Civil Court of the City of New York, Richmond County

11330/07

Katherine A. Levine, J.

This case raises the murky issue of what precise evidence a defendant insurer must present in support of its late denial based upon fraud to withstand the granting of summary judgment to a plaintiff medical services provider in a No-Fault case. It also raises anew whether the recent Court of Appeals decision in Fair Price Medical Supply Corp. V. Travelers Indemnity Co., 10 NY3d 556 (2008) requires an insurer to proffer the defense that a provider is fraudulently incorporated within 30 days or whether that defense remains non waivable.

Plaintiff, Manhattan Medical Imaging (“Manhattan Medical “or “plaintiff”), a medical service provider, seeks an order granting it summary judgment based upon a claimed prima facie showing that the bills were properly submitted and that the defendant State Farm Automobile Ins. Co. (“State Farm” or “defendant”) failed to pay or deny the claim within 30 days. Plaintiff also

asserts that defendant’s denial was untimely.

To grant summary judgment, “it must clearly appear that no material and triable issue of fact is presented” Forrest v. Jewish Guild for the Blind, 3 NY3d 295 (2004); Zuckerman v, City of New York, 49 NY2d 557 (1980). A plaintiff establishes a prima facie entitlement to judgment as a matter of law “by submitting evidentiary proof that the prescribed statutory billing form has been mailed and received, and that payment of no -fault benefits was overdue.” Mary Immaculate Hosp. v. Allstate Ins.,, 5 AD3d 742, 743 (2d Dept. 2004); Second Medical v. Auto One Ins., 20 Misc 3d 291, 293 (Civil Ct., Kings Co. 2008).

State Farm asserts that plaintiff has failed to establish a prima facie case since the affidavit of plaintiff’s billing manager is “boilerplate” and not based upon her personal knowledge and therefore does not come in under the business records exception to the hearsay rule. The affidavit of plaintiff’s billing manager, Bella Kirzhner, clearly comes within the business records exception, as contained in CPLR 4518(a), as it exhaustively details the record keeping procedures of the business that created the records and clearly details the dates of the services, the amounts due, and her personal knowledge of the billing practices. See, Second Medical v. Auto One supra at 294-95. It details that the bills were made and kept in the ordinary course of business at the time the services were rendered and sets forth the precise mailing procedure which were followed. In fact, Kirzhner “personally packaged, sealed, applied postage to and mailed the bill.” As such, plaintiff has made a prima facie showing of entitlement.

The burden then shifts to the defendant in a no fault case to show a triable issue of fact. Alvarez v Prospect [*2]Hosp., 68 NY2d 320, 324 (1986). To defeat an award of summary judgment to plaintiff, defendant must provide proof, in evidentiary form, that it either paid or denied the claim within 30 days of receipt or that it asserts a non- precludable defense. Carle Place Chiropractic v. NY Central Mutual Fire Ins. Co., 2008 NY Slip Op 51065U at 7, 19 Misc 3d 1139A (Dist. Ct. Nass. Co. 2008). See Central General Hospital v. Chubb Insurance Co, 90 NY2d 195 (1997); Presbyterian Hosp. City of NY v. Maryland Casualty Co., 90 NY2d 274 (1997).

Defendant contends that plaintiff’s motion should be denied because the evidence strongly suggests that 1) plaintiff’s assignor was engaged in a “staged accident” caused in furtherance of an insurance fraud scheme and therefore there is no coverage; and 2) plaintiff may be fraudulently incorporated since it’s facility may “possibly” be owned by a non licensed physician thereby violating the Business Corporation Law, the No Fault Regulations. Defendant asserts that these are non-precludable defenses, regardless of when it issued its denials. In fact, the denial of claim forms( NF-10′) dated December 12th and 26th 2001 assert as the basis of denial that the loss was not caused by a covered accident but by intentional collusive acts and also because there were violations of the fraud provision.

STAGED ACCIDENT DEFENSE

In Fair Price Medical v. Travelers Ins., 10 NY3d 556 (2008), the Court of Appeals clarified when an insurance company would not be precluded from offering a defense to its refusal to pay no – fault benefits even though it denied the claims beyond the 30 day period. There, Travelers issued its denial nearly two years after receiving the claim, based upon the assignor’s statement that he had never received medical supplies from the plaintiff. The Civil Court denied plaintiff’s motion for summary judgment, finding that defendant was not precluded by the 30 day rule since it had asserted fraud as a defense. The Appellate Division affirmed the Appellate Term’s reversal of the lower court’s order denying plaintiff summary judgment on the grounds that :

in this case, unlike a staged accident case, there was an actual automobile accident, which

caused Nivelo to sustain actual injuries, for which he was treated by actual health care providers, who issued actual prescriptions for medical supplies to treat his injuries. Nivelo’s undisputably real accident had resulting injuries triggered with the coverage provided for in his insurance policy with the defendant” Fair Price Med. Supply Corp. V. Travelers Indem. Co. 42 AD3d 277, 284 (2d Dept. 2007) affg 9 Misc3d 76 (App. Term 2d and 11th Jud. Dist 2005).

In sum, the Appellate Division concluded that while Travelers could contest the assignor’s claim as fraudulent, it must do so within the tight deadlines imposed by the no -fault system. 42 AD3d at 286.

The Court of Appeals affirmed . It first cited to its recent review of the legal framework behind the No – Fault Law in Hospital for Joint Diseases v. Travelers Prop. Cas. Ins., 9 NY3d 312, 317 (2007); namely that the no fault insurance system was designed to ensure “prompt compensation for losses incurred by accident victims without regard to fault or negligence,” to reduce the burden on the courts, and to provide substantial premium savings to New York motorists. ” In furtherance of these goals, the Superintendent of Insurance promulgated regulations implementing the No Fault Law ( Ins. Law art. 51) including “circumscribed time frames for claim procedures” 9 NY3d at 317. The accident victim must submit a notice of claim to the insurer no later than 30 days after the accident (11 NYCRR 651.1, 65-2.4(b) and the insurance company must pay or deny the claim within 30 days after receipt of the proof of the claim (see Ins. Law §5106 (a), 11 NYCRR 65-3.8 ©). Substantial consequences flow from an insurer’s failure to company with this 30 day requirement including preclusion from asserting a defense against payment of a claim. Fair Price , 10 NY3d at 563 citing Hospital for Joint Diseases, 9 NY3d at 317-318. See, Presbyterian Hosp., supra, 90 NY2d at 278 (1997);Mt. Sinai Hosp. V. Chubb Group of Ins. Co., 43 AD3d 889-90 (2d Dept. 2007).

In Hospital for Joint Diseases, supra, the Court, citing to its prior decision in Central General Hospital, supra, cautioned that there was only one “narrow” exception to the preclusion rule for those situations where an insurance company raises the defense of lack of coverage. 9 NY3d at 318 . The Court explained that in such cases [*3]“an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. Fair Price, 10 NY3d at at 563 citing Joint Diseases, 9 NY3d at 318. See, e.g. Tahir v. Progressive Casualty Ins. Co., 12 Misc 3d 657, 662 (Civil Ct., NY Co., 2006) (“staged accident fraud” actually posed an issue of non coverage as opposed to fraud because under no -fault concepts, insurance coverage is limited to an “accident” ).

Thus, the “key issue” in every case is whether the ” facts fit within the narrow no-coverage exception to the preclusion rule” 10 NY3d at 564. A court, in determining whether a specific defense is precluded under the 30 day rule or falls within the exception entails a judgment as to whether the defense is more like a “normal exception ” from coverage such as a policy exclusion or a lack of coverage in the first instance, i.e. a defense “implicating a coverage matter”. 10 NY3d at 565.

It is well settled, as noted by the Appellate Division in Fair Price, that the defense of a staged automobile accident survives preclusion and, if substantiated would constitute a “complete defense to the action. 42 A.D. at 354. See, Mtr of Liberty Mutual Insurance Co. v Goddard, 29 AD3d 698, 699 (2d Dept. 2006); Melbourne Medical P.C. v Utica Mutual Ins. Co., 4 Misc 3d 92, 94 ( App. Term 2d Dept. 2004). A court must first ascertain , however, whether a defendant has adduced proof in admissible form sufficient to create a triable issue of fact. Melbourne Medical, supra. Plaintiff herein alleges that the defendant failed to rebut its prima facie case since the allegations of a non covered accident or a “staged” event are not supported by evidence in admissible form and that defendant failed to present a “founded belief” that the injuries did not arise out of the accident .

The general standard the insurer must assert for a lack of coverage or fraud defense is one “premised on the fact or founded belief that the alleged injury does not arise out of an insured

incident” but was a deliberate event staged in furtherance of a scheme to defraud the insurer.” Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d at 199., See also, Metro Medical Diagnostics, P.C. v Eagle Ins. Co., 293 AD2d 751 (2d Dept 2002). Thus, the insurer has the burden to come forward with proof in admissible form to establish “the fact” or “foundation for its belief” that the alleged incident was a staged event to defraud the insurer. Mt. Sinai Hospital v Triboro Coach Inc., 263 AD2d 11(2d Dept 1999).

While opposition papers often stumble upon the failure to present evidentiary material in admissible form, an insurer may avoid this pitfall by submitting an opposition affidavit which “sets 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.” Complete Orthopedic Supplies, Inc. V. State Farm Insurance Co., 16 Misc 3d 996 (Civil Ct., Queens Co. 2007) citing Phillips v. Kantor & Co., 31 NY2d 307, 311-12 (1972). It is clear that “unsubstantiated hypotheses and suppositions,” such as an unsworn report of an investigator alleging that an “uncooperative” insured (but not assignor) had been involved in prior accidents alleged to be suspicious , are insufficient to raise a triable issue of the assignor’s fraud. A.B Medical Services PLLC v. Eagle Insurance Co., 3 Misc 3d 8, 10 (App. Term, 2 Dept. 2003). However, there is a dearth of case law as to what what precisely must be included within an investigator’s affidavit so as to defeat a plaintiff’s motion for summary judgment. See, Complete Orthopedic Supplies. Supra; PDG Psychological, P.C. v. State Farm Ins., Co, 12 Misc 3d 1183A, 824 N.Y.S. 2d 766 (Civil Ct., Kings Co. 2006); Inwood Hill Medical P.C. Bronx Neurodiagnostics v. Allstate Ins. Co., 3 Misc 3d 1110A, 787 N.Y.S.2d 678 (Civil Court, NY, Co. County 2004).

In a number of cases, defendant insurers have been permitted to proceed to trial based upon affidavits of investigators employed by the insurance company’s Special Investigations Unit (“SIU”) who allege personal knowledge of the alleged fraud. See, American Honda Finance Corp. V Progressive Casualty Ins. Co., 290 AD2d 850 (3d Dept. 2002) (“at this preliminary stage of the proceeding, a question of fact is lurking as to whether Perez committed fraud or made other material representations such that policy exclusion would preclude recovery); Northern Medical v. State Farm Mutual Automobile I ns. Co., 2008 NY Slip Op. 50753U, 19 Misc 3d 1117A (Civil Ct., Queens Co., 2008). [*4]

In PDG Psychological v. State Farm Ins. Co., 12 Misc 3d 1183 A, 824 N.Y.S. 2d 766 (Civil Ct. Kings Co. 2006), the defendant, in support of its defense of an intentional collision, proffered the testimony of an SIU investigator who stated that the claims had been denied because the accident occurred two months after the assignor’s policy had been instituted and because there were several discrepancies between the transcripts of the examinations under oath (“EUOs”) of the passengers and the assignor, including where they were going, when they all met, the time of the accident, where the car was at the time of the impact and the names of the passengers. These discrepancies, coupled

with the other driver’s statement, raised factual issues.

