class should not be certified if Globe is the class representative, as “there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it” (Hanon v Dataproducts Corp., 976 F2d 497, 508 [1992] [citations omitted]; see Koos v First Nat. Bank of Peoria, 496 F2d 1162, 1165 [1974]; Folding Cartons, Inc. v America Can Co., 79 FRD 698 [1978]; Weisman v Darneille, 78 FRD 669, 671 [1978]; Di Pace v Linsco/Private Ledger Corp., 2004 WL 1410046 [Cal Ct App 2004]; Benzing v Farmers Ins. Exch., 179 P3d 103 [Colo Ct App 2007], cert granted 2008 WL 434677, 2008 Colo LEXIS 160 [2008]; cf. Lamarca v Great Atl. & Pac. Tea Co., Inc., 16 Misc 3d 1115[A], 2007 NY Slip Op 51424[U] [2007]; Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A], 2006 NY Slip Op 51969[U] [2006]).

Superiority

CPLR 901 (a) (5) provides that a class may be certified only if “a class action is superior to other available methods for the{**59 AD3d at 146} fair and efficient adjudication of the controversy.” The No-Fault Law provides claimants with the option of commencing a plenary action or submitting the dispute to arbitration (see Insurance Law § 5106 [b]). In addition, the No-Fault Law provides that the claimant may recover penalty interest at a rate of 24% (see Insurance Law § 5106 [a]), a remedy [*11]not available in a class action. However, the availability of an arbitration alternative does not mean such a proceeding is superior to a class action which, through the aggregation of many similar claims, provides an incentive to the legal profession to expend the resources necessary to fully litigate often complex cases such as the instant matter, including the pursuit of this very appeal. The “very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights” (Amchem Products, Inc. v Windsor, 521 US 591, 617 [1997]; see Pruitt v Rockefeller Ctr. Props., 167 AD2d at 21; Super Glue Corp. v Avis Rent A Car Sys., 132 AD2d 604, 607-608 [1987]; Yollin v Holland Am. Cruises, 97 AD2d 720, 721 [1983]; Friar v Vanguard Holding Corp., 78 AD2d at 98-99; Matter of Arroyo v State of New York, 12 Misc 3d 1197[A], 2006 NY Slip Op 51606[U], *6 [2006]; see also Bell v Superior Ct., 69 Cal Rptr 3d 328, 349 [Ct App 2007]). In addition, should individual class members wish to pursue arbitration, and thereby recover statutory penalties unavailable in a class action, they may do so by opting out of the class sought to be certified (see Cox v Microsoft Corp., 8 AD3d at 40; Ridge Meadows Homeowners’ Assn. v Tara Dev. Co., 242 AD2d 947, 947 [1997]; Super Glue Corp. v Avis Rent A Car Sys., 132 AD2d at 606).

Moreover, as with the requirements of CPLR 901 (a) (2), referable to the issues of liability and damages calculations, the prosecution of this proposed class action is fairly straightforward and quite manageable. Thus, although the motion to certify a class was properly denied because of Globe’s inadequacy as a class representative, upon reargument, the denial of the motion should have been without prejudice to renewal.

Accordingly, the appeal from the order entered July 21, 2006, is dismissed, as that order was superseded by the order entered November 8, 2006, made upon reargument. The order entered November 8, 2006, is reversed insofar as appealed from, on the facts and in the exercise of discretion, upon reargument, so much of the order entered July 21, 2006, as denied that branch of the plaintiff’s motion which was to certify a class action pursuant{**59 AD3d at 147} to CPLR article 9 is vacated, and that branch of the plaintiff’s motion is denied without prejudice to renewal.

Spolzino, J.P., Florio and Miller, JJ., concur.

