Civil Court of the City of New York, Bronx County

1741/07

Plaintiff:

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Esqs.

Edward A. Cespedes, Esq.

of Counsel

150 Herricks Road

Mineola, New York 11501

(516) 741-4799

Defendant:

McDonnell & Adels, P.C.

Diana Leahy. Esq.

401 Franklin Avenue

Garden City, New York 11530

(516) 328-3697

Sharon A. Aarons, J.

Plaintiff commenced this action to recover no-fault first party benefits for unpaid medical services provided to Anthony Montes in the amount of $1,221.04, together with statutory interest, statutory attorney’s fees and costs and disbursements. This matter came before this Court for trial on December 7, 2007. In support of its prima facie case, plaintiff submitted a copy of its summons [*2]and complaint, a Notice to Admit and defendant’s Responses to the Notice to Admit, which were marked and entered into evidence as Court Exhibits I, II and III, respectively. Neither plaintiff nor defendant presented any witnesses nor proffered any other evidence. After review of these Court Exhibits and oral argument the Court ruled that plaintiff had not established a prima facie case and granted defendant’s motion for a directed verdict. Due to the fact that it has now become increasing common for plaintiffs seeking to recover no-fault first party benefits to attempt to establish its/their prima facie case at trial through the use of a Notice to Admit and the responses thereto, has resulted in the trial courts being divided on this issue (compare RJ Med., P.C. v. All-State Ins. Co., 15 Misc 3d 1140(A), 841 NYS2d 823 (Civ. Ct., Bronx County, 2007);PDG Psychological, P.C. v. State Farm Mut. Auto Ins. Co., 12 Misc 3d 1183(A), 824 NYS2d 766 (Civ. Ct., Kings County, 2006), with Seaside Med., P.C. v. General Assur. Co., 16 Misc 3d 758, 842 NYS2d 234 (Dist. Ct., Suffolk County, 1st Dist. 2007); New York Massage Therapy P.C. v. State Farm Mut. Ins. Co., 14 Misc 3d 1231(A), 836 NYS2d 494 (Civ. Ct., Kings County, 2006), the Court stated it would issue a formal written Decision/Order addressing the matter.

Plaintiff’s Notice to Admit (Court Exhibit II) asked the defendant to admit the following eleven items:

1. The defendant received the claims(s) for No-Fault benefits that are the subject of thisaction.

2. The defendant received the N-F-3 Verification of Treatment Form(s) that are the subjectof this action.

3. The defendant received the bill(s) that are the subject of this action.

4. The defendant received Assignment of Benefits Form(s) for the claim(s) that are thesubject of this action.

5. Annexed hereto are true and accurate copies of the plaintiff’s bill(s), claim(s) and/orN-F-3(s) referenced in 1 through 3 above, and the Assignment of Benefits formsreferenced in 4 above.

6. The defendant received the summons and complaint in this action.

7. The defendant received plaintiff’s bill(s) and/or N-F-3(s) referenced in 1 through 3 above,and the Assignment of Benefits form(s) referenced in 4 above, more than thirty daysbefore the defendant received the summons and complaint in this action.

8. The defendant has not paid the bill(s), claims(s) and/or N-F-3(s) referenced in 1 through3 above.

9. The defendant has not paid the bill(s), claims(s) and/or N-F-3(s) referenced in 1 through3 above, in full. [*3]

10. The defendant did not mail requests for verification to the plaintiff for the plaintiff’sbill(s), claims(s) and/or N-F-3(s) referenced in 1 through 3 above.

11. The defendant issued a policy of insurance covering the vehicle(s) plaintiff’s assignor(s)was/were in, or by which the assignor(s) was/were injured, at the time of the underlyingmotor vehicle accident(s).

Defendant’s verified Response to plaintiff’s Notice to Admit contained the same verbatim response to each of the eleven questions of the Notice to Admit which reads as follows:

Objection. The Notice to Admit goes to the heart of the matter being litigated and,

as such, is an improper use of a Notice to Admit. The Hawthorne Group, LLC v. RREVentures, et al., 7 AD3d 320, 324 (1st Dep’t 2004) and Sagiv v. Gamache, 26 AD3d 368, 369 (2nd Dep’t 2006); Defendant further objects as Plaintiff is asking Defendant to admit the genuineness and authenticity of any documents provided heretofore which is improper as such is exclusively within Plaintiff’s knowledge. Spawton v. James E. Strates Shows, Inc., 75 Misc 2d 813, 349 NYS2d 295 (Sup. Ct. Erie County, 1973) (emphasis added).

CPLR §3123(a) provides, inter alia, as follows:

Each of the matters of which an admission is requested shall be deemed admitted

unless within twenty days after service thereof or within such further time as the

court may allow, the party to whom the request is directed serves upon the party

requesting the admission a sworn statement either denying specifically the matters

of which an admission is requested or setting forth in detail the reasons why he

cannot truthfully either admit or deny those matters.

Here, the defendant neither admitted, denied or set forth a reason why he could not truthfully either admit or deny those matters sought in the Notice to Admit. Unlike requests for written interrogatories where a party is permitted to object and state the reason with reasonable particularity (CPLR§3133 (a)), such a procedure is not authorized with a Notice to Admit (CPLR§3123(a)). Webb v. Tire and Brake Distributor, Inc., 13 AD3d 835, 786 NYS2d 636 (3rd Dept. 2004). If a party believes that any of the requests for admissions are improper the correct procedure is seek a protective order under CPLR§3103. Kowalski v. Knox, 293 AD2d 892, 741 NYS2d 291 (3rd Dept. 2002). Otherwise, they may be deemed be admitted. Id. at 892; Tire and Brake Distributor, Inc., 13 AD3d at 838. Notwithstanding the fact that a party fails to respond to a Notice to Admit or its responses are improper, it is still the function of the court to review the propriety of the Notice to Admit and disregard same if the requests are improper. Eddyville Corp. v. Relyea, 35 AD3d 1063, 827 NYS2d 315 (3rd Dept. 2006).

The defendant herein contends that the admissions sought by plaintiff in its Notice to Admit are improper because they go to the heart of the matter being litigated. The purpose of a Notice to Admit is to obviate the necessity of producing witnesses to testify at trial pertaining to facts and/or documents where there “can be no substantial dispute at the trial and which are within the knowledge of the other party or can be ascertained by him upon reasonable inquiry.” CPLR§3123(a). An analysis of plaintiff’s Notice to Admit and relevant case law reveals that none of the individual [*4]questions for which admissions are sought rise to the level of matters that go to the “heart of the matter” and consequently the admissions sought by the plaintiff in its Notice to Admit were proper. Bajaj v. General Assurance, 2007 NY Slip Op. 27487 (App. Term, 2nd and 11th Jud. Dists.); General Assur. Co., 16 Misc 3d at 763-767; Marigliano v. State Farm Mut. Auto Ins. Co., 12 Misc 3d 1180(A), 824 NYS2d 764 (Civ. Ct., Richmond County, 2006); State Farm Mut. Ins. Co., 836 NYS2d at 494. Notwithstanding that the admissions sought by the plaintiff in its Notice to Admit were proper, the plaintiff by failing to append the documents it specifically stated were attached to its Notice to Admit, did not establish its prima facie case. State Farm Mut. Auto Ins. Co. 824 NYS2d at 764.

Parenthetically, the Court notes that the issue in no-fault health care provider case of whether use solely of a Notice to Admit and/or a defendant’s responses or lack thereto can establish a prima facie case has resulted in an apparent split of authority between the Appellate Term, 2nd and 11th Jud. Dists., and the Appellate Term, 1st Department. The Appellate Term, 2nd and 11th Jud. Dist., has unequivocally held in Bajaj that a Notice to Admit by itself is insufficient to establish a prima facie case and that a health care provider was required to tender evidentiary proof of the transaction sued upon in admissible form. However, the Appellate Term, 1st Dept., in Fair Price Med. Supply, Inc. v. St. Paul Travelers Ins. Co., 16 Misc 3d 8, 838 NYS2d 848 (2007), sustained a plaintiff’s prima facie case at trial based solely on defendant’s responses to plaintiff’s demand for verified written interrogatories. Unlike Bajaj, Fair Price did not require the submission of evidentiary proof of the transaction sued upon. Accordingly, in this department it appears, based upon Fair Price, that a plaintiff can establish solely through the use of a Notice to Admit and/or a defendant’s responses thereto a prima facie case.

CONCLUSION

For the reasons stated above, plaintiff had not established a prima facie case, defendant’s motion for a directed verdict is granted and plaintiff’s complaint is dismissed .

The foregoing constitutes the decision and Order of the Court.

Dated: January, 2008______________________________

Bronx, New YorkSharon Aarons, J.C.C.

[*1]

Civil Court of the City of New York, Bronx County, December 10, 2007

APPEARANCES OF COUNSEL

Law Offices of Teresa M. Spina, Woodbury (Emilio A. Cacace of counsel), for defendant. Leon Kucherovsky, New York City (Alan Goldstein of counsel), for plaintiff.

