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, New York County

64123/05

For plaintiffs:

Christopher McCollum, Esq.

Law Offices of Christopher McCollum

57 W. 57th St., Suite 502

New York, NY 10019

917-407-5690

For defendant:

Allison B. Frischling, Esq.

Bruno, Gerbino & Soriano, LLP

445 Broad Hollow Road, Suite 220

Melville, NY 11747

631-390-0010

Barbara Jaffe, J.

By notice of motion dated January 25, 2007, defendant moves for an order granting it leave to renew and reargue my decision and order of December 6, 2006 granting summary judgment to plaintiffs on their claims for unpaid no-fault insurance benefits, statutory interest, and attorney fees. For the following reasons, the motion is denied.

I. PRIOR DECISION

In granting plaintiffs summary judgment, I held that they had established, prima facie, that their office manager had personally mailed the pertinent no-fault claim forms to defendant and that defendant had failed to deny plaintiffs’ claims timely. Defendant raised no objection to plaintiffs’ prima facie case.

In holding that defendant had failed to establish good cause for seeking discovery relating [*2]to its defenses and plaintiffs’ corporate structure, I found that: 1) in light of plaintiffs’ counsel’s affirmation that plaintiff Devonshire Surgical Facility (Devonshire) was officially converted from a general partnership into a limited liability corporation and notwithstanding the absence of its name from lists maintained on the websites of the New York State Education Department’s Office of Professions and the New York Department of State Division of Corporations, defendant failed to demonstrate sufficiently that at the time the healthcare services were rendered, Devonshire was fraudulently incorporated; 2) defendant failed to demonstrate sufficiently that the revocation of Allen Chamberlin’s license to practice medicine based on conduct he engaged in during 1998 constitutes good cause to believe that his facility, defendant Carnegie Hill Orthopedic Services (Carnegie Hill), was fraudulently incorporated in 2001 when the services in issue were rendered; 3) because the revocation of Chamberlin’s license was based on his excessive and unnecessary treatments and fraudulent billing for services never provided, which are forms of provider fraud, and absent any indication that defendant had interposed a timely denial based on those defenses, plaintiffs are not precluded from seeking reimbursement; and 4) defendant failed to interpose in its answer any contention that an independent contractor had provided the services at issue and that Chamberlin had violated the prohibition against self-referral.

II. RE-ARGUMENT

A motion for leave to reargue “shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion.” (CPLR 2221[d][2]).

A. Defendant’s discovery demands relating to Carnegie Hill’s corporate structure

1. Contentions

Defendant argues that there exists good cause for discovery relating to Carnegie Hill’s corporate structure, again relying solely on the 2005 administrative finding that Chamberlin engaged in fraudulent billing and fraudulent and excessive medical practices in 1998 as evidence that he engaged in those practices in 2001. As Chamberlin’s license was revoked based on conduct he engaged in during 1998, defendant argues, his license must be deemed revoked as of 2001, and if Chamberlin was not authorized to practice medicine in 2001, then Carnegie Hill had issued him shares in violation of Business Corporation Law (BCL) § 1507(a) and was thus fraudulently incorporated in 2001. (Affirmation of Alison B. Frischling, Esq., dated Jan. 25, 2007 [Frischling Aff.]). Defendant thus attempts to avoid preclusion of a defense based on provider fraud by characterizing it as one sounding in fraudulent incorporation.

In opposition, plaintiffs observe that I had rejected the same argument in my December 2006 decision. (Affirmation of Christopher McCollum, Esq., dated Mar. 12, 2007 [McCollum Aff]).

2. Analysis

Pursuant to 11 NYCRR 65-3.16 (a) (12), effective April 4, 2002, unlicensed or fraudulently licensed healthcare providers are ineligible to receive reimbursement for no-fault medical services provided by them. In affirming the dismissal of an insurer’s causes of action for fraud and unjust enrichment, the Court of Appeals held in State Farm Mut. Auto. Ins. Co. v Mallela, that no such causes of action lie for payments made by insurers before April 4, 2002. (4 [*3]NY3d 313, 322 [2005]). The Court also observed that insurers may withhold payment for medical services provided by enterprises incorporated in violation of BCL §§ 1507 and 1508 and Education Law § 6507(4)(c). Pursuant to BCL §1507, a professional service corporation may issue shares only to those individuals who are authorized by law to practice the profession which the corporation is authorized to practice.

Here, it is undisputed that Chamberlin was authorized by law to practice medicine when Carnegie Hill was organized. And, although Chamberlin’s license has now been revoked and he must now disassociate himself from Carnegie Hill (BCL § 1509 [if shareholder of professional service corporation becomes legally disqualified to practice his profession, he must sever all employment with and financial interests in corporation]), absent any indication that the revocation is retroactive or that any of the governing statutes, regulations, or case law requires that lawfully issued shares be invalidated retroactively, there is no basis for finding that Carnegie Hill was fraudulently incorporated when formed merely because Chamberlin’s license was revoked thereafter. (See CKC Chiro. v Republic Western Inc. Co., 5 Misc 3d 492 [Civ Ct, Kings County 2004] [provider may be reimbursed for services rendered when she was properly licensed or registered, even if she subsequently became unlicensed or unregistered]).

I also observe that the conduct underlying the revocation of Chamberlin’s license relates to defenses which, if this action arose in the Second Department, are precluded if not timely denied. (Careplus Med. Supply Inc. v State-Wide Ins. Co., 11 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2005] [fraudulent billing or performance of excessive or unnecessary medical treatment are forms of provider fraud]; Fair Price Med. Supply Corp. v Travelers Indemn. Co., 9 Misc 3d 76 [App Term, 2d Dept 2005] [defense based on fraudulent scheme to obtain no-fault benefits precluded due to untimely denial]; Ocean Diagnostic Imaging, PC v Utica Mutual Ins. Co., 9 Misc 3d 138[A], 2005 NY Slip Op 51745[U], *1 [App Term, 9th & 10th Jud Dists 2005] [alleged irregularities in the treatment and billing process did not support defense that survived preclusion]). Although no appellate court in the First Department has addressed the issue of whether a defense based on services billed but never rendered is subject to preclusion for untimely denial, and a judge in the Eastern District of New York disagrees with the Appellate Term’s decision in Fair Price, 9 Misc 3d 76, that a defense based on services billed but not rendered is subject to preclusion (Allstate Ins. Co. v Valley Physical Med. & Rehab., P.C., 475 F Supp2d 213 [US Dist Ct, EDNY 2007]), here, defendant did not even allege that plaintiffs billed for services that were not rendered.

In any event, evidence that Chamberlin fraudulently or excessively billed or unnecessarily treated patients in 1998 is inadmissible to prove that he engaged in such conduct in 2001. (Prince, Richardson on Evidence § 4-517 [11th Ed Farrell]; see Matter of Brandon, 55 NY2d 206 [1982]; Hand v Stanper Food Corp., 224 AD2d 584 [2d Dept 1996] [evidence that defendant’s principal broke two signs in front of defendant’s premises over five-year period prior to alleged accident, without more, insufficient to support inference that he broke sign at issue]; Kelly v Ryder Truck Rental, Inc., 14 Misc 3d 127[A], 2006 NY Slip Op 52467[U] [App Term 1st Dept 2006] [evidence of prior accident inadmissible to support inference of fraud absent any claim that prior accident was staged]; Maraziti v Weber, 185 Misc 2d 624 [Sup Ct, Dutchess County 2000] [motion in limine granted as to prior findings of Department of Health]). If Carnegie Hill excessively billed for its services or billed for services never rendered, defendant would have had [*4]the means of proving it without relying on inadmissible evidence of a disposition to engage in fraud. Rather, it seeks to rely solely on inadmissible evidence of prior misconduct.

As defendant failed to establish that it properly sought discovery from Carnegie Hill based on a non-precluded defense (A.B. Med. Svces., PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d & 11th Jud Dists 2006]), that it has good cause to believe that Carnegie Hill was fraudulently incorporated, and that Carnegie Hill was required to respond to defendant’s discovery requests on these issues (see A.B. Med. Svces., PLLC, 11 Misc 3d 71 [discovery demands relating to precluded defenses are “palpably improper” and plaintiff healthcare provider need not respond to them]; Devonshire Surgical Facility and Carnegie Hill Orthopedic Services v GEICO, NYLJ, Apr. 7, 2006, at 20, col 1 [Civ Ct, New York County] [defendant may not allege provider fraud if not asserted in denial]), it has failed to demonstrate that I overlooked or misapprehended any matter of fact or law in deciding the prior motion.

B. Defendant’s discovery demands relating to Devonshire’s corporate structure

Defendant claims that discovery relating to Devonshire’s corporate structure is warranted as it may reveal that Devonshire was not a properly licensed entity when the services in issue were rendered. It relies, as it did in its opposition to plaintiff’s motion for summary judgment, on the results of two website searches which do not list Devonshire as a professional medical corporation prior to 2006. (Frischling Aff.). Devonshire denies that defendant’s allegations against it, even if true, constitute a defense of fraudulent incorporation, and claims that a violation of the Business Corporation Law is curable and that Devonshire was and continues to be a properly licensed entity. (McCollum Aff.).

As Devonshire was not incorporated at the time the services in issue were rendered, Mallela, 4 NY3d 313, as well as Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 (1st Dept 2006), are inapposite absent any requirement that an entity offering professional services be incorporated. I observe that BCL §1503(a) merely permits one or more individuals authorized by law to render the same professional service to organize a professional service corporation.

I also observe that only business and not for profit corporations, limited partnerships, limited liability companies and limited liability partnerships, as well as other miscellaneous businesses, are listed on the New York Department of State’s Division of Corporation’s website; general partnerships, sole proprietorships, and limited liability partnerships are expressly excluded from it. Consequently, as the absence of Devonshire’s name from the website list prior to 2006 reflects only that Devonshire was not incorporated as a business or not for profit corporation, limited partnership, limited liability company, or limited liability partnership before that time, it is immaterial.

Pursuant to Education Law § 6507(4)(c), the New York State Education Department is required issue a certificate of authority to a qualified professional service organization organized pursuant to BCL § 1503. As Devonshire was not organized pursuant to BCL § 1503, Education Law § 6507(4)(c) is not applicable.

I also find that defendant’s conclusory allegations that an independent contractor provided the services in issue and that Chamberlin violated the prohibition against self-referral form no basis for discovery as defendant did not plead such defenses and did deny the claims based thereon. Defendant has thus failed to demonstrate good cause to assert, nor has it even argued, [*5]that at the time that Devonshire rendered the services at issue, it was owned, operated, controlled or otherwise involved with unlicensed individuals or entities.

Accordingly, plaintiffs were not required to respond to discovery demands on these issues.For all of these reasons, defendant has failed to establish good cause to believe that Devonshire was fraudulently incorporated before May 2006, and absent such good cause, defendant is not entitled to discovery on this issue. Consequently, defendant has failed to establish that I overlooked or misapprehended any matter of fact or law in deciding the prior motion.

C. Triable issues of fact

Defendant also includes in its motion for leave to reargue a claim that there exist triable issues of fact as to whether Devonshire was ever a properly licensed entity and whether Carnegie Hill improperly issued shares to Chamberlin. It argues, without any explanation, that Devonshire’s registration with the Department of State as a “domestic limited liability company” rather than “professional limited liability company” raises a triable issue as to whether it is a licensed provider. (Frischling Aff.).