Ordered that the appeal from the order entered July 21, 2006, is dismissed, as that order was superseded by the order entered November 8, 2006, made upon reargument; and it is further,

Ordered that the order entered November 8, 2006, is reversed insofar as appealed from, on the facts and in the exercise of discretion, upon reargument, so much of the order entered July 21, 2006, as denied that branch of the plaintiff’s motion which was to certify a class action pursuant to CPLR article 9 is vacated, and that branch of the plaintiff’s motion is denied without prejudice to renewal; and it is further,

Ordered that one bill of costs is awarded to the appellant.

Footnotes

Footnote 1: Regulation 83 was amended, effective October 6, 2004, and now states that where there is no specific schedule for reimbursement, the insurer must pay the “lesser of: (1) the acquisition cost . . . to the provider plus 50 percent; or (2) the usual and customary price charged to the general public” (11 NYCRR Appendix 17-C, part F [a]). All the parties agree that the former Part E governs in this case.

Footnote 2: In his affidavit sworn to April 21, 2006, Christopher J. Jones, a “Detective with the NYPD’s Fraudulent Accident Investigation Squad . . . for the past 2½ years,” stated that “[f]raud by DME suppliers against no-fault insurance companies is widespread. It has been a principal focus of our Squad’s investigation . . . On or about June 1, 2005, Mr. Francois was arrested as the result of an undercover investigation in which I was involved. He was arrested for offering to pay an undercover agent to stage a phony automobile accident and refer the alleged ‘victims’ to a medical clinic. The specific charges were insurance fraud in the third degree and conspiracy in the fifth degree . . . Subsequently, Mr. Francois entered into a plea agreement, pleading guilty to disorderly conduct.”

Footnote 3: For other examples of insurer “repricing” of medical bills, see Reyher v State Farm Mut. Auto. Ins. Co. (171 P3d 1263 [Colo Ct App 2007]) and LaBerenz v American Family Mut. Ins. Co. (181 P3d 328 [Colo Ct App 2007], cert denied 2008 WL 1701094, 2008 Colo LEXIS 414 [Sup Ct 2008]).

Footnote 4: Counterclaims against the class representative and/or the members of the class may be asserted to discourage class participation and render the named class representatives inadequate by creating a seemingly unique defense. The courts must carefully examine the merits and purpose of class action counterclaims (see Van Gemert v Boeing Co., 590 F2d 433 [1978], affd 444 US 472 [1980] [absent class members who are not parties are not subject to counterclaims under Federal Rules of Civil Procedure rule 13 since such counterclaims may be used to encourage class members to opt out of the class]; Equity Residential Props. Trust v Yates, 910 So 2d 401, 404 [Fla Ct App 2005] [“we find no error in the trial court’s denial of the landlord’s motion to bring a class-wide counterclaim”]; Purcell & Wardrope Chartered v Hertz Corp., 175 Ill App 3d 1069, 530 NE2d 994 [1988] [dismissing counterclaim against class representative for lack of evidence]; Shaver v Standard Oil Co., 89 Ohio App 3d 52, 623 NE2d 602 [1993] [assertion of counterclaim against named plaintiff does not destroy ability of representative to comply with typicality requirements; the counterclaim should be treated as a request for a setoff against the named plaintiff’s individual claim]; see also 3 Weinstein-Korn-Miller, NY Civ Prac ¶ 901.19 [2d ed]).

—[*1] Moira A. Doherty, Uniondale, N.Y. (Janice P. Rosen of counsel), for appellant.

Joseph Henig, P.C., Bellmore, N.Y., for respondent.

In an action to recover no-fault medical payments under insurance contracts, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Brandveen, J.), dated December 3, 2007, as granted that branch of the plaintiff’s motion which was for summary judgment on the first cause of action.

Ordered that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the plaintiff’s motion which was for summary judgment on the first cause of action is denied.