{**18 Misc 3d at 723} OPINION OF THE COURT

Sharon Aarons, J.

Relief Requested

Defendant moves for an order, pursuant to CPLR 2221 (e), granting defendant leave to renew and ordering a new trial based upon a change in law. Defendant’s motion is granted. Written opposition was submitted. Defendant’s motion for leave to renew is granted and upon renewal this court’s decision/order, dated October 31, 2006, is vacated, and plaintiff’s motions in limine for preclusion and for a directed verdict are denied.

Procedural Background[*2]

Plaintiff assignee brought this action against defendant, the assignor’s no-fault carrier, to recover for health services rendered to the assignor on December 10, 2004 in the nature of medical equipment supplied following the motor vehicle accident on October 28, 2004. Defendant contends that the medical equipment for which the plaintiff submitted a bill seeking $1,152 was not medically necessary.

Factual Background

On October 31, 2006 the parties appeared for trial of this action. They entered into a written stipulation, in writing and on the record, that plaintiff’s submission of the bill for services, the assignment of benefits and defendant’s denial of claim form (collectively admitted as plaintiff’s exhibit 1) would meet plaintiff’s burden of proof establishing its prima facie case. The parties further stipulated the timeliness and mailing of defendant’s denial of claim form. At the trial of this action, plaintiff made a motion in limine to preclude the peer review doctor from testifying and to preclude the defendant’s defense of lack of medical necessity on the grounds that the defense of lack of medical necessity was not preserved because the defendant’s denial of claim form, while asserting the defense of lack of medical necessity, neither specified the factual basis nor the medical rationale, and a copy of the peer review was not sent to the plaintiff. The court granted the plaintiff’s motions for preclusion and for a directed verdict in favor of the plaintiff and against the defendant in the amount of $1,152 with interest from August 2, 2005. The court’s granting of plaintiff’s motions was based upon the authority of the Appellate Term, Second{**18 Misc 3d at 724} and Eleventh Judicial Districts, rendered in A.M. Med. Servs., P.C. v Allstate Ins. Co. (12 Misc 3d 144[A], 2006 NY Slip Op 51426[U], *3 [2006]), which stated that

“this court has repeatedly held that where a denial of claim form fails to set forth with sufficient particularity the factual basis and medical rationale for its denial based upon lack of medical necessity, the defendant is precluded from asserting said defense. In the instant case, defendant’s denial of claim forms with respect to said claims, and the accompanying explanation of benefits forms, merely advised plaintiff that the claims were denied pursuant to a peer review report and that a copy of said report would be sent to plaintiff under separate cover. Since there is no evidence that the peer review was sent to plaintiff under separate cover within the 30-day claim determination period, and the denials of claims were otherwise devoid of any factual basis for the denials, defendant is precluded from asserting lack of medical necessity as a defense to said claims and plaintiff is entitled to summary judgment upon said claims” (citations omitted).

On November 3, 2006 the defendant served upon plaintiff a notice of appeal from the court’s decision/order and filed same with the Clerk of the Court on November 17, 2006.

Discussion and Analysis

The 1999 amendment of CPLR 2221 codified the rules pertaining to reargument and [*3]renewal motions. CPLR 2221 (e) (2) makes clear that a motion to vacate or modify a prior order on the ground that there has been a change in the law that would change the prior determination is a renewal motion. While the 1999 amendment set forth a specific time frame for the making of a motion to reargue (30 days after service of a copy of the order determining the prior motion with notice of entry [CPLR 2221 (d) (3)]), a motion to renew contains no statutory time prescription. The issue of the timeliness of a motion to renew under the 1999 statutory amendment was addressed by the Appellate Division, Second Department, in Glicksman v Board of Educ./Cent. School Bd. of Comsewogue Union Free School Dist. (278 AD2d 364 [2000]). In Glicksman the plaintiff’s complaint was dismissed. No appeal was taken from the order/judgment of dismissal. Subsequently, there was a change in the decisional law and seven months later a renewal motion ensued{**18 Misc 3d at 725} pursuant to the then recently amended CPLR 2221 (e) (2). The motion court granted the renewal motion and the Appellate Division reversed. The Appellate Division held that there was no indication in the legislative history of any intent to change the long-standing rule regarding finality of judgments and that a motion to renew may not be made after judgment was entered and no appeal was pending. Glicksman reaffirms that the law remains unchanged and that a motion to renew based upon a change in the law must still be made while the case is sub judice, i.e., still pending in the court system. (See also Daniels v Millar El. Indus., Inc., 44 AD3d 895 [2d Dept 2007]; Matter of Eagle Ins. Co. v Persaud, 1 AD3d 356 [2d Dept 2003].) Plaintiff does not assert that the defendant was untimely in the service or filing of its notice of appeal or that defendant’s appeal was dismissed. Consequently, defendant’s motion is timely since no judgment was entered and an appeal was pending and, as such, the court retains jurisdiction to determine the instant motion.

Subsequent to the issuance of this court’s decision/order and judgment, dated October 31, 2006, the Appellate Division, Second Department, decided the case of A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co. (39 AD3d 778 [2007]). That Court (at 779) stated as follows:

“For the reasons set forth in A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co. (39 AD3d 779 [2007] [decided herewith]), and New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co. (39 AD3d 832 [2007] [decided herewith]), we disagree with the Appellate Term’s conclusion that the defendant’s denial of claim forms were insufficient because they failed to set forth with sufficient particularity the factual basis and medical rationale upon which they were based. The applicable regulations provide that if a no-fault claim is denied in whole or in part based on a medical examination or peer review report requested by the insurer, then the insurer shall release a copy of that report to, among others, the applicant or its attorney, upon written request (see 11 NYCRR 65-3.8 [b] [4]). Had it been the intent of the Department of Insurance to require the carrier to set forth a medical rationale in the prescribed denial of claim form (see NYS Form N-F 10; 11 NYCRR 65-3.4 [c] [11]), it would have so provided.”

The Appellate Term, First Department, concurred in A.I.D. Med. Supplies v GEICO Gen. Ins. Co. (15 Misc 3d 140[A], 2007{**18 Misc 3d at 726} NY Slip Op 51044[U] [2007], specifically citing A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co.; see also Andrew Carothers, M.D., P.C. v New York Cent. Mut. Fire Ins. Co., 16 Misc 3d 136[A], 2007 NY Slip Op 51613[U] [App Term, 2d & 11th Jud Dists 2007]; Delta [*4]Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]).

As previously stated, prior applicable law mandated that a denial of claim based upon lack of medical necessity must set forth with sufficient particularity the factual basis and medical rationale for such denial. This could be set forth either in the denial of claim form or in a peer review report attached to the denial of claim form or sent to plaintiff within 30 days of the denial under separate cover. Since this was not done in the case at bar, this court, applying applicable law, held that the defense of lack of medical necessity was not preserved. The decisions of the appellate courts, cited above, subsequently ruled that pursuant to applicable Insurance Department regulations, upon request, an insurer is required to release a copy of the peer review report to the applicant or its attorney; that a denial based upon lack of medical necessity is not insufficient because it fails to set forth the factual basis and medical rationale; and that had it been the intent of the Insurance Department to require the factual basis and medical rationale in the denial it would have so provided. Hence, herein, the fact that the denial of claim form does not state a factual basis or a medical rationale does not invalidate the denial that was timely sent as so stipulated at trial by the plaintiff.

Accordingly, defendant’s motion must be granted.

Conclusion

Defendant’s motion for leave to renew is granted and upon renewal this court’s decision/order, dated October 31, 2006, is vacated, and plaintiff’s motions in limine for preclusion and for a directed verdict are denied. The Clerk of the Court, upon being served with a copy of this order with notice of entry is directed to place this action upon an appropriate calendar for trial and to notify the respective parties herein. Since this action is being restored to the trial calendar as a result of a change in existing law made by the Appellate Division, neither the filing of a new notice of trial nor the payment of any additional fees are required.

Civil Court of the City of New York, Bronx County

79629/02

Nelida Malave-Gonzalez, J.

Plaintiff commenced this action to recover no-fault first party benefits for unpaid medical services provided to Fabio Vargas in the amount of $2, 498.38. In support of its prima facie case, plaintiff submitted a Notice to Admit. Neither plaintiff nor defendant presented any witnesses.

To establish a prima facie case for first party no-fault benefits, proof of a properly submitted statutory claim form or its substantial equivalent is sufficient. The burden then shifts to the defendant to establish the lack of medical necessity. 11 NYCRR §§ 65.3.4(c), 65-3.8(c), CPLR § 5106.The issue before this Court is whether the submission of a Notice to Admit is sufficient to establish a prima facie case to recover no-fault first party benefits for unpaid medical services.

