[*1] Decided on January 14, 2011

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

PRESENT: Schoenfeld, J.P., Hunter, Jr., Torres, JJ
.

Defendant appeals from those portions of an order of the Civil Court of the City of New York, Bronx County (Elizabeth A. Taylor, J.), dated April 6, 2010, which denied its motion for summary judgment dismissing the claims of plaintiffs Spring Medical, P.C. and Right Aid Diagnostic Medicine, P.C. Per Curiam.

Order (Elizabeth A. Taylor, J.), dated April 6, 2010, insofar as appealed from, modified to grant defendant summary judgment dismissing the claims of plaintiff Spring Medical, P.C.; as modified, order affirmed, without costs.

Defendant made a prima facie showing of entitlement to judgment as a matter of law dismissing plaintiff Spring Medical, P.C.’s claims for assigned first-party no-fault benefits. Defendant established through the affidavit of its claims examiner and excerpts from the Workers’ Compensation Medical Fee Schedule, which may be judicially noticed by this Court (see Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13, 21 [2009]), that the fees Spring charged for the medical services it rendered to the assignor exceeded the relevant rates set forth in the fee schedule. In opposition, Spring failed to raise a triable issue regarding [*2]defendant’s interpretation of the fee schedule or calculation of the applicable fees. Therefore, defendant’s motion for summary judgment dismissing Spring’s claims — which sought the difference between the amount Spring charged for the services and payments defendant made to Spring pursuant to the fee schedule — should have been granted (see Cornell Med., P.C. v Mercury Cas. Co., 24 Misc 3d 58 [2009]).

Defendant’s motion for summary judgment dismissing the claim of plaintiff Right Aid Diagnostic Medicine, P.C. based on lack of medical necessity was properly denied, since defendant did not demonstrate as a matter of law that it timely denied the claim within the statutory 30-day period (see Country-Wide Ins. Co. v Zablozki, 257 AD2d 506 [1999], lv denied 93 NY2d 809 [1999]) or that the 30-day period was tolled by a proper verification request (see Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535 [2005]). We note in this connection that the reply affirmation submitted by Right Aid could not be considered for the purpose of showing a prima facie entitlement to summary judgment (see Batista v Santiago, 25 AD3d 326 [2006]).
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
I concur
Decision Date: January 14, 2011

[*1] Decided on January 10, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

PRESENT: : NICOLAI, P.J., MOLIA and LaCAVA, JJ
2009-2227 N C.

Appeal from an order of the District Court of Nassau County, First District (Fred J. Hirsh, J.), dated August 31, 2009. The order denied defendant’s motion for summary judgment dismissing the complaint insofar as asserted by plaintiff Sound Shore Medical Center and granted plaintiff Sound Shore Medical Center’s cross motion for summary judgment.

ORDERED that the order is reversed, without costs, defendant’s motion for summary judgment dismissing the complaint insofar as asserted by plaintiff Sound Shore Medical Center is granted and plaintiff Sound Shore Medical Center’s cross motion for summary judgment is denied.

In this action by providers to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint insofar as asserted by plaintiff Sound Shore Medical Center (plaintiff) on the ground that the action was premature because plaintiff had failed to provide requested verification documents. Plaintiff cross-moved for summary judgment. The District Court denied defendant’s motion for summary judgment and granted plaintiff’s cross motion for summary judgment. The instant appeal by defendant ensued.

Contrary to the determination of the District Court, the affidavit of defendant’s claims [*2]examiner was sufficient to establish that defendant had timely mailed the verification request and follow-up verification request in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]). In addition, defendant’s moving papers established that plaintiff had failed to provide the requested verification.

In support of its cross motion and in opposition to defendant’s motion for summary judgment, plaintiff did not assert that it had never received the initial and follow-up verification requests nor did it assert that it had fully complied with these requests. Plaintiff’s attorney merely argued that since the affidavit of the hospital biller, taken together with the copy of the certified return receipt card, established that defendant had received the bill on December 22, 2008, defendant’s initial verification request, sent on November 26, 2008, pre-dated defendant’s receipt of the bill and was therefore a nullity. However, the record establishes that defendant’s initial verification request was sent to plaintiff after plaintiff had sent, and defendant had received, a UB-04 form, which specified the treatment rendered. The UB-04 form is the successor to the UB-92 form and the functional equivalent of the NF-5 form (see Insurance Department Regulations [11 NYCRR] § 65-3.5 [a], [f]). Accordingly, defendant’s initial verification request was not untimely (cf. Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [1999]).