The plaintiff, as assignee of two insureds under policies issued by the defendant, commenced this action to recover no-fault medical payments. The plaintiff moved for summary judgment on the complaint, arguing that the defendant had failed to timely pay or deny the claim of either insured under the relevant no-fault regulations (see 11 NYCRR 65-1.1 et seq.). The defendant thereafter paid the claim of Edward Caruso (the subject of the second cause of action) and made partial payment on the claim of Josh Logan (the subject of the first cause of action). In the order appealed from, the Supreme Court, inter alia, granted that branch of the plaintiff’s motion which was for summary judgment on the first cause of action regarding Logan’s claim. We reverse the order insofar as appealed from.

The plaintiff demonstrated its prima facie entitlement to judgment as a matter of law on the [*2]first cause of action regarding Logan’s claim with evidence that the claim was neither paid nor denied within 30 days of the defendant’s receipt of the prescribed claim forms (see Westchester Med. Ctr. v Progressive Cas. Ins. Co., 51 AD3d 1014 [2008]; Westchester Med. Ctr. v State Farm Mut. Auto. Ins. Co., 44 AD3d 750 [2007]; 11 NYCRR 65-3.8 [a] [1], [c]). However, in opposition, the defendant raised a triable issue of fact as to whether it timely and properly denied the claim based on Logan’s alleged intoxication at the time of the accident by issuance of a denial of coverage on that ground within 30 days of the receipt of additional verification it requested concerning the claim (see Westchester Med. Ctr. v Progressive Cas. Ins. Co., 51 AD3d 1014 [2008]; Westchester Med. Ctr. v State Farm Mut. Auto. Ins. Co., 44 AD3d 750 [2007]; 11 NYCRR 65-3.5; 11 NYCRR 65-3.8 [e], [g]). Thus, that branch of the plaintiff’s motion which was for summary judgment on the first cause of action should have been denied.

The plaintiff’s remaining contention is without merit. Ritter, J.P., Florio, Miller and Carni, JJ., concur.

—[*1] Kagan & Gertel, Brooklyn (Irving Gertel of counsel), for appellant.

Marjorie E. Bornes, New York, for respondent.

Order, Supreme Court, New York County (Edward H. Lehner, J.), entered August 1, 2007, which granted plaintiff insurer’s motion for summary judgment declaring that it has no duty to defend and indemnify defendant insureds in an underlying personal injury action brought by defendant-appellant, and denied appellant’s cross motion for summary judgment directing plaintiff to satisfy the judgment in the underlying action, affirmed, without costs.

Although appellant had provided plaintiff with information about the accident shortly after it occurred, in compliance with the policy, she failed to give plaintiff notice of her suit against its insureds until 14 months after the suit was commenced and she had obtained an order for a default judgment. Plaintiff having thus lost its right to appear and interpose an answer, its disclaimer of coverage was proper (see Insurance Law § 3420 [a] [3]; American Tr. Ins. Co. v B.O. Astra Mgt. Corp., 39 AD3d 432 [2007], lv denied 9 NY3d 802 [2007]). Concur—Tom, J.P., Nardelli, Sweeny and DeGrasse, JJ.

McGuire, J., concurs in a separate memorandum as follows: I agree with the majority’s implicit conclusion that plaintiff insurer American Transit Insurance Co. (ATIC) was required to show that it was prejudiced by the failure of defendant Klausner, the plaintiff in the underlying personal injury action, to provide timely notice to ATIC of the action she had commenced against ATIC’s insured. I write separately because I believe we should explain that conclusion, especially in light of decisions by this Court and the Second Department that appear to support a different conclusion.

Although ATIC did not receive timely notice of the action from Klausner, it did receive [*2]timely notice of the accident, as is evinced by the letter it sent to Klausner less than two months after the accident requesting that she complete a form providing information about the accident and her injuries. Indeed, ATIC conceded in its reply papers that it had received timely notice of the accident. Moreover, that letter addresses Klausner as “Claimant.” According to Klausner’s submission opposing ATIC’s motion for summary judgment, she completed and returned the form, and her attorney thereafter provided medical reports and records to ATIC and engaged in settlement discussions with ATIC. ATIC did not dispute these assertions in its reply papers.