A Notice to Admit is ” . . . a written request for admission . . . of the genuineness of any papers or documents described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry. C.P.L.R. § 3123. Failure to timely respond to a Notice to Admit, either by denial or detailed reason as to why a denial or admission is not possible, shall result in those items requested deemed admitted. However, a Notice to Admit may not be used to elicit an admission of fundamental and material issues or ultimate facts. Meadowbrook-Richman, Inc. V. Cicchiello, (1st Dept. 2000); PDG Psychological, P.C. v. State Farm Ins. Co., 12 Misc 3d 1183(a)(2006).

The issue before the bench is considerably new. A cursory search of New York cases reveals no “on point” appellate decisions which would bind this Court. As such, an analysis of both arguments is worthwhile.

As defined above, a Notice to Admit may be used to settle any fact that is not at issue. A Notice to Admit should not contain any questions that would require that the opposing party concede any material facts. It is for this reason that failure to respond to a notice to admit is deemed as an admission. Conversely, if Notice to Admit is permitted as the sole evidence to [*2]establish a prima facie case, logical reasoning would follow that there was no material issues presented at trial and thus no prima facie case made.

One cannot deem any failure to respond to a Notice to Admit as an admission to a material fact. To allow such would spawn an abuse of this disclosure device and contradict the purpose of the Notice to Admit. Further, it would prevent attorneys from regarding their ethical duty to actively participate in the litigation of each case as well as timely responding to documents submitted by opposing counsel.

Recently, in Fair Price Medical Supply v. St. Paul Travelers Ins. Co., 2007 NY Slip Op. 27173, the Appellate Division, First Department affirmed a case where interrogatories were admitted to prove plaintiff’s prima facie case. Specifically, to establish that in response to the interrogatories, defendant admitted that it received the no-fault claims and made partial payment on the claims. The case at bar is distinguishable from Fair Price Medical Supply for many reasons. Although both discovery devices, the Interrogatory and a Notice of Admit function quite differently.^[FN1] First, an Interrogatory must be given under oath, where as a Notice to Admit need not be. Further, an Interrogatory may be used to unearth any relevant subject. However, as defined above, a Notice to Admit may not be used to seek answers to material issues to be resolved at trial. Sagiv v. Gamache, 26 AD3d 368 (2nd Dept. 2006).The instant case is further distinguished from Fair Price Medical Supply because that defendant responded to the Interrogatories. The Appellate Division found it contradictory that the defendant now claims that plaintiff’s did not submit proof that the claims were mailed, received or overdue although these issues were admitted under oath in response to the interrogatory. That is not the case here.

Plaintiff’s Notice to Admit requested the following admissions:

1. That the bill(s) attached to the Summons and Complaint was received by the defendant.

2. That said bill(s) was received on or before 12-01-2002.

3. That defendant did not mail a denial of claim form NF-10 to the plaintiff within thirtydays of receipt of said bill.

4. That defendant did not issue any requests for verification to the plaintiff.

5. That the occurrence of the underlying accident is not disputed.

6. That the assignor’s involvement in said accident is not disputed.

7. That there was a policy of insurance in effect covering the accident of 12/21/01.

8. That the injuries claimed were causally related to the motor vehicle accident.

9. That RJ Medical, P.C. is properly licensed in the State of New York.

10. That the assignor complied with all notice requirements.

11. That plaintiff complied with all notice requirements.

12. That the bill submitted was in accordance with the New York State WorkersCompensation Fee Schedule.

Plaintiff did not submit bills or any other documents to this Court to support the Notice to Admit. Defendant did not respond to the Notice to Admit and alleged at trial, that the plaintiff never submitted the requisite bills or forms with the Notice to Admit. Nor were said bills or [*3]forms previously provided. Defendant’s failure to respond to the Notice to Admit would deem the question of whether the bills were previously submitted as an admission and thus conceded at trial. Although technically correct, the requested admissions go to the heart of the matter. The requested admissions are of material issue at the trial. A no-fault first party benefits case requires only that the requisite bills, forms and substantially equivalent documents be admitted to prove a prima facie case. If admitted to by default during discovery, which is what happens when no response to the Notice to Admit is effectuated, it alleviates the plaintiff any burden of moving forward on its prima facie case. Thus, resulting in the plaintiff having established absolutely no material issue at trial upon which this court could hang the proverbial hat.

The plaintiff did not provide any additional evidence at trial and thus is unable to prove through admissible evidence that payment was not made on a timely submitted claim. As such, plaintiff’s action is dismissed.

The foregoing constitutes the Decision and Order of the Court.

Dated:______________________________________________

Hon. Nelida Malave-Gonzalez, J.C.C.

Footnotes

Footnote 1: CPLR 3130(1).

Civil Court of the City of New York, Bronx County

74244/03

Lizbeth González, J.

The plaintiff is a medical provider who seeks payment for no-fault medical services rendered to the assignor. The claim was rejected by the defendant-insurer on the ground of lack of medical necessity. At trial, the plaintiff’s bills were not accepted into evidence pursuant to CPLR 4539(b) because its computer copies, unlike the originals, were unsigned. The defendant’s interrogatories, however, establish that the plaintiff’s bills were received and that a deficiency in the amount of $1261.81 remains outstanding. The defendant, which produced no witnesses, argues that the claim should be denied because the plaintiff failed to introduce into evidence an assignment of benefits as part of its prima facie case. This Court is compelled to follow the authority of the Appellate Term, First Department, which recently held that an insurer’s failure to object to the adequacy of a plaintiff’s no-fault claim form within 10 days of receipt waives any defenses based thereon, including any deficiencies in the assignment of benefits. (Laufer v Lumberman’s Mutual Casualty Co., NYLJ, Oct. 17, 2005, at 27, col. 1 .) The defendant, which failed to introduce its denial into evidence, concedes that no objection to the plaintiff’s omission of its assignment was raised.

After careful consideration, this Court determines that the plaintiff met its prima facie burden by a preponderance of the credible evidence. The Clerk of the Court is directed to enter judgment for the plaintiff in the amount of $1261.81 together with statutory interest, attorney’s fees and costs.

This constitutes the decision and judgment of the Court.

Dated:January 5, 2006

So ordered,

_________________________________

Hon. Lizbeth González

Supreme Court, Bronx County

13527/2005

For Petitioner

Matthew E. Schaefer Esq.

Freiberg & Peck, LLP

12 East 41st Street, New York, NY 10017

Lucy Billings, J.

Petitioner seeks to vacate a New York No-Fault Arbitration Panel award dated February 24, 2004, granting respondent’s claim for reimbursement of medical expenses arising from a motor vehicle collision. Petitioner claims the arbitrator lacked jurisdiction over petitioner. C.P.L.R. § 7511(b)(1)(iii). While the court may lack personal jurisdiction over petitioner, based on the uncontradicted attestation that petitioner has not transacted or been licensed to transact business in New York, C.P.L.R. §§ 301 and 302; LaMarca v. Pak-Mor Mfg., 95 NY2d 210, 214 (2000), petitioner still may have been subject to the arbitration forum, so that the arbitrator’s award was within her power. C.P.L.R. § 7511(b)(1)(iii).

I.CONTACTS WITH NEW YORK

It is undisputed that petitioner is a Pennsylvania corporation transacting business in that state. Although not addressed in the petition or supporting affidavits, the arbitration decision concludes, and petitioner does not contradict, that it insured a vehicle involved in the collision from which the claimed medical expenses arose and which occurred in New York. A contract of insurance covering a vehicle travelling in New York does not amount to sufficient contact with the state to confer jurisdiction. C.P.L.R. § 302(a)(1); Chase Manhattan Bank v. AXA Reins., UK, 300 AD2d 16, 19 (1st Dep’t 2002); New York Cent. Mut. Ins. Co. v. Johnson, 260 AD2d 638, 639 (2d Dep’t 1999).

No evidence or even allegations, however, indicate that the insured vehicle was not registered in New York or that the vehicle owner was not a New York resident. These facts may bear on whether the court would have jurisdiction here. Preferred Mut. Ins. Co. v. Fu Guan Chan, 267 AD2d 181, 182 (1st Dep’t 1999); New York Cent. Mut. Ins. Co. v. Johnson, 260 AD2d at 639.

II.THE REQUIREMENT THAT INSURERS SUBMIT TO ARBITRATION

More to the point for purposes of the arbitrator’s power, C.P.L.R. § 7511(b)(1)(iii), the owner and operator of a motor vehicle insured for liability by a Pennsylvania insurer still may be “covered persons” under New York Insurance Law § 5102(j), if the vehicle had in effect the “financial security” required by New York Vehicle and Traffic Law (VTL) § 311. NY Ins. Law § 5102(j); Marshall v. Nationwide Mut. Ins. Co., 166 AD2d 852, 853 (3d Dep’t 1990). Since even [*2]a non-resident owner of a vehicle travelling in New York must comply with New York law, making the owner liable for the vehicle’s negligent operation, VTL § 388(1) and (3), a non-resident owner’s failure to maintain the required financial security subjects the owner to penalties. VTL § 318(4). See Servido v. Superintendent of Ins., 53 NY2d 1041 (1981), aff’g 77 AD2d 70, 85 (1st Dep’t 1980); General Acc. Ins. Co. v. Tran, 246 AD2d 543, 544 (2d Dep’t 1998); Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d 358, 359 (Sup. Ct. Kings Co. 2005). “Financial security” means “ability to respond in damages for liability arising out of the ownership, maintenance or use of a motor vehicle as evidenced by an owner’s policy of liability insurance.” VTL § 311(3). VTL § 311(4)(a) defines an “owner’s policy of liability insurance” as a liability policy with prescribed minimum limits.