Since plaintiff has not rebutted defendant’s prima facie showing that defendant’s initial request and follow-up request for verification were timely and that plaintiff failed to respond to same, defendant established that its time to pay or deny the claim was tolled. Consequently, defendant’s motion for summary judgment dismissing the complaint, on the ground that the action was premature, should have been granted (see Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Mary Immaculate Hosp. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 130[A], 2008 NY Slip Op 52046[U] [App Term, 9th & 10th Jud Dists 2008]). Accordingly, the order is reversed, defendant’s motion is granted and plaintiff’s cross motion for summary judgment is denied.

Nicolai, P.J., Molia and LaCava, JJ., concur.
Decision Date: January 10, 2011

[*1] Decided on January 10, 2011

SUPREME COURT OF THE STATE OF NEW YORK

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

PRESENT: : GOLIA, J.P., PESCE and STEINHARDT, JJ
2009-1635 Q C.

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered June 11, 2009. The order, insofar as appealed from as limited by the brief, granted the branch of defendant’s cross motion seeking to compel plaintiff to produce copies of its corporate tax returns and its tax records regarding its professional employees, and provided that the complaint would be dismissed in the event plaintiff failed to produce these documents.

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

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. Defendant cross-moved, pursuant to CPLR
3126, to dismiss the complaint due to plaintiff’s failure to provide the information requested in defendant’s interrogatories and defendant’s notice for discovery and inspection or, in the alternative, to compel plaintiff to provide such information. Plaintiff appeals, as limited by the brief, from so much of the Civil Court’s order as granted the branch of defendant’s cross motion seeking to compel plaintiff to produce copies of its corporate tax returns and its tax records regarding its professional employees, and provided that the complaint would be dismissed in the event plaintiff failed to produce these documents.

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

Golia, J.P., Pesce and Steinhardt, JJ., concur.

Lincoln Gen. Ins. Co. v Alev Med. Supply, Inc.

2011 NY Slip Op 21012 [30 Misc 3d 60]

Accepted for Miscellaneous Reports Publication

AT2

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, March 23, 2011

[*1]

Lincoln General Insurance Company, Appellant, v Alev Medical Supply, Inc., Respondent.

Supreme Court, Appellate Term, Second Department, January 10, 2011

Lincoln Gen. Ins. Co. v Alev Med. Supply Inc., 25 Misc 3d 1019, reversed.

APPEARANCES OF COUNSEL

Rivkin Radler LLP, Uniondale (Stuart M. Bodoff of counsel), for appellant.

{**30 Misc 3d at 61} OPINION OF THE COURT

Memorandum.

Ordered that the order is reversed, without costs, the complaint is reinstated, and plaintiff’s motion for leave to enter a default judgment is granted.

Plaintiff insurer commenced this action against defendant, a provider of durable medical equipment, seeking to recover, based on a theory of unjust enrichment, $2,846.18 in assigned first-party no-fault benefits which had been paid to defendant as assignee of Andrey Armstrong on December 4, 2008. Before commencing this action, plaintiff conducted an examination under oath of defendant’s assignor on December 18, 2008, in connection with the treatment rendered to him by various health care providers, and concluded that defendant’s assignor had never been supplied with the equipment for which defendant had billed and been reimbursed. After defendant failed to appear or answer the complaint, plaintiff moved, pursuant to CPLR 3215, for leave to enter a default judgment. In support of its motion, plaintiff submitted a copy of the summons and complaint; proof of service thereof on the Secretary of State, pursuant to Business Corporation Law § 306; additional proof of service in compliance with CPLR 3215 (g) (4) (i); an affirmation of counsel; an affidavit of the no-fault supervisor of plaintiff’s managing general agent, which was responsible for processing and paying no-fault claims; and numerous exhibits. There was no opposition to the motion. The District Court denied the motion based on plaintiff’s failure to have raised the fraudulent billing issue in a timely denial of claim. The instant appeal by plaintiff ensued.