The evidence presented by defendant is somewhat similar to that presented in PDG Psychological, supra. Defendant presented statements of the assignors which, although unsworn and unsigned, were certified by the transcriber, and the signed and sworn to affidavit of Lee Ann Fink, who is employed in the Special Investigations Unit (“SIU”). Fink memorialized the somewhat minor inconsistencies in the various assignors’ statements, including the color and make of the car they were in that was supposedly involved in the accident, different reasons as to why they were all together with the same driver, who was seated in the front of the car at the time of the accident and whether the car was stopped at the point of the accident.

While this court does not believe that defendant presents a strong case of a staged accident, it presents enough inconsistencies to rise above the base level of “unsubstantiated hypothesis and suppositions” so as to permit this defense to go to trial. The court is not troubled that the statements of the assignors were not verified or signed since their transcribed statements were certified by the transcriber. See R. M. Newell Co. V. Rice, 236 AD2d 843, 844 ( 4th Dept. 1997), ( deposition transcripts certified as accurate by transcriber admissible on summary judgment motion even though unsigned). Nor is the court concerned that Fink was not present during the taking of the statements See, e.g, PDG Psychological, supra, Northern Medical, P.C., supra ((trial held despite late denial based upon SIU investigators’s finding that there was a staged accident based upon his review of the file for the first time a few weeks before the trial and his running a prior claim history on the assignor).

In sum, this court denies plaintiff’s motion for summary judgment with respect to defendant’s denial based upon a staged accident.

PROVIDER FRAUD

Defendant similarly is not precluded from raising its defense that plaintiff may be fraudulently incorporated since it is ” possibly” owned by both a physician and non physician, the latter of which is prohibited by both the Business Incorporation Law, the No – fault regulations and the seminal case of State Farm Mutual Auto Ins. V. Mallela, 4 NY3d 313 (2005).^[FN1]

`In Mallela, the Court of Appeals held that insurers may withhold payment for medical services provided by fraudulently licensed medical service corporations to which patients, who are covered by no-fault insurance, have assigned their claims. Insurance Law §5102 requires no-fault carriers to reimburse patients or their medical provider assignees for “basic economic loss”. In order to combat incidences of fraud, the Superintendent of Insurance promulgated 11 NYCRR 65-3.16(a)(12) , which excludes payments made to fraudulently licensed providers from the meaning of basic economic loss as contained in Section 5102. 4 NY3d at 320. After finding this regulation valid, the Court held that carriers “may look beyond the face of licensing documents to identify wilful and material failure to abide by state and local law.” Id at 321-22. See Cambridge Medical P.C. v. Nationwide Property and Casualty Ins. Co., 19 Misc 3d 1110A, 859 N.Y.S. 2d 901 ( Civil Ct., Richmond Co. 2008).

In Eastern Medical P.C. v. Allstate Ins. Co., 19 Misc 3d 775 (Dist. Ct. Nassau Co. 2008), the court rejected [*5]Allstate’s contention that Fair Price had reshaped the analysis of fraud based defenses so as to make a Mallela/ fraudulent incorporation defense untimely if not made within the 30 day denial period. The court first noted that there was no support for the premise behind defendant’s argument: that the Court of Appeals was ignorant of its own precedent when it decided Mallela and that the Fair Price Court chose to somehow abrogate Mallela in its decision. The court then noted that while the Court of Appeals precedent cited in Fair Price ^[FN2] dealt “with contract interpretation” or “the interplay between policies of insurance and applicable laws and regulations,” the Malella court dealt solely with statutory interpretation, 19 Misc 3d at 779. The Mallela defense was thus not predicated upon a policy exclusion or the extent of coverage provided by a contract of insurance but rather upon a statutory defense arising from a claimant’s failure to comply with applicable sections of the Business Corporation, Limited Liability and Education Laws. Id at 780.

The court then noted that even though there was no contention in Mallela that medical payments were not otherwise required by the policy, the Mallela court did not qualify the insurer’s right to deny payment to the fraudulently incorporated provider by requiring a timely denial. 19 Misc 3d at 780. Rather, the challenged regulation in Mallela did not create a new category of exclusion but rather was “a condition precedent with which all claimants must comply in order to receive benefits.” Id at 780 citing 4 NY3d at 321 n.3. Therefore, Fair Price did not alter, much less address prior precedent that a fraudulent incorporation defense “is a non- waivable defense .and is therefore not subject to the 30-day preclusion rule” ( Midwood Acupuncture P.C. v. State Farm Mutual Auto, 14 Misc 3d 131A, 2007 N.Y Slip Op 50052 U ( App. Ter, 2d Dept. 2007). Id at 781. Nor is such a defense waived by the failure to assert it in a denial of claim form. Multiquest v. Allstate Ins. Co., 17 Misc 3d 37, 39 ( App. Term, 2d Dept. 2007).

Defendant is therefore not precluded from raising its defense of fraudulent incorporation provided that it presents a “founded belief”that the corporation is ineligible to obtain no-fault benefits by reason of a fraudulent corporate filing. Central General Hospital., supra,; Inwood Hill Medical AB Medical Services v. Prudential Property & Casualty Insurance Company, 11 Misc 3d 137 (A) (Appellate Term Second Dept. 2006). Defendant herein alleges that Dr. Brownstein is not the sole owner of Manhattan Medical but rather shares his ownership responsibilities with Sam Stern, a non physician. The attorney’s affirmation cites a number of certificates of incorporation which allegedly show a labyrinth of interconnections between plaintiff Manhattan Medical and Universal Diagnostic Imaging, the latter of which is purportedly owned by Stern. Defendant also alleges that Brownstein owns at least five other imaging companies and is allegedly facing civil fraud lawsuits stemming from his ownership of other entities. Also attached is an EBT of the assistant office manager of plaintiff who indicates that Stern is one of the other owners of plaintiff and the testimony of plaintiff’s business manager in another where she testified that Stern is a general partner of plaintiff.

The court finds that defendant has articulated a”founded belief” that plaintiff is fraudulently incorporated as it is actually controlled by a non-licensed professional. Defendant has therefore made

allegations sufficient to raise an issue of fact as to whether plaintiff is fraudulently incorporated. See,

Tahir v. Progressive Casualty Ins. Co., 12 Misc 3d 657, 664 (Civil Ct., NY Co. 2006)(“fraudulent intent is rarely established by direct proof, but we nevertheless conclude that there are sufficient badges of fraud’ in this case from which such intention can be inferred “citing Spires v. Mihou, 13 AD3d 1056,57 (4th Dept. 2007)).

The court directs plaintiff to respond to defendant’s discovery request within 60 days of this decision.

The foregoing constitutes the Decision and Order of the Court.

DATED: September 4, 2008

Hon. Katherine A. Levine [*6]

Judge, Civil Court

ASN byon

Footnotes

Footnote 1:This defense is typically referred to as the “Malella defense” or “fraudulent incorporation” defense.

Footnote 2:he precedents followed by Fair Price were Presbyterian Hospital ,supra and Central General Hosp., supra.

[*1]

Civil Court of the City of New York, Richmond County, June 26, 2008

APPEARANCES OF COUNSEL

Law Office of Peter C. Merani, New York City (William Larkin of counsel), for defendant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (Joaquin J. Lopez of counsel), for plaintiff.

{**20 Misc 3d at 845} OPINION OF THE COURT

Katherine A. Levine, J.

Plaintiff Prime Psychological Services, P.C. and defendant American Transit Insurance Company stipulated at oral argument that the sole issue before the court was whether the defendant’s failure to issue the denial of claim form (N-F 10 form) “in duplicate” was a fatal error, thus precluding defendant from asserting a defense which would result in the granting of summary judgment to plaintiff. There is no dispute that plaintiff established a prima facie case and that defendant timely mailed its denial of claim form, setting forth the defense of lack of medical necessity, to plaintiff.^[FN1] Defendant does not assert in its opposition that the claim forms were mailed in duplicate but simply states that the omission, if any, was neither “basic” nor “numerous” (citing Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2d Dept 2005]).

This issue presents a case of first impression since it appears that no court has directly ruled upon whether to grant summary judgment to a plaintiff when the sole deficiency in the denial of claim form was that it was not issued in duplicate. As such, a statutory analysis of the Insurance Law and the pertinent regulations promulgated thereto is in order.

Article 51 of the Insurance Law (Comprehensive Motor Vehicle Insurance Reparations Act) (added by L 1984, chs 367, 805, as amended), commonly known as New York’s No-Fault Insurance Law (No-Fault Law), provides a plan for compensation of victims of motor vehicle accidents for economic loss without regard to fault or negligence. (Oberly v Bangs Ambulance, 96 NY2d 295 [2001].) The general framework for payment of first-party benefits is contained in Insurance Law § 5106 (a), which 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{**20 Misc 3d at 846} within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month.”

The Superintendent of the New York State Insurance Department promulgated Regulation 68 and codified it under 11 NYCRR part 65. The pertinent regulation in this case, 11 NYCRR 65-3.8, entitled “Payment or denial of claim (30 day rule),” provides in subdivision (c) (1) that

“[i]f the insurer denies a claim in whole or in part involving elements of basic economic loss . . . the insurer shall notify the applicant . . . on the prescribed denial of claim form, in duplicate, and shall furnish, if requested by the applicant, one copy of all prescribed claims form submitted by or on behalf of the applicant thereto” (emphasis supplied).

“The governing rule of statutory construction is that courts should look first to the statutory language in question, which is to be ‘generally given its natural and most obvious meaning.’ ” (Matter of Greenberg [Ryder Truck Rental], 70 NY2d 573, 577 [1987], quoting McKinney’s Cons Laws of NY, Book 1, Statutes § 94; Association of Contr. Plumbers of City of N.Y. v Contracting Plumbers Assn. of Brooklyn & Queens, Inc., 302 NY 495, 500 [1951].) “[I]f there is nothing to indicate a contrary intent, terms of general import will ordinarily be given their full significance without limitation.” (70 NY2d at 577, quoting Statutes § 114.)

The primary goal of the court in interpreting a statute is to determine and implement the legislature’s intent. (Matter of Tompkins County Support Collection Unit v Chamberlin, 99 NY2d 328, 335 [2003].) A court “may not reject a literal construction (of a statute) unless it is evident that a literal construction does not correctly reflect the legislative intent.” (A.J. Temple Marble & Tile v Union Carbide Marble Care, 87 NY2d 574, 580-581 [1996]; see Statutes § 73.) “[T]he legislative history of an enactment may also be relevant and ‘is not to be ignored, even if words be clear’ ” (Feher Rubbish Removal, Inc. v New York State Dept. of Labor, Bur. of Pub. Works, 28 AD3d 1, 5 [4th Dept 2005], quoting Riley v County of Broome, 95 NY2d 455, 463 [2000], quoting Statutes § 124, Comment, at 252). A construction which would result in absurdity is to be rejected (Statutes § 145; see McDonald v State of New York, 176 Misc 2d 130, 134 [Ct Cl 1998]). Furthermore, “[i]n construing a statute, the court should consider the mischief sought to be remedied{**20 Misc 3d at 847} and should favor the construction which will suppress the evil and advance the remedy.” (Matter of New York Life Ins. Co. v State Tax Commn., 80 AD2d 675, 677 [3d Dept 1981]; Marigliano v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d 766, 771-772 [Civ Ct, NY County 2007].)