If the vehicle involved here was owned by a New York resident or registered in New York, so that petitioner in fact transacted business here, requiring petitioner’s policy covering the vehicle to meet VTL § 311(4)(a)’s requirements, NY Ins. Law § 5107, or petitioner’s policy otherwise met them, petitioner would be an “insurer” subject to New York’s claims settlement procedures. NY Ins. Law §§ 5102(g), 5106(b). Those procedures in turn require insurers to provide the option of arbitration by the New York No-Fault Arbitration Panel for claimants seeking benefits. Id.; Hospital for Joint Diseases v. Allstate Ins. Co., 5 AD3d 441, 442 (2d Dep’t 2004).

If the vehicle was registered in a state other than New York, then to be an “insurer” subject to New York’s arbitration procedures, NY Ins. Law §§ 5102(g), 5106(b); 11 N.Y.C.R.R. § 65.18(a)(1), petitioner, “an unauthorized insurer” in New York, but “authorized to transact business in another state,” must have filed a consent to service and a declaration that petitioner’s policy be considered in compliance with VTL § 311. VTL § 311(4)(c). See VTL § 344(a); 11 N.Y.C.R.R. § 65-1.8(c); Marshall v. Nationwide Mut. Ins. Co., 166 AD2d at 853; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 360 & n.1. Such actions by the insurer are akin to an agreement to arbitrate or participation in the arbitration process, subjecting the insurer to the arbitration forum’s jurisdiction. Nardor v. Gondol, 17 AD3d 142, 143 (1st Dep’t 2005).

Medical expenses arising from a collision involving a vehicle registered outside New York and covered by an insurer authorized only in another state may be compensable based not only on the insurer’s conformance with the above statutory provisions. Compensation also may be available based on an insurance policy that itself permits an interpretation extending coverage to meet other states’ financial security requirements, commonly referred to as an “‘Out-of-State Insurance’ clause.” General Acc. Ins. Co. v. Tran, 246 AD2d at 544. See American Home Assur. Co. v. Employers Mut. of Wausau, 54 NY2d 874 (1981), aff’g 77 AD2d 421, 427 n.4, 428 (1st Dep’t 1980); Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 361 & n.2.

III.THE ARBITRATION AWARD

The arbitrator relied on New York Insurance Law § 5107. That statute requires insurers transacting or authorized to transact business in New York to sell, whether in New York or in another state, motor vehicle liability policies that meet New York’s financial security requirements and to reimburse medical expenses arising out of insured vehicles’ use in New York. Midwest Mut. Ins. Co. v. Pisani, 250 AD2d 512, 513 (1st Dep’t 1998); Allstate Ins. Co. v. Ramos, 234 AD2d 41, 42 (1st Dep’t 1996). While petitioner may not have presented the arbitrator with admissible evidence that petitioner neither transacts, nor is authorized to transact business in New York, and therefore is not subject to § 5107, petitioner does attest to those facts here, albeit without specifically addressing where the vehicle owner resides or where the vehicle is registered.

Nonetheless, even though Insurance Law § 5107 may not apply to petitioner, the provisions outlined above, in particular VTL §§ 311(4)(c) and 344(a) and 11 N.Y.C.R.R. § 65-1.8(c) or the “out-of-state insurance clause,” may apply. If they do, they would require petitioner to reimburse medical expenses arising out of its insured vehicles’ use in New York and subject petitioner to New York’s arbitration procedures, NY Ins. Law §§ 5102(g), 5106(b); 11 N.Y.C.R.R. § 65.18(a)(1), regardless whether Insurance Law § 5107 applies. General Acc. Ins. [*3]Co. v. Tran, 246 AD2d at 544; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 361 & n.2.

IV.THE RELEVANT FACTS

Although petitioner presents facts relevant to the court’s jurisdiction and to Insurance Law § 5107’s application, the record does not reveal, first, where petitioner’s insured vehicle was registered or where the vehicle owner resided. Even if the vehicle was registered outside New York and the owner is a nonresident of this state, the record nowhere discloses petitioner’s vehicle liability policy: whether it complied with New York’s financial security requirements, whether petitioner filed a declaration that the policy be considered in compliance, or whether it contained an out-of-state insurance provision. VTL §§ 311(4)(c), 344(a); 11 N.Y.C.R.R. § 65-1.8(c); General Acc. Ins. Co. v. Tran, 246 AD2d at 543-44; Marshall v. Nationwide Mut. Ins. Co., 166 AD2d at 853; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 360-61 & ns. 1-2. These facts all bear on whether the policy may in fact provide for payment of first party benefits for a collision in New York and require petitioner to provide claimants the option of arbitration by the New York No-Fault Arbitration Panel. NY Ins. Law §§ 5103, 5106(b); 11 N.Y.C.R.R. §§ 65.18(a)(1), 65-1.8(c).

V.CONCLUSION

In sum, the issue here is not whether the court has jurisdiction over petitioner, but whether the arbitrator did, or, more precisely, whether the arbitrator had the power to award respondent benefits payable by petitioner. C.P.L.R. § 7511(b)(1)(iii). Absent the facts determinative of this issue, the court denies the petition to vacate the arbitration award. This decision constitutes the court’s order and judgment dismissing the proceeding.

DATED: December 31, 2005_______________________

LUCY BILLINGS, J.S.C.

Supreme Court, Bronx County

20926/2004

Dianne T. Renwick, J.

In this special proceeding, pursuant to CPLR Article 75, petitioner CNA Insurance^[FN1] seeks a permanent stay of arbitration of a claim for supplemental underinsured motorist (SUM) benefits sought by claimant Kim Hampton. The SUM claim stems from an automobile accident involving a van insured by petitioner. At the time of the accident, claimant Hampton had been riding as a passenger in the van. After settling her personal injury action against the tortfeasor,^[FN2] Hampton sought SUM benefits under the endorsement of the policy issued by petitioner CNA Insurance. Petitioner, however, avers that claimant is not entitled to SUM benefits because the subject [*2]automobile accident was not the cause of her femur fracture. (The femur is the thighbone; it extends from the hip to the knee.) This Court now renders a determination based upon the testimonial and documentary evidence presented at the framed issue hearing, which suggests two alternative causes of claimant’s femur fracture, the impact of the car collision and a slip and fall on sidewalk ice.

Framed Issue Hearing

Eyewitnesses’ Description of the Car Accident

At the framed issue hearing, claimant Kim Hampton, who is legally blind, testified that on March 11, 1999, she was riding as a passenger in a van owned by her employer Advocates for the Blind. Hampton was seated, her lap seat belt fastened, in the first row of bench seats, behind the front passenger seat. There was an arm rest in the down position next to Hampton’s right leg. Upon crossing the intersection of 67th Street and 78th Avenue, Queens, the van collided with a another vehicle that had failed to obey a stop sign. As a result, the van sustained a “very heavy” impact to the front passenger side, causing it to swerve, propel forward and strike a building. Hampton reported that the impact from the first collision was “very heavy,” but the seat belt prevented her from falling off her seat. The impact caused Hampton’s glasses to fly off her face, and her upper right leg, from just above the knee, to up around her hip, to hit either the armrest or the door of the van. Hampton believed her upper right leg hit the door or the armrest, but she could not actually see without her glasses. Upon impact, Hampton felt a lot of pain in her right leg. Hampton then felt a second impact when the vehicle struck the building.

Immediately after the second impact, Hampton smelled smoke and got scared. Feeling that the van might explode, she moved to exit the van. She turned her body to the right, toward the rear passenger side door. While remaining seated, Hampton, who was heavy set (weighing close to 240 pounds) placed her left foot on the van’s interior step, in an effort to move her body toward the side door. She then opened the door and moved herself onto the floor of the van by sliding onto her bottom, while her leg remained dangling in a partially straightened position. Hampton grabbed the van door in an attempt to assist herself in standing up, but she could not do it and fell onto the sidewalk, directly in front of the van.

According to the driver of the van, Ruperto Duncan, the impact from the car was “very heavy.” After the van ran into the building and began to “smoke,” he exited the van’s driver’s side and walked around to the passenger’s side. Duncan then observed Hampton lying injured on the ground. Duncan informed the police personnel, who arrived at the scene to assist Hampton, that she had fallen on sidewalk ice upon exiting the van. At the hearing, Duncan, however, conceded that he did not actually witness her fall. In fact, Duncan testified that he did not speak with Hampton about the accident. He had no recollection how he got that information, but assumed that she had fallen on ice.