With very limited exceptions, an insurer’s failure to pay or deny a claim within the 30-day claim determination period (see Insurance Law § 5106) precludes the insurer from interposing most defenses to payment of no-fault benefits, including the fact that medical services or medical [*2]equipment billed for were never actually provided (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]). If an insurer is precluded from asserting a defense due to its failure to pay or deny a claim within the 30-day claim determination period, it may not{**30 Misc 3d at 62} later seek to recover amounts it paid on the claim based on a theory of unjust enrichment (see e.g. Cornell Med., P.C. v Mercury Cas. Co., 24 Misc 3d 58 [App Term, 2d, 11th & 13th Jud Dists 2009]). However, where, as here, an insurer timely pays a claim within the 30-day claim determination period, the insurer is not foreclosed from affirmatively commencing an action to recover the amounts paid on the claim when the insurer later discovers that the claim is fraudulent (see State Farm Mut. Auto. Ins. Co. v Grafman, 655 F Supp 2d 212, 223-224 [ED NY 2009]; State Farm Mut. Auto. Ins. Co. v James M. Liguori, M.D., P.C., 589 F Supp 2d 221 [ED NY 2008]; see also Carnegie Hill Orthopedic Servs. P.C. v GEICO Ins. Co., 19 Misc 3d 1111[A], 2008 NY Slip Op 50639[U] [Sup Ct, Nassau County 2008, Austin, J.]; Progressive Northeastern Ins. Co. v Advanced Diagnostic & Treatment Med., NYLJ, Aug. 2, 2001, at 18, col 2 [Sup Ct, NY County, Gammerman, J.]). The fact that the insurer chose to pay first-party no-fault benefits within the 30-day claim determination period, at a point when the insurer had no reason to deny the claim, “cannot in any sense be taken as a concession that the claim is legitimate” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224 [1986]). Indeed, an opinion issued by the New York State Department of Insurance specifically states that the No-Fault Law “is in no way intended and should not serve as a bar to subsequent actions by an insurer for the recovery of fraudulently obtained benefits from a claimant, where such action is authorized under the auspices of any statute or under common law” (Ops Gen Counsel NY Ins Dept [Nov. 29, 2000]). The rationale behind this interpretation is that

“payment of fraudulently obtained No-Fault benefits, without available recourse, serves to undermine and damage the integrity of the No-Fault system, which was created as a social reparations system for the benefit of consumers . . . To conclude that the No-Fault statute bars the availability of other legal remedies, where the payment of benefits [was] secured through fraudulent means, renders the public as the ultimate victim of such fraud, in the form of higher premiums based upon the resultant increased costs arising from the fraudulent actions” (id.).

Moreover, “[t]here is nothing in the legislative history or case law interpretations of the statute or in Insurance Department regulations, opinions or interpretations of the statute that supports the argument that the statute bars such actions” (id.).{**30 Misc 3d at 63}

Accordingly, contrary to the conclusion of the District Court, plaintiff is not barred from bringing this action seeking recovery of the amount it paid to defendant. As plaintiff demonstrated its compliance with CPLR 3215 (f) and (g) (4) (i), the District Court should have granted plaintiff’s motion for leave to enter a default judgment.

Tanenbaum, J.P., Molia and Iannacci, JJ., concur.

Allstate Social Work & Psychological Servs., PLLC v Utica Mut. Ins. Co.

2011 NY Slip Op 21010 [30 Misc 3d 90]

Accepted for Miscellaneous Reports Publication

AT2

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, April 13, 2011

[*1]

Allstate Social Work and Psychological Services, PLLC, as Assignee of Daniel Jocelyn and Another, Appellant, v Utica Mutual Insurance Company, Respondent.

Supreme Court, Appellate Term, Second Department, January 10, 2011

Allstate Social Work & Psychological Servs., PLLC, 22 Misc 3d 723, affirmed.

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville (Charles W. Benton of counsel), for respondent. Gary Tsirelman, P.C., Brooklyn, for appellant.

{**30 Misc 3d at 91} OPINION OF THE COURT

Memorandum.

Ordered that the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits for psychological services rendered to its assignors, defendant moved for summary judgment dismissing the complaint based upon, among other things, the failure of plaintiff’s assignors to attend independent medical examinations (IMEs) by a psychologist, which were scheduled by Hudson Valley Medical Consultants (HVMC). The Civil Court granted defendant’s motion, and this appeal by plaintiff ensued.

It is uncontested that defendant established that the IME requests were timely mailed in accordance with HVMC’s standard office practices and procedures and that the assignors failed to appear for the IMEs (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). However, plaintiff contends that defendant’s insurance policy, which incorporates the language of the mandatory personal injury protection endorsement (Insurance Department Regulations [11 NYCRR] § 65-1.1), requires that IMEs of eligible injured persons (EIPs) be conducted only by physicians, to the exclusion of other health care providers, even when the health services for which first-party no-fault benefits are sought were provided by nonphysicians. In rejecting [*2]plaintiff’s contention, the Civil Court relied on an opinion of the State Insurance Department, dated March 12, 2004 (see 2004 Ops Gen Counsel NY Ins Dept No. 04-03-10). We find that the Insurance Department Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act (11 NYCRR part 65), read as a whole, in accordance with the rules of construction, and the State Insurance Department’s opinion, to which we accord great{**30 Misc 3d at 92} deference, lead to the conclusion that the requirement that an EIP submit to medical examinations, as set forth in the mandatory personal injury protection endorsement (Insurance Department Regulations [11 NYCRR] § 65-1.1), should not be limited strictly to examinations by physicians. Thus, in the instant matter, we find that the psychologist retained by defendant could properly have conducted the IMEs of plaintiff’s assignors, who had received psychological treatment (see generally Stephen Fogel Psychological, P.C., 35 AD3d at 722; Meridian Acupuncture Care v Geico Ins. Co., 31 AD3d 509 [2006]). A contrary conclusion would frustrate the core objective of the no-fault scheme by limiting the universe of health care providers who can perform IMEs to physicians, thereby delaying the processing of no-fault claims (see also Stephen Fogel Psychological, P.C., 35 AD3d at 722). Therefore, we find that defendant properly denied plaintiff’s claims based on its assignors’ failure to satisfy a condition precedent to coverage.