In Argo Corp. v Greater N.Y. Mut. Ins. Co. (4 NY3d 332, 340 [2005]), the Court of Appeals held that a commercial liability insurer “was not required to show prejudice before declining coverage for late notice of lawsuit.” The Court stressed in its opinion, however, that the carrier also had not received timely notice of claim (id. at 339-340). As the Court of Appeals noted in Argo, “[i]n Matter of Brandon (Nationwide Mut. Ins. Co.) (97 NY2d 491 [2002]), we again departed from the general no-prejudice rule and held that the carrier must show prejudice before disclaiming based on late notice of a lawsuit in the SUM [supplementary underinsured motorist] context” (4 NY3d at 339). In Rekemeyer v State Farm Mut. Auto. Ins. Co. (4 NY3d 468 [2005]), the plaintiff in a declaratory judgment action against her insurance carrier “did not submit her notice of SUM claim as soon as practicable” (id. at 474). Although the notice of claim was untimely, the Court accepted the plaintiff’s argument that the Court should “relax its application of the no-prejudice rule in SUM cases where the carrier has been timely put on notice of the accident” (id.).

Because this case is not one involving SUM coverage, Klausner cannot maintain that Matter of Brandon and Rekemeyer require relaxation of the no-prejudice rule. Indeed, Rekemeyer arguably supports the opposite conclusion: timely notice of the accident should not lead to relaxation of the no-prejudice rule because this is not a SUM case. Moreover, the proposition that ATIC was required to show that it was prejudiced by Klausner’s failure to give timely notice of her suit against ATIC’s insured is at least called into question by our recent decision in 1700 Broadway Co. v Greater N.Y. Mut. Ins. Co. (54 AD3d 593 [2008]). In 1700 Broadway, the insured did not give notice to the commercial general liability insurer of the underlying personal injury action against the insured until eight months after the insured was served with the summons and complaint. This Court held that the unexplained delay “constituted late notice as a matter of law” and that the insurer “was not required to demonstrate prejudice by reason of the delay in order to disclaim coverage” (id. at 593-594). Although nothing in this Court’s opinion suggests that the insurer had received timely notice either of the occurrence or of the claim, nothing in the opinion suggests that whether either notice had been given in timely fashion was relevant to the holding. Moreover, the Second Department has held that an insurer validly disclaimed coverage on the ground of untimely notice of the underlying personal injury action against its insured even though the insurer had received written notice of the accident one month after the accident and one of the plaintiffs in the personal injury action had sought no-fault benefits from the insurer not later than 3½ months after the accident (Matter of GEICO Co. v Wingo, 36 AD3d 908 [2007]).

As the majority indicates, this appeal is controlled by our decision in American Tr. Ins. Co. v B.O. Astra Mgt. Corp. (39 AD3d 432 [2007], lv denied 9 NY3d 802 [2007]). Consistent with the emphasis the Court of Appeals placed in Argo on the fact that the carrier had not received timely notice of claim, this Court held that “[h]aving received timely notice of claim, plaintiff insurer was not entitled to disclaim coverage based on untimely notice of the [*3]claimant’s commencement of litigation unless it was prejudiced by the late notice” (id. at 432). This case is a fortiori to B.O. Astra, because ATIC received both timely notice of the accident and timely notice of Klausner’s claim.

The majority’s analysis premises the propriety of the disclaimer of coverage on ATIC “having . . . lost its right to appear and interpose an answer.” For this reason, and because the majority goes on to cite B.O. Astra, it appears that the majority has concluded, albeit implicitly, that ATIC was required to show prejudice. As stated above, I agree that B.O. Astra requires that conclusion. Unquestionably, moreover, ATIC was prejudiced by Klausner’s failure to provide notice until after she had obtained a default judgment. As Justice Lehner observed in his written decision granting ATIC’s motion for summary judgment, although ATIC “could . . . have applied to vacate the default . . . on the part of its insured, it is far from clear whether such a motion would be granted, and it could be prejudicial to [ATIC’s] rights to require it to appear for its insured under such circumstances.” I would add only—I doubt Justice Lehner meant to suggest otherwise—that it is prejudicial to ATIC’s rights to require it to shoulder the burden of moving to vacate the default.