Conflicting Medical Opinions As to the Cause of the Femur Fracture

At the framed issue hearing, respondent presented a medical expert, Dr. Lynne Richardson, the attending physician at Elmhurst Hospital emergency room on the date of the accident. Dr. Richardson supervised the resident physician, Dr. Stuart Miller, who first saw claimant Hampton in the emergency room. Based upon her examination of the claimant and a review of the pertinent medical record, Dr. Richardson opines, with a reasonable degree of medical certainty, that the femur fracture was caused by the two vehicle impacts on the day of the [*3]accident. Dr. Richardson explains that femur fractures are fairly uncommon as a result of a fall from a standing position because it takes a significant impact to break the femur. In addition, Dr. Richardson considered the fact that, immediately after the collision, the claimant experienced severe pain, which is one of the symptoms of femur fracture. Under the circumstances, Dr. Richardson surmises, the most likely scenario in this case was that the claimant suffered the fracture during the impacts to her lower body within the van, and then fell while attempting to exit the van due to the inability of her injured leg to bear her weight.

Petitioner CNA Insurance’s medical expert, Dr. Andrew Bazos, a neurosurgeon, disagrees with Dr. Richardson’s conclusion. Based upon his review of the pertinent medical record and the witnesses’ statements detailing the accident, Dr. Bazos opines, with a reasonable degree of medical certainty, that the femur fracture resulted from a sidewalk fall on ice, as was reported throughout the medical record, namely the “ambulance triage notes,” the “Rehab Medicine Referral to Psychiatry” and the “resident’s notes.” Dr. Bazos explains that femur fractures are caused by events that involve a lot force; it takes a sudden forceful impact to break the bone. In the doctor’s estimation, the collision could not have created sufficient force to break the femur bone. As support, the doctor relied on the fact that respondent had been wearing her seat belt prior to the accident and that there was no visible deformity in any part of the van near where the injured person had been sitting. In addition, Dr. Bazos explains, had the claimant’s femur been fractured during the car collision, the claimant could not have been able to attempt to get up, as she described, due to the severity of the injury and the claimant’s weight.

Discussion

Courts may stay arbitration where “the particular claim sought to be arbitrated is outside the scope of the agreement to arbitrate.” See County of Rockland v. Primiano Constr. Co., 51 NY2d 1, 7 (1980); CPLR §7503 (b); Sisters of St. John the Baptist, Providence Rest. Convent v. Phillips R. Geraghty Constructor, 67 NY2d 997, 999 (1986). Courts have held that to qualify for no-fault benefits in the form of underinsured/or uninsured motorist coverage, the insured vehicle must be the proximate cause of the claimant’s injuries. See e.g., Walton v. Lumbermens Mut. Cas. Co., 88 NY2d 211, 215 (1996); Farm Family Cas. Ins. Co. v. Trapani, 301 AD2d 740 (3rd Dept. 2003); New York Cent. Mut. Fire Insurance v. Hayden, 209 AD2d 927 (4th Dept. 1994).

The seminal case on this subject is Walton v. Lumbersmen Mut. Cas. Co., 88 NY2d 211, 215 (1996), where the Court of Appeals held that “the vehicle must be the proximate cause of the plaintiff’s injury before the absolute liability imposed by the statute arises.” As the Court explained, “no-fault first party benefits are available only when the motor vehicle is the instrumentality that causes the injury plaintiff claims.” 88 NY2d 211, 213 (1996). Accordingly, “when a plaintiff’s injury is caused by an instrumentality other than the insured vehicle, liability for the losses sustained are more properly addressed outside the area of no-fault motor vehicle insurance.” Id at 214. Such interpretation, the Court held, “reflects the legislature’s intent to draw the line between motor vehicle accidents and all other types of torts and to remove only the former from the domain of common law tort litigation.” Id.

Here, as fully described above, the parties have presented two possible causes of respondent-claimant’s injury (femur fracture). Claimant asserts that her injury was caused by the impact to her body against the van during the collision. In contrast, petitioner claims that Hampton’s injuries had no casual connection to the insured vehicle; that it was caused by a [*4]sidewalk slip and fall on ice. This Court’s determination of which version is more credible would be dispositive of the issue of whether the injury falls within the ambit of no-fault insurance, as having been caused by the insured vehicle. Of course, claimant-respondent’s version falls within the ambit of no-fault insurance since it is based upon the claim that the femur fracture was caused by the impact of her body against the van.

Conversely, petitioner’s version, that claimant’s femur fracture was caused by a sidewalk slip and fall on ice, upon exiting the van, would not support a claim for no-fault insurance, since under such version the insured vehicle would not have been the instrumentality that caused the injury. Contrary to respondent’s allegations, proximate cause is not established merely because injuries occurred while entering or exiting a vehicle. Adopting this approach would be tantamount to equating proximate cause with the term “occupying” a vehicle. However, as noted above, the law is abundantly clear that more than occupancy is required to establish a casual link between a motor vehicle and a claimant’s injuries. Instead, what is required is that the motor vehicle was the actual instrumentality which produced the injuries. See e.g., Walton v. Lumbermens Mut. Cas. Ins. Co, supra; Matter of Farm Family Cas. Ins. Co. v. Trapani, supra; New York Central Mutual Fire Insurance v. Mark Hayden, supra.

Indeed, courts have consistently held that just because an injury occurs in or near a motor vehicle does not mean necessarily that a vehicle was the proximate cause of the claimant’s injuries. For example, in Sochinski v. Bankers & Shippers Ins. Co., 221 AD2d 889 ( 3rd Dept. 1995), the Appellate Division held that the claimant did not qualify for first-party, no-fault benefits even though the injuries occurred while the claimant was in occupancy of the motor vehicle. In Sochinski, the insured was allegedly injured when airborne particles caused by sandblasting at a highway construction site entered the car’s open window and lodged in his eyes. The court held that the claimant did not qualify for first-party, no-fault benefits for his injury to his eye because such injury would have occurred even if he had not been in his motor vehicle. Since the motor vehicle was wholly incidental to the event which produced the injury, it was not the instrumentality, i.e. proximate cause, of the injury. Id.

Likewise, in New York Cent. Mut. Fire Ins. Co. v. Hayden, 209 AD2d 927 (4th Dept. 1994), an injury that occurred immediately upon alighting a motor vehicle did not fall within the ambit of no-fault law because the vehicle itself was not the instrumentality that caused the claimant’s injury. In New York Cent. Mut. Ins. Co. v. Mayden, supra, the personal injuries suffered by the claimant-passenger occurred when he got out of the vehicle and fell through a hole in a railroad trestle after the vehicle’s left wheels became stuck in a gap between the track on the trestle and the road for vehicles. The court found that the injuries were not covered by the passenger’s uninsured motorist (SUM) insurance since the accident did not arise out of the inherent nature of the vehicle. Id.

Conversely, in Farm Family Cas. Ins. Co. v. Trapani, 301 AD2d 740 (3rd Dept. 2003), the claimant’s injuries that occurred while alighting a motor vehicle were deemed to fall within the ambit of no-fault law where the vehicle itself was the instrumentality that caused the claimant’s injuries. In Trapani, supra, the driver lost control of her car and struck a utility pole. The car’s impact moved the pole, causing its power lines to short out and rain sparks and hot pieces of wire down onto the 75-year-old claimant, who was standing in her garden along the roadway near her home. In attempting to run from this hazard, claimant fell and sustained injuries to her head and [*5]left knee. The court found that the vehicle proximately caused the claimant’s injuries since the hazard that caused the fall was triggered by the impact of the car on the pole. Id.

Here, assuming, that claimant Hampton’s injuries are attributed to a slip and fall accident on sidewalk ice, this Court would have to find that such injury does not fall within the ambit of supplemental underinsured motorist coverage, based upon the reasoning of Walton v. Lumbersmen Mutual Casualty Ins. Co., supra, and the aforementioned analogous cases. The hazard that triggered the sidewalk slip and fall —the ice — cannot be attributed, like Farm Family Casualty Ins. Co. v. Trapani, supra, to the use or operation of the automobile. Instead, like in New York Cent. Ins. Co. v. Hayden, supra, and Sochinski v. Bankers and Shippers Insurance Company, supra, the fall would have occurred even if claimant had not been in his motor vehicle. Under the circumstances, the vehicle was the mere situs of the accident, and thus cannot be the proximate cause of the injury. Cf. Lumbermen’s Mut. Cas. Co. v. Logan, 88 AD2d 971(2nd Dept. 1982).