Accordingly, the Civil Court’s order granting defendant’s motion for summary judgment dismissing the complaint is affirmed.

Golia, J.P., Pesce and Steinhardt, JJ., concur.

[*1] Decided on December 30, 2010

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

PRESENT: McKeon, P.J., Schoenfeld, Shulman, JJ
570736/09.

Defendant, as limited by its brief, appeals from that portion of an order of the Civil Court of the City of New York, Bronx County (Raul Cruz, J.), entered March 18, 2009, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Raul Cruz, J.), entered March 18, 2009, insofar as appealed from, reversed, without costs, defendant’s motion for summary judgment granted, and the complaint dismissed. The Clerk is directed to enter judgment accordingly.

Defendant-insurer made a prima facie showing of entitlement to judgment as a matter of law dismissing the complaint, which asserted claims to recover assigned first-party no-fault benefits. Defendant demonstrated, through the affirmed peer review report of a physician, that the medical supplies plaintiff-provider afforded to its assignor were not medically necessary (see generally CPT Medical Services, P.C. v New York Cent. Mut. Fire Ins. Co., 18 Misc 3d 87 [2007]). In this connection, we note that the physician opined that the medical supplies were not medically necessary because the assignor was already receiving both physical and chiropractic therapy for his injuries, treatment that the physician concluded was sufficient under the circumstances. In opposition, plaintiff, which did not submit any evidence regarding the medical necessity of the supplies, failed to raise a triable issue.
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.

McKeon, P.J., Schoenfeld, Shulman, JJ.

Enko Enterprises International, Inc., NY County Clerk’s No.
a/a/o Pena Felix, 570736/09
Plaintiff-Respondent, –
against-
Calendar No. 10-125
Clarendon National Insurance
Company,
Defendant-Appellant.
Defendant, as limited by its brief, appeals from that portion of an order of the Civil Court of the City of New York, Bronx County (Raul Cruz, J.), entered March 18, 2009, which denied its motion for summary judgment dismissing the complaint.
Per Curiam.
Order (Raul Cruz, J.), entered March 18, 2009, insofar as appealed from, reversed, without costs, defendant’s motion for summary judgment granted, and the complaint dismissed. The Clerk is directed to enter judgment accordingly.
Defendant-insurer made a prima facie showing of entitlement to judgment as a matter of law dismissing the complaint, which asserted claims to recover assigned first-party no-fault benefits. Defendant demonstrated, through the affirmed peer review report of a physician, that the medical supplies plaintiff-provider afforded to its assignor were not medically necessary (see generally CPT Medical Services, P.C. v New York Cent. Mut. Fire Ins. Co., 18 Misc 3d 87 [2007]). In this connection, we note that the physician opined that the medical supplies were not medically necessary because the assignor was already receiving both physical and chiropractic therapy for his injuries, treatment that the physician concluded was sufficient under the circumstances. In opposition, plaintiff, which did not submit any evidence regarding the medical necessity of the supplies, failed to raise a triable issue.
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: December 30, 2010

DECEMBER 30, 2010
SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT
								May 2010 Term

Decision Date: December 30, 2010

Lenox Hill Radiology, P.C. v Tri-State Consumer Ins. Co.

2010 NY Slip Op 20530 [31 Misc 3d 13]

Accepted for Miscellaneous Reports Publication

AT1

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, April 27, 2011

[*1]

Lenox Hill Radiology, P.C., as Assignee of Edward Bredy, Respondent, v Tri-State Consumer Insurance Company, Appellant.

Supreme Court, Appellate Term, First Department, December 30, 2010

APPEARANCES OF COUNSEL

Corigliano, Geiger & Verrill, Jericho, for appellant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, LLC, Mineola, for respondent.

{**31 Misc 3d at 14} OPINION OF THE COURT

Per Curiam.