Finally, there is no merit to Klausner’s argument that ATIC’s disclaimer is really a disclaimer for failure to cooperate. Although an insurer can disclaim on account of its insured’s failure to cooperate in the handling of a claim, ATIC disclaimed on the distinct ground of lack of timely notice of the underlying action. The requirement of timely notice of that action is a condition precedent to ATIC’s liability (American Tr. Ins. Co. v Sartor, 3 NY3d 71, 76 [2004]), and Klausner failed to exercise her independent right to fulfill this policy obligation (id. [“the Legislature has given an injured party the statutory right to fulfill this policy obligation (of timely notice) by allowing any necessary notification to be issued by the claimant”]).

—[*1] Stern & Montana, LLP, New York, N.Y. (Richard Montana of counsel), for appellant.

Joseph Henig, P.C., Bellmore, N.Y., for respondents.

In an action to recover no-fault medical payments under insurance contracts, the defendant appeals from so much of an order of the Supreme Court, Nassau County (Mahon, J.), dated January 28, 2008, as granted that branch of the motion of the plaintiff St. Barnabas Hospital, as assignee of Miguel Jimenez, which was for summary judgment on the first cause of action and denied that branch of its cross motion which was for summary judgment dismissing the first cause of action.

Ordered that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion of the plaintiff St. Barnabas Hospital, as assignee of Miguel Jimenez, which was for summary judgment on the first cause of action and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

The plaintiff St. Barnabas Hospital, as assignee of Miguel Jimenez (hereinafter the Hospital), made a prima facie showing of entitlement to judgment as a matter of law on the first cause of action to recover no-fault benefits by demonstrating that the prescribed statutory billing forms were mailed to and received by the defendant and that payment was overdue (see Westchester Med. Ctr. v Allstate Ins. Co., 53 AD3d 481 [2008]; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903, 904 [2007]; New York & Presbyt. Hosp. v Countrywide Ins. Co., 44 AD3d 729, 730 [2007]). [*2]

However, in opposition, the defendant raised a triable issue of fact as to whether the Hospital timely complied with the demand for verification (see Mount Sinai Hosp. v Allstate Ins. Co., 25 AD3d 673, 674 [2006]). The defendant was not obligated to pay or deny the claim until all demanded verification was provided by the Hospital (see New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512, 513 [2006]; Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96, 100-101 [2005], mod on other grounds 8 NY3d 294 [2007]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492, 493 [2005]).

Accordingly, the Supreme Court correctly denied that branch of the defendant’s cross motion which was for summary judgment dismissing the first cause of action, but should not have granted that branch of the Hospital’s motion which was for summary judgment on the first cause of action. Mastro, J.P., Rivera, Fisher and Eng, JJ., concur.

—[*1] Carman, Callahan & Ingham, L.L.P., Farmingdale (Michael F. Ingham of counsel), for appellant.

Gregory J. Allen, State Insurance Fund, Liverpool (Susan B. Marris of counsel), for respondent.

Spain, J. Appeal from an order of the Supreme Court (Egan, Jr., J.), entered February 6, 2008 in Albany County, which denied petitioner’s application pursuant to CPLR 7511 to vacate an arbitration award.

On July 12, 2004, Michael Chesebro was driving in the Village of Baldwinsville, Onondaga County when his vehicle was struck in the rear by Deborah Redden,^[FN1] who was operating a 1999 Dodge minivan owned by her employer, Julie J. Taddeo, the owner of Affordable Wheelchair Transportation. Chesebro was injured. Petitioner insured the minivan, which was registered as a [*2]passenger vehicle but bore livery license plates belonging to a commercial vehicle, a 1998 Dodge minivan also owned by Taddeo, which was insured by another carrier. It is uncontested that on this day Redden was using the passenger vehicle bearing the livery plates to transport passengers for Taddeo’s business.