Therefore, despite the primary importance of literal construction, “[t]he courts may in a proper case indulge in a departure from literal construction and . . . sustain the legislative intention although it is contrary to the literal letter of the statute” (Feher Rubbish Removal, Inc. at 5, quoting Statutes § 111). “The letter of a statute is not to be slavishly followed when it . . . leads to conclusions, inconsistent with the general purpose of the statute or to consequences irreconcilable with its spirit and reason.” (Matter of Statewide Roofing v Eastern Suffolk Bd. of Coop. Educ. Servs., First Supervisory Dist. of Suffolk County, 173 Misc 2d 514, 517 [Sup Ct, Suffolk County 1997].) Thus, in [*2]construing a law, a court “will sometimes be guided more by its purpose than its phraseology, whereby a statute is not to be read with a literalness that destroys the meaning, intention, purpose or beneficial end for which the statute has been designed.” (Id.; see generally Statutes § 96.) In fact, the meaning of certain words may, in a proper case, be restricted or limited so as to avoid “absurd, unjust or other objectionable results.” (Matter of Statewide Roofing at 518; see Statutes § 113.)

It is imperative in ruling upon no-fault insurance matters not to lose sight of the fundamental goal of the regulatory scheme, which is “designed to promote prompt payment of legitimate claims” (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]) and prompt resolution of injury claims, to limit cost to consumers and to alleviate unnecessary burdens on the courts. (Pommells v Perez, 4 NY3d 566 [2005]; see also Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 285 [1997] [“The tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices”]; All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907, 910 [Civ Ct, Queens County 2004] [the purpose of the no-fault statute is to encourage prompt payment of claims, to discourage investigation by insurers and to penalize delays].)

As the Court of Appeals noted in Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854 [2003]), the most significant{**20 Misc 3d at 848} changes made by the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65),^[FN2] was a reduction in the time frames applicable to the filing of notices and proofs of claim—a consequence of the Superintendent’s determination that much of the abuse was associated with the lengthy time frames within which claims could be presented to insurers. The Superintendent also concluded that the shorter time frames would better effectuate the legislative purpose of providing prompt compensation “as the loss is incurred, while reducing rampant abuse.” (Id. at 867; Inwood Hill Med. at *4.) Accordingly, it is the court’s duty to interpret and apply the no-fault regulations in a consistent manner leading to the prompt payment of valid, documented claims. (See Marigliano v New York Cent. Mut. Fire Ins. Co. at 774.)

With these principles in mind, this court finds that the defendant’s failure to mail the N-F 10 form in duplicate is not fatal and does not render its denial a nullity. It should first be noted that contrary to plaintiff’s contention, no court has declared that a denial of claim form is fatally defective so as to warrant its preclusion solely on the grounds that it was not issued in duplicate. In New York Univ. Hosp. Rusk Inst. v Hartford Acc. & Indem. Co. (32 AD3d 458 [2d Dept 2006]) the plaintiff attacked the validity of the defendant’s denial, both because the defendant issued its partial denial by letter rather than by utilizing the prescribed N-F 10 form, and because the denial was not issued in duplicate. While finding that the denial letter adequately conveyed the information mandated by the prescribed N-F 10 form, the court still found the denial to be defective because “defendants failed to establish that the letter had been [*3]issued in duplicate and approved by the Department of Insurance.” (Id. at 460.) The Rusk court did not discuss plaintiff’s failure to serve the denial in duplicate. Furthermore, Rusk has only been cited for the proposition that the N-F 10 denial form was not sufficiently specific or particular to apprise the claimant of the grounds upon which the disclaimer is predicated and, hence, could not constitute a valid denial. (See Westchester Med. Ctr. v Allstate Ins. Co., 45 AD3d 579 [2d Dept 2007]; Elmont Open MRI & Diagnostic Radiology, P.C. v GEICO{**20 Misc 3d at 849} Ins. Co., 18 Misc 3d 1117[A], 2008 NY Slip Op 50113[U] [Nassau Dist Ct 2008] [N-F 10 denial form issued by respondent, neither on the prescribed form as it existed in 2005, nor on the form allegedly approved by the Insurance Department in 2002, was not valid since neither old nor new regulations permit an insurer to adjust or amend its forms on its own accord]; Olympic Chiropractic, P.C. v American Tr. Ins. Co., 14 Misc 3d 129[A], 2007 NY Slip Op 50011[U] [App Term, 2d Dept 2007].)

In fact, the source for the Rusk court’s pronouncement concerning the sufficiency of the N-F 10 denial form was Nyack Hosp. v State Farm Mut. Auto. Ins. Co. (11 AD3d 664, 665 [2d Dept 2004]), where the Second Department declared that “[a] proper denial of claim form must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]) and must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated.’ ” Furthermore, “[a] timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d Dept 2004]).

In Nyack (supra), the court found the denial of claim form to be fatally defective in that it failed to include a number of the basic items called for in the prescribed form, such as the name of the health services provider, the date and amount of the claims being denied, and the date it received those claims. In Amaze (supra), the timely denial was found to be factually insufficient in that defendant failed to provide any specifics with regard to its conclusory defense that certain of the medical equipment was duplicative. Both of these cases found that preclusion was warranted because the content of the N-F 10 forms was not sufficiently specific.

There appears to be one case where a court addressed the repercussions that should attach to a party’s failure to serve a form in duplicate. In Nagy v Rothstein (53 Misc 2d 367 [Sup Ct, NY County 1966]) the defendant moved to dismiss the complaint because a notice of claim was never served and the complaint, which was not served in duplicate as required of a notice of claim, could not substitute for a notice of claim. The complaint, however, was served within the 90-day time period governing the service of a notice of claim. The court granted the plaintiff’s motion to treat the complaint, as originally served, as a notice of claim because the original complaint met all the statutory{**20 Misc 3d at 850} requirements of a notice of claim except that it did not set forth the plaintiff’s post office address and was not served in duplicate. The court first noted that it looks to the “substance of the paper served and not to its label,” and found that in accordance with the purpose behind the “notice of claim,” defendant “had due and timely notice of the incident and ample time to conduct its investigation.” (Id. at 369 [emphasis supplied].) As to the defendant’s assertion that no court has ever allowed a complaint to serve as both a notice of claim and a complaint, i.e., one paper served in place of two, the court stated that it “does not count the papers. It looks rather to their merit and their substance. No litigant who states a cause of action will be turned [*4]away by mistakes in labeling or in his counting of the papers required to be served.”^[FN3] (Id.)

The same reasoning applies to the instant matter. Plaintiff does not claim that the information contained in the N-F 10 was “insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law.” Nor does plaintiff contend that it was deprived of prompt specific notice as to the reasons for the insurer’s denial or that it was prejudiced because it only received one copy of the N-F 10. In fact, since the regulations set forth that both the original N-F 10 form and its duplicate shall be served on the medical provider, the service of the duplicate N-F 10 is basically redundant. As such, plaintiff’s contention that it must be awarded summary judgment because the denial was not issued in duplicate runs counter to the very legislative intent behind the No-Fault Law—to process claims within a short time frame and expeditiously so as to avoid prejudice and red tape dilatory practices.

As such, both plaintiff’s and defendant’s motions for summary judgment are denied and this case is to proceed to trial.

Footnotes

Footnote 1: Defendant commenced this motion requesting that the action be dismissed because plaintiff failed to rebut defendant’s denial of its claim on the grounds of lack of medical necessity. Plaintiff, in turn, brought a cross motion contending that it was entitled to summary judgment because defendant failed to establish that it had mailed the denial forms in duplicate, hence rendering its denial a nullity.

Footnote 2: For a detailed analysis of the history behind the amended Regulation 68, see Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854, 860-864 [2003]) and Inwood Hill Med. v Allstate Ins. Co. (3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U] [Civ Ct, NY County 2004]).

Footnote 3: While discussing the number of papers, the court never specifically addressed the fact that the complaint quo notice of claim was not served in duplicate. However, by granting plaintiff’s motion for leave to serve an amended notice of claim and an amended complaint, the court obviously did not find the failure to serve the papers in duplicate to be fatal.

Civil Court of the City of New York, Richmond County

11704/07

Counsel for Defendant:

Gregory J. Guido, Esq.

SHORT & BILLY, P.C.

217 Broadway, Suite 511

New York, NY 10007

212-732-3320

Counsel for Plaintiff: Joaquin J. Lopez, Esq.

Baker, Sanders, Barshay, Grossman,

Fass, Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Katherine A. Levine, J.

Plaintiff Jin Huo Lac (“plaintiff” or “Lac”), a medical service provider, commenced this

action, pursuant to the No-Fault Law, to recover payments from defendant American Transit Insurance Company (“defendant”) for services plaintiff rendered to its assignor Maria Acosta (“assignor” or “Acosta”) as a result of the injuries that she sustained in an automobile accident. .

Defendant moves to dismiss the action on the ground that the assignor is entitled to Workers Compensation because she was attached to a taxi corp/ car service base as an employee and that the Workers Compensation Board (“Board”) has primary jurisdiction over issues of coverage. Defendant had previously denied plaintiff’s claim based upon the aforementioned reason (See Explanation of Benefits and NF 10 form attached as Exhibit 6 to defendant’s motion.) Defendant asserts that this court therefore lacks jurisdiction to hear the complaint pursuant to 11 NYCRR § 65-3.16(a)(9), Section 142 (7) of the Workers Compensation Law and precedent. Defendant also seeks to amend its answer to include the affirmative defense that this court lacks subject matter jurisdiction.

Plaintiff asserts that “a no-fault insurer asserting a defense that Workers Compensation is primary would need to establish, as a threshold matter, that the claimant was employed at the time of the underlying motor vehicle accident.” Plaintiff asserts that defendant failed to submit any admissible evidence that the assignor was employed at the time of the accident. To this end, plaintiff contends that the police accident report, which states that the TLC license plate on the car Acosta was driving is registered, is inadmissable as rank hearsay since there is no proof that the officer saw the accident. Even assuming, arguendo, that the report is admissible, plaintiff contends that defendant still has failed to establish that the assignor was “working” at the time of the accident; i.e. that the accident occurred during the course of employment.

Plaintiff and defendant stipulated at oral argument that the main issue before the court [*2]was whether the Workers Compensation Board has primary jurisdiction over the factual question of whether plaintiff’s assignor was acting within the scope of her employment at the time of the accident. An ancillary but determinative issue is whether the police accident report, which sheds light upon the issue of the assignor’s employment, is admissible.

In support of its position, defendant asserts that the assignor was the driver of a livery vehicle, license number T455140C , registered in New York State and insured by American Transit Insurance Company. In its reply papers defendant avers that the aforementioned license plate was authorized by the Taxi & Limousine Commission “which reasonably infers that the vehicle is a taxi or for-hire”. Defendant further avers that the police accident report and defendant’s review reveals that the vehicle operated by Acosta was registered and insured by Katt Corporation which defendant summarily asserts is a taxi/limousine service.

The police accident report (exhibit 7) does not have the two boxes – “not investigated at scene” and “accident reconstructed” on the first line checked off. Therefore, the police officer who filled out this form presumably observed the results of the accident. The accident report also sets forth that the car is registered to the Katt Corporation and lists the insurance policy number. The accident report checks off that a duplicate copy must be sent to the NYC Taxi & Limousine Commission.

The only document that relates to plaintiff’s employment, or lack thereof, is the NF-3 – “Verification of Treatment by Attending Physician or other provider of Health Service” (Exhibit 2 to defendant’s moving papers) which was presumably filled out by plaintiff Lac. Question number 4 – Occupation – is filled out as not applicable and question number 10 – “is condition due to injury arising out of patient’s employment?” is answered as “No” . The NF-3 is not signed but notes that the signature is on file.