The question that remains is which version does this Court credit as the actual cause of claimant’s femur fracture. In making such determination this Court is guided by several principles applicable in the context of a petition to stay arbitration of a claim for no-fault benefits. The petitioner bears the burden of showing sufficient evidence to justify a stay of the arbitration of respondent’s claim for SUM benefits. See Aetna Casualty & Surety Ins. Co. v. McMichael, 176 AD2d 315 (2nd Dept. 1991); In Re. Nationwide Ins. Co. 170 AD2d 683 (2d Dept. 1991). It is also the general rule that when there is ambiguity as to existence of coverage, doubt must be resolved in favor of the insured and against the insurer. See, Handelsman v. Sea Ins. Co., 85 NY2d 96, 101 (1994). Moreover, where possible, courts will generally opt in favor of ruling for no-fault coverage of an insured under the facts of the particular case, unless such a ruling would not be in cadence with the statutory language and purpose. See e.g., Johnson v. Hartford Insurance Co., 100 Misc 2d 367, 369 (NY Sup.Ct. 1979).

Evaluated under such legal matrix, the proof offered by petitioner is not sufficient to grant a permanent stay of the arbitration of the claim for SUM benefits, when juxtaposed with the proof offered by respondent-claimant. Both medical experts’ conflicting opinions as to the cause of the femur fracture have a legitimate factual foundation, but based on different versions of the accident. Under the circumstances, the determination of the cause of claimant’s injury is dependent, in substantial measure, upon an assessment of the credibility of claimant’s account of her injury, which is more consonant with plaintiff’s expert’s medical opinion. In assessing claimant’s credibility, this Court concludes that Hampton’s testimony was consistent, clear, candid, and, therefore, credible.

This Court, however, is troubled by the fact that the medical evidence is replete with the statement that claimant had fallen on sidewalk ice. Nevertheless, such troubling statement is, in the context of this case, insufficient to counterbalance respondent’s evidence. Significantly, no evidence from any witness was submitted directly attributing the troubling statement to claimant Hampton. Under the circumstance, it is equally likely that the sole source of the statement was the driver who reported it to the police personnel, albeit conceding at the hearing that he had not actually witnessed claimant’s fall; nor could he recollect the source of the statement. Viewed in its totality, the evidence preponderates in favor of a finding that the femur fracture was caused by the impact of the van’s collision with the automobile and building.

[*6]Conclusion

For the foregoing reasons, this petition is denied to the extent of declaring and adjudging that petitioner failed to meet its burden of establishing that claimant’s injuries were not proximately caused by the insured motor vehicle. The Clerk is directed to dismiss the petition forthwith. Accordingly, the parties are directed to proceed to arbitration of the Supplemental Underinsured Motorist (SUM) claim.

This constitutes the Decision, Order, and Judgment of the Court.

Dated: November 29, 2005__________________________

Bronx, New YorkHon. Dianne T. Renwick, JSC

Footnotes

Footnote 1:Transcontinental Insurance Company does business as CNA Insurance Company.

Footnote 2:The van was struck by a motor vehicle driven and owned, respectively, by Margaret and Herbert Adask.

Civil Court of the City of New York, Bronx County

32861/2005

Julia I. Rodriguez, J.

The actions at issue were commenced by plaintiff/medical providers seeking a money judgment against defendant/insurance carrier for recovery of no-fault medical benefits rendered to its assignor, plus statutory interest and attorneys’ fees. [Insurance Law §5106 et seq; 11 N.Y.C.R.R.R. §65-1.1 et seq.; §65.15[h][1] and §65.17[b][6][v]].

*******

After service of the respective summonses and complaints defendant interposed an Answer alleging numerous affirmative defenses. The defenses relevant to the instant motion(s) included:

(1) Plaintiff has materially misrepresented that a licensed physician was the owner of the plaintiff’s practice with the purpose and intent of inducing Defendant to make payments for medical services which the true owners would not be entitled to receive under the no-fault endorsement of the applicable policies.

(2) The Plaintiff is not a properly licensed facility according to the Business Corporation Law and the Public Health Law, and thus has engaged in the unlawful practice of medicine.

(3) The plaintiff lacks standing to bring the within action as it was controlled, owned, managed and supervised by persons who are not licensed or authorized to own a professional service corporation or authorized to practice medicine in violation of the Business Corporation, Education and Insurance Laws.

(4) Plaintiff is engaged in the unlawful practice of fee splitting in violation of 10 N.Y.C.R.R. §600.9 and the Education Law and Public Law §4500 and therefore is not entitled to recover no-fault benefits.^[FN1]

In accompaniment of each Answer, defendant also served a Demand for Verified Written Interrogatories, a Combined Demand and Notice of Examination Before Trial of the

plaintiff, the agents, servants or employees of said parties having knowledge of the subject matter concerning all of the relevant facts and circumstances in connection with the issues alleged in the plaintiff’s verified complaint.

The Combined Demand sought discovery and inspection of various documents, including but not limited to

the assignment, assignor’s application, bills, copies of all checks and other evidence demonstrating payment received from defendant, complete office notes, all sign-in sheets, plaintiff’s curriculum vitae, plaintiff’s Certificate of Incorporation, and the resume and curriculum vitae of each expert upon whose testimony you will rely upon at the time of trial concerning the subject lawsuit.

Plaintiff’s first response to the Demand for Interrogatories was rejected by defendant as “insufficient and nonresponsive.” Simultaneously with this rejection defendant served a Supplemental Demand for Verified Written Interrogatories and Amended Notice of Examination Before Trial. The amended EBT demand specified two individuals to be deposed: (1) Dr. Dipak Nandi – owner/operator, and (2) Ying-Li – medical provider/acupuncturist.

Thereafter, plaintiffs provided defendant with discovery indicating that Dipak Nandi is a licensed physician and certified acupuncturist, and that he is also sole shareholder in each of the plaintiff/medical corporations. After motion practice to dismiss plaintiffs’ actions for lack of disclosure or to compel plaintiffs to comply with defendant’s discovery demands, said motions were resolved by stipulations which read, in pertinent part:

Plaintiff shall provide responses to defendant’s written discovery demands and supplemental demands pertaining to standing within 60 days, to the extent not already provided: and

Defendant to advise plaintiff in writing within 45 days of receipt of plaintiff’s written discovery responses of a deposition of plaintiff’s alleged owner, Dr. Nandi is required.

Plaintiff reserves the right to move for a protective order regarding Dr. Nandi’s deposition.

********

Before the instant court are nine motions where defendant, Travelers Insurance Company, seeks an order pursuant to §3126 dismissing the actions for plaintiffs’ failure to provide Court-ordered discovery, or in the alternative, for an Order compelling plaintiffs to provide all outstanding discovery and produce Dr. Nandi and Ying-Li to ascertain evidence of the entities’ corporate structure and method of payment and sum of salaries.

The court sua sponte hereby consolidates the motions and respective cross-motions for protective orders in the nine above-reference actions solely for purposes of disposition herewith.

********.

In opposition, plaintiffs present that Dr. Nandi was neither the treating acupuncturist or the individual who submitted the bills in these cases. Plaintiffs submit that they have already provided defendant with incorporation documents, licenses, payroll information and complete responses to defendant’s discovery demands, including plaintiffs’ lease agreements. Plaintiffs contend that the discovery establishes that (1) Dr. Nandi is a licensed medical doctor and that both he and the treating acupuncturists are State-certified; (2) that the plaintiff/medical facilities are lawfully incorporated entities; and (3) that Dr. Nandi owns and operates the plaintiff [*3]corporations and other acupuncture clinics which he is qualified to do under State law.

In its Repl[ies] defendant does not dispute that it has received the relevant corporate documents, medical and acupuncturists’ licenses. However, defendant argues that still outstanding are Dr. Nandi’s and plaintiff/corporations’ tax returns, salary records for Dr. Nandi and his employees, and facility lease agreements between the medical providers and other entities, presumably, management companies. Defendant further argues that the deposition of Dr. Nandi:

. . . is material and necessary to the defense of this action and goes to the heart of the issue in this case, which is whether [the medical providers were] fraudulently incorporated and thus not entitled to no-fault benefits. The information sought is relevant to resolve the issue of whether the ]plaintiffs are] properly licensed to the New York State Business Corporation Law and Education Law as the plaintiff[s] will not be able to collect benefits under the no-fault law if they cannot establish standing [¶8 of Reply].

***********

Before consideration of whether medical providers were fraudulently incorporated and thus not entitled to no-fault benefits, the first issues for the court are whether defendant preserved a defense premised on fraud in any of its denials, and if it did not so, whether the fraud alleged falls within the category of defenses which are not waived by the insurer despite failure to raise it in a timely denial.