I first observe that defendant’s opposition to plaintiff’s motion for summary judgment was based solely on plaintiffs’ failure to respond to its discovery demands. Consequently, these new arguments may not be considered. (CPLR 2221[d][1]; Mariani v Dyer, 193 AD2d 456 [1st Dept 1993] [motion to reargue not appropriate vehicle to assert arguments different from those asserted on original motion]). In any event, defendant cites no authority in support of its proposition that licensed health care providers must be registered only as professional limited liability companies.

I thus find that defendant failed to establish that I overlooked or misapprehended any of its evidence or relevant decisions in granting plaintiffs summary judgment on their claims. For all of these reasons, I adhere to my prior decision and deny defendant’s motion to reargue.

III. RENEWAL

A motion for leave to renew “shall be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination, and shall contain reasonable justification for the failure to present such facts on the prior motion. (CPLR 2221[e][2], [3]).

A. Retroactivity of fraudulent incorporation regulation

In moving to renew, defendant relies on Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 (1st Dept 2006), for the proposition that a provider’s prior fraudulent conduct may be used to prove that the provider conducted itself similarly on a subsequent occasion. Counsel maintains that the First Department held that “a providers [sic] fraudulent conduct can be applied retroactively.” (Frischling Aff.). It maintains that the decision constitutes a change in law which would change my prior determination, and that the regulation applies to the period during which plaintiffs rendered the services in issue. It thus argues that as there is reason to believe, based on the subsequent revocation of Chamberlin’s license, that plaintiffs were fraudulently licensed or had engaged in fraudulent conduct when the services were rendered, plaintiffs may not be entitled to reimbursement for those services. (Id.).

The First Department recently applied Mallela to claims for services rendered prior to April 4, 2002, rejecting a provider’s argument that it was entitled to be reimbursed for claims [*6]relating to services rendered prior to the effective date of the regulation, reasoning that “[t]he very word reimbursement,’ used in the regulation, implies that the services had already been provided . . . [and that] it would be illogical to read [Mallela] as applying only to claims submitted on or after April 4, 2002.” (Belt Parkway, 33 AD3d 407). Thus, unlicensed and fraudulently licensed health care providers and those that are incorporated in violation of BCL

§§ 1507 and 1508 and Education Law § 6507(4)(c) are ineligible to be reimbursed even if their services were rendered prior to April 4, 2002.

While the court applied the regulation retroactively, it did not even address the issue raised by defendant, namely, whether a provider’s fraudulent conduct on one occasion may be utilized to prove that it engaged in fraudulent conduct on another occasion. As noted supra (II.A.2.), evidence of prior misconduct is generally inadmissible to prove later alleged misconduct.

Consequently, the decision in Belt Parkway does not change my determination that defendant failed to establish good cause to seek discovery concerning Carnegie Hill’s alleged fraudulent incorporation.

B. Plaintiffs’ prima facie case

Defendant maintains that recent decisions compel the finding that the affidavit supporting plaintiffs’ motion for summary judgment was insufficient to lay a foundation for the admission in evidence of plaintiffs’ business records or demonstrate that the claims were overdue. (Frischling Aff.). Plaintiffs argue that the supporting affidavit was based on their office manager’s personal knowledge of the contents of the mailings and the mailings themselves. (McCollum Aff.). In reply, defendant argues that the affidavit is insufficient as plaintiffs’ office manager fails to set forth her knowledge of plaintiffs’ business practices and procedures or any specifics concerning the claims at issue, such as the date of the accident, dates of service, and amounts in dispute. (Reply Affirmation of Allison B. Frischling, Esq., dated March 29, 2007 [Frischling Reply Aff.]).Here, plaintiffs’ officer manager swore that she had personal knowledge of the documents, that she personally verified that they were contained in the envelopes, that she mailed the envelopes, and that defendant neither paid nor denied the claims within thirty days. She also stated that she has been plaintiffs’ office manager for more than seven years, that one of her responsibilities is the supervision of all billing procedures and mailing of claim forms, and that based on her personal knowledge and review of the file, the claims forms annexed to the motion papers were made by plaintiffs’ employees who had the obligation to make the record in the regular course of business and who had the actual knowledge of the events recorded or received the information from someone within the business who had actual knowledge and was under a business duty to report the events to the maker of the records, and that the documents were made at the time of the transaction or occurrence or a reasonable time thereafter.

In Dan Medical, P.C. v NY Central Mutual Fire Ins. Co., 14 Misc 3d 44 (App Term, 2d Dept 2006), the plaintiff submitted the affidavit of its corporate officer stating that the documents attached to the plaintiff’s motion papers were its business records. The court held that the plaintiff “failed to demonstrate that the officer possessed sufficient personal knowledge of [its] office practices and procedures so as to lay a foundation for the admission of the annexed documents as business records.” (14 Misc 3d at 46).

Here, plaintiffs’ office manager had personal knowledge of plaintiffs’ business practices [*7]and procedures for creating the claims, as well as personal knowledge that the claims were mailed to defendant. Thus, her affidavit satisfies the requirements for admitting in evidence as business records the claims and annexed documents.

Moreover, plaintiffs’ office manager set forth in her affidavit the amounts plaintiffs billed defendant for the services at issue and the date on which she mailed the claims to defendant, and she states that defendant did not pay or timely deny the claims. She also refers to the claim forms and other documents annexed to plaintiffs’ papers which indicate the dates of service and types of services provided by plaintiffs.

In PDG Psych., P.C. v Ntl. Grange Mut. Ins. Co., 14 Misc 3d 136(A), 2007 NY Slip Op 50242(U) (App Term, 2d & 11th Jud Dists 2007), the court held that the plaintiff’s officers’ affidavit was too vague and conclusory to support plaintiffs’ prima facie case as the officer did not identify what services were rendered, when they were rendered, the amounts which were owed or the dates on which the claims were mailed, but only alleged that the bills were accurate and that proof of mailing was available for inspection.

Here, the affidavit references the annexed documents for which a sufficient evidentiary foundation was laid, thereby providing the specific details of the amounts billed, the dates of service and services rendered, and the date the claims were mailed. Consequently, the affidavit was sufficient to satisfy plaintiffs’ prima facie burden.

I thus find that as defendant failed to demonstrate that there has been any change in the law that would change the prior determination, leave to renew is denied.

IV. SHORT SERVICE

In its reply, defendant claims that plaintiffs did not serve their opposition to its motion by March 16, 2007, the date agreed to in the parties’ stipulation dated February 26, 2007. (Frischling Reply Aff.).

While plaintiffs’ affidavit of service of the opposition papers reflects that the papers were served on March 19, 2007, defendant replied on the merits to the papers and alleges no prejudice. I thus find that it waived plaintiffs’ late service. (See Piquette v City of New York, 4 AD3d 402 [2d Dept 2004] [although motion made on insufficient notice, plaintiffs waived objection to it by opposing it on merits]; Adler v Gordon, 243 AD2d 365 [1st Dept 1997] [petitioner waived right to contest late service of motion by opposing it on merits]).

V. CONCLUSION

Accordingly, defendant’s motion for leave to reargue is granted and re-argument is denied, and defendant’s motion for leave to renew is denied. This constitutes the decision and order of the court.

_______________________________

Barbara Jaffe, JCC

DATED:May 21, 2007

New York, New York [*8]

[*1]

[*2]Civil Court of the City of New York, Queens County, May 14, 2007

APPEARANCES OF COUNSEL

Cohen & Jaffe, Lake Success (Richard S. Jaffe and Stefan Belinfanti of counsel), for plaintiff. Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP, New York City (Shelly Hefefz of counsel), for defendant.

OPINION OF THE COURT

Diane A. Lebedeff, J.

Currently, torrents of no-fault litigation deluge New York courts and no-fault requests for accelerated judgment swell our motion calendars.^[FN1] Adding to the turmoil is that no-fault [*3]summary judgment motions pose undeniable difficulties, in large part, because traditional summary judgment formulations give poor guidance for their ready resolution.

Building a more workable approach to no-fault summary judgment motions requires recognition that the bulk of no-fault summary judgment issues are decided on the sufficiency of the papers and arguments of law regarding specific no-fault technicalities, as well as explicit identification of no-fault variations of traditional summary judgment precepts.^[FN2] Using that foundation, construction of a series of relevant inquiries produces the following four-step analysis for no-fault summary judgment motions: (1) a threshold review of the three requisite showings of a no-fault plaintiff’s prima facie case; (2) an assessment of the insurer’s tendered proof of issuance and service of its response, if any; (3) a regulatory compliance review of any properly served insurer response, weighing a response’s timeliness, form and substance; and (4), finally, a search for triable issues of fact in relation to any properly preserved, otherwise precludable defenses, as well as of defenses independent of the response process. This decision concentrates on these four areas of inquiry, with amplification and qualifications footnoted.

This same analysis is adaptable to identification of trial issues in no-fault cases and—by starting with the second step—to insurers’ motions and cross motions for summary judgment. In relation to the case before the court, the plaintiff’s motion and insurer’s cross motion for summary judgment are subjected to the above pattern of analysis and, near the end of this decision, special consideration is given to the fee schedule dispute posed.

Step 1: Plaintiff’s Prima Facie Threshold Review

As a matter of law, a no-fault plaintiff’s summary judgment showing is extremely limited [*4]and is free of the normal summary judgment obligation to rebut defenses.^[FN3] A no-fault plaintiff’s necessary prima facie showing consists of only three scant elements.

First, the claimant must present in its original motion papers the claim and assignment forms it submitted to the insurer (see, A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 127[A], 2005 NY Slip Op 50432[U] [App Term, 2d & 11th Jud Dists 2005] [as to claim form]; see, Inwood Hill Med. P.C. v Allstate Ins. Co., supra, 2004 NY Slip Op 50565[U], *7; T&G Med. Supplies, Inc. v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 1017[A], 2005 NY Slip Op 50636[U] [Civ Ct, NY County 2005]). Second, necessary to a proper evidentiary foundation for the forms and related documents, a supporting affidavit must establish the tendered records are part of plaintiff’s business records (see CPLR 4518 [a]; North Acupuncture, P.C. v State Farm Ins. Co., 14 Misc 3d 130[A], 2006 NY Slip Op 52523[U], *2 [App Term, 2d & 11th Jud Dists 2006]).^[FN4] Third, the no-fault plaintiff must prove that the claim and assignment forms were served upon the insurer.^[FN5] [*5]

The adequacy of plaintiff’s motion is tested by inspecting the plaintiff’s affidavits and exhibits for sufficiency. If these three elements are made out and stand unrefuted, a no-fault plaintiff is entitled to a determination that it has made out its prima facie case.^[FN6]

Step 2: Assessment of Proof of Issuance and Service of Insurer’s

Denial or Unsatisfied Request

Because no-fault plaintiffs’ summary judgment motion papers need not counter pleaded denials and affirmative defenses, insurers bear the entire burden of establishing the existence of cognizable defenses (see generally, Mitchell S. Lustig and Jill Lakin Schatz, Outside Counsel, Summary Judgment Motions: Defending No-Fault Insurer, NYLJ, Oct. 26, 2005, at 4, col 4). This second analytic stage reviews the insurer’s opposition papers to determine whether the insurer makes a threshold showing that it preserved a precludable defense or that unsatisfied verification requests exist.