Pursuant to Insurance Law §5102 (b), “first party benefits” means payments to reimburse a person for basic economic loss due to personal injury arising out of use or operation of a motor vehicle, less (2) “Amounts recoverable on account of such injury under…Workers’ Compensation benefits, or disability benefits under article nine of the Workers’ Compensation Law. 11 NYCRR 65-3.16(a)(9) provides that pursuant to Insurance Law, §5102 (b), “when the applicant is entitled to Workers’ Compensation benefits due to the same accident, the Workers’ Compensation carrier shall be the sole source of reimbursement for medical expenses.”

Similarly, Workers’ Compensation Law, §142 (7) provides that “(w)here there has been a motor vehicle accident which caused personal injury and there is a dispute as to whether the injury occurred in the course of employment, the Workers’ Compensation Board shall…hold an expedited hearing on…whether the accident occurred within the course of employment”

The courts have consistently ruled that the Legislature has vested “primary jurisdiction” in the Workers’ Compensation Board over the issue of the availability of coverage under the Workers’ Compensation Law, and that the plaintiff has “no choice but to litigate this issue before the Board”. Liss v. Trans Auto Systems, Inc., 68 NY2d 15, 21 (1986); Alvarez v. Empire Mut’l [*3]Ins. Co., 171 AD2d 262, 268 (1st Dept. 1991); Diane Becker v. Clarkstown Cent. Sch. Dist., 157 AD2d 641 (2d Dept. 1990); Lenox Hill Radiology v. American Transit Ins. Co., 2008 NY Slip Op. 50330U, 18 Misc 3d 1136A, 239 N.Y.L.J. 46 (Civil Ct., NY Co. 2008). See, Mattaldi v. Beth Israel Medical Center, 297 AD2d 234 (1st Dept. 2002)(threshold issue of whether the plaintiff was in the course of her employment must first be determined by the Board.

Where a case is likely to fall within the exclusive jurisdiction of the Board, the plaintiff bears the burden of pleading and proving the absence of compensation. The plaintiff must demonstrate either that 1) no compensation policy covering the plaintiff was in existence, or 2) that plaintiff was not an employee of the defendant, or 3) that the injury did not arise out of and in the course of plaintiff’s employment. O’Rourke v Long, 41 NY2d 219, 225 (1976); Weber v. State of New York, 104 Misc 2d 947 (Court of Claims, 1980).

“Where the availability of Workmen’s Compensation hinges upon the resolution of questions of fact or upon mixed questions of fact and law, the plaintiff may not choose the courts as the forum for the resolution of such questions.” O’Rourke v Long , 41 NY2d 219, 228 (1976). On the other hand, the presence or absence of insurance coverage for a particular employee is a question of law to which the court retains jurisdiction. Id. at 225. Likewise, where the determination of the employment status of an injured party involves a pure matter of law, such as statutory construction, the court retains jurisdiction. Id. at 224. See, Jean-Paul Fouchecouort v. Metropolitan Opera Assn, 537 F. Supp. 2d 629 (S.D.NY)(court determined that plaintiff, an opera singer, fell within the statutory definition of an employee and that plaintiff was therefore barred by the exclusive remedies provisions of the Workers Compensation Law from bringing suit before court).

Pared to its minimum, the procedural implications of O’Rourke are that “where the trial court can resolve the limited issues of employment status or the existence of a compensation policy in a reasonable summary fashion, it should do so. Conversely, where determination of an issue, such as whether the accident arose out of plaintiff’s employment, is likely to require extensive fact finding similar to a plenary trial, the court should, in the exercise of sound discretion, defer to the Board.” Weber v. State of New York, 104 Misc 2d 947 (Court of Claims, 1980). Then, the Board must be given an opportunity to find plaintiff’s injuries the result of a compensable accident; this claim being a jurisdictional predicate to a civil action. Liss, supra at 21; O’Rourke, supra at 226.

Plaintiff contends that before a defendant insurance company can argue that the Board has primary jurisdiction, it must establish, as a threshold matter, that the claimant was employed at the time of the underlying motor vehicle accident, citing Global Liberty Ins. Co. v. Abdelhaq, 36 AD3d 909 ( 2d Dept. 2007). It also asserts that it is impossible for defendant to establish employment since the one document that might shed light on the assignor’s employment – the police accident report – is rank hearsay.

The Second Department’s decision in Global Liberty is quite cryptic but does not appear [*4]in any way to diminish the force of the aforementioned precedent.^[FN1] At issue in Global was whether the court should permanently stay an arbitration proceeding over a claim for No-Fault benefits on the grounds that the insured was entitled to Workers Compensation benefits. The petitioner insurance company claimed that the insured’s “base affiliation” with a cab service obligated the latter to secure Workers Compensation for the insured. The court refused to issue a stay on the grounds that the petitioner insurance company “failed to submit evidence that Kenmore was the insured’s employer at the time of the accident.” In fact, the petitioner alleged that the insured violated his insurance contract by failing to notify petitioner that “he left his base affiliation with Kenmore”.

The most that can be garnered from Global is that when the only proof submitted is that the insured had some how ceased his relationship with the cab company, hence negating any implication that there was an employment relationship, the court need not relinquish jurisdiction to the Board. In the instant matter, on the other hand, there is conflicting evidence as to whether any employment relationship existed : the NF-3 seems to negate the existence of an employment relationship whereas the police accident report seems to confirm it. The issue thus presented is whether the police accident report constitutes admissible evidence and, if so, does it constitute sufficient evidence to raise a complicated factual question on employment so as to warrant the intercession of the Workers Compensation Board.

In Lenox Hill Radiology, supra , the court addressed the quantum of proof necessary for the court to decline jurisdiction in favor of the Workers Compensation Board. The defendant insurance company relied upon two documents in support of its position that the assignor was employed at the time of the accident. The first was an application for No-Fault benefits (N-F 2), filled out on behalf of the assignor and signed by the assignor. The question on this form inquiring whether the assignor was in the course of his employment at the time of the accident was answered yes. The second document was the MV -104 police accident report filled out by an officer which stated that the assignor ‘s vehicle was a taxi.

As to admissibility, the court found both documents to come within the business exception to hearsay. The police accident report could be considered “under the business record exception …to the extent it was based upon the personal observations of the police officer present at the scene and under a business duty to make it” Id. citing Westchester Medical Ctr v. State Farm Mut. Ins. Co., 44 AD3d 750, 753 ( 2d Dept. 2007). Since neither the box “not investigated at the scene” nor “accident reconstruction” were checked off, the court concluded that the officer’s notation that the assignor’s vehicle was a “taxi” was “necessarily based on his observation at the scene of the accident”. The same conclusion could also be drawn from the [*5]police report in the instant matter.^[FN2]

After citing the aforementioned precedent for the proposition that Worker’s Compensation is primary, the Lenox court stated that the “defendant must show only that there is potential merit’ to its claim that [the assignor] was employed at the time of the accident so as to trigger a determination by the Workers’ Compensation Board. Id. citing A.B. Medical Serv. PLLC v. American Transit Ins. Co., 8 Misc 3d 127A, 801 NYS2d 776 [App. Term 2d Dept. 2005). The court found that the NF-2 stating that the assignor was employed at the time of the accident, and the observation of the police officer that the vehicle was a taxi, was sufficient for defendant to meet its burden. The court also noted that the plaintiff had failed to tender any evidence about the assignor’s employment status.

Conversely, in A.B. Medical, supra , the court found that the insurance company had failed to establish the defense’s “potential merit” so as to warrant the Workers Compensation Board’s review of the facts. As against plaintiff’ s proof – the assignor’s sworn statement that he was not working when the accident occurred and the purported employer’ s sworn statement that the assignor was not working – the insurance company interposed only a claim adjuster’s statement that claimant was eligible for Workers Compensation, based upon an employer’s unsworn statement dated 18 months before the accident, and a police accident report that the court would not consider since it was offered for the first time in defendant’s reply papers. The court therefore concluded that the defendant’s claim that the assignor acted in the course of his employment at the time of the accident was “mere speculation” and failed to establish any issues of fact regarding Worker’s Compensation coverage that must be resolved by the Board.

In all cited cases but one ^[FN3] the courts have found primary jurisdiction to rest with the Board only where the movant has presented evidence about the employment relationship above and beyond a police accident report, i.e. the “right of control, method of payment, furnishing of material and nature of work, which are traditionally considered in determining whether an employment relationship existed”. Arvatz v. Empire Mutual Ins. Co, supra , 171 AD2d at 267. See, Juan Lapont v. Savvas Cab Corp., 244 AD2d 208 (1st Dept. 1997) (sufficient facts presented to demonstrate potential merit of Workers Compensation defense: plaintiff’s supervisor gave him work assignments and distributed his wages; supervisor also provided affidavit stating that he and plaintiff were both employees at defendant cab corporation and that defendant maintained a Workers Compensation insurance policy for its employees ); Hammer Associates, Inc v. Delmy Productions, Inc., 118 AD2d 441 (1st Dept. 1986) ( plaintiff entered into a written contract for a stipulated sum for a term certain and the time and place where he would work was determined by defendants leading to court’s conclusion that plaintiff was an employee “as a [*6]matter of law” ); Weber v. State, supra (claimant’s decedent employed by the State as a custodian, the policy of compensation insurance covering claimant was procured by state and was in full force and effect at time of accident, and claimant’ s demise arose out of and in course of employment); Lenox Hill Radiology, supra (police accident report and application for no-fault benefits (N-F 2)..

Based on the aforementioned precedent and the evidence presented, this court concludes that the defendant has failed to show that there is potential merit’ to its claim that the assignor was employed at the time of the accident so as to trigger a determination by the Workers’ Compensation Board. Its motion for summary judgment to dismiss the complaint is denied.

Defendant’s motion to amend its answer to include an affirmative defense based upon this court’s lack of subject matter jurisdiction is granted. Leave to amend pleadings should be freely given (CPLR §3025[b]), and, in the absence of surprise or prejudice, it is an abuse of discretion as a matter of law for a trial court to deny leave to amend an answer during a trial. McCaskey, Davies & Assocs. v. N.Y.C. Health & Hops. Corp., 59 NY2d 755, 757 (1983); Smith v. Pizza Hut of America, Inc., 289 AD2d 48 , 50 (1st Dept. 2001). Plaintiff does not even assert, in its cross motion for summary judgment, that it will be prejudiced.

While the court, as set forth above, has serious doubts about the viability of defendant’s argument that this court lacks subject matter jurisdiction, both parties will have an opportunity, at trial, to present their positions as to whether, as a matter of law, there is Workers Compensation insurance coverage for the assignor and whether the assignor falls within the statutory definition of an employee under the Workers Compensation Law. This court reserves a decision on whether plaintiff has proven its prima facie case until trial.

The foregoing constitutes the decision and order of the court.

Dated:June 12, 2008

Staten Island, NYHon. Katherine A. Levine

Judge, Civil Court

Appearances

Counsel for Defendant:

Gregory J. Guido, Esq.

SHORT & BILLY, P.C.

217 Broadway, Suite 511

New York, NY 10007

212-732-3320

Counsel for Plaintiff: [*7]

Joaquin J. Lopez, Esq.

Baker, Sanders, Barshay, Grossman,

Fass, Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Footnotes

Footnote 1:There are no cases which, to this court’s knowledge, have followed Global whichprobably accounts for plaintiff’s citation solely to Global.

Footnote 2: The only difference is that here, there is no notation that the vehicle was a taxi. The officer identified the make of the vehicle as a Lincoln.

Footnote 3: Attached to defendant’s papers is the case of Precision Diagnostic Imaging v. American Transit Ins. Co., 054411 CV 2003 (Civil Ct., NY Co. 5/16/05).

Civil Court of the City of New York, Richmond County

11810/07

Counsel for Plaintiff:

Law Offices of Emilia I. Rutigliano

2503 65th Street

Brooklyn, NY 11204

718-382-1266

Counsel for Defendant:

Jean Kang, Esq.