Judgment, entered on or about September 9, 2008, reversed, with $30 costs, and complaint dismissed.

Upon the trial of this action to recover payment of first-party no-fault benefits arising from plaintiff’s performance of four separate MRIs of plaintiff’s assignors, Civil Court awarded judgment in plaintiff’s favor in the principal amount of $4,390.16. The principal defense advanced by defendant insurer at trial was that plaintiff’s claims were premature because plaintiff had failed to respond to defendant’s verification requests (see 11 NYCRR 65-3.5 [b]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2004]). Upon review of the record, we conclude that defendant presented evidence of its office mailing practice sufficient to establish that the verification requests had been mailed and presumably received by plaintiff. In this posture, and in the absence of any claim or showing that plaintiff ever responded to defendant’s timely requests for verification, we reverse the judgment appealed from and dismiss the action as premature.

At trial, defendant presented the testimony of an experienced claims examiner, Jennifer Piccolo, who both personally prepared the initial and follow-up verification requests here at issue and possessed firsthand knowledge of defendant’s standard office mailing practice. The witness’s credible and consistent account of the mailing procedures generally followed by defendant, including how the mail was systematically picked up during the workday, when it would “go out,” and what steps would be taken if a verification letter was returned as undeliverable (an event which, the witness noted, did not occur here), “obviated the necessity of producing a witness with personal knowledge of the actual mailing” of defendant’s verification letters (see Badio{**31 Misc 3d at 15} v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230 [2004]). Nor was it incumbent upon defendant to produce a witness, such as a mail clerk or other clerical employee, whose duty [*2]it was to ensure compliance with its mailing procedures or who possessed personal knowledge of such compliance (see Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [2007]).

Having established its routine and reasonable office practice, defendant met its burden to establish that the verification letters were mailed to (and presumably received by) plaintiff. Plaintiff not only failed to produce any countervailing evidence to rebut the presumption of receipt, but has not at any time affirmatively denied receipt of the verification letters.

Before concluding, we would be remiss in failing to note that the facts and circumstances of this action do much to illustrate the disturbing reality that first-party no-fault benefits litigation has become the antithesis of what was supposed to be an expeditious and simplified process for the payment of medical costs for injuries sustained in motor vehicle accidents (see Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 214 [1996]). Too often, lawsuits with a value akin to a small claims action become bogged down by an insistence by one party or another that mailing of routine forms be established with scientific precision, asking judges, already burdened to the breaking point with the veritable legion of no-fault cases overflowing from our court dockets (while very able arbitrators remain underutilized), to require multiple witnesses to be summoned to the courthouse, merely to establish a presumption of mailing, even in the absence of an express denial of receipt of the disputed correspondence. Unfortunately, this class of cases has spawned a body of “gotcha” jurisprudence, marked by a near manic preoccupation with form over substance.

How we have reached this sorry state is of little moment. Perhaps all branches of government need to call a “time out” and, working together, endeavor to construct a workable process to achieve what the framers of the no-fault statute had in mind when they sought to establish a simplified and expeditious process to reimburse those of our citizenry injured in automobile accidents. For sure, the system now in place is not achieving that laudable aim.

Schoenfeld, J. (dissenting). I fully agree with the majority’s sentiment that it is time for a change in no-fault litigation, which has become overly protracted and wasteful. Clearly, a{**31 Misc 3d at 16} streamlined process that yields timely, substantive results to ensure reimbursement, when appropriate, is needed. In the present case, all that was required at trial was the testimony of an individual with knowledge of defendant’s standard mailing practice. As this was not done, however, I respectfully dissent and would affirm the trial judge’s finding in favor of plaintiff.

At trial, defendant did not dispute that it received plaintiff’s bills, but averred that plaintiff failed to respond to its request for verification. In support thereof, defendant offered the testimony of Jennifer Piccolo, an experienced claims examiner.

Ms. Piccolo testified to having reviewed plaintiff’s claims, and stated why further verification was needed. As a result, she prepared verification letters and placed them in “a bin slot . . . within the department,” to be “picked up by the clerical department.” She further testified that if mail was not delivered and came back to her office, the address would be checked, and if it was wrong, it would be corrected and re-mailed. However, Ms. Piccolo candidly admitted to not knowing the mailroom procedure:

“Q: Do you have personal knowledge of the actual policies of the people who handle that mail that’s returned?

[*3]

“A: Personal knowledge, yes.

“Q: Personal knowledge as in you observe them do their day to day job with respect to . . . receipt of mail returned?

“A: No.

“Q: Nor with any of their other responsibilities with respect to mailing, correct?

“A: Correct.”