Just as a plaintiff must do, and by reason of similar case law standards, the insurer must advance copies of all relevant communications, prove the service of each, and establish a [*6]business record foundation (see, Mitchell S. Lustig and Jill Lakin Schatz, Outside Counsel, Proper Proof of Mailing Under NY No-Fault Law, NYLJ, Oct. 2, 2006, at 4, col 4 [as to insurer’s proof of mailing]). If the insurer claims an unsatisfied request is outstanding, the insurer must submit a copy of the original request and a follow-up request, establish issuance and service of the requests, and supply evidence of the failure to respond or cooperate (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721 [2006]; Psychological Practice, P.C. v State Farm Fire & Cas. Co., 16 Misc 3d 12, 13 [App Term, 2d Dept 2007] [general statement of affiant’s “personal knowledge” not sufficient factual support to establish failure to appear for examination]).^[FN7] However, if the insurer issued a denial while a verification request was outstanding, the request is deemed waived and is disregarded (King’s Med. Supply Inc. v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450[U], *2 [App Term, 2d & 11th Jud Dists 2005]).

Step 3: Regulatory Compliance Review of Timeliness and Form

of No-Fault Insurer’s Denial or Verification Requests

If the defendant does establish that it issued and served a denial or verification requests, each communication must be examined to determine if it serves as a proper defense by conforming in timing, form and substance with the requirements of the “Rube-Goldberg-like maze” of the No-Fault Law and the “thicket” of governing Insurance Department regulations (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., supra, 90 NY2d at 286, 280).^[FN8]

In relation to timeliness, the insurer must provide proof of “when the . . . [denial or] request . . . was mailed” (I & B Surgical Supply v New York Cent. Mut. Fire Ins. Co., 16 Misc 3d 4, 6 [App Term, 2d & 11th Jud Dists 2007]), and show mailing within the appropriate time period (see n 2). Typically, an insurer’s affidavit refers to the date of [*7]printing of the form and describes a procedure which assured a properly addressed envelope containing the form was mailed on that day or the next business day.

As to form and substance of a denial, a “proper denial of claim must include the information called for in the prescribed denial of claim form . . . and must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated’ ” and cannot be amended after the applicable time period has passed (Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664 [2d Dept 2004], quoting General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]). A denial is deficient if it is “factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (id. at 665, quoting Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d Dept 2004]).^[FN9]

In relation to the form of a verification request, it must “request . . . information . . . relative to . . . [the] claim” from the claimant or identify to the claimant the persons or entities asked to provide the information (Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 17 [2d Dept 1999]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535 [2d Dept 2005] [“delay” letter explaining investigation underway not a verification request]). Belated litigation objections that such requests are unclear are generally rejected (Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553, 555 [2d Dept 1999] [“Any confusion . . . as to what was being sought should have been addressed by further communication, not inaction”]; Metroscan Med. Diagnostics, P.C. v Progressive Cas. Ins. Co., 15 Misc 3d 126[A], 2007 NY Slip Op 50500[U], *2 [App Term, 9th & 10th Jud Dists] [fact of response showed request sufficiently clear]).

On these issues, the court reaches a straightforward determination of law unless some cognizable question of ambiguity is raised by a litigant (compare Foley Prods. v Singer Corp., 133 AD2d 531 [4th Dept 1987] [where no ambiguity in document, no deferral for factual exploration]). Dismissal on the ground of prematurity follows if proper unsatisfied outstanding verification requests are established. Where a proper and timely denial is found, the court proceeds to the next analytic step.

Step 4: Summary Judgment Evaluation of Properly Cognizable Defenses[*8]

Only at this final stage are typical summary judgment principles applied to those defenses found preserved and unprecluded, as well as to any independent defenses, with recognition that the defendant bears the burden on such defenses for reasons set forth above.^[FN10] Some defenses can be resolved as a matter of law and others on the basis of evidentiary standards appropriate to the nature of the case. In ruling on such motions, when appropriate, courts should preserve judicial resources and not shy away from granting partial relief as to predicate elements where the record does not support a full determination (CPLR 3212 [e], [g]).

The point upon which opposition papers frequently stumble is the failure to present evidentiary material in admissible form (New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512, 513 [2d Dept 2006]; CPLR 3212 [b]).^[FN11] However, because summary judgment may be defeated when the opponent raises a “significant doubt” regarding the existence of “a material, triable issue of fact,” an insurer may avail itself of the alternative of an opposition affidavit which[*9]“set[s] forth names of witnesses, the substance of their testimony, how it was known what their testimony would be, and how the witnesses acquired their knowledge” (Phillips v Kantor & Co., 31 NY2d 307, 311-312 [1972]).^[FN12]

With respect to fee schedule disputes, special treatment is appropriate once, as here, the insurer establishes a timely denial objecting that a charge was not a permissible scheduled fee.^[FN13] Where a fee for medical services or goods does not have a fixed value in the applicable fee schedule and no comparable charge is shown, it is typically found that the fee schedule dispute raises a triable issue (see, for example, A.B. Med. Servs., PLLC v American Tr. Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50680[U] [App Term, 2d & 11th Jud Dists 2007]).

Conclusion and Application

In the captioned matter, plaintiff moves, and the insurer cross-moves, for summary judgment. The plaintiff has made out a prima facie case, with the insurer admitting receipt of the [*10]two subject claims (step 1); denials are shown to have been issued and served (step 2); the denials are proper in timeliness, form and substance, and preserved fee schedule objection (step 3); and the fee schedule disputes pose triable issues of fact (step 4).

As to the cross motion, the insurer does not establish a proper scheduled fee for the goods at issue and does not show a properly comparable fee. Although the insurer does establish that a verification request was unanswered, it presents no argument of law as to why such request should not be held waived by reason of the denial nor urge that the motion is premature because of outstanding discovery related to matters within the exclusive knowledge of the movant (CPLR 3212 [f]; 3101; Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90 [App Term, 2d & 11th Jud Dists 2006]).

Based on the foregoing, the motion and cross motion are granted to the extent that it is determined that plaintiff has established its prima facie case and that triable issues of fact exist as to proper scheduled fees, and they are otherwise denied.

Footnotes

Footnote 1: “No-fault” litigation is brought by medical establishments pursuing insurers for payment of assigned economic loss claims of motor vehicle accident victims. Starting in 2002, a majority of no-fault claimants began to choose litigation over arbitration (Robert A. Stern, Take the Money and Run: The Fraud Crisis in New York’s No-Fault System, 75 NY St BJ 35, 35 [Oct. 2003] [“(b)etween 1999 and 2002, arbitrations and court actions reversed places in the volume of cases filed”]), and they continue to do so in increasing numbers. Statistics portray the consequences. In calendar year 2006 alone, the New York City Civil Court had approximately 100,000 new no-fault case filings, of which roughly 70,000 were filed in Queens County Civil Court. In Queens County Civil Court, on a typical 2007 court day, a trial judge may be assigned two to seven no-fault trials and, on the summary judgment no-fault motion calendar, 100 or so motions may appear; considering a larger time frame of the last six months of 2006 in that same court and all types of no-fault motions, a total of almost 11,000 no-fault motions were resolved on the no-fault motion calendars, with more than 3,000 cases marked disposed, primarily by and before this judge.

Footnote 2: The technical issues involve the no-fault system’s “tightly timed process of claim, disputation and payment” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 281 [1997]; Insurance Law § 5101 et seq.; 11 NYCRR 65-1.1 et seq.; see , last updated Feb. 2, 2007, for Insurance Department Web site links to the No-Fault Law, regulations, forms, opinion letters and frequently asked questions).

The process of claim submission and insurer response, and the computation of time periods, are well summarized elsewhere (see Inwood Hill Med. v Allstate Ins. Co., 3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U], *4-7 [Civ Ct, NY County 2004, Hagler, J.]; see also Metroscan Imaging v American Tr. Ins. Co., NYLJ, Dec. 10, 1999, at 27, col 5 [Civ Ct, NY County 1999, Karen Smith, J.] [addressing “old” regulations in effect prior to Apr. 5, 2002]). Briefly put, once a claim is submitted (11 NYCRR 65-3.11 [b]), payment is subject to the “30 day rule” (11 NYCRR 65-3.8 [a] [1]), with a default of timely payment entitling a claimant to sue for payment of an overdue claim (Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742-743 [2d Dept 2004]). While a failure to issue a timely denial precludes an insurer from subsequent objection to the sufficiency or propriety of the claim form submitted (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., supra, 90 NY2d at 278), a timely denial preserves the stated objections for litigation. Unsatisfied insurer requests support dismissal of claims.

Footnote 3: A no-fault plaintiff’s substantive proof of its claim is the claim form (Insurance Law § 5106 [a] [claim form gives “proof of the fact and amount of loss sustained”]; 11 NYCRR 65-1.1 [d] [Sec I, Conditions, Proof of Claim] [claim form proves “particulars of the nature and extent of the injuries and (health benefits) received and contemplated”]; Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224 [1986] [“to receive payment (a claimant) need only file a ‘proof of claim’ (which) the insurers are obliged to honor”]). The exemption from the normal summary judgment motion requirement that a movant “show that there is no defense to the cause of action” (CPLR 3212 [b]) arises because courts have perceived that the “clear legislative mandate to facilitate the prompt and efficient resolution of first-party no-fault claims” requires that a litigating no-fault claimant be subjected to “[no] greater burden of proof after the action is commenced than was necessary at the claim stage” (Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U], *3 [App Term, 2d & 11th Jud Dists 2003]; see Global Med. Equip., Inc. v Allstate Ins. Co., 15 Misc 3d 131[A], 2007 NY Slip Op 50675[U], *1 [App Term, 2d & 11th Jud Dists 2007] [plaintiff need not show denial untimely]).

Footnote 4: Such an affidavit must show the affiant “possessed sufficient personal knowledge of plaintiff’s office practices and procedures so as to lay a foundation for the admission of the . . . documents as business records” (Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44, 46 [App Term, 2d & 11th Jud Dists 2006] [affiant’s unelaborated description as “corporate officer” insufficient]; Vista Surgical Supplies, Inc. v Allstate Ins. Co., 15 Misc 3d 126[A], 2007 NY Slip Op 50502[U] [App Term, 9th & 10th Jud Dists 2007] [conclusory statement that documents were business records insufficient]; Pine Hollow Med., P.C. v Progressive Cas. Ins. Co., 13 Misc 3d 131[A], 2006 NY Slip Op 51870[U] [App Term, 2d & 11th Jud Dists 2006] [proper proffer by affidavit of employee of billing company]).

Footnote 5: Service of both the no-fault claim and assignment forms is established by an actual affidavit of mailing or by proof of “an office practice and procedure followed . . . in the regular course of . . . business . . . geared so as to ensure the likelihood that [the item] is always properly addressed and mailed” (Nassau Ins. Co. v Murray, 46 NY2d 828, 829-830 [1978]). A post office receipt may supply additional “direct proof of actual mailing” (LMK Psychological Servs., P.C. v Liberty Mut. Ins. Co., 30 AD3d 727, 728 [3d Dept 2006]) provided evidence relates the receipt to an identified mailing (New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547, 548 [2d Dept 2006]). A conclusory affidavit of service is insufficient (A.B. Med. Servs. PLLC v Specialty Natl. Ins. Co., 11 Misc 3d 144[A], 2006 NY Slip Op 50810[U], *2 [App Term, 2d & 11th Jud Dists 2006] [finding deficient statement affiant “issued,” “billed out,” and “sent” claims]). A proper showing of mailing gives rise to a presumption of receipt and an insurer asserting it did not receive a claim bears a heavy burden to overcome that presumption (see, for example, Maldonado v Steiner, 10 Misc 3d 128[A], 2005 NY Slip Op 51905[U] [App Term, 2d & 11th Jud Dists 2005]).