It is now settled that an insurer must adhere to a “timely timed process” of denial or waive defenses which are not asserted within 30 days or tolled by the verification process. Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274, 660 NYS2d 536, 683 NE2d 1 (1997). [11 N.Y.C.R.R. §§65.15 et seq, 3.5(b)(d)(e), 65-3..6(b), 65-3.8 (a)(1) et seq.] The only exceptions to the 30-day rule to deny or pay the claim are where the insurer’s basis for denying the payment is based on lack of coverage of the policy. Central General Hospital v. Chubb Group of Insurance Companies, 90 NY2d 195, 199, 681 NE2d 413, 659 NYS2d 246 (1997) (a defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident is a lack of coverage defense which is not precluded by an untimely denial). The seminal language in Chubb reads:

. . . The denial of liability based upon lack of coverage within the insurance agreement . . . is distinguishable from disclaimer attempts based on a breach of a policy condition [cites omitted] . . . Strict compliance with the time requirements of both the statute and regulations may be obviated and the preclusion remedy rendered unavailable when denial of claims is premised on a lack of coverage . . . We would not . . . extend this exceptional exemption to excuse [defendant insurer’s] untimely defense in relation to the treatment being deemed excessive by the insurer. That would not ordinarily implicate a coverage matter and, therefore, failure to comply with the Insurance Law time restriction might properly preclude the insurer from a belated rejection of the billing on that basis.

Central General Hospital v. Chubb Group, supra , 90 NY2d 195 at 199.

In this case, none of the denials issued by defendant prior to commencement of these actions alleged a staged accident or lack of coverage, or any scintilla sounding in fraud. Indeed, [*4]the bulk of the denials herein merely stated:

Per New York State Law Regulation 68, “Upon request by the Company, the eligible injured person or someone on his behalf shall:

(a) execute a written proof of claim under oath;

(b) provide authorization that will enable the Company to obtain medical records; and

(c) provide any other pertinent information, your entire claim No-Fault Benefits is denied.

[sic] DUE TO: FAILURE TO SUBMIT ALL REQUESTED INFORMATION IN A REASONABLE TIME FRAME, LACK OF VERIFICATION AND NON-COOPERATION. THEREFORE, YOUR BILLS [sic] ARE DENIED.^[FN2]

At this juncture of the analysis, defendant is not entitled to depose Dr. Nandi or the treating acupuncturists for the purposes it proposes, because defendant failed to preserve any defense sounding in fee splitting, improper incorporation or licensing in its denial. However, the next inquiry is whether any of these defenses falls within the narrow exception(s) of defenses which are not waived by an untimely denial.

*******

Defendant argues that it is entitled to depose Dr. Nandi because now “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law.” State Farm Mutual Automobile Co. v. Mallela, et al, 4 NY3d 313, 321, 827 NE2d 758, 794 NYS2d 700 (2005).

Mallela concerned a lawsuit filed by State Farm insurance company in the United States [*5]District Court for the Eastern District of New York seeking a judgment declaring that

it need not reimburse defendants – fraudulently incorporated medical corporations – for assigned claims submitted under no-fault. . . . According to the complaint, the unlicensed defendants paid physicians to use their names on paperwork filed with the State to establish medical service corporations. Once the medical service corporations were established under the facially valid cover of the nominal physician owners, the nonphysicians actually operated the companies. To maintain the appearance that the physicians owned the entities, the nonphysicians caused the corporations to hire management companies (owned by the nonphysicians), which billed the medical corporations inflated rates for routine services. In this manner, the actual profits did not go to the nominal owners but were channeled to the nonphysicians who owned the management companies.

The claim was that the medical providers in Mallela were in violation of §§1504 and 1508 of the Business Corporation Law (BCL). BCL §1504(a) states, in pertinent part, that “no professional service corporation may render professional services except through individuals authorized by law to render such professional services as individuals.” The Superintendent of Insurance had determined that insurance carriers may withhold payment of no-fault claims which had been assigned to those medical providers which were owned or controlled by non-physicians. The Superintendent’s regulation is found in Section 65-3.16(a)(12) of 11 N.Y.C.R.R, which reads:.

Measurement of no-fault benefits. (a) Medical expenses.

(12) A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.

One contention by the medical providers in Mallela was that even if they were not in compliance with corporate licensing requirements, they were entitled to payment because all personnel who actually treated the patients rendered their services within the scope of their licensed specialties, and therefore, this extent of licensing compliance was “within the regulatory framework for reimbursement.” 4 NY3d at 321.

The Mallela Court found the Superintendent’s Regulation [§65-3.16(a)(12)] valid and that it was undermined by the claim that the individual practitioners who treated the patients were properly licensed within their fields:

Where, as here, the Superintendent has properly crafted a rule within the scope of his authority, that rule has the force of law and represents the policy choice of this State.

4 NY3d at 321.

Based upon Mallela, this court holds that the defenses of fraudulent incorporation and unlawful fee splitting are proper exceptions to the 30-day rule because said conduct is specifically barred by statute. Mallella, supra (insurance carriers may withhold payment of claims to medical corporations which are in violation of specific statutes concerning [*6]incorporation and fee splitting with non physicians). Concomitantly, these defenses are not waived or precluded by an untimely denial See also Ozone Park Medical Diagnostic Associates v. Allstate Insurance Company, 180 Misc2d 105, 109, 689 NYS2d 616, 618 (A.T. 2d Dep’t 1999) (where the specific wording a statute [Public Health Law §238-a] prohibits a financial relationship between a referring practitioner and the medical provider, then “it logically follows that the 30-day limitation . . . [rule] would not apply if the instant case fell within the ambit of [the statute]”).

However, in this case defendant fails to demonstrate by “fact or founded belief” that the medical corporations were not properly licensed either at their inception or thereafter, that non-physicians are practicing medicine at plaintiffs’ facilities and/or that the physicians billing for services rendered are not properly licensed in their respective fields. Notably, defendant is in receipt of the Certificate(s) of Incorporation, copies of medical licenses and registrations, and copies of lease and management agreements for several of the plaintiffs herein.^[FN3] Significantly, defendant does not dispute the validity of any corporate registrations and/or medical licenses provided by plaintiff(s), or present legal authority prohibiting Dr. Nandi from owning more than one medical facility. There is no submission by an individual with personal knowledge that any investigation has been conducted at the New York State Department of Education and/or Secretary of State, or other source, which contradicts the corporate and licensing data provided by plaintiffs. Rather, via an affidavit by Kathy Aplin, a manager employed by defendant in its Special Investigative Unit, defendant states it is its “contention” that the 10 [ten] professional medical corporations, including plaintiffs herein, allegedly owned by Dr. Dipak Nandi, a licensed acupuncturist, are in fact owned by non-medical personnel. Ms. Aplin states that evidence collected to date indicates that Dr. Nandi’s facilities are managed, controlled and operated by unlicensed individuals who ultimately profit from these medical facilities in direct violation of the Business Corporations Law and Educational Law of the State of New York. However, Ms. Aplin fails to submit “the evidence collected to date” applicable to the actual medical providers named in the captions herein.

In addition, Ms. Aplin offers information which is unrelated to the plaintiffs before the court. For example, Ms. Aplin alleges that Dr. Nandi was not certified to practice acupuncture in January 2001 when Universal Acupuncture was incorporated. The court deems this information irrelevant because Universal Acupuncture is not a named plaintiff herein, it is undisputed that Dr. Nandi obtained certification to practice acupuncture in 2001 after January 2001, and all claims in the various complaints are for services rendered after 2001.

Ms. Aplin attaches numerous lease agreements between parties that are not related to this lawsuit. As to those lease agreements which involve one of the parties named in the actions before the court, those lease agreements expired in either 2001 or 2002; there is no allegation that said agreements were renewed and their relevance to the no-fault claims at issue. [*7]

Ms. Aplin refers to documents obtained from a lawsuit against Dr. Nandi, but fails to identify the date said lawsuit was commenced, the caption and index number, the court in which it appeared, and the disposition, if any.

Ms. Aplin states that Travelers “became concerned” that many of the bills submitted by plaintiffs were for unnecessary treatment which “was motivated by interests other than the best interests of the patients” [¶24]. However, she cites no specific findings of patients being rendered unnecessary treatment, and none of the denials herein stated medical non-necessity as a ground for denial of plaintiffs’ claims. Cf. A.B. Medical Services PLLC v. State Farm Mutual Automobile Insurance Company, 4 Misc 3d 83, 84, 781 NYS2d 822, 823 (9th & 10th Jud. Dists. 2004) (examinations of the assignors under oath revealed significant discrepancies and raised questions of fact as to whether medical services were rendered after symptoms abated).

Clearly, Ms. Aplin’s affidavit is replete with hearsay, conjecture and speculation and, therefore, insufficient to raise an issue of fact as to plaintiffs’ fraudulent corporation or other specific fraudulent conduct.

This court holds that Mallela did not open a valve authorizing full disclosure into corporate licensing matters absent good cause and/or reasonable foundation in no-fault medical provider actions. Significantly, Mallella referred to the role of Superintendent of the Insurance in investigating claims of regulatory breaches, and implied that the insurance carrier would conduct its investigation within the confines of the statutory verification process. Consider, Mallela offered the caveat that the no-fault regulatory scheme

does not permit abuse of the truth-seeking opportunity that 11 N.Y.C.R.R. 65-3.16(a)(12) authorized. Indeed, the Superintendent’s regulations themselves provide for the agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause (see 11 N.Y.C.R.R. 65-3.2[c]. In the licensing context, carriers will be unable to show ‘good cause’ unless they can demonstrate behavior tantamount to fraud.”