After paying workers’ compensation benefits to Chesebro, respondent filed an application (a PIP form) for arbitration with the New York Personal Injury Subrogation Arbitration Forum, seeking intercompany reimbursement of those paid benefits ($50,000) from petitioner pursuant to the loss transfer provisions of Insurance Law § 5105 (a). Petitioner submitted a PIP form denying the claim, asserting that its insured’s passenger vehicle was her personal vehicle and not used primarily for the transportation of persons or property, as required by Insurance Law § 5105 (a). After limited documentary evidence was submitted,^[FN2] the arbitrator determined that respondent was entitled to reimbursement from petitioner. Petitioner then commenced this proceeding to vacate the arbitration award, which Supreme Court denied, and petitioner now appeals.

As relevant here, Insurance Law § 5105 (a) provides that an insurer liable for first party benefits or a workers’ compensation carrier that pays benefits in lieu of first party benefits, which another insurer would otherwise be obligated to pay but for the No-Fault Law, has a right to recover “only if at least one of the motor vehicles involved [weighs] more than [6,500 pounds] unloaded or is . . . used principally for the transportation of persons or property for hire” (emphasis added). The latter alternate requirements have been recognized to be “condition[s] precedent to ultimate recovery” (Matter of Progressive Cas. Ins. Co. v New York State Ins. Fund, 47 AD3d 633, 634 [2008]), and were added by amendment in 1977 “to limit the right of insurance carriers to recover first-party payments” (Matter of State Farm Mut. Auto. Ins. Co. v Aetna Cas. & Sur. Co., 132 AD2d 930, 931 [1987], affd 71 NY2d 1013 [1988]). Respondent, as the applicant seeking reimbursement, bore the burden of proof to show entitlement to recover benefits paid^[FN3] (see e.g. Matter of Hanover Ins. Co. v State Farm Mut. Auto. Ins. Co., 226 AD2d 533, 534 [1996]; Matter of Eveready Ins. Co. v Lumberman’s Mut. Cas. Co., 201 AD2d 649, 649 [1994]; Republic Claims Serv. Co. v Allstate Ins. Co., 160 AD2d 925, 926 [1990]). Insurance Law § 5105 (b) “provides that mandatory arbitration is the sole remedy regarding disputes between insurers over responsibility for payment of first-party benefits” (State Farm Mut. Auto. Ins. Co. v Nationwide Mut. Ins. Co., 150 AD2d 976, 977[*3][1989]).

Here, the record is devoid of evidence establishing the “principal use” of the passenger vehicle insured by petitioner. No proof established when the livery plates were put on the passenger vehicle, or if this plate-switching or use of the passenger vehicle to transport persons or property for hire occurred on any occasions other than the date of the accident, i.e., if it was Taddeo’s or Redden’s practice to use this passenger vehicle “for hire.” Petitioner did not submit an affidavit from its insured and none of the documentary evidence established that the “principal use” of the vehicle it insured was other than its registered status as a passenger vehicle (compare Victoria Ins. Co. v Utica Mut. Ins. Co., 8 AD3d 87, 87 [2004]), i.e., the only evidence is that on the day of this accident, the passenger vehicle was being used “for hire,” bearing livery plates from another vehicle.