A plaintiff may tender an insurer’s denial of claim form as an acknowledgment of receipt as its business record (see Medical Expertise v Trumbull Ins. Co., 196 Misc 2d 389, 390-394 [Civ Ct, Queens County 2003, Siegal, J.]; but see Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 132[A], 2006 NY Slip Op 51879[U], *2 [App Term, 2d & 11th Jud Dists 2006] [such tender establishes no other element of plaintiff’s prima facie case]).

Footnote 6: Rarely, an estoppel or a triable issue of fact arises from an actual or possible error in a claim or assignment form (see Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U], *4 [App Term, 2d & 11th Jud Dists 2003] [estoppel as to items not prescribed]; Amaze Med. Supply v Eagle Ins. Co., 3 Misc 3d 130[A], 2004 NY Slip Op 50389[U] [App Term, 2d & 11th Jud Dists 2003] [same, items not delivered to assignor]; see generally, Resnick v Levine, 80 AD2d 699 [3d Dept 1981] [as to errors in business ledgers]; see, Damadian MRI in Garden City, P.C. v Windsor Group Ins., 2 Misc 3d 138[A], 2004 NY Slip Op 50266[U], *2 [App Term, 2d & 11th Jud Dists 2004] [“whether plaintiff is the same entity as the one named in the assignment” can be question of fact] [as to assignment]). Dismissal is warranted where the claim form discloses services were performed by an independent contractor, rather than by claimant (see Rockaway Blvd. Med. P.C. v Progressive Ins., 9 Misc 3d 52, 54 [App Term, 2d Dept 2005]).

Footnote 7: These requirements apply to verification requests, as well as requests for appearance at an examination under oath and independent medical examination. A failure to appear for a “preclaim” examination may be viewed as a lack of cooperation which defeats coverage (see Inwood Hill Med., P.C. v General Assur. Co., 10 Misc 3d 18 [App Term, 1st Dept 2005]), but a plaintiff may render the question a triable issue of fact by offering “a valid excuse for . . . [the] nonappearance [or demonstrate] that the . . . requests were unreasonable under the circumstances” (Amaze Med. Supply Inc. v General Assur. Co., 12 Misc 3d 127[A], 2006 NY Slip Op 50910[U], *1-2 [App Term, 2d & 11th Jud Dists 2006]).

Footnote 8: This review follows the pattern of CPLR 3212 (g) in that the court—”by examining the papers” and “interrogating counsel”—reaches a determination of operative legal facts “deemed established for all purposes in the action” which are “not in dispute or are incontrovertible,” often winnowed during oral argument. This process permits the trial court to comply with the mandatory obligation to take judicial notice of state agency regulations (CPLR 4511 [a]) and be alerted to new appellate decisions not covered in papers prepared over as long as a nine-month period (see Socrates Psychological Servs., P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 642, 645 n 1 [Civ Ct, Queens County 2005]).

Footnote 9: Typical denials assert a defective assignment of benefits, belated filing of the claim, a lack of medical necessity (whether for the treatment or inflation in the quantum or cost of treatment), and that a charge exceeds permitted fee schedules. In many instances, a clear statement of the objection is sufficient, and even medical necessity denials need not set out a medical rationale (A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co., 39 AD3d 778 [2d Dept 2007], revg 12 Misc 3d 30 [App Term, 2d & 11th Jud Dists 2006]; A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779 [2d Dept 2007]; New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co., 39 AD3d 832 [2d Dept 2007]). A rejection for untimely filing must “advise claimants of their right to justify late submissions” or be “deemed ineffective” (Radiology Today, P.C. v Citiwide Auto Leasing Inc., 15 Misc 3d 92, 94 [App Term, 2d & 11th Jud Dists 2007]).

Footnote 10: There are roughly three classes of additional independent defenses. First, some center upon arguments “that the alleged injury does not arise out of an insured incident,” often by asserting a “staged accident” or an independent basis for the injury (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; see also 11 NYCRR 65-3.8 [e]; A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12 Misc 3d 8, 11 [App Term, 2d & 11th Jud Dists 2006] [assignee health care provider not an “innocent” third party and may be subject to retroactive cancellation of fraudulently procured policy]). Second, some urge a lack of eligibility to receive no-fault payments under no-fault or other rules applicable to the medical provider, the patient, or the insured (see, for example, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 320 [2005] [improper professional corporation]). Third, albeit less commonly seen, traditional defenses exist, such as statutes of limitations, exhaustion of policy benefits, and the like.

Footnote 11: Formal or substantive requirements apply to certain affidavits (Support Billing & Mgt. Co. v Allstate Ins. Co., 15 Misc 3d 126[A], 2007 NY Slip Op 50496[U], *1 [App Term, 2d & 11th Jud Dists 2007] [doctor must affix stamped facsimile signature (citing CPLR 2106)]; Bath Med. Supply, Inc. v Allstate Indem. Co., 13 Misc 3d 142[A], 2006 NY Slip Op 52273[U] [App Term, 2d & 11th Jud Dists 2006] [out-of-state affidavit needs certificate of conformity to comply with CPLR 2309 (c)]; see All County Open MRI & Diagnostic Radiology P.C. v Travelers Ins. Co., 11 Misc 3d 131[A], 2006 NY Slip Op 50318[U], *2 [App Term, 9th & 10th Jud Dists 2006] [“peer review . . . conclud(ing) that there was no medical necessity due to ‘the lack of sufficient information’ upon which the reviewer could make such determination” deficient, absent proof of verification request for such information]). Exhibits should also be in admissible form or their proffer limited to admissible portions (see, as to police reports, Johnson v Lutz, 253 NY 124 [1930]; 58 NY Jur 2d Evidence and Witnesses § 480 [police reports, generally]; § 503 [police report as to cause of accident or injury]). And, even though “admissions by a party of any fact material to the issue are always competent evidence against [that party], wherever, whenever or to whomsoever made” (Reed v McCord, 160 NY 330, 341 [1899]), some formal requirements may be applicable to assure accuracy (see R.M. Newell Co. v Rice, 236 AD2d 843, 844 [4th Dept 1997], lv denied 90 NY2d 807 [1997] [proffer of reporter-certified unsigned deposition transcript]).

Footnote 12: Such showing is distinguished from a simple offer of proof because its proponent should “demonstrate acceptable excuse for [its] failure to meet the requirement of tender in admissible form” (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; see, Ratut v Singh, 186 Misc 2d 350, 351 [Civ Ct, Kings County 2000], and Vincent C. Alexander, New York Practice, Opposing Summary Judgment With Hearsay, NYLJ, Mar. 15, 2004, at 3, col 1 [discussing cases]; see Ocean Diagnostic Imaging, P.C. v Lancer Ins. Co., 6 Misc 3d 62, 65 [App Term, 2d & 11th Jud Dists 2004, Golia, J., dissenting]). This type of opposition is likely to be tendered when a defense is “that the alleged injury does not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., supra, 90 NY2d at 199), or an insurer urges “badges of fraud” are present (see Tahir v Progressive Cas. Ins. Co., 12 Misc 3d 657, 664 [Civ Ct, NY County 2006, Lebedeff, J.] [collecting cases in dicta]).

Footnote 13: A medical provider must limit its charges to those permitted by approved fee schedules (Insurance Law § 5108 [a]; 11 NYCRR 68.0 [f]), which protects a patient from erosion of available benefits by inflated charges (Ops Gen Counsel NY Ins Dept No. 04-06-11 [June 16, 2004]; see AIU Ins. Co. v Olmecs Med. Supply, Inc., 2005 WL 3710370, *1-4, 2005 US Dist LEXIS 29666, *4-13 [ED NY 2005] [scheme to highly inflate durable medical goods claims]). Fees for services and procedures are governed by the workers’ compensation fee schedule (11 NYCRR 68.1), and durable medical goods fees are governed by the New York Medicaid fee schedule (11 NYCRR part 68, Appendix 17C, part F [a]; , last updated May 1, 2007). An attorney’s affirmation can request judicial notice of a scheduled fee and submit the page of the fee schedule applicable to the fee on the date of service or sale.

If an insurer demonstrates it was correct in its reading of the fee schedules or its identification of comparable procedures, it is entitled to judgment (Forrest Chen Acupuncture Servs., P.C. v GEICO Ins. Co., 15 Misc 3d 137[A], 2007 NY Slip Op 50874[U] [App Term, 2d & 11th Jud Dists 2007]; Great Wall Acupuncture v GEICO Gen. Ins. Co., 16 Misc 3d 23 [App Term, 2d & 11th Jud Dists 2007] [acupuncturist’s fee properly set as equivalent to chiropractor performing acupuncture]), unless the claimant shows “an unusual procedure or unique circumstance justifies the necessity” for a charge above the scheduled fee (11 NYCRR 68.4).

Civil Court of the City of New York, Kings County

047582/06

Attorney for Plaintiff:

Ilona Finkelshteytn, Esq.

2503 65th Street

Brooklyn, New York 111204

Attorney for Defendant:

Jaffe & Nohavicka

40 Wall Street – 12th Floor

New York, NY 10005

Alice Fisher Rubin, J.

Plaintiff commenced this action against the defendant to recover first party no-fault benefits pursuant to CPLR 5106(a) of the Insurance Law and Regulation of the New York State Insurance Department (11 NYCRR Sect. 65-1.1 et. seq.), for medical services rendered.

Plaintiff moves for summary judgment as a matter of law on the grounds that the claimants assigned their “no fault” benefits to plaintiff pursuant to the terms of the insurance policies sold by defendant, and the timely submission of invoices and/or bills to defendant in accordance with the New York State Insurance Law, were not denied or paid within 30 days, pursuant to the New York State Insurance Law. Defendant cross-moves for summary judgment and opposes plaintiff’s motion on the grounds that the denial was timely and based upon the

revocation of the assignment by the assignor, Richard Proctor.

The rule governing summary judgment requires the proponent of a summary judgment motion to make a prima facie showing of entitlement to summary judgment as a matter of law, offering sufficient evidence to eliminate any material issues of fact from the case” (Winegrad v. New York University Medical Center, 64 NY2d 851 [1985]; Tortello v. Carlin, 260 AD2d 201 [1st Dept., 1999]). The burden of proof, as well as persuasion rests with the proponent of the summary judgment motion. Once the burden is satisfied, the opponent of the motion must produce sufficient evidence, in admissible form, establishing the existence of a triable issue of fact. [*2]

Pursuant to both the Insurance Law and the regulations promulgated by the Superintendent of Insurance, an insurer is required to either pay or deny a claim for no-fault automobile insurance benefits within 30 days from the date an applicant supplies proof of claim. (See, Insurance Law 5106[a]; 11 NYCRR 65.15[h]). Failure to pay benefits within the 30-day requirement renders the benefits “overdue,” and all overdue payments bear interest at a rate of 2% per month. In addition, the claimant is entitled to recover attorney’s fees where a “valid claim or portion” was denied or overdue. See, Presbyterian Hospital in the City of New York v. Maryland Casualty Company, 90 NY2d 274, 660 N.Y.S.2d 536 (1997).

A plaintiff ordinarily establishes the submission of the claim forms by demonstrating that proof of proper mailing, which gives rise to the presumption that the claim forms were received by the addressee. The presumption may be created either by proof of actual mailing or by proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed. See, Residential Holding Corp., v. Scottsdale Ins. Co., 286 AD2d 679 [2001].

The plaintiff has annexed the affidavit of Kristina Meledina, billing manager, of the assignee, which makes reference to the plaintiff’s standard office mailing practices and/or procedures. The affidavit is sufficient to establish plaintiff’s mailing of its claim forms.