Jaffe & Koumourdas, LLP

40 Wall Street, 12th Floor

New York, NY 10005

212-809-7800

Katherine A. Levine, J.

Plaintiff Park Slope Medical and Surgical Supply, Inc.(“plaintiff” or “Park Slope”) brought this action to recover the sum of $817.25 with statutory interest, attorney fees, and costs for medical equipment it provided to its assignor Alicia Marsh (“Marsh”). Park Slope moves for summary judgment on the grounds that it has demonstrated a prima facie case of entitlement to payment for the medical supplies it furnished to Marsh. Defendant cross moves for summary judgment and to dismiss this action on the grounds that Park Slope failed to comply with the two verification requests it mailed on January 18, 2007 and February 17, 2007 wherein it requested the NF-3s, assignment of benefits and the initial narrative report from the referring physician.

Country-Wide states that its request for copies of the NF-3 and assignment of benefits are still outstanding and that it therefore was not required to pay the claim. The complaint should thus be dismissed because this action was prematurely filed.

Park Slope does not dispute defendant’s assertion that it never provided the above requested information, but asserts as justification that the second verification request was improper because it was made on the 30th day after the first request for verification. Plaintiff argues that Insurance Regulation 11 NYCRR Section 65-3.6 (b) bars the insurance carrier from issuing a second verification request until thirty days have elapsed from the time it made its first verification request, during which time it has received no response to its request.

Pursuant to Insurance Law § 5106(a) and 11 NYCRR 65-3.5, an insurer is required to [*2]either pay or deny a claim for no fault automobile insurance benefits within 30 days from the date an applicant supplies proof of claim or it will be precluded from offering any defenses at trial. Mt Sinai Hosp. v. Chubb Group of Ins. Cos., 43 AD3d 889-90 (2d Dept. 2007). See, Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d 274, 278 (1997). An insurer may toll the 30 day period by properly requesting verification within 15 days from the receipt of the bill (11 NYCRR 65.15(d)); Psych. & Massage Therapy Assoc., PLLC v. Progressive Casualty Ins. Co., 5 Misc 3d 723 (Civ Ct, Queens Co., 2004). If the “requested verification has not been supplied to the insurer 30 calendar days after the original receipt, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested….” 11 NYCRR Section 65-3.6(b). “A claim need not be paid or denied until all demanded verification is provided” New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 569, 570 (2d Dept. 2004). See Insurance Law § 5106(a); 11 NYCRR 65-3.5(c), 65-3.8(a)(1).

As is typical in the area of No-Fault Law, two diametrically opposed decisions have been rendered by the Civil Court on this issue – whether the insurer must wait until thirty days have lapsed before sending its follow-up request or be precluded from offering defenses at trial. In Psych. & Massage Therapy, supra ^[FN1] Judge Agate determined that neither case law nor statutory language required the insurer to wait thirty days before it could submit a follow-up request or be precluded from offering any defenses at trial. Id at 724. Interpreting the predecessor to Regulation 11 NYCRR § 65-3.6 (b) ^[FN2] , the court stated that “(w)hile the regulations require an insurer to submit a follow-up request within 30 days from the date of submission of the request, it does not mandate that the insurer wait 30 days before sending a follow up request. Instead, this time frame is a limit to the amount of time an insurer may wait before sending a follow up request.” Id at 724-25. The court then found that:

penalizing defendant for sending a follow-up request 25 days after its initial request is inconsistent with the goals of the No-Fault Law. The purpose of the No-Fault Law is to allow swift compensation for qualified injured persons from the insurance companies. (citation omitted). The regulations require insurers to act quickly in evaluating insured claims and to avoid prejudicial delays (citation omitted). The verification requirement exists in order for insurers to have their opportunity to promptly investigate and respond to legitimate claims, not to delay payment (citation omitted).

Psych. & Massage Therapy Assoc., PLLC, supra , p.725.

The court further noted that plaintiff’s attempt to penalize defendant for being too prompt [*3]would be totally inconsistent with defendant’s duties under the No-Fault Law to promptly respond to the insured’s claims. Id at 726.Defendant would suffer undue prejudice if a verification request was found improper as it would have to pay for a claim for which it complied with the regulations. Moreover, defendant’s early follow-up verification request did not prejudice plaintiff in any manner, as plaintiff was not under any time restraint to respond to defendant’s verification. Id. On appeal, the Appellate Term stated, without any elaboration, that: “despite defendant’s untimely denial of plaintiff’s claim for the sum of $ 1,360.48, defendant was not precluded from asserting the defense of lack of coverage” Psych. & Massage Therapy Assoc., PLLC v. Progressive Cas. Ins. Co., 2006 NY Slip Op 51351U, 12 Misc 3d 140A, 824 NYS2d 766 (App. Term, 2d Dept. 2006).

In Seaside Medical P.C. v. State Farm Mutual, 12 Misc 3d 1127, 819 NYS2d 819(Civil Ct. Richmond Cty 2006), on the other hand, Judge Sweeney credited the plaintiff’s argument that the toll to the defendant insurer’s time to pay or deny the claim was eviscerated when the defendant sent out the second verification request only 28 days after the first verification request had been mailed. After citing to a number of cases which were not on “all fours” with the instant matter because the defendants in those cases did not do any follow up after the plaintiff had failed to comply with the first verification request, Judge Sweeney noted that here the defendant did follow up but not within the 10 day period specified in 11 NYCRR 65-3.6(b). While the defendant acted “diligently,” it did not strictly adhere to the language of the regulation which was fatal since “No -Fault Regulations are in derogation of the common law and must be strictly construed.” 12 Misc 3d at 1130 citing Presbyterian Hosp. in NY. v. Aetna Cas. & Sur. Co., 233 AD2d 431, 432 (2d Dept. 1996) lv. den.. 90 NY2d 802(1997). Since defendant did not comply with the clear language of 11 NYCRR 65-3.6(b) requiring it to follow up with the plaintiff for the verification at least once during the 10 day period specified in the regulation, Judge Sweeney found that the toll “occasioned by defendant’s initial requests for verification dissipated ab initio.” Id at 1131.

While both civil courts correctly noted that no other court has directly dealt with this precise issue, the Second Department found, without any explanation, that the 30 day period in which an insurer must pay or deny a claim is tolled where there was an outstanding follow up verification request that was sent before the 30 day waiting period expired. At issue in New York & Presbyterian Hospital v. American Transit Ins. Co., 287 AD2d 699 (2d Dept. 2001) was the form of the verification letters sent by the defendant insurer, as opposed to the timeliness of the verification requests. The lower court granted summary judgment to the respondent medical provider because the defendant insurer’s request for additional information was not made on the forms prescribed by 11 NYCRR 65.15. In reversing the lower court’s grant of summary judgment, the Second Department stated that if the requested information is not received within 30 days, the insurer must send a follow up letter within 10 days thereafter. The court commented that the defendant insurer had timely requested additional verification of the claim from respondent on October 5, 1999 and when such verification was not received within 30 days, it sent a timely follow up letter dated November 1, 1999 (approximately 27 days after the first request).

In the instant matter, the follow up verification request was sent on the 30th day after the original request for verification was sent. As set forth above, Regulation 11 NYCRR 65-3.6(b) [*4]states: “if any verification has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days follow up with the party from whom the verification was requested…” Does the wording of this statute mandate that the insurer wait until the 31st day before he sends the follow up request or may he send it on the 30th day? The language of NYCRR 65-3.6(b), which must be strictly construed, does not answer this question as neatly as was the case in Sea Side Medical (28 days after the initial request) or Psych. & Massage Therapy (25 days after the initial request).

Where the literal meaning of the statute is unclear, the courts may look to the legislative history of the statute or regulation, as the primary consideration of the court is to ascertain and give effect to the intention of the Legislature. Statutes, §92; Dodge v. Bd. of Educ. Schodack C.S.D., 167 Misc 2d 186 (Sup. Ct. Albany Co. 1996). In construing a statute, a court must look to its “spirit and purpose, and objectives of the enactors must be kept in mind.” Western Regional Off-Track Betting Corp. v. SEIU, 115 Misc 2d 124, 127 (Sup. Ct. Erie Co. 1982). Thus, in construing a law , a court ” will sometimes be guided more by its purpose than its phraseology, whereby a statute is not to be read with a literalness that destroys the meaning, intention, purpose or beneficial end for which the statute has been designed.” Statewide Roofing v. Eastern Suffolk Bd. of Coop. Educ. Servs., 173 Misc 2d 514 (NY Sup. Ct. 1997). See generally, McKinney’s Cons Laws of NY, Book 1, Statutes §96.

It is imperative in ruling upon No Fault insurance matters not to lose sight of the fundamental goal of the regulatory scheme, which is “designed to promote prompt payment of legitimate claims.” Nyack Hosp. v. General Motors Acceptance Corp., 8 NY3d 294, 300 (2007). As the Court of Appeals noted in Medical Society of State v. Serio, 100 NY2d 854 (2003), the most significant changes made by the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65), was a reduction in the time frames applicable to the filing of notices and proofs of claim—a consequence of the Superintendent’s determination that much of the abuse was associated with the lengthy time frames within which claims could be presented to insurers . The Superintendent also concluded that the shorter time frames would better effectuate the legislative purpose of providing prompt compensation “as the loss is incurred, while reducing rampant abuse” 100 NY2d, supra at 862.

Accordingly, a court must interpret and apply the No-Fault Regulations in a manner leading to the prompt payment of valid, documented claims. In light of the aforesaid principles of statutory construction and the purpose behind the No-Fault Regulations, this Court finds that defendant’s sending the follow up verification request on the 30th day after the original request for verification was timely and in accordance with the regulations. Since Country-Wide has established that the verification request in this action was unsatisfied, its time period to pay or deny the claim has not elapsed. See Vista Surgical Supplies, Inc. v. General Assurance Co., 12 Misc 3d 129(A), 819 NYS2d 214 (App Term, 2nd & 11th Jud Dists, 2006). Therefore, this action is premature and must be dismissed Doshi Diagnostic Imaging Services v. State Farm Insurance Co., 16 Misc 3d 42 (App Term, 2nd Dept., 2007).

Accordingly, defendant’s motion to dismiss the complaint is granted in its entirety and plaintiff’s motion for summary judgment is denied.

This constitutes the decision and order of the court.

Date: May 27, 2008

____________________________________

Hon. Katherine A. Levine

Judge, Civil Court

Staten Island, NY

Appearances

Footnotes

Footnote 1: The only difference between the instant matter and Psych & Massage Therapy, supra is that in the latter case the second verification request was sent 25 rather than 30 days after the submission of the first verification request.

Footnote 2:The pertinent regulation in effect for policies renewed prior to April 5, 2002 was 11 NYCRR 65.15(e)(2).

Civil Court of the City of New York, Richmond County

025762/06

Counsel for Plaintiff:

Colleen Terry, Esq.

Baker, Sanders Barshay, Grossman, Fass, Muhlstock

& Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Counsel for Defendant:

Lindsay Alexander, Esq.

Epstein & McDonald

One Whitehall Street, 13th Floor

New York, NY 10004-2109

212-248-9100

Katherine A. Levine, J.

Defendant Nationwide Property and Casualty (“defendant”) moves to dismiss plaintiff Cambridge Medical, P.C. A/A/O Richard Edwards ( “plaintiff”) complaint for failure to comply with defendant’s Demand for a Verified Bill of Particulars and Combined Demand Request pursuant to C.P.L.R § 3126. Defendant alleges that because plaintiff failed to respond to it’s discovery request, defendant would be severely prejudiced at trial. In the alternative, defendant requests that the court grant summary judgment because the institution of the lawsuit is premature as plaintiff failed to comply with its verification requests.