Where, as here, the parties are obligated by statutory mandate to submit their dispute to arbitration (see Insurance Law § 5105 [b]), the arbitrator’s determination is subject to “closer judicial scrutiny” than with voluntary arbitration (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). “To be upheld, an award in a compulsory arbitration proceeding must have evidentiary support and cannot be arbitrary and capricious” (id. [citations omitted]; see Matter of Utica Mut. Ins. Co. [Selective Ins. Co. of Am.], 27 AD3d 990, 992 [2006]). On this record, there is no evidentiary support or rational basis for the arbitrator’s determination that petitioner’s insured passenger vehicle was used “principally . . . for hire” as required for respondent to obtain reimbursement under Insurance Law § 5105 (a) (see Matter of Progressive Cas. Ins. Co. v New York State Ins. Fund, 47 AD3d at 634; Matter of Allstate Ins. Co. v American Arbitration Assn., 26 AD3d 374, 374 [2006]; Matter of Kemper Ins. Co. v Westport Ins. Co., 9 AD3d 431, 432 [2004]). To the extent that the arbitrator granted respondent’s application based upon its finding that petitioner’s insured passenger vehicle was “at the time” being used as a vehicle for hire, such a conclusion is inadequate to support the award and is “in disregard of the standard prescribed by the legislature” (Mount St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 NY2d 493, 506 [1970]), i.e., that one of the vehicles be used “principally . . . for hire” (Insurance Law § 5105 [a] [emphasis added]). The arbitration award should, therefore, be vacated.

Further, respondent relies heavily on petitioner’s failure to produce evidence presumably within its possession or reach regarding the principal use of its insured’s vehicle. However, the record does not reflect that respondent availed itself of any of the avenues for discovery, such as requesting a hearing at which witnesses could be called (see CPLR 7506 [c]), asking the arbitrator to issue subpoenas to procure documentary evidence (see CPLR 7505; see also Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 7505, at 682-683 [1998]) or, as a last resort, applying to the court for an order directing disclosure in aid of arbitration upon a showing of extraordinary circumstances (see CPLR 3102 [c]; see also Siegel, NY Prac § 597, at 1052-1054 [4th ed]; Matter of Goldsborough v New York State Dept. of Correctional Servs., 217 AD2d 546, 547 [1995], appeal dismissed 86 NY2d 834 [1995]). While “[u]nder the CPLR, arbiters do not have the power to direct the parties to engage in disclosure proceedings” (De Sapio v Kohlmeyer, 35 NY2d 402, 406 [1974]; see Matter of Goldsborough v New York State Dept. of Correctional Servs., 217 AD2d at 547), avenues of disclosure were clearly available (see Siegel, NY Prac § 597, at 1052-1054 [4th ed]).

Mercure, J.P., Carpinello, Kane and Kavanagh, JJ., concur. Ordered the order is reversed, on the law, without costs, petitioner’s application granted and arbitration award vacated.

Footnotes

Footnote 1: Chesebro’s vehicle then struck the vehicle in front of him.

Footnote 2: Respondent’s proof included the accident report, Department of Motor Vehicles records, claim payment data sheets, copies of bills paid, and workers’ compensation award decisions. Petitioner submitted the Department of Motor Vehicles records, pictures of the vehicles and insurance documents.

Footnote 3: We do not agree with the arbitrator’s conclusion that petitioner’s position, that its insured vehicle was not used “principally . . . for hire,” is an affirmative defense. Rather, the principal use of the vehicle is a threshold part of respondent’s required showing, as the applicant seeking reimbursement under Insurance Law § 5105 (a) (see CPLR 3018; cf. Matter of State Farm Mut. Auto. Ins. Co. v City of Yonkers, 21 AD3d 1110, 1111 [2005]).

—[*1] Basch & Keegan, L.L.P., Kingston (Derek J. Spada of counsel), for appellant.

Finder & Cuomo, L.L.P., New York City (Paul L. Meli of counsel), for respondent.

Spain, J. Appeal from an order of the Supreme Court (Czajka, J.), entered January 8, 2007 in Columbia County, which, among other things, denied plaintiff’s motion for summary judgment.

The facts are undisputed. On May 29, 2005, plaintiff was a passenger in a car driven by his friend and owned by plaintiff’s mother. They stopped for gas and, while plaintiff was pumping gasoline, the gas pump nozzle popped out of the car’s fuel tank, causing some gasoline to spill on the ground and, unbeknownst to him, on his clothing. Plaintiff then entered the gas station store to purchase a pack of cigarettes. Shortly after leaving the gas station in the vehicle, plaintiff attempted to light a cigarette, causing the gasoline on his clothing to ignite. As a result, he suffered severe burns to the right side of his body, right arm and leg.