In addition, the court finds that the plaintiff has established its prima facie case, inasmuch as the defendant’s denial of claim forms which are annexed to defendant’s opposition papers as Exhibit “A,” as well as plaintiff’s moving papers, establish the dates of defendant’s receipt of the claim forms. See, PDG Psychological, P.C., (Jones) v. Utica Mut. Ins. Co., 11 Misc 3d 128[A], 2006 NY Slip Op. 50246[U][AT 2nd & 11th Jud. Dists.].

Defendant opposes plaintiff’s motion and cross-moves for summary judgment on the grounds that the denial was timely, as well as the fact that the assignment was revoked by the assignor, Richard Proctor. In support of its cross-motion, the defendant annexes a copy of the letter it received from Richard Proctor, which indicates that he was in fact involved in a car accident on 6/4/05, that he was requesting to drop all claims and that he would be willing to be held responsible for all medical bills.

After careful consideration of the moving papers, supporting documents and opposition thereto, the court finds that plaintiff is entitled to summary judgment as a matter of law.

In order for a provider to receive direct payment from an insurer under the no-fault regulation, the claims must have been assigned to the provider pursuant to an assignment containing language required by the regulation (See, 11 NYCRR 65-3.11[b][2].).

Plaintiff has annexed a copy of assignment of benefits form, which was signed by the assignor, Richard Proctor on June 4, 2005. [See, Exhibit “1” to plaintiff’s moving papers]. The defendant does not argue the validity of the assignment of benefits form, and there is no indication that same was an issue which verification was requested. The applicable rules and regulations are as follows: [*3]

§65.3-11 – Direct Payments

(a) An insurer shall pay benefits for any element of loss, other than death benefits, directly to the applicant or, when appropriate, to the applicants parent or legal guardian or to any person legally responsible for necessities, or, upon assignment by the applicant or any of the aforementioned persons, shall pay benefits directly to providers of health care services as covered under section five thousand one hundred two (a)(1) of this article….Emphasis added.

(2)(d) If an assignment has been furnished an insurer, the assignor or legal representative of the assignor shall not unilaterally revoke the assignment after the services for which the assignment was originally executed were rendered. If the assignment is revoked for services not yet rendered, the assignor or leal representative shall provide written notification to the insurer that the assignee has been notified of the revocation.

The services rendered by plaintiff-provider were rendered on 6/17/05 and 6/27/05, all of which total $304.79. The assignor’s revocation letter which is addressed to defendant is dated 6/25/05. Section 65.3-11 states that the assignor may not unilaterally revoke the assignment after services for which the assignment was originally executed were rendered. Therefore, the assignor could not revoke the assignment as to those services rendered on or before 6/25/07. The regulation also states that if the assignment is revoked for services not yet rendered, the assignor or legal representative shall provide written notification to the insurer that the assignee has been notified of the revocation.

The defendant has not submitted to this court, and the record is void as to a letter from the assignor that the assignee was notified of the revocation. The letter which is annexed to defendant’s cross-motion is a letter which merely states that the assignor is “requesting to drop all claims.” The defendant’s proof is insufficient to establish its prima facie entitlement to summary judgment.

Accordingly, summary judgment is hereby awarded in favor of plaintiff and against defendant in the amount of $304.79, with interest at 2% per month from 7/22/05, costs and attorney’s fees. Defendant’s cross-motion is hereby denied.

This constitutes the order of this Court.

Court Attorney to notify.

Dated: Brooklyn, New York

March ______, 2007

______________________________

Alice Fisher Rubin, J.C.C. [*4]

Civil Court of the City of New York, Kings County

011541/05

Peter P. Sweeney, J.

Plaintiff Primary Psychiatric Health, P.C. commenced this action to recover assigned first-party no-fault benefits for psychological services that it provided to multiple assignors. The parties appeared before the undersigned for trial on November 9, 2006. At that time, the only open claims were for psychological services provided to assignors Everald Poole and Terry Johnson.

Before the trial began, the parties stipulated to the elements of plaintiff’s prima facie case. Defendant’s sole defense to the claims was that there was “no coverage at all” under its policy because neither of plaintiff’s assignors suffered a psychological injury as a result of the underlying motor-vehicle accident. Citing Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195 [1997], counsel for the defendant maintained that this defense is non-waivable and not subject to the 30 day preclusion rule.

Plaintiff rested without calling any witnesses. Defendant called two witnesses, Dr. Michael Rosenfeld and Dr. Samuel M. Rock.

Dr. Rosenfeld testified that he performed an independent psychological examination of Everland Poole on February 25, 2003 at defendant’s request. As part of his examination, he interviewed Mr. Poole to determine the nature and onset of his psychological complaints. Dr. Rosenfeld maintained that such an interview is standard practice and an essential component of a psychological examination. He further testified that he relied upon the information Mr. Poole gave him during the interview in forming his professional opinion and that psychologists routinely rely upon such information in forming professional opinions.

Plaintiff’s counsel objected and maintained that anything said by Mr. Poole during the interview was hearsay. He further maintained that since no evidence was presented demonstrating that the information provided by Mr. Poole was reliable, Dr. Rosenfeld could not rely upon such information as a basis for his opinion.

The court reserved decision and permitted Dr. Rosenfeld to testify over the objection. The parties were directed to brief the issue and the court agreed that it would consider striking Dr. Rosenfeld’s opinion testimony if plaintiff prevailed on the objection.

Dr. Rosenfeld testified that when he asked Mr. Poole to describe his psychological [*2]complaints, Mr. Poole gave him no indication that he had suffered a psychological injury. He made no complaints of suffering from any type of psychological symptomology.

Dr. Rosenfeld testified he proceed to conduct a full psychological examination of Mr. Poole and that the examination was in all respects “unremarkable.” Based upon his examination, he opined that Mr. Poole did not sustain a psychological injury as a result of the accident.

Dr. Rock was the next to testify. Dr. Rock performed an independent psychological examination of Terry Johnson at defendant’s request on April 2, 2003. He also conducted an interview of his subject as part of his examination. Plaintiff’s counsel again objected and maintained that Dr. Rock should not be allowed to base his opinion on the information he obtained from Mr. Johnson during the interview because such information was hearsay and no evidence was presented demonstrating that the information was reliable. The court again reserved decision and allowed Dr. Rock to testify over objection.

Dr. Rock testified that Mr. Johnson told him, in sum and substance, that he had no psychological complaints whatsoever following the accident. He further testified that all other aspects of his examination were within normal limits. He opined that Mr. Johnson did not suffer a psychological injury as a result of the accident.

Upon reviewing and evaluating the evidence and the memorandums of law submitted by the parties, and having had the opportunity to assess the credibility of the witnesses, the Court makes the following findings of fact and conclusions of law.

Discussion:

The covering language contained in the Mandatory Personal Injury Protection Endorsement (PIP Endorsement), obligated the defendant to “pay first-party benefits to reimburse for basic economic loss sustained by an eligible injured person on account of personal injuries caused by an accident arising out of the use or operation of a motor vehicle or a motorcycle during the policy period and within the United States of America, its territories or possessions, or Canada” (11 NYCRR 65-1.1 [emphasis added] ). While an insurer is generally precluded from raising any defense to a claim for first-party no-fault benefits where the claim was not denied within 30 days of its receipt, as here, (Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274 [1997], failure to deny a claim within 30 days does not preclude an insurer from defending a claim “on a strict lack of coverage ground” (Central General Hosp. v. Chubb Group of Ins. Companies, 90 NY2d 195, 198 [1997] ). Stated differently, “the preclusion remedy does not apply to a defense of no coverage at all” (90 NY2d at 202).

Since the coverage provided by the PIP Endorsement is for “personal injuries caused by an accident arising out of the use or operation of a motor vehicle or motorcycle“, if defendant is correct in its assertion that Mr. Pool and Mr. Johnson did not sustain a psychological injury as a result of the accident, the court agrees that there would be “no coverage at all” for the claims. Defendant did not have to establish that it timely denied the claims to assert this defense.

In the instant case, after plaintiff’s prima facie case was established, defendant’s experts, Dr. Rosenfeld and Dr. Rock, presented unrebutted testimony that neither of Mr. Poole or Mr. Johnson sustained a psychological injury as a result of the underlying motor vehicle accident. The court fully credits the opinions of both psychologists and finds that there is no coverage for the claims.

The court rejects plaintiff’s contention that Dr. Rosenfeld and Dr. Rock should have been [*3]precluded from basing their professional opinions, in part, on the information obtained from plaintiff’s assignors during the independent psychological examinations. While it is true that an expert witness must generally rely on facts “in the record or personally known to the witness”(Cassano v. Hagstrom, 5 NY2d 643, 646 [1959], rearg. denied 6 NY2d 882 [1959] ), “[u]nder the professional reliability exception, material not in evidence may be used to formulate an expert’s opinion provided that the material not in evidence is of the kind accepted in the profession as a basis in forming an opinion, and the material not in evidence is accompanied by evidence establishing its reliability” (Scanga v. Family Practice Associates of Rockland, P.C., 27 AD3d 547, 548 [2nd Dep’t 2006]; citing, Hambsch v. New York City Tr. Auth., 63 NY2d 723, 726 [1984]; People v. Sugden, 35 NY2d 453, 460-461 [1974] ; Wagman v. Bradshaw, 292 AD2d 84, 85 [2nd Dep’t 2002] ). Once the predicates of the exception have been met,” hearsay testimony given by [an] expert . . . for the limited purpose of informing the [fact finder] of the basis of the expert’s opinion and not for the truth of the matters related’ is admissible” (People v Wright, 266 AD2d 246, 247 [1999], lv denied 94 NY2d 831 [1999], quoting People v Campbell, 197 AD2d 930, 932-933 [1993], lv denied 83 NY2d 850 [1994]).

Defendant demonstrated that the information provided by plaintiff’s assignors during their psychological examinations is of the kind of out-of-court material accepted in the field of psychology as a basis in forming a professional opinion. Indeed, plaintiff concedes this point. Plaintiff correctly asserts, however, that no evidence was presented demonstrating that the information provided by plaintiff’s was reliable.

In Home Care Ortho. Med. Supply, Inc. v American Manufactures Mut. Ins. Co., 2007 NY Slip Op 50302(U) [App. Term, First Dep’t 2006], the Appellate Term held that the lower court erred in precluding defendant’s expert “from testifying because his opinion [was] based, at least in part, on his review of the assignors’ medical records.” The court reasoned that “[p]laintiff may not be heard to challenge the reliability of the assignors’ medical records and reports, which, in response to defendant’s verification requests, were affirmatively relied upon by plaintiff as proof of claim” (id.); see also, Cross Continental Medical, P.C. v. Allstate Ins. Co., 822 NYS2d 356, 357 {13 Misc 3d 10} [App. Term, First Dep’t 2006] ).

In this court’s view, the holding in Home Care Ortho. Med. Supply, Inc. is consistent with the legislative policy reflected in the numerous provisions of the No-Fault Law which provide for the prompt verification and disposition of claims (Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 214, 222 [1996]; Presbyterian Hosp. in City of New York v. Maryland Cas. Co., 90 NY2d 274, 281[1997]; Dermatossian v. New York City Tr. Auth., 67 NY2d 219, 224-225 [1986]; Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 827 NYS2d 217, 220 {35 AD3d 720} [2nd Dep’t 2006] ).