In its verification requests, defendant’s claims department asked for certain information: the certificate of incorporation, the SS4 (application of federal employer identification program), the IRS acknowledgment letter approving TIN and the completed W-9 form, the name, address, license, certification, etc. for each person connected with the treatment or testing of the assignor in the instant claim, and sale of shares of ownership. Although defendant does not so state, the aforementioned requests appear to give rise to a defense of fraudulent incorporation in violation of the truth seeking opportunity set forth in 11 N.Y.C.R.R. sec.65.3.16(a)(12).

In its Demand for a Verified Bill of Particulars, counsel for defendant seeks a plethora of documents including items which appear to be similar to those requested in the verification requests: the names, addresses and birth dates of all directors, officers, shareholders, employees and owners listed on the stock certificate for plaintiff’s facility at time services were rendered (1-5).

Plaintiff asserts that it provided discovery that was proper and that defendant is not entitled to further discovery since it is merely engaging in a fishing expedition that is prohibited by State Farm Insurance Co. v. Mallela, 4 NY3d 313 (2005) and the regulations. Plaintiff also argues that under the No-Fault Law, the need for disclosure “must be substantiated by the [*2]reasons for the denial contained in the NF-10 and not simply predicated upon a plethora of unreserved affirmative defenses inserted in the answer as an afterthought.” See Metropolitan Radiological Imaging v. State Farm Mutual Auto Ins. Co., 2005 Slip Op 25063 (NY Civil Ct. 2006). Finally, plaintiff asserts that the verification forms were not timely mailed and that the affidavits of mailing were inadmissible.

In Mallela, the Court of Appeals held that insurers may withhold payment for medical services provided by fraudulently licensed medical service corporations to whom patients, who are covered by no-fault insurance, have assigned their claims. Insurance Law §5102 requires no-fault carriers to reimburse patients or their medical provider assignees for “basic economic loss.” In order to combat incidences of fraud, the Superintendent of Insurance promulgated 11 N.Y.C.R.R. 65-3.16(a)(12), which excludes from the definition of basic economic loss payments made to unlicensed or fraudulently licensed providers, thus rendering them ineligible for reimbursement. 4 NY3d at 320. After finding this regulation valid, the Court held that carriers “may look beyond the face of licensing documents to identify wilful and material failure to abide by state and local law.” Id at 321. Addressing the defendants’ contention that the insurance companies would turn this “investigatory privilege into a vehicle for delay and recalcitrance,” the Court stated:

“The regulatory scheme …. does not permit abuse of the truth-seeking opportunity that 11 N.Y.C.R.R. sec. 65-3.16(a)(12) authorizes. Indeed, the Superintendent’s regulations themselves provide for agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause. (See N.Y.C.R.R. sec 65-3.2(c). In the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do…We expect and the Legislature surely intended, vigorous enforcement by the Superintendent against any carrier that uses the licensing requirement regulation to withhold or obstruct reimbursement to non-fraudulently incorporated health care providers. “

4 NY3d at 322.

The issue presented by these motions is therefore whether the language contained in Mallela requiring that a defendant insurer show “good cause” by demonstrating behavior on the plaintiff’s part ” tantamount to fraud,” applies to discovery requests and or verification requests. Mallela does not squarely address this issue.

This court follows the reasoning of Judge Sweeney in Carothers v. Insurance Companies et al, 13 Misc 3d 970 (Civil Ct., Richmond Co. 2006) and adopts that court’s finding that “good cause” is not a mandatory requisite to ordering discovery. In Carothers, supra , Judge Sweeney first noted that the regulation interpreted by the Mallela court – 11 NYCRR 65-3.2

(c) – “demands that the carriers delay payment of claims to pursue investigations solely for good cause.” Insurers are prohibited from demanding “verification of facts unless there are good reasons to do so” and are required to request verification of facts “as expeditiously as [*3]possible.” Judge Sweeney then found that the “investigations the Court was discussing in Mallela are those conducted by insurers during the claims process in accordance with their entitlement under the regulatory scheme to seek verification of claims (11 NYCRR part 65) and not those conducted by litigants during the discovery process” 13 Misc 3d at 972.

However, Judge Sweeney then noted that the entire discussion of good cause in Mallela was non-binding dicta since the only question that the Mallela court agreed to answer upon certification was whether “a medical corporation that was fraudulently incorporated” was entitled to be reimbursed by insurers for medical services rendered by licensed medical practitioners” Id at 973 citing 4 NY3d at 320.

Article 31 of the CPLR governs discovery actions before the civil court, and its disclosure provisions simply do not condition discovery upon a showing of “good cause”.^[FN1] Judge Sweeney found that the guiding principle behind article 31 of the CPLR was that there should be “full disclosure of all matter material and necessary in the prosecution and defense of an action” (CPLR §3101 (a)). The words material and necessary are to be interpreted liberally and the test is “one of usefulness and reason” to assist in the preparation for trial by sharpening the issues. 13 Misc 3d at 973 citing Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 (1968). See also, Midwood Acupuncture P.C. v. State Farm Mutual, 14 Misc 3d 131A, 836 NYS2d 486 ( App. Term, 2d Dept. 2007); Midborough Acupuncture P.C. v. State Farm Ins. Co., 13 Misc 3d 58 (App. Term, 2d Dept. 2006) (both applying the material and necessary standard).

Furthermore, since the “defense of fraudulent incorporation is a complete defense to a claim for no-fault benefits, one that is not subject to the rules of preclusion,” it appears that the bar against which to measure whether a defendant has shown that its discovery requests on the issue of fraudulent incorporation are “material and necessary” is quite low. Id at 975. See Lexington Acupuncture, P.C. v. State Farm Insurance Co., 12 Misc 3d 90, 820 NYS2d 385 ( App. Term, 2d Dept. 2006); A.B. Medical Services PLLC v. Prudential Propr. & Cas. Co., 11 Misc 3d 137[A], 816 NYS2d 693 (App. Term 2d & 11th Jud. Dists. 2006). See also, Midborough Acupuncture PC v. State Farm Ins Co. Supra 13 Misc 3d at 58 (defendant’s papers establish that defendant’s discovery requests concerning whether plaintiff was fraudulently incorporated are material and necessary).

However, in the end, “the scope of discovery is not unlimited” and is left to the broad discretion of the trial court, which must assess the request on a case by case basis taking into consideration the “intrusiveness of the discovery device and the merits, or lack thereof, of the claim” 13 Misc 3d at 974 citing Greater NY Mutual Ins. Co. v. Lancer Ins. Co., 203 AD2d 515, 517 (2d Dept. 1994). Since the amounts in dispute in most no- fault claims are small, the court should not “hesitate to exercise its protective powers under CPLR §313(a) so as to curtail discovery where it may become an unreasonable annoyance and tend[s] to harass and overburden the other party”, Conrad v. Park, 204 AD2d 1011, 1012 ( 1994), or “to prevent the proverbial [*4]fishing expedition” Id citing Auerbach v. Klein, 30 AD3d 451, 452 (2d Dept. 2006); Lattire v. Smith, 304 AD2d 534, 536 (2d Dept. 2003). To this end, Judge Sweeney found that the primary tool to be used by the court to control and supervise the scope of discovery was the protective order pursuant to CPLR §3103(a). Id at 974.

This court is not convinced that different standards should govern the verification requests made by an insurance company during its investigatory stage, as opposed to discovery requests made by counsel for an insurance company during litigation for Mallela type documents. As set forth above, the scope of verification requests was not at issue in Mallela. Application of a higher standard for verification requests does not make sense since an insurance company should be able to ascertain as expeditiously as possible whether a medical provider is fraudulently incorporated under the No- Fault Law. However, since the Court of Appeals did find that the regulations preclude insurance carriers from delaying payment of claims unless they can show “good cause,” which demands a demonstration of behavior tantamount to fraud, this court must abide by the distinction.

The verification request for corporate documents does not contain any assertion that plaintiff Cambridge Medical engaged in any behavior that would cause one to suspect that it has been fraudulently incorporated. (See Exhibit C annexed to motion). As such, plaintiff need not further respond to the verification requests and this court denies the motion for summary judgment.

Defendant also fails to offer any justification for its request for Mallela type documents in its subsequent discovery requests. Its answer is void of any affirmative defense that defendant has reason to believe that the plaintiff may be fraudulently incorporated. However, in light of the broad latitude afforded to the courts in this department to grant Mallela type discovery requests, this court, upon conducting a balancing test, directs that plaintiff produce: the names, addresses and birth dates of all directors, officers, shareholders and owners listed on the stock certificate for plaintiff’s facility at the times services were rendered. Pursuant to CPLR §3103 (a) , this court issues a protective order limiting discovery to the aforementioned items, as the remainder of the bill of particulars ask for information that is either within the defendant’s knowledge or is unduly burdensome, irrelevant or immaterial.

For the above reasons, defendant’s motions to dismiss and/or summary judgment are denied. Given this ruling, this court need not consider plaintiff’s allegations with regard to the admissibility of the verification forms. It does appear, however, that the affidavit of mailing does allege personal knowledge of the mailing procedures and hence comports with the instructions set forth in Delta Diagnostic Radiology, P.C. a/a/o Lidaine Philogene v. Chubb Group of Insurance,17Misc 3d 16 (2007)..

This constitutes the decision and order of the court.

Dated: March 21, 2008___________________________

Staten Island, NYHON. KATHERINE A. LEVINE

Judge, Civil Court

Appearances

Counsel for Plaintiff:

Colleen Terry, Esq.

Baker, Sanders Barshay, Grossman, Fass, Muhlstock

& Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Counsel for Defendant:

Lindsay Alexander, Esq.

Epstein & McDonald

One Whitehall Street, 13th Floor

New York, NY 10004-2109

212-248-9100

Footnotes

Footnote 1:In a footnote Judge Sweeney noted that although a showing of good cause is not a mandatory prerequisite to discovery, good cause is a factor that “might be considered” in determining the permissible scope of discovery

Civil Court of the City of New York, Richmond County

25573/06

Counsel for Plaintiff:

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock

& Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-2320

Counsel for Defendant:

Teresa M. Spina, Esq.

88 Froelich Farm Blvd.

Suite 202

Woodbury, NY 11797

516-682-7274

Katherine A. Levine, J.

Plaintiff Cambridge Medical P.C. (“plaintiff”), a medical services provider, seeks to recover $1,617.69 for the EMG/NCV it conducted upon the assignor Webster Simmons (“Simmons” or “claimant”) following injuries that the claimant sustained in an automobile accident. Defendant Government Employees Insurance Company (“defendant” or “Geico”) claims that the tests were medically unnecessary. At the trial held on January 23, 2008, the parties stipulated to plaintiff’s prima facie case and defendant’s timely denial of the claim. [*2]Therefore, the only issue presented to the court was whether the EMG/NCV conducted on October 5, 2006 was medically necessary.

The medical records put into evidence by plaintiff reveal that claimant had appeared before Dr. Anand, a doctor of physical medicine and rehabilitation associated with plaintiff, on both September 19 and October 5, 2006 wherein he presented both times with complaints of neck pain which radiated to the left arm, and numbness and tingling to the left arm. On both occasions Dr. Anand conducted a physiatrics examination of the cervical spine which revealed muscle spasm and associated tenderness to palpation, and a Spurling’s test which was positive on the left. He found the following impressions: cervical sprain/strain; neck and back pain, spasm and r/o cervical radiculopathy – a nerve root problem at the neck with pain going down the arm (Plaintiff s 2). On September 19th Dr. Anand did not recommend that the patient undergo an electro diagnostic evaluation in order to rule out radiculopathy and/or other peripheral nerve damage. However, if the patient’s condition failed to improve with conservative management, reevaluation would be considered. Since September 5, 2006 the claimant had been undergoing physical therapy five times a week consisting of massage, joint mobilization, therapeutic exercise, ultrasound, hot packs and electrical stimulation.