Defendant denied plaintiff’s claim for no-fault insurance benefits on the ground that his injuries did not arise out of the use or operation of a motor vehicle (see Insurance Law § 5102 [b]; § 5103 [a] [1]). Plaintiff then commenced the instant action in Supreme Court seeking to recover no-fault insurance benefits. After discovery was completed, plaintiff moved for summary judgment on the issue of his entitlement to no-fault insurance benefits and defendant cross-moved for a declaratory judgment that defendant has no obligation to plaintiff. Supreme Court granted defendant’s cross motion and denied plaintiff’s motion. Plaintiff now appeals.

No-fault insurance benefits are payable only if a person’s injury “aris[es] out of the use [*2]or operation of a motor vehicle” (Insurance Law § 5102 [b]; see § 5103 [a] [1]). Inasmuch as “[t]he vehicle must be a proximate cause of the injury before the absolute liability imposed by the statute arises” (Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 215 [1996]), we agree with Supreme Court’s conclusion that plaintiff’s injuries—sustained when he attempted to light a cigarette, igniting gasoline that he had spilled on his clothing—did not arise out of the use of the vehicle. Indeed, plaintiff’s injuries would have occurred even if he had never reentered the vehicle and his friend had driven away (see Sullivan v Barry Scott Agency, Inc., 23 AD3d 889, 890 [2005]; cf. Matter of Farm Family Cas. Ins. Co. [Trapani], 301 AD2d 740, 741-742 [2003]). Thus, although plaintiff’s injuries occurred while he was inside the moving vehicle, because “the vehicle itself was not a cause of the damage,” he is not entitled to no-fault benefits (Walton v Lumbermens Mut. Cas. Co., 88 NY2d at 215; see Sullivan v Barry Scott Agency, Inc., 23 AD3d at 890, Sochinski v Bankers & Shippers Ins. Co., 221 AD2d 889 [1995]).

Mercure, J.P., Peters, Malone Jr. and Stein, JJ., concur. Ordered that the order is affirmed, with costs.

—[*1] Amos Weinberg, Great Neck, N.Y., for appellants.

John P. Humphreys, Melville, N.Y. (David R. Holland and Dominic P. Zafonte of counsel), for respondents.

In an action to recover assigned first-party no-fault benefits under an insurance contract, the plaintiffs appeal, by permission, from an order of the Appellate Term of the Supreme Court for the Second and Eleventh Judicial Districts, dated June 4, 2007, which affirmed an order of the Civil Court of the City of New York, Kings County (Nadelson, J.), entered April 5, 2005, denying their motion for partial summary judgment.

Ordered that the order dated June 4, 2007 is affirmed, with costs.

The plaintiffs failed to establish their prima facie entitlement to judgment as a matter of law. The plaintiffs’ medical service providers failed to demonstrate the admissibility of their billing records under the business records exception to the hearsay rule (see CPLR 4518 [a]; Matter of Leon RR., 48 NY2d 117, 122-123 [1979]; Hochhauser v Electric Ins. Co., 46 AD3d 174, 179-180 [2007]; Kane v Triborough Bridge & Tunnel Auth., 8 AD3d 239, 241 [2004]; Rosenthal v Allstate Ins. Co., 248 AD2d 455, 456-457 [1998]). Thus, the plaintiffs’ motion was properly denied, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]).

To the extent that the plaintiffs raise any issue with respect to the defendant’s cross motion for summary judgment dismissing the complaint, that issue is not properly before us, as the cross [*2]motion remains pending and undecided (see Katz v Katz, 68 AD2d 536, 542-543 [1979]). Prudenti, P.J., Santucci, McCarthy and Chambers, JJ., concur.