In this case, the interviews conducted by defendant’s examining psychologists were essential components of the psychological examinations defendant had requested as additional verification of the claims. There is no basis to treat the information that was obtained from these interviews differently from information that defendant had obtained from the medical reports and records in Home Care Ortho. Med. Supply, Inc. In both cases, the information was obtained by the defendant in response to a verification request. The court therefore holds that the plaintiff in this case cannot challenge the reliability of the information obtained by defendant’s examining [*4]psychologists during the interviews.

In Home Care Ortho. Med. Supply, Inc., it was the plaintiff that provided the verification whereas in this case, it plaintiff’s assignors provided the verification. This distinction, in the court’s view, is irrelevant. Certainly, if plaintiff’s assignors were prosecuting this action, under Home Care Ortho. Med. Supply, Inc., they could not challenge the reliability of any verification they provided to the defendant in response to a verification request. Since an assignee “stands in the shoes” of an assignor and acquires no greater rights than its assignor (Long Island Radiology v. Allstate Ins. Co., 36 AD3d 763 [2nd Dep’t 2007]; Arena Const. Co. v. Sackaris & Sons, 282 AD2d 489 [2nd Dep’t 2007] ), logic dictates that an assignee should be estopped from challenging the reliability of verification provided by its assignor. This is especially true given the fact that the No-Fault regulations entitle insurers to obtain verification directly from eligible injured persons (11 NYCRR 65-3.5( c), 11 NYCRR 65-3.5(d); 11 NYCRR 65-1.1).

For all of the above reasons, it is hereby

ORDERED that judgment be entered in favor of the defendant dismissing the claims.

This constitutes the decision and order of the court.

Dated:March 27, 2007________________________________

PETER P. SWEENEY

Civil Court Judge

[*1]

Civil Court of the City of New York, New York County, March 12, 2007

APPEARANCES OF COUNSEL

Votto, Cassata & Gullo, LLP, Staten Island (Michelle S. Titone of counsel), for defendant. Sanders, Grossman, Fass & Muhlstock, P.C., Mineola (Michael C. Rosenberger and Shayna Sacks of counsel), for plaintiff.

OPINION OF THE COURT

Shlomo S. Hagler, J.

Defendant New York Central Mutual Fire Insurance Company (NYCM) moves for an order “revising the attorney’s fees on plaintiff’s judgment in the above captioned matter, pursuant to 11 NYCRR 65-3.10 and 65-4.6.” Plaintiff Adam Marigliano, LMT, opposes the motion.

Background

Plaintiff medical provider sought to recover the sum of $1,593.67 in first-party no-fault benefits assigned to him by defendant’s insureds. Defendant denied the claims based on lack of medical necessity, overlapping services, failure to bill services in accordance with the no-fault fee schedule, and lack of causal relationships between the accidents and the injuries alleged. As a result of defendant’s denial and subsequent nonpayment of claims, plaintiff commenced this action in or about August 2005 by the filing and service of the summons and verified complaint. (Exhibit A to defendant’s motion.) Defendant interposed its answer in September 2005. (Id.) Thereafter, plaintiff filed his notice of trial. Defendant then moved for an order to vacate the notice of trial pursuant to 22 NYCRR 202.21 (e) and 208.17 (c), and compelling plaintiff, plaintiff’s assignor, and the treating physician to appear for depositions pursuant to CPLR 3124 and 3125. Plaintiff opposed the motion and cross-moved for an order granting him summary judgment pursuant to CPLR 3212 or, in the alternative, a protective order pursuant to CPLR 3103.

By decision/order dated July 25, 2006 (prior order), this court granted defendant’s motion to vacate the notice of trial and compel depositions of plaintiff and the treating physician only. This court also granted plaintiff partial summary judgment on his third, seventeenth, twenty-seventh and [*2]thirty-first causes of action, each for assignor Jose Contreras in the sum of $69.29 for a total of $277.16, “together with interest at the statutory rate of 2% per month pursuant to 11 NYCRR § 65-3.9 (a) and statutory attorney’s fees pursuant to 11 NYCRR § 65-4.6.” The parties were directed to settle judgment accordingly.^[FN1] (Exhibit B to defendant’s motion.)

Arguments

The gravamen of defendant’s motion is that plaintiff is only entitled to a single attorney’s fee award for the total or aggregate of all four bills and causes of action plaintiff brought on behalf of the same assignor, Jose Contreras. In sharp contrast, plaintiff argues that he is entitled to a separate attorney’s fee award for each of the four claims. In other words, plaintiff seeks payment of attorney’s fees on a “per claim” basis.

Attorney’s Fees

The current statutory authority governing first-party no-fault benefits is codified in the “Comprehensive Motor Vehicle Insurance Reparations Act” under article 51 of the Insurance Law (L 1984, chs 367, 805). This legislation is commonly referred to as the “No-Fault Law” because it provides a plan for compensation of victims of motor vehicle accidents for economic loss without regard to fault or negligence. (Montgomery v Daniels, 38 NY2d 41 [1975]; Oberly v Bangs Ambulance, 96 NY2d 295 [2001].) The general framework for payment of first-party benefits, including attorney’s fees, derives from Insurance Law § 5106 (a). It states as follows:

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

Regulation 68, 11 NYCRR Part 65

The Insurance Department is the governmental agency responsible for the administration of article 51 of the Insurance Law. In this capacity, the Superintendent of Insurance, interpreting Insurance Law § 5106, promulgated Regulation 68 and codified it under 11 NYCRR part 65.

Four sections of these regulations—sections 65-4.6, 65-3.10, 65-3.19 and 65-4.10 (j)—form the blueprint or outline for payment of attorney’s fees in first-party benefit actions. However, section 65-4.6 is the only section which applies to awarding attorney’s fees in a court action where the claimant is the prevailing party. The other sections are inapplicable to court actions as they refer to late payment of claims, offsets, arbitration and master arbitration awards. [*3]

Section 65-4.6 sets forth the limitations on attorney’s fees pursuant to Insurance Law § 5106 (a). The relevant portions of this section dealing with court actions are subdivisions (a), (c) and (e) as follows:

“(a) If an arbitration was initiated or a court action was commenced by an attorney on behalf of an applicant and the claim or portion thereof was not denied or overdue at the time the arbitration proceeding was initiated or the action was commenced, no attorney’s fees shall be granted. . . .

“(c) Except as provided in subdivisions (a) and (b) of this section, the minimum attorney’s fee payable pursuant to this subpart shall be $60. . . .

“(e) For all other disputes subject to arbitration, subject to the provisions of subdivisions (a) and (c) of this section, the attorney’s fee shall be limited as follows: 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850.”

Nomenclature

The dispute between the parties partially stems from the imprecise nomenclature of terms that health providers, insurers and even courts utilize interchangeably in first-party benefit actions. This is primarily so because the Insurance Department’s regulations interpreting Insurance Law § 5106 (a) do not contain a section defining integral terms. They often misuse the common terms of “bill,” “claim,” and “cause of action.”

A bill should be defined as an account of the provider’s request for payment for treatment/services rendered and/or supplies provided. A “claim” under article 51 of the Insurance Law should be referred to as a “proof of claim”^[FN2] which is submitted as a “Verification of Treatment by Attending Physician or Other Provider of Health Service” (form NF-3), or less commonly, “Verification of Hospital Treatment” (form NF-4), or “Hospital Facility” (form NF-5) or their functional equivalents. Significantly, the forms provide the insurer with the name of the policyholder, name and address of the provider, policy number, date of accident, date of health care service, place of service, description of various treatment/service rendered and charges billed. Each “proof of claim” form may encompass a bill for a single service or treatment rendered or multiple bills for several treatments and/or services rendered on one or more dates.

The legal definition of cause of action is “[a] group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person.” (Black’s Law Dictionary 235 [8th ed 2004].) [*4]

Payment of Attorney’s Fees

Claim Versus Cause of Action

One of the latest issues arising in the thicket of first-party no-fault regulations is whether attorney’s fees are awarded based on each “proof of claim” as defined above or computed through the aggregate of all bills, proofs of claim, and causes of action for the same assignor.

A majority of the trial courts which have dealt with this issue have awarded attorney’s fees based on each proof of claim. (See, e.g., Willis Acupuncture, P.C. v Government Empls. Ins. Co., 6 Misc 3d 1002[A], 2004 NY Slip Op 51702[U] [Civ Ct, Kings County 2004, Thomas, J.]; A.M. Med. Servs. P.C. v New York Cent. Mut. Fire Ins. Co., NYLJ, July 24, 2006, at 25, col 1 [Civ Ct, Queens County, Raffaele, J.]; Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. Co., 14 Misc 3d 673 [Civ Ct, Queens County 2006, Siegal, J.]; Valley Stream Med. & Rehab, P.C. v Liberty Mut. Ins. Co., 15 Misc 3d 576 [Civ Ct, Queens County 2007, Lebedeff, J.].)

On the other hand, an informal opinion letter issued by the Office of the General Counsel of the Insurance Department on October 8, 2003 (exhibit C to defendant’s motion), and relied upon by one trial court in Marigliano v New York Cent. Mut. Fire Ins. Co. (13 Misc 3d 1079 [Civ Ct, Richmond County 2006, Sweeney, J.]), endorses the awarding of attorney’s fees based on the aggregate of all bills, proofs of claim, and causes of action for the same assignor.

While there is a plethora of cases in the Second Department on this complex issue, there do not appear to be any reported decisions in the trial and appellate levels of the First Department. Incredibly, this case appears to be one of first impression in the First Department even though the No-Fault Law was enacted more than 30 years ago. A proper review of this issue requires analysis of the legislative intent, statutory construction and historical perspective of Insurance Law § 5106 (a).

Legislative Intent

The noble and stated intent of the No-Fault Law was to create a new and improved insurance reparations system “which . . . assures that every auto accident victim will be compensated for substantially all of his [or her] economic loss, promptly and without regard to fault; [and] will eliminate the vast majority of auto accident negligence suits, thereby freeing our courts for more important tasks.” (Governor’s Mem approving L 1973, ch 13, 1973 McKinney’s Session Laws of NY, at 2335 [emphasis added]; Matter of Granger v Urda, 44 NY2d 91 [1978].)

The Court of Appeals also noted that the avowed purpose of the No-Fault Law was to “guarantee” “prompt and full compensation for economic losses . . . without the necessity of recourse to the courts[;] the Legislature acted reasonably to eliminate much of the wasted expenditures of premium dollars on expenses extraneous to treatment of injury.” (Montgomery v Daniels, 38 NY2d 41, 55 [1975] [emphasis added]; Insurance Law former § 675 [1].)

A lynchpin of the No-Fault Law was the prompt payment of victims’ claims under the so-called “30-day rule” as first-party benefits were “overdue if not paid within thirty days after the [*5]claimant supplies proof of the fact and the amount of loss sustained.” (Montgomery, 38 NY2d at 47, quoting Insurance Law former § 675 [1].)

“The Legislature provided that where an unpaid claim is overdue, as here, a claimant shall recover as part of his award his attorney’s reasonable fee (Insurance Law, § 675, subd 1 [now Insurance Law § 5106 (a)]). It is clear that the Legislature intended that an insurance company not be able to frustrate the operation of the statute [No-Fault Law] by throwing legal obstacles in the path of recovery.” (Matter of Simmons [Government Empls. Ins. Co.], 59 AD2d 468, 473 [2d Dept 1977].)

Thus, the Legislature intended to mandate the insurer’s strict compliance with the “30-day rule” to avoid the claimant resorting to judicial intervention by imposing one of the highest statutory interest rates payable at two percent per month as well as payment of attorney’s fees.