It is well established that the decision of the fact-finding court should not be disturbed unless it is obvious that the court’s conclusion could not be reached under any fair interpretation of the evidence. (Frame v Maynard, 78 AD3d 508 [1st Dept 2010].) Further, the burden is on the insurer to establish proper and timely mailing of verification requests. (Westchester Med. Ctr. v Progressive Cas. Ins. Co., 6 Misc 3d 1039[A], 2005 NY Slip Op 50348[U] [Nassau Dist Ct 2005]; see Lehrer McGovern Bovis, Inc. v Public Serv. Mut. Ins. Co., 268 AD2d 388 [1st Dept 2000].)

As noted in Badio v Liberty Mut. Fire Ins. Co. (12 AD3d 229, 230 [1st Dept 2004]): “An insurer is entitled to a presumption that a [request] was received when the proof exhibits an office practice and procedure . . . which shows that the [request has]{**31 Misc 3d at 17} been duly addressed and mailed.” (Emphasis added and internal quotation marks omitted.) In that case, “Liberty Mutual did present the testimony of an employee who possessed personal knowledge of the office mailing practice, including how the mail was picked up and counted, and how the names and addresses on each item were confirmed.” (Id.)

Clearly Ms. Piccolo, who placed her letters in a bin slot within her own particular department, did not know whether such letters were put in a postal box that day. Nor did she have personal knowledge regarding even the basic mailing practice and procedure of her company. In Westchester Med. Ctr. v Countrywide Ins. Co. (45 AD3d 676 [2d Dept 2007]), defendant contended that a claim for payment was premature because plaintiff failed to respond to its verification requests. However, the Court, in holding that the statements by a supervisor employed in defendant’s claims department were insufficient, noted that she “had no personal knowledge that the verification requests were actually mailed on the dates they were issued.” (Id. at 676.) The Court further stated that “her conclusory allegations regarding the defendant’s office practice and procedure failed to establish that [it] was designed to ensure that the verification requests were . . . properly mailed.” (Id. at 676-677; accord Modern Psychiatric Servs. P.C. v Progressive Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50143[U] [App Term, 2d Dept 2006]; Careplus Med. Supply Inc. v Travelers Home & Mar. Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50648[U] [App Term, 2d Dept 2005].)

Accordingly, the judgment in favor of plaintiff should not be disturbed.

McKeon, P.J., and Shulman, J., concur; Schoenfeld, J., dissents in a separate opinion.

[*1] Decided on December 23, 2010

SUPREME COURT OF THE STATE OF NEW YORK

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

PRESENT: : GOLIA, J.P., PESCE and STEINHARDT, JJ
2009-2001 K C.

Appeal from an order of the Civil Court of the City of New York, Kings County (Lisa S. Ottley, J.), entered July 16, 2009. The order, insofar as appealed from, denied the branch of defendant’s motion seeking summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is reversed, without costs, and the branch of defendant’s motion seeking summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint or, in the alternative, for a finding, pursuant to CPLR 3212 (g), that defendant had issued timely and valid
claim denials. The Civil Court found that defendant’s claim denial forms “were timely and properly mailed,” and held that the sole issue to be determined at trial was the medical necessity of the medical supplies at issue. This appeal by defendant ensued.

The papers submitted in support of defendant’s motion for summary judgment included two peer review reports in admissible form, both of which set forth a factual basis and medical rationale for the opinions of the peer reviewers that there was a lack of medical necessity for the medical supplies at issue. In opposition to defendant’s motion, plaintiff stated that it was not in possession of all the information and documentation relied upon by the peer reviewers and that these documents were “essential to justify opposition” to defendant’s motion (CPLR 3212 [f]). Plaintiff, however, failed to demonstrate that it needed these documents in order to raise a triable issue of fact as to whether the supplies at issue were medically necessary (see Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; GZ Med. & Diagnostic, P.C. v Mercury Ins. Co., 26 Misc 3d [*2]146[A], 2010 NY Slip Op 50491[U] [App Term, 2d, 11th & 13th Jud Dists 2010]), and that it had served discovery demands during the ample opportunity that it had to seek discovery of such documentation before the summary judgment motion was made (see Mega Supply & Billing, Inc. v Clarendon [reported as Larendon] Natl. Ins. Co., 28 Misc 3d 137[A], 2010 NY Slip Op 51452[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Urban Radiology, P.C., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U]).

In light of the foregoing, as well as the Civil Court’s CPLR 3212 (g) finding that defendant’s claim denial forms were timely and properly mailed, a finding which plaintiff does not dispute on appeal, and since plaintiff failed to rebut defendant’s prima facie showing that there was a lack medical necessity for the supplies at issue (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]), the branch of defendant’s motion seeking summary judgment dismissing the complaint should have been granted.