The Mallella Court cited to and presumed that carriers follow the “practice principles” enunciated in §65-3.2[c]:

Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.

Consequently, Mallela did not alter the settled rules that (1) an insurer’s lack of coverage defense must be premised on fact or founded belief [General Hospital v. Chubb Group, supra ,], (2) that an insurer must stand or fall upon those defenses raised in a timely denial preserved with tolling mandates [Presbyterian Hospital v. City of New York, supra ; Inwood Hill Medical P.C. v. Allstate Insurance Company, 3 Misc 3d 1110(A), 787 NYS2d 678, 2004 {3 Misc 3d 1110(A)} WL 1381082 (Div. Ct. NY Co. 2004)], (3) that discovery in no-fault actions is tailored by the grounds asserted in the denial [Metropolitan Radiological Imaging, PC v. State Farm Mutual Automobile Insurance Company, 7 Misc 3d 675, 790 NYS2d 373 {7 Misc 3d 675} (Civ. Ct. [*8]Qns. Co. 2005) ; and (4) Mallella did not define, expand or restrict the meaning of “fraud.”^[FN4]

However, while the Mallela Court did not define fraud, it defined “good cause:”

In the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do.

4 NY3d at 322. Thus, a new question is what constitutes “behavior tantamount to fraud?” While this court does not venture to offer an example, defendant’s submission in this case lacks a reliable foundation to infer that the medical providers are engaging in behavior that can be described as “tantamount to fraud.” Consequently, defendant does not demonstrate that it is entitled to the depositions it seeks, since it is axiomatic that Article 31 of the CPLR [Civil Practice Law and Rules] is not to be utilized for ‘fishing expeditions.’

It remains that after Mallela the distinction between denials based on lack of coverage and all others, made in Chubb, supra , is still the prevailing law. Fair Price Medical Supply Corp. v. Travelers Indemnity Company, __ Misc 3d __, __ {9 Misc 3d 76} NYS2d. __, 2005 WL 1994132, 2005 NY Slip O. 25343. (A.T. 2d & 11th Jud. Dists. 2005). In Fair Price the Appellate Term first found that the insurer did not deny the claim within 30 days, and then considered whether the insurer’s claim of fraud was precluded by the untimely denial. Specifically, the insurer claimed that it was not required to pay the medical provider’s claim because the eligible injured person, the assignor, stated he never received the medical supplies. The Appellate Term adhered to Chubb, supra , and held in favor of the medical provider, stating that a:

defense based on a provider’s fraudulent scheme to obtain no-fault benefits [was] precluded by defendant’s untimely claim denial. . . . we are bound by the majority’s unequivocal construction [in Chubb] of the No-Fault Law which limits an insurer’s ability to resist ‘ill-founded, illegitimate and fraudulent claims’ submitted by providers of medical services or medical equipment to the ‘strict, short-leasehed contestable period’ set forth in the verification protocols [cites omitted]. The clear implication is that a defense based on a provider’s alleged fraudulent claim for no-fault benefits is precluded by an insurer’s failure effectively to invoke its remedies in the ‘contestable period,’ one of the ‘tradeoff[s] of the no-fault reform’ which the Legislature recognized as the cost of providing ‘prompt uncontested’ first-party insurance benefits.

After Mallela insurance carriers are still required to make a showing that the defense of fraud is well-founded and in good faith. See KC Ocean Diagnostic Imaging PC v. Utica Mutual Insurance Company, __ Misc 3d ___, N.Y.L.J. 7/18/05, p.37, col. 4 (A.T. 2nd & 12th Jud. Dists.) (“defendant [insurer] is not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite its untimely denial of the claim” and evidence was sufficient to sustain defense]; cf., Medical Services PLLC, Somun Acupuncture, PC, Square Synogogue Transportation Inc. V. GEICO Casualty Insurance Co., __ Misc 3d __, N.Y.L.J. May 5, 2005, p.31, col.2 (A.T. 2nd & 12th Jud. Dists.) (although defendant/insurer not “precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme” in an untimely denial, defendant’s evidence “was insufficient to demonstrate that the defense was based upon a “‘founded belief that the alleged injur[ies] did not arise out of an insured incident” [cites omitted]; AB Medical Services PLLC v. Eagle Insurance Co, 3 Misc 3d 8, 9, (A.T. 2nd & 11th Jud. Dists. 2003) (an insurer’s “founded belief” that an accident was staged cannot be based upon “unsubstantiated hypothesis and supposition”).

Cf. Metroscan Imaging PC v. GEICO Insurance Company, 8 Misc 3d 829, 797 NYS2d 737 {8 Misc 3d 829} (Civ. Ct. Qns. Co. 2005), where the court consolidated sixty (60) actions for purposes of permitting amendment of the insurer’s answers to include a defense of fraudulent incorporation, and scheduled a framed hearing on that issue. Apparently, the insurer in Metroscan presented that the doctor and owner of the professional corporations “sold his medical license to [another medical group identified by name] to maintain the appearance that the companies were owned by a physician [also identified] [w]hen in actuality the corporate entities were owned, controlled and operated by non-physicians.” Id. 8 Misc 3d at 831, 797 NYS2d at 739. By contrast, defendant herein does not identify one non-licensed individual who either owns, controls or operates the medical corporations owned by Dr. Nandi, even though defendant has been provided with management agreements and income tax information for certain employees.

For the foregoing reasons, defendant’s motion(s) to dismiss the complaint(s) or, in the alternative, to compel the deposition of Dr. Nandi and Ying Li and/or other treating acupuncturists are denied in their entirety; and plaintiffs’ cross-motion(s) for protective order are granted.

In light of the foregoing, the court declines to address plaintiffs’ further argument that Mallela is limited to claims arising on or after April 4, 2002, deferring that discussion to when that is the pertinent issue before the court. See Multiquest PLLC v. Allstate Insurance Co., __ {9 Misc 3d 76} NYS2d __, 2005 WL 2085966, 2005 NY Slip Op. 25356 (Civ. Ct. NY 2005) (the intent of the Mallela III Court is that payment may be withheld to claims arising prior to April 4, 2002 where the medical providers were incorporated unlawfully).

Dated: Bronx, New York

October 6, 2005

________________________________

Julia I. Rodriguez, Judge of the Civil Ct.

Footnotes

Footnote 1: In the matter of Maple Medical Acupuncture, a/a/o Cathy Mayo, Index 079563/2004, the Verified Answer did not allege any defense related to corporate structure and ownership, licensing or fee splitting.

Footnote 2: In the matter of Maple Medical Acupuncture, a/a/o Cathy Mayo, Index 79563/2004, the first denial dated 5/10/02 reiterates the language noted herein. Inexplicably, there is a subsequent denial dated 7/9/02 which reads: Based on the inconsistencies in the statement obtained from Cathy Mayo, the facts of the loss were not verified. Therefore, your no fault claim is denied. The court notes the both denials omit the date of bill, period of the bill and the date the bill was received by the Insurer. In the matter of Delta Medical Acupuncture, P.C., a/a/o Basilicia Rodriguez, Index 79564/2004 the only denial attached is not dated and merely states: Due to inconsistencies in the statement given, the facts of the loss could not be verified. Therefore, the bill has been denied. In the matter of Delta Medical Acupuncture, a/a/o Kwanza Adams, Index 79565, the denial reads: In accordance with the NYS No-Fault Law, an Independent ACUPUNCTURE [sic] Medical Examination was held on 7/23/01 by Doctor Baron. After completion of exam and review of medical reports submitted, Doctor Baron indicated: THERE WAS NO FURTHER NEED OF ACUPUNCTURE TREATMENT. Therefore, all further ACUPUNCTURE benefits are denied.

Footnote 3: Plaintiff provided defendant with management agreements by Triborough Healthcare Management Corp. a non-party herein, in the matter(s) of : Statewide Medical, a/a/o Raghunandan, Index 32816/05; Continental Medical a/a/o McKenna, Index 77931/04; Continental Medical a/a/o Fernandez, Index 53514/03. Dr. Nandi is the sole owner and shareholder of Triborough Healthcare.

Footnote 4: The fact that Mallela declined to further define fraud was discussed by the court in RDK Medical v. General Assurance, 8 Misc 3d 1025(A), 2005 WL 1936342 at 4 (Civ. Ct. NY Co. 2005), which noted that as of this writing no appellate court has articulated a general “fraud” defense that is not subject to the preclusion rule [cites omitted] . . . the Court of Appeals was given the opportunity to do so in the “fraudulently incorporated enterprises” case [i.e., Mallela], but declined to do so, relying instead on a governing regulation [cites omitted].