Statutory Construction

When construing a statute, a court “should consider the mischief sought to be remedied . . . and . . . should construe the act in question so as to suppress the evil and advance the remedy.” (McKinney’s Cons Laws of NY, Book 1, Statutes § 95; see also, T.D. v New York State Off. of Mental Health, 228 AD2d 95, 106 [1st Dept 1996]; Lincoln First Bank of Rochester v Rupert, 60 AD2d 193, 197 [4th Dept 1977].)

With this principle in mind, a fair reading of Insurance Law § 5106 (a) provides for payment of attorney’s fees on a “per claim” basis. The statute requires a claimant to supply the insurer with the “proof of the fact and amount of loss sustained.” This is tantamount to the claimant submitting to the insurer a “proof of claim” such as the NF-3, NF-4 or NF-5 forms or their functional equivalents. The statute further states that “[i]f proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied.” This infers that multiple treatments and services may be consolidated into a single “proof of claim” which is subject to the “30-day rule.” The triggering event which results in payment of interest and attorney’s fees is the insurer’s failure to pay a “valid claim or portion” thereof within 30 days. In other words, there is a cause and effect relationship. The “cause” is the insurer’s failure to timely pay any portion of the substantiated “proof of claim” and the “effect” is the insurer’s required payment of the claim with interest thereon and attorney’s fees. Simply stated, at the time any portion of the “proof of claim” becomes overdue, the insurer is liable to pay attorney’s fees for each overdue item.

As stated above, the legislative intent of the No-Fault Law was to promptly and fully compensate auto accident victims without judicial intervention. When an auto accident victim is forced to resort to litigation due to nonpayment of benefits, it frustrates the legislative intent to remedy “the mischief” and advance the goal of prompt and full compensation and to discourage litigation. Therefore, the payment of the victim’s attorney’s fees should be awarded for each “proof of claim” that becomes overdue.

Historical Perspective

There are at least three Second Department appellate decisions which have held that a claimant is entitled to recover statutory attorney’s fees on a “per claim” basis. (Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co., 207 AD2d 338 [2d Dept 1994]; Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501 [2d Dept 1994]; St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641 [2d Dept [*6]1995].)

What makes this issue perplexing is the brevity of each of the above appellate decisions which neither explained nor defined its usage of the term “claim.” Even the landmark case of Smithtown Gen. Hosp. v State Farm Mut. Auto Ins. Co. (supra) has been cited by both parties in support of their respective positions. Claimants assert the plain meaning of the term “claim” as actually a “proof of claim” (i.e., NF-3, NF-4, or NF-5). Insurers opine that the Smithtown court’s meaning of “claim” is really referring to 21 different causes of action and assignors. In other words, each cause of action for a different assignor constitutes a “claim.” A review of the Smithtown complaint and the briefs submitted to the Appellate Division indicates that the 21 claims at issue were actually 21 causes of action for 21 different assignors. Unfortunately, there were no two proofs of claim submitted for any one assignor. Therefore, no definitive determination of the issue may reasonably be adduced from the Smithtown holding.

However, there is an earlier Second Department decision in Mid-Island Hosp. v Empire Mut. Ins. Co. (120 AD2d 652 [2d Dept 1986]) which should end the controversy. In Mid-Island Hosp., plaintiffs served a complaint asserting five causes of action for nonpayment of first-party no-fault benefits. The first and second causes of action were brought by one of the plaintiffs, Mid-Island Hospital, on behalf of the same assignor, Mildred Koegel, for separate claims of $2,532 and $422. Plaintiffs argued they were entitled to additional “fees on fees” for prosecuting the action. The insurer took the position that plaintiffs were only entitled to payment of the then statutory minimum payment of $50 per claim for each cause of action and no “fees on fees” were authorized under the applicable statute. The Appellate Division affirmed the trial court’s finding that “plaintiffs were entitled to attorney’s fees of $50 on each of their five causes of action, as each claim was settled prior to commencement of the instant action.” (Id. at 653.) Significantly, the Appellate Division held that plaintiff Mid-Island Hospital was entitled to attorney’s fees of $50 for each of the two claims that it brought on behalf of Ms. Koegel. The Mid-Island Hosp. holding convincingly demonstrates that plaintiffs are entitled to be compensated for attorney’s fees for each proof of claim brought on behalf of the same assignor.

Insurance Department’s Opinion Letter of October 8, 2003

The Insurance Department’s opinion letter of October 8, 2003 is informal and not binding on any court. (State Farm Mut. Auto. Ins. Co. v Mallela, 372 F3d 500, 506 [2d Cir 2004]; Matter of Park Radiology v Allstate Ins. Co., 2 Misc 3d 621, 625 n 2 [Civ Ct, Richmond County 2003, Vitaliano, J.].)

Courts may defer to the government agency charged with the responsibility for administration of the particular statute “[w]here the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom” (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459 [1980]). However, where

“the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent [as in this case], there is little basis to rely on any special competence or expertise of the administrative agency [the Insurance Department] and its interpretative regulations are therefore to be accorded much less weight. And, of course, if the regulation runs counter to the clear wording of a statutory provision, it should not [*7]be accorded any weight.” (Id.)

Similarly, where the Insurance Department’s interpretations of Insurance Law § 5106 (a) and its regulations are irrational and unreasonable, they will not be upheld. (Id.)

In this case, the Insurance Department’s opinion letter of October 8, 2003 limits the claimant’s recovery to the “total amount of individual bills disputed . . . regardless of whether one bill or multiple bills are presented as part of a total claim for benefits.” (Ops Gen Counsel NY Ins Dept No. 03-10-04 [Oct. 2003].) This is an irrational and unreasonable interpretation of the statutory construction of Insurance Law § 5106 (a), runs contrary to the legislative intent of providing claimants with prompt and full compensation, and ignores the historical perspective of the courts which have, at least, awarded the minimum attorney’s fees for each disputed claim which is resolved in favor of the claimant.

Accordingly, this court rejects the Insurance Department’s informal and nonbinding opinion letter of October 8, 2003, for reasons similar to those of several trial courts that have done so in the past. (Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. Co., supra; Valley Stream Med. & Rehab, P.C. v Liberty Mut. Ins. Co., supra.)

Conclusion

Defendant’s motion to revise the attorney’s fees on the plaintiff’s judgment is denied as defendant failed to provide a copy of said proposed judgment and plaintiff is entitled to a minimum attorney’s fee of $60 for each of the four “claims” he asserted on behalf of his assignor, Jose Contreras. The parties are directed to settle the judgment accordingly.

Footnotes

Footnote 1: Neither party settled the judgment. Moreover, defendant failed to attach a copy of the proposed judgment that it seeks to revise.

Footnote 2: A “proof of claim” would be more accurate and avoid confusion because a “claim” can also be loosely defined as a “cause of action.” (Black’s Law Dictionary 264 [8th ed 2004].)

[*1]

Civil Court of the City of New York, Kings County, March 7, 2007

APPEARANCES OF COUNSEL

McDonnell & Adels, P.C., Garden City, for defendant. Gary Tsirelman, P.C., Brooklyn, for plaintiff.

OPINION OF THE COURT

Alice Fisher Rubin, J.

Plaintiff commenced this action against the defendant to recover first-party no-fault benefits pursuant to section 5106 (a) of the Insurance Law and Regulations of the New York State Insurance Department (11 NYCRR 65-1.1 et seq.), for medical services rendered.

Defendant moves for an order granting summary judgment in favor of defendant based on plaintiff’s attempt to relitigate a claim which was previously dismissed by the court, and imposition of sanctions against plaintiff’s counsel for having engaged in frivolous conduct.

Plaintiff opposes the motion on the grounds that the prior action was dismissed due to plaintiff’s failure to comply with discovery demands.

The plaintiff commenced this action against the defendant to recover first-party no-fault benefits pursuant to section 5106 (a) of the Insurance Law and the regulations, in the amount of $800 for acupuncture treatment allegedly rendered to the assignor, Cindy Hall, as a result of an automobile accident which occurred on July 27, 2002. Prior to this action, the plaintiff commenced an action against defendant State Farm on behalf of the same assignor, Cindy Hall, for the same services as indicated in this action.

In the prior action, after service of the summons and complaint, issue was joined and discovery demands were made on or about January 30, 2003. On May 10, 2004, the plaintiff served a notice of trial. The defendant moved to strike the notice of trial on the grounds that discovery had not been completed. Thereafter on June 28, 2004, the defendant served a supplemental demand for discovery. On June 29, 2004, the parties appeared before the Honorable Ellen Spodek, and the attorneys entered into a stipulation which marked the case off the trial calendar, and required plaintiff to provide all discovery on or before July 29, 2004. Due to plaintiff’s failure to comply with the discovery demands as stipulated to, the defendant moved for [*2]an order to dismiss plaintiff’s complaint for failure to comply. On May 10, 2005, the parties appeared before the Honorable Robin Garson. After oral argument on the motion, the court granted defendant’s order to show cause, and dismissed the action due to plaintiff’s failure to comply with the stipulation requiring plaintiff to comply with all outstanding discovery.

Thereafter, the plaintiff commenced the action which is the subject of defendant’s motion to dismiss, pursuant to CPLR 3212. Defendant argues that the plaintiff is attempting to relitigate the same bills which were the subject of the previous lawsuit. Defendant further argues that the bills in question do not involve different dates of service than the previous bills submitted under the prior action, and therefore plaintiff is estopped from relitigating the bills in issue due to the dismissal of plaintiff’s prior action.

In opposition to defendant’s motion to dismiss, the plaintiff argues that pursuant to CPLR 205, the plaintiff can recommence the action within six months after termination. Plaintiff argues that Judge Garson’s dismissal of the prior case limited her holding to the discovery stipulation only.

After careful consideration of the moving papers, supporting documents and opposition thereto, the court finds as follows:

The plaintiff timely commenced the instant action against the defendant seeking the same relief that it sought in the prior action.

“CPLR 205. Termination of action” states as follows:

“(a) New action by plaintiff. If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff, or, if the plaintiff dies, and the cause of action survives, his or her executor or administrator, may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period.”

However, this court disagrees with plaintiff’s argument that it is not precluded from commencing a new action under a new index number. The complaint was dismissed after oral argument of defendant’s motion to dismiss, on the grounds that the plaintiff failed to comply with discovery demands as per a stipulation signed by both attorneys. Plaintiff’s attempt to now argue that the discovery demands were unduly cumbersome and burdensome, and therefore plaintiff was unable to comply with said demands is too late. The arguments, as conceded to by plaintiff [*3]should have been made before the judge hearing oral argument on the motion to dismiss. Furthermore, plaintiff could have moved to reargue the motion and/or appeal the court’s decision.

In Andrea v Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, P.C. (Habiterra Assoc.) (5 NY3d 514, 520 [2005]), the Court of Appeals held that the “neglect to prosecute” exception in CPLR 205 (a) applies not only where the dismissal of the prior action is for “[w]ant of prosecution pursuant to CPLR 3216, but whenever neglect to prosecute is in fact the basis for dismissal” (internal quotation marks omitted). The plaintiff failed to comply with discovery demands, and after repeated demands for the outstanding discovery, as well as failure to comply with a stipulation, defendant moved to dismiss the complaint, which was granted by the court.

The purpose of excluding actions dismissed for neglect to prosecute from those that can be, in substance, revived by a new filing under CPLR 205 (a) was to assure that a dismissal for neglect to prosecute would be a serious sanction, not just a bump in the road. (See, Andrea v Arnone, Hedin, Casker, Kennedy & Drake, supra; Carven Assoc. v American Home Assur. Corp., 84 NY2d 927 [1994]; Flans v Federal Ins. Co., 43 NY2d 881 [1978].)