On October 5, 2006, however, Anand recommended that the claimant undergo an electro diagnostic evaluation, including an electromyography (“EMG”) and nerve conduction velocity (“NCV”) of the region and bilateral upper extremities in order to rule out radiculopathy and/or other peripheral nerve damage. The impression of the electro diagnostic study, conducted on October 5, 2006, revealed evidence of C5-C6 radiculopathy on the left and active denervation in the left C5-C6 innervated musculature and moderate carpal tunnel syndrome affecting sensory and motor components. Dr. Anand recommended continued chiropractic care for the involved spinal areas.

A presumption of medical necessity attaches to a defendant’s admission of the plaintiff’s timely submission of proper claim forms, and the burden then switches to the defendant to demonstrate the lack of medical necessity. Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins., 2007 NY Slip Op. 52273U; 2007 NY Misc. LEXIS 7860 (Dist. Ct., Nassau Co. 12/3/2007);A.B. Medical Services, PLLC v. NY Central Mutual Fire Ins. Co., 7 Misc 3d 1018(A), 801 N.Y.S., 2d 229 (Civil Ct. Kings. Co. 2005); Citywide Social Work & Psychological Services v. Travelers Indemnity, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004). Defendant thus bears “both the burden of production and the burden of persuasion with respect to the medical necessity of the treatment or testing for which payment is sought.” See, Bajaj v. Progressive Ins. Co., 14 Misc 3d 1202(A) (N.Y.C. Civ. Ct. 2006). The quantum of proof necessary to meet defendant’s burden, at the bare minimum, is to “establish a factual basis and medical rationale for the lack of medical necessity of plaintiff’s services.” Id. See also, A.B. Medical Services, supra .

Defendant presented the testimony of Dr. Joseph C. Cole who is board certified in physical medicine and rehabilitation. Dr. Cole conducted a peer review by reviewing a number [*3]of medical records or reports as listed in his peer review letter (defendant’s 2). Dr. Cole first described the EMG test which consists of putting a subcutaneous electrode or needle into the skin and recording abnormal electrical activity of the muscles and nerves. The NCV consists of stimulating a part of the body to measure the distance and velocity.

Dr. Cole stated in his peer review letter that it was the “standard of care” to order electro diagnostic testing only when the results of such test would benefit the patient more so than a detailed history and physical exam would. He also testified that the American Association of Electro Diagnostic Medicine (“AAEM”) guidelines reflect that EMG/NCV testing should only be used as an extension of a detailed history and physical examination, and only when the “results of the test would be expected to affect treatment” (Tr, 5).

Dr. Cole opined that the EMG/NCV test was not medically necessary because based on his review of the records he could not discern, “regardless of the results of the test”, how the test would have benefitted the patient any more so than a detailed patient history and physical examination would have (Tr. 4).He found that the history and physical examination findings did not substantiate the performance of such tests and would not be necessary prior to the continuation of conservative physical therapy or chiropractic care. He also opined that a physical exam of the muscles to see if there were spasms and a neurological exam would have benefitted the claimant as much as the EMG/NCV.

Dr. Cole also disagreed with the use of EMG/NCV testing to rule out radiculopathy since its limitations in evaluating this condition were “well outlined in the literature”. He stated that the AAEM minimonograph No.32 ( not submitted into evidence) reflects that EMG/NCV testing is not “the test of choice” as a screening tool for radiculopathy since it can’t be used to exclude radiculopathy even if there is a finding of normal. Furthermore, “cervical radiculopathy is diagnosed everyday in medicine with an EMG”. (Tr. 7)

Dr. Cole also acknowledged that Dr. Anand did not initially request an electro diagnostic test as he wanted to see if the patient would improve with conservative care, i.e. physical therapy and chiropractic care. He also acknowledged that on October 5, 2006 the claimant still was complaining of pain to the arm, weakness at the biceps and neck pain with radiation ideation and that the Spurling test was positive. (Tr.10). Additionally, there was a decreased range of motion of the cervical spine between the two reports so that the patient had not improved at all.

Dr. Cole admitted that the function of an electro diagnostic exam was to localize nerve tensions as accurately as possible and that the EMG/NCV was the “gold standard” in that (Tr. 11). He also agreed that establishing a specific diagnosis is important in the effective management of an individual who presents with a complaint of lower back pain and that an individualized electro diagnostic study was an extension of a detailed history and physical exam and could be useful and important in the proper evaluation of an individual with back pain. He stated that an EMG/NCV could help localize nerve root lesions as could a physical examination. [*4]Dr. Cole agreed with the statement in a 1999 AAEM article – chapter 9 “Practice Parameters for Needle Electromyographic Evaluation” (plaintiff’s 3) which noted that “a needle EMG is widely regarded as the technique of choice in the diagnostic evaluation of cervical radiculopathy.” This article also stated that “(b)ased on a critical review of the literature, electro diagnostic evaluation is found to be moderately sensitive and highly specific in establishing a diagnosis of cervical radiculopathy.”

The court then asked what it believed to be the crux of the issue – why would an expert conclude that the electro diagnostic study would be of no benefit to the plaintiff when there had been no subsiding of the pain over time and why would the test not assist the doctors in diagnosing why the pain still existed (Tr. 16). Dr. Cole responded that as of September 19th the patient had been diagnosed with radiculopathy and that “this diagnosis is made everyday without EMG” and that in this case the EMG would not add to or enhance the care.” (Tr. 16). The doctor then confirmed that regardless of the results of the test, there would be no change in treatment (Tr. 17).

This court finds that the defendant’s proof fails to prima facie demonstrate the lack of medical necessity for the treatment in question. Fatally missing from the doctor’s testimony is any mention of the applicable generally accepted medical/professional standard and the plaintiff’s departure therefrom. In the leading case of Services v. Travelers Indemnity, Citywide Social Work & Psychological, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004), Justice Battaglia succinctly stated:

“A no-fault insurer defending a denial of first-party benefits on the ground that the billed-for-services were not medically necessary’ must at least show that the services were inconsistent with generally accepted medical/professional practice. The opinion of the insurers’s expert, standing alone, is insufficient to carry the burden of proving that the services were not medically necessary”.

See , Acupuncture Prime Care v. State Farm Mutual Auto, supra .A generally accepted medical/professional practice has been defined as “that range of practice that the professional will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling.” 3 Misc 3d at 616.; A.B. Medical Services , P.L.L.C., supra .

In order to find that a treatment or service is not medically necessary, the defendant must show by medical evidence “that the treatment or services would be ineffective or that the insurer’s preferred health care treatment or lack of treatment would lead to an equally good outcome.” Fifth Avenue Pain Control Center v. Allstate Insurance Co.,196 Misc 2d 801, 807-08 (Civil Ct. Queens Co. 2003). The insurer’s expert’s reliance solely on his peer review report will be insufficient to disprove medical necessity. Id, See, A.R. Medical Art, P.C. v. State Farm Mutual Auto, 11 Misc 3d 1075A, 815 NYS2d 493 (Civil Ct., Kings Co. 2006).

In fact, an AAEM publication issued one year after the AAEM minimonograph #

32 cited by Dr. Cole is diametrically opposed to Cole ‘s position that the electro diagnostic test is [*5]not medically necessary since it states that a ” (a) needle EMG is widely regarded as the technique of choice in the diagnostic evaluation of cervical radiculopathy.” Dr. Cole’s testimony that the test could serve no purpose is belied by the fact that the treating physician did initially recommend conservative management of the claimant’s condition by continuing with a regimen of physical therapy. The treating physician also performed physical exams on two occasions before ordering the test. It was only after the claimant’s injuries did not improve over a span of over a month that Dr. Anand recommended that the insured undergo electro diagnosis for the purpose of ruling out radiculopathy or other nerve damage. In fact, Dr. Cole admitted that an individualized electro diagnostic study was an extension of a detailed history and physical exam and that the symptoms that the insured was exhibiting could be indicative of conditions other than radiculopathy, for example, carpel tunnel syndrome.

In a case somewhat analogous to the instant matter, Dr. Cole offered similar testimony that the EMG/NCV test was not medically necessary since the patient was improving and the physical examination and history could readily determine that the assignor was suffering from radiculopathy, thus making the need for the testing redundant. A.R. Medical Art, P.C. v. State Farm Mutual, supra . There, as in the instant matter, the plaintiff offered no testimony to rebut Dr. Cole but rather the parties stipulated into evidence the letter of medical necessity for the NCV/EMG from a doctor employed by the assignee’s medical office. The court noted that the positions between the treating physician and Dr. Cole were contradictory and that the assignee’s doctor had used the electro diagnostic testing in light of the patient’s complaints to make an exact diagnosis, locate a possible lesion, determine the extent of injury and exclude possible conditions. The court ruled that: “in the face of a course of treatment that has not been shown to have no medical purpose or performed towards no medical objective, this Court is not prepared to second guess a treating doctor who decides that a medical test is necessary for his/her medical diagnosis and treatment.”

This ruling applies with even greater force here where there was no evidence that the insured was improving from the conservative treatment recommended by the treating physician. Furthermore, only after two physical exams did the treating physician order the test to rule out radiculopathy.

In summary, Dr. Cole’s testimony failed to demonstrate the lack of medical necessity and judgment is rendered accordingly in favor of the plaintiff.

The foregoing constitutes the decision and order of the court.

Dated:March 5, 2008

Staten Island, NYHon. Katherine A. Levine

Judge, Civil Court

Civil Court of the City of New York, Richmond County

023996/06

Counsel for Plaintiff:Baker, Sanders, Barshay, Grossman, Fass, Muhlstock

& Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Counsel for Defendant:Samuel G. Lesman, Esq.

Melli, Guerin & Wall, P.C.

17 Battery Place

Suite 610

New York, NY 10004

212-509-6300

Katherine A. Levine, J.

In the instant matter the assignor Maria Tavarez (“Tavarez” or “claimant”) of plaintiff American Chinese Acupuncture, P.C. (“plaintiff”), was allegedly injured in an automobile accident on or about December 21, 2003. Tavarez assigned the cost of her six sessions of acupuncture treatment, in the amount of $257.04, to plaintiff health care provider. At the trial held on January 9, 2008, the parties stipulated to plaintiff’s prima facie case and defendant’s timely denial of the claim. Therefore, the only issue presented to the court was whether the six sessions of acupuncture sessions in March 2004 were medically necessary.

A presumption of medical necessity attaches to a defendant’s admission of the plaintiff’s timely submission of proper claim forms, and the burden then switches to the defendant to demonstrate the lack of medical necessity. Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins., 2007 NY Slip Op. 52273U, 2007 NY Misc. LEXIS 7860 (Dist. Ct., Nassau Co. 12/3/2007);A.B. Medical Services v. NY Central Mut. Fire Ins. Co., 7 Misc 3d 1018(A), 801 N.Y.S., 2d 229 (Civil Ct. Kings. Co. 2005); Citywide Social Work & Psychological Services v. Travelers Indemnity, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004).

The parties stipulated into evidence the verification of treatment form (“NF3”) which indicated that Tavarez’s diagnosis and concurrent conditions were pain – neck (cervicalgia) and pain – low back (lumbalgia). Defendant presented the testimony of Dr. Joseph Kalangie who is a diplomate and board certified in physical medicine and rehabilitation. Dr. Kalangie performed an independent medical examination (“IME”) upon Tavarez approximately six weeks after her accident. The claimant informed him that several days after the accident she sought medical treatment due to headaches, pain in the neck, lower back and both shoulders. She also indicated she was placed on a regimen of physical therapy and other treatments, including acupuncture four times a week. She indicated that she currently had headaches, pain in the [*2]lower back and pain in both shoulders.