Golia, J.P., Pesce and Steinhardt, JJ., concur.
Decision Date: December 23, 2010

[*1] Decided on December 20, 2010

SUPREME COURT OF THE STATE OF NEW YORK

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

PRESENT: : STEINHARDT, J.P., PESCE and WESTON, JJ
. 2009-113 Q C 2009-1471 Q C

Appeals from a judgment of the Civil Court of the City of New York, Queens County (Bernice Daun Siegal, J.), entered December 30, 2008, and from an order of the same court (Diane A. Lebedeff, J.), entered May 27, 2009. The judgment, after a nonjury trial, awarded plaintiffs the principal sum of $4,223.17. The order denied defendant’s motion to vacate the judgment.

ORDERED that, on the court’s own motion, the appeals are consolidated for purposes of disposition; and it is further,

ORDERED that the judgment is affirmed, without costs; and it is further,

ORDERED that the appeal from the order entered May 27, 2009 is dismissed as academic.

Plaintiffs commenced this action to recover assigned first-party no-fault benefits for medical services rendered. After a nonjury trial, the Civil Court (Bernice Daun Siegal, J.) found, among other things, that defendant had failed to establish, by clear and convincing evidence, its defense that plaintiffs were ineligible for reimbursement of no-fault benefits on the ground that they were operated in violation of state licensing requirements. As a result, judgment was [*2]entered in favor of plaintiffs in the principal sum of $4,223.17. Thereafter, defendant moved to vacate the judgment on the ground that the judgment awarded no-fault statutory interest based on an improper accrual date. The Civil Court (Diane A. Lebedeff, J.) denied defendant’s motion. Defendant appeals from the judgment and the post-judgment order, which appeals we consolidate for disposition.

The appeal from the post-judgment order is dismissed as academic since the issue can be reviewed on the appeal from the judgment (see Binghamton Precast & Supply v A. Servidone, Inc./Anthony Constr. Corp., 257 AD2d 731, 732 n [1999]).

It is well settled that a provider of healthcare services is ineligible for reimbursement of assigned first-party no-fault benefits “if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 321 [2005]). State law mandates that professional service corporations be owned and controlled only by licensed professionals (see Business Corporation Law § 1503 [a]; §§ 1507, 1508), and that licensed professionals render the services provided by such corporations (see Business Corporation Law § 1504 [a]). A professional corporation which is actually controlled by a management company owned by unlicensed individuals in violation of the Business Corporation Law is not entitled to be reimbursed for no-fault benefits (see One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738 [2008]).

On appeal, defendant contends that the Civil Court erred in finding that defendant had to establish its defense – – that plaintiffs were operated in violation of state licensing requirements thereby making plaintiffs ineligible for reimbursement of no-fault benefits – – by clear and convincing evidence rather than merely by a preponderance of the evidence. In support of this proposition, defendant cites V.S. Med. Servs., P.C. v Allstate Ins. Co. (25 Misc 3d 39 [App Term, 2d, 11th & 13th Jud Dists 2009] [an insurer need only establish the defense of a staged accident by a preponderance of the evidence]). We need not ultimately decide this issue here since, upon a review of the record, we find that the evidence adduced at trial was insufficient to establish, even by a preponderance of the evidence, that plaintiffs were operated in violation of state licensing requirements. To the extent that defendant sought to establish at trial that the management company hired by plaintiffs was the entity that actually “operated” (Mallela at 319) the plaintiff corporations, the record is devoid of facts establishing any of the indicia of ownership or control by one other than plaintiffs’ licensed professional.

Where, as here, a provider is found to be entitled to reimbursement of no-fault benefits, it is entitled to no-fault statutory interest from the time that the claim is overdue (see former Insurance Department Regulations [11 NYCRR] § 65.15 [h] [1], now Insurance Department Regulations [11 NYCRR] § 65-3.9 [a]). However, statutory interest is tolled if the provider fails to request arbitration or commence a lawsuit within 30 days after receiving the denial (see LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009]; East Acupuncture, P.C. v Allstate Ins. Co., 15 Misc 3d 104 [App Term, 2d & 11th Jud Dists 2007], affd 61 AD3d 202 [2009]). Since defendant failed to establish that it ever sent denial of claim forms to plaintiffs, the accrual of interest was never tolled and interest due on the claims commenced from 30 days after the claims were submitted to the insurer for payment (see Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501 [1994]). Upon a review of the [*3]record, we find that the Civil Court properly determined the date that interest began to accrue.