Accordingly, defendant’s motion to dismiss is hereby granted; the complaint is dismissed in its entirety, without an imposition of sanctions.

[*1]

[*2]Civil Court of the City of New York, Queens County, February 23, 2007

APPEARANCES OF COUNSEL

Kenneth F. Nwele, Brooklyn, for Valley Stream Medical & Rehab, P.C., plaintiff. Alden Banniettis, Brooklyn (Damien Semel–DeFeo and Jeff Henle of counsel), for A.M. Medical Services, P.C., plaintiff. Bee Ready Fishbein Hatter & Donovan, LLP, Mineola (Lee–David Weiner of counsel), for Liberty Mutual Insurance Company, defendant. Bruno, Gerbino & Soriano, LLP, Melville (Akwei Oko Acquaye of counsel), for Allstate Insurance Company, defendant.

OPINION OF THE COURT

Diane A. Lebedeff, J.

Two motions bring up for review the treatment of attorney’s fee awards in court cases seeking payment of no-fault economic loss benefits. Treated together for the purposes of motion disposition, these cases form the basis for an inquiry into the recently disputed question of the proper formula to use for computation of a no-fault attorney’s fee award to a prevailing plaintiff’s [*3]counsel in routine no-fault litigation, as well as an exploration of the situations in which a plaintiff is not entitled to an attorney’s fee award.

The General Attorney’s Fee Rule for a Prevailing No-Fault Plaintiff

It is well established that a prevailing no-fault claimant may claim an award of attorney’s fees (Insurance Law § 5106 [a] [such attorney’s fees are “subject to limitations promulgated by the superintendent (of the NY State Department of Insurance)]”). A number of formulas for such fees may be found in the “thicket” of no-fault Insurance Department regulations (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 280 [1997], rearg denied 90 NY2d 937 [1997]).^[FN1]

There is, however, only a single provision governing an attorney’s fee award in routine court litigation for a no-fault unpaid economic loss claim, which is that such an “attorney’s fee shall be . . . 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the . . . court, subject to a maximum fee of $850” and a “minimum attorney’s fee . . . [of] $60” (11 NYCRR 65-4.6 [e], [c]). Long established appellate authority holds that such fees were to be calculated “per claim,” which means for each separate claim form submitted to an insurer (Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co., 207 AD2d 338, 339 [2d Dept 1994] [trial court “failed to follow the formula” of the regulations and “incorrectly interpreted the $850 ceiling to apply to the entire action, rather than to each claim, and failed to set a minimum fee of $60 per claim”]). This “per claim” calculation was accepted as the proper approach prior to and subsequent to that Second Department decision (see Hempstead Gen. Hosp. v Allstate Ins. Co., 120 Misc 2d 303, 311 [Sup Ct, Nassau County 1983], revd on other grounds 106 AD2d 429 [2d Dept 1984], affd 64 NY2d 958 [1985]; Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501, 501 [2d Dept 1994] [“per claim”]; St. Clare’s Hosp. v Allstate Ins. Co., 215 AD2d 641, 641 [2d Dept 1995] [fees to be fixed “per claim” and minimum applied to “each such claim”]).^[FN2]

This conclusion has seemingly been drawn into question by an opinion letter issued by [*4]the Office of the General Counsel of the Insurance Department on October 8, 2003. Entitled “No-Fault Attorney Fees for Multiple Provider Bills,” it opines that—specifically in relation to court actions—”the amount of attorney’s fees awarded will be based upon 20% of the total amount of first party benefits awarded” and that “the 20% calculation is based upon benefits awarded from the total number of disputed bills in a court action” (text appears at [accessed Feb. 23, 2007]), which would potentially lower legal fees awards by applying the dollar cap to all combined claims, instead of treating claims separately. The opinion letter represents that its conclusion springs from a plain reading of the regulations and it contains no legal rationale, points to no change in governing case law, and does not rest upon a contemporaneous amendment of the regulatory language.

Three courts recently addressed this 2003 no-fault attorney’s fee opinion letter. In A.M. Med. Servs. P.C. v New York Cent. Mut. Fire Ins. Co. (NYLJ, July 24, 2006, at 25, col 1 [Civ Ct, Queens County 2006, Raffaele, J.]), the court declined to follow the opinion letter and calculated attorney’s fees based upon each claim form, noting that the “total award” basis “flies in the face of existing decisional precedent,” “gives the defendant insurers a windfall by limiting their exposure for litigation fees,” “provides carriers with a disincentive to settlement, and encourages . . . no-fault litigation.” In Alpha Chiropractic P.C. v State Farm Mut. Auto Ins. (14 Misc 3d 673 [Civ Ct, Queens County 2006, Siegal, J.]), the court found the opinion letter unpersuasive, for similar reasons. In Marigliano v New York Cent. Mut. Fire Ins. Co. (13 Misc 3d 1079 [Civ Ct, Richmond County 2006, Sweeney, J.]), the court deferred to the opinion letter on the basis of limited arguments.

This court finds the attorney’s fee opinion letter does not merit departure from settled law for three interrelated reasons. First, it must be recognized that this document is not a regulation adopted in conformity with the State Administrative Procedure Act (State Administrative Procedure Act § 101 et seq.), and facially falls in the class of exempt “interpretive statements and statements of general policy which in themselves have no legal effect but are merely explanatory” (State Administrative Procedure Act § 102 [2] [b] [iv]). Courts often find such opinion letters merit no weight (see State Farm Mut. Auto. Ins. Co. v Mallela, 175 F Supp 2d 401, 418 n 12 [ED NY 2001, Sifton, J.] [declining to follow a Department of Insurance opinion letter and noting that another opinion letter “relied upon by plaintiff, was authored at the instance of lead counsel for the insurers in . . . (a) matter pending in state court, who provided the Department with a five-page exposition of the issues presented”]).

Second, Insurance Department opinion letters which endorse a litigation or arbitration result contrary to existing judicial dictates specifically find little judicial favor. Such dismissive treatment was given to a 2000 Insurance Department opinion letter entitled “No-Fault Burden of Proof,” which was generally recognized to be an administrative attempt to avoid the Court of Appeals preclusion rule announced in Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co. (supra) by requiring a no-fault claimant to prove medical necessity even if the issue were not preserved by a timely denial. That 2000 opinion letter was given so little regard that its rejection was not even discussed in Matter of Pradip Das/N.Y. Med. Rehab v Allstate Ins. Co. (297 AD2d 321 [2d Dept 2002]), although extensively argued therein, which was described at length in Matter of Park Radiology v Allstate Ins. Co. (2 Misc 3d 621 [Civ Ct, Richmond County 2003]) and Preferred Med. Imaging, P.C. v Liberty Mut. Fire Ins. Co. (11 Misc 3d 1059[A], 2006 NY Slip Op 50278[U] [Suffolk Dist Ct 2006]).

Third and most compelling, absent any change in statutory law or regulations, common-[*5]law precedent principles require all lower trial courts view as binding applicable Appellate Division decisions, unless and until there is any conflicting authority (People v Towndrow, 187 AD2d 194, 195 [4th Dept 1993], lv dismissed 81 NY2d 1021 [1993] [“It should hardly need to be stated that trial courts are bound to follow the holdings of the Appellate Division”]; Mountain View Coach Lines v Storms, 102 AD2d 663, 664 [2d Dept 1984, Titone, J.] [“doctrine of stare decisis requires trial courts in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or this (department) pronounces a contrary rule” which doctrine is “necessary to maintain uniformity and consistency”]). Given stare decisis precepts, this court is not free to depart from settled legal precedent and is barred from according any weight or consequence to the subject opinion letter.

Based on the foregoing, the court determines that the prevailing no-fault claimant’s attorney’s fees herein are to be calculated on a per claim basis under settled principles of law. Accordingly, the court rejects the contrary argument raised in A.M. Med. Servs., P.C. v Allstate Ins. Co. and, because there is no objection to the plaintiff’s mathematical calculation, awards legal fees in the amount requested by the successful plaintiff for the two claim forms at issue.

Exceptions to the General Rule for No-Fault Plaintiff’s Attorney’s Fee

There are also situations in which a no-fault plaintiff is not entitled to an attorney’s fee under the regulations, directly or by construction. No legal fee is available, of course, in cases in which a plaintiff has no valid claim at the outset of the action (11 NYCRR 65-4.6 [a] [“If . . . a court action was commenced by an attorney on behalf of an applicant and the claim or portion thereof was not denied or overdue at the time . . . the action was commenced, no attorney’s fees shall be granted”]). And, in certain defined situations, litigation concerning a no-fault fee schedule dispute might not support an attorney’s fee (11 NYCRR 65-4.6 [i] [“if the charges by a health care provider . . . exceed the limitations contained in the (fee) schedules established pursuant to section 5108 of the Insurance Law, no attorney’s fee shall be payable” unless the litigation “involve(s) interpretation of such schedules or inadvertent miscalculation or error”]).

However, the regulations facially do not address the situation where a plaintiff had a valid claim for unpaid no-fault benefits at the commencement of the litigation but, for reasons independent of the litigation, has no proper claim for no-fault damages at its conclusion. In Valley Stream Med. & Rehab, P.C. v Liberty Mut. Ins. Co., one of the two cases at bar, after service of the summons and complaint, the plaintiff itself subsequently pursued and secured a settlement in arbitration for the same claim through different counsel. Given these facts, plaintiff is unable to demonstrate that even some small part of the original claim remained unpaid (compare Dondysh v Lumbermans Mut. Ins. Co., 168 Misc 2d 121 [App Term, 2d Dept 1996] [some interest remained unpaid]). In short, there is no outstanding obligation on the part of the insurer shown.

As to the regulation, it bases a claimant’s attorney’s fee calculation upon consideration of “the amount of first-party benefits, plus interest thereon, awarded by the . . . court” (11 NYCRR 65-4.6 [e]), and the regulation is interpreted literally (Hempstead General Hosp. v Allstate Ins. Co., supra, 106 AD2d at 431 [modification of judgment because the ” ‘fee upon a fee’ awarded to plaintiff . . . is not authorized by the regulations”]). Here, given that neither benefits nor interest [*6]are due to plaintiff, there is no dollar figure to which the percentage calculation, the dollar maximum, or the dollar minimum attaches and there is no basis upon which legal fees may be awarded.

Accordingly, the court denies the application for legal fees in Valley Stream Med. & Rehab, P.C. v Liberty Mut. Ins. Co. The court does not address whether the client has any obligation to pay an attorney’s fee to its attorney of record, given that such an issue is outside the scope of the instant papers.

Footnotes

Footnote 1: Internet links to the text of the current regulations, the superseded older regulations effective through April 5, 2002, the no-fault statute, various no-fault fee schedules, and Insurance Department circular letters and opinion letters may be found at (accessed Feb. 23, 2007).

The current regulations’ provisions applicable to attorney’s fee awards in court proceedings appear within 11 NYCRR 65-4.6, to be distinguished from numerous other rules applicable in other situations, such as in claims processing and late payment of arbitration awards (11 NYCRR 65-3.10), lien and offset situations (11 NYCRR 65-3.19) and proceedings before a master arbitrator (11 NYCRR 65-4.10 [j]).

Footnote 2: Although the applicable language of the mathematical formula remained unchanged over time, amendments did increase the dollar amount of the maximum figures and changed the context in which the formula appeared. The older regulation is quoted in full in Hempstead General Hosp. v Allstate Ins. Co. (supra, 106 AD2d at 429-430).