With regard to defendant’s contention that the interest was improperly compounded, former Insurance Department Regulations (11 NYCRR) § 65.15 (h) (1) provided for interest at the rate of “two percent per month, compounded.” While the aforementioned regulation was superseded on April 5, 2002 by Insurance Department Regulations (11 NYCRR) § 65-3.9 (a), which provides for “interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month,” the claims involved herein are all governed by the former Insurance Department Regulations. Defendant further asserts that to the extent that the former regulation provided for the compounding of interest, it was inconsistent with the statute. However, the statute merely provides for interest to be calculated at a rate of 2% per month and does not indicate a legislative preference for either simple or compound interest. Since the regulation providing for compound interest is not inconsistent with Insurance Law § 5106 (a) and it “is neither irrational nor unreasonable, it is entitled to deference” (East Acupuncture, P.C., 61 AD3d at 209). Accordingly, defendant’s contention that the court erred in awarding compound interest lacks merit.

Finally, defendant’s defense of statute of limitations was waived since defendant never raised said defense in its answer or in a pre-answer motion to dismiss the complaint (see CPLR 3211 [e]; Ferri v Ferri, 71 AD3d 949 [2010]).

In light of the foregoing, the judgment is affirmed.

Steinhardt, J.P., Pesce and Weston, JJ., concur.
Decision Date: December 20, 2010

[*1] Decided on December 16, 2010

SUPREME COURT OF THE STATE OF NEW YORK

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

PRESENT: : STEINHARDT, J.P., PESCE and WESTON, JJ
2009-2179 K C.

Appeal from an order of the Civil Court of the City of New York, Kings County (Johnny Lee Baynes, J.), entered July 21, 2009. The order, insofar as appealed from, denied defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is modified by providing that defendant’s cross motion for summary judgment dismissing the complaint is granted except as to plaintiff’s claim for $160.56 (for services rendered on January 10, 2007); as so modified, the order is affirmed, without costs. The matter is remitted to the Civil Court for all further proceedings on the $160.56 claim.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint. The Civil Court denied the motion and the cross motion, finding that “triable issues of fact exist as to the Workers[‘] Compensation fee schedule and medical necessity.” Defendant appeals from so much of the order as denied its cross motion.

The record demonstrates that the acupuncture services at issue were rendered by a licensed acupuncturist, and that defendant timely denied (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]) the portions of plaintiff’s claims for acupuncture services that it determined exceeded the proper rate of reimbursement for services provided by a licensed acupuncturist. As a matter of law, an insurer may use the workers’ compensation fee [*2]schedule for acupuncture services performed by chiropractors to determine the amount which a licensed acupuncturist is entitled to receive for such services (see Great Wall Acupuncture, P.C. v Geico Ins. Co., 26 Misc 3d 23 [App Term, 2d, 11th & 13th Jud Dists 2009]). Since it is undisputed that defendant reimbursed plaintiff pursuant to such workers’ compensation fee schedule, plaintiff is not entitled to any additional reimbursement on the claims which defendant determined exceeded the proper rate of reimbursement under the fee schedule for acupuncture services rendered by a chiropractor, and defendant’s cross motion for summary judgment with respect to the unpaid portions of said claims should have been granted.

Defendant also timely denied (see St. Vincent’s Hosp. of Richmond, 50 AD3d 1123; Residential Holding Corp., 286 AD2d 679; Delta Diagnostic Radiology, P.C., 17 Misc 3d 16) charges of $90 and $35 for services rendered on March 28, 2007, based upon independent medical examinations (IMEs) performed on March 20, 2007, which found a lack of medical necessity for further acupuncture services. In support of its cross motion for summary judgment with respect to said charges, defendant submitted IME reports and accompanying affidavits of an acupuncturist and a chiropractor which established, prima facie, a lack of medical necessity for the services at issue. Although plaintiff submitted, in opposition to the cross motion, an “Affidavit of Medical Necessity” of its licensed acupuncturist, that affidavit did not meaningfully refer to, let alone rebut, the conclusions set forth in the IME reports (see Eastern Star Acupuncture, P.C. v Mercury Ins. Co., 26 Misc 3d 142[A], 2010 NY Slip Op 50380[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Pan Chiropractic, P.C. v Mercury Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). Accordingly, so much of defendant’s cross motion as sought summary judgment dismissing those charges should have been granted (see A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

Since defendant did not make a prima facie showing of its entitlement to judgment as a matter of law with respect to the remaining claim in dispute, i.e., a charge for $160.56 (for services rendered on January 10, 2007), its motion for summary judgment was properly denied as to this claim.

Steinhardt, J.P., Pesce and Weston, JJ., concur.
Decision Date: December 16, 2010