Dr. Kalangie’s IME of Tavarez revealed that the cervical and lumbar strain/sprain, as well as the bilateral shoulder contusion, had resolved. Specifically, the doctor examined the cervical spine and found no sensory deficit or motor weakness of the upper extremities. There was no complaint of any radiation of pain. He also examined both shoulders and found normal rotation and no instability of the joints Finally, he examined the lumbosacral spine and found no complaints of tenderness and normal range of motion and no atrophy.

Based on his examination he opined that treatment had been reasonable, related and necessary from a physiastrist point of view and that there was no need for further chiropractic care and acupuncture treatment. Since all the alleged injuries due to the accident had been resolved, there was no need for any type of further formal treatment.

On cross examination, Dr. Kalangie stated that he was not a licensed acupuncturist and he does not perform and has no training in acupuncture. He opined that acupuncture provides relief to pain and admitted that Tavarez was complaining of pain.He did not have her medical records at the time of the exam and did not request the records even though he could have. He does, however, review other medical records when he himself is the treating physician of patients in auto accidents. 25-30% of his income is derived from peer reviews and IMEs. In 75% of the cases he does not find medical necessity.He typically spends 20-30 minutes on an IME.

In response to questions posed by the court, the doctor indicated that pain is subjective and that his findings as to the shoulders and spine were objective. He did not assess the complaints of headaches since that was outside of his realm of expertise.

Defendant contends that it has proven lack of medical necessity and it therefore is not responsible for the $257.00 charged by plaintiff. It pointed out that plaintiff offered no rebuttal. Plaintiff posits a number of grounds as to why the doctor’s testimony should not be credited, only one of which this court finds determinative: that the doctor is under an obligation to state the generally accepted medical practice and expertise in treating claimant and how plaintiff deviated from this practice.

This court finds that the defendant’s proof fails to prima facie demonstrate the lack of medical necessity for the treatment in question. Fatally missing from the doctor’s testimony is any mention of the applicable generally accepted medical/professional standard and the plaintiff’s departure therefrom. In the leading case of Services v. Travelers Indemnity, Citywide Social Work & Psychological, 3 Misc 3d 608, 609 ( Civil Ct., Kings Co. 2004), Justice Battaglia succinctly stated:

“A no-fault insurer defending a denial of first-party benefits on the

ground that the billed-for-services were not medically necessary’

must at least show that the services were inconsistent with [*3]

generally accepted medical/professional practice. The opinion

of the insurers’s expert, standing alone, is insufficient to carry the

burden of proving that the services were not medically necessary.”

See , Acupuncture Prime Care v. State Farm Mutual Auto, supra .A generally accepted medical/professional practice has been defined as “that range of practice that the professional will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling.” 3 Misc 3d at 616.; A.B. Medical Services , P.L.L.C., supra .

Although acupuncture, physical therapy, and chiropractic are distinct modalities of treatment, they could conceivably be used to treat the same condition. Rose Med. Acupuncture Servs. P.C. v. Specialized Risk Mgmt., 2004 NY Slip Op 51078U, 4 Misc 3d 1027A, 798 NYS2d 348 (City Court, Mt. Vernon, 2004). See, Universal Acupuncture Pain Services, P.C. v Lumbermens MutualCasualty Co., 195 Misc 2d 352, 758 NYS2d 795 (Civ Ct. Queens Co. 2003). Thus, where the insurer and medical provider disagree on what should be classified as concurrent care, and a denial is then issued, the dispute should be brought before a court of competent jurisdiction for final resolution on this pivotal issue (See id.).

Here, Dr. Kalangie did not posit that acupuncture and physical therapy constituted concurrent care. Nor did he even address how he would treat Tavarez’s complaints of headaches and why acupuncture could not alleviate the subjective pain that she allegedly was suffering. The conclusory opinion of Dr. Kalangie, standing alone, is insufficient to demonstrate the lack of medical necessity.

In conclusion, the court grants judgment in favor of plaintiff.

The foregoing constitutes the decision and order of the court.

Dated:February 6, 2008

Staten Island, NYHON. KATHERINE A. LEVINE

Judge, Civil Court

ASN by ________ on ____________.

A P P E A R A N C E S

Counsel for Plaintiff:Baker, Sanders, Barshay, Grossman, Fass, Muhlstock

& Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Counsel for Defendant:Samuel G. Lesman, Esq.

Melli, Guerin & Wall, P.C.

17 Battery Place

Suite 610

New York, NY 10004

212-509-6300

[*1]

Civil Court of the City of New York, Richmond County, October 2, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossmanfass, Muhlstock & Neuwirth, Mineola, for plaintiff. Cambio, Votto, Cassata & Gullo, Staten Island, for defendant.

OPINION OF THE COURT

Peter P. Sweeney, J.

The issue presented in this action to recover assigned first-party no-fault benefits is how attorney’s fees should be calculated in an action that involves multiple assignors and the submission of multiple bills on different dates.

Factual Background:

The trial of this action was scheduled to begin on April 26, 2006. At that time, the parties entered into a written stipulation settling all aspects of the action except for the issue of attorney’s fees. Pursuant to the stipulation, defendant agreed to pay a specified portion of each of the 21 bills that were in dispute. The bills were submitted on behalf of three assignors and each bill was submitted on a different date.

Plaintiff maintains that, for each bill, he is entitled to an attorney’s fee in the amount of $60 or 20% of the amount of the bill, plus interest thereon, subject to a maximum of $850, whichever amount is greater. Defendant maintains that, for each assignor, plaintiff is entitled to an attorney’s fee in the amount of $60 or 20% of the aggregate amount of all the bills that were submitted on behalf of that assignor, plus interest thereon, subject to a maximum of $850.

For the following reasons, the court agrees with defendant.

Discussion:

The no-fault regulation that governs awards of attorney’s fees is 11 NYCRR 65-4.6. 11 NYCRR 65-4.6 (c) provides that “[e]xcept as provided in subdivisions (a) and (b) of this section,^[FN1] the minimum attorney’s fee payable pursuant to this Subpart shall be $60.” 11 NYCRR 65-4.6 (e) provides, in pertinent part, that

“[f]or 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. . . .”

On October 8, 2003, the New York State Insurance Department issued an opinion letter interpreting 11 NYCRR 65-4.6 (c) and (e) (Ops Gen Counsel NY Ins Dept No. 03-10-04 [2003]). The precise question addressed by the New York State Insurance Department in the opinion letter was:

“When an assignee No-Fault provider submits bills for health services rendered to an eligible injured person to that person’s insurer, and such bills are either denied or partially paid and the provider thereafter initiates a court action to contest the denials of the multiple bills which results in a payment award to the provider, is the provider entitled to a minimum attorney’s fee of $60 for each denied bill now required to be paid, or is the proper amount of attorney’s fees based upon the aggregate sum of all bills awarded reimbursement by the Court in the single action that was commenced?” (Emphasis added.)

The New York State Insurance Department answered the question as follows:

“The minimum amount of attorney’s fees awarded to an assignee health provider who has prevailed in a court action brought against a No-Fault insurer is based upon the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which had been submitted and denied. The minimum attorney fee amount of $60 is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action.” (Emphasis added.)

The Department of Insurance concluded that court-initiated actions to resolve payment disputes come within the purview of 11 NYCRR 65-4.6 (e) since such disputes are “subject to arbitration” in that the provider had the option to seek a resolution of the dispute by submitting it for no-fault arbitration in the first instance. It went on to reason:

“Section 65-4.6(e) makes it clear that the amount of attorney’s fees awarded will be based upon 20% of the total amount of first party benefits awarded. That total amount is derived from the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured.” (Emphasis added.)

Pursuant to section 65-4.6 (e), the total amount due the attorney will be derived by calculating 20% of the total claim which is resolved in favor of the applicant, which amount is totaled from the total amount of disputed bills which are submitted on behalf of the applicant. This total amount is subject to a cap of $850. Where 20% of the total claim awarded results in an amount less than $60, the attorney is entitled to the minimum $60 fee pursuant to section 65-4.6 (c). Since the 20% calculation is based upon benefits awarded from the total number of disputed bills [*3]in a court action commenced, an attorney would not be entitled to a $60 fee for each disputed bill which is resolved in favor of the applicant.

It is well settled that an administrative agency’s construction and interpretation of its own regulations is entitled to the greatest weight (Matter of Herzog v Joy, 74 AD2d 372, 375 [1st Dept 1980], affd 53 NY2d 821 [1981]; Matter of Tommy & Tina, Inc. v Department of Consumer Affairs of City of N.Y., 95 AD2d 724, 724 [1983], affd 62 NY2d 671 [1984]). If an administrative agency’s interpretation of one of its own regulations is neither irrational nor unreasonable nor counter to the clear wording of a statutory provision, it should be upheld (Matter of John Paterno, Inc. v Curiale, 88 NY2d 328, 333 [1996]; Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448 [1985]; see also, Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins. of State of N.Y., 72 NY2d 753, 761-762 [1988]).

11 NYCRR 65-4.6 was promulgated by the Department of Insurance, the administrative agency empowered to implement and interpret the No-Fault Law (see Ostrer v Schenck, 41 NY2d 782 [1977]; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 863 [2003]; Breen v Cunard Lines S. S. Co., 33 NY2d 508, 511 [1974]; Insurance Law § 301). In the court’s view, its interpretation of 11 NYCRR 65-4.6 was neither irrational, unreasonable nor counter to any statutory provision.^[FN2] Plaintiff’s suggestion that opinion letters issued by administrative agencies carry little weight is without merit (see, e.g. Matter of New York State Assn. of Life Underwriters v New York State Banking Dept., 190 AD2d 338, 342-343 [3d Dept 1993], affd 83 NY2d 353 [1994] [holding that deference had to be given to an opinion letter issued by the New York State Banking Department which interpreted Banking Law § 96 unless the interpretation was irrational or unreasonable]; see also Ocean Diagnostic Imaging P.C. v State Farm Mut. Auto. Ins. Co., 9 Misc 3d 73, 75 [App Term, 2d & 11th Jud Dists 2005]; S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists 2004]; Bronx Med. Servs., P.C. v Lumbermans Mut. Cas. Co., 2003 NY Slip Op 51022[U] [App Term, 1st Dept 2003]).^[FN3]

Plaintiff’s contention that the holdings in Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co. (207 AD2d 338, 339 [2d Dept 1994]) and Hempstead Gen. Hosp. v Insurance [*4]Co. of N. Am. (208 AD2d 501, 501-502 [2d Dept 1994]) are dispositive of the issues before the court is also without merit. At issue in Smithtown Gen. Hosp. and Hempstead Gen. Hosp. was the interplay between 11 NYCRR former 65.17 (b) (6) (iii) and 11 NYCRR former 65.17 (b) (6) (v), the predecessor no-fault regulations to 11 NYCRR 65-4.6 (c) and (e). 11 NYCRR 65.17 (b) (6) (iii) provided: “Except as provided in subparagraphs (i) and (ii) of this paragraph, the minimum attorney’s fee payable pursuant to this section shall be $60.” 11 NYCRR 65.17 (b) (6) (v) provided, in pertinent part, as follows: “For all other disputes subject to AAA and IDA arbitrations, subject to the provisions of subparagraphs (i) and (iii) of this paragraph, 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.”

In both Smithtown Gen. Hosp.^[FN4] and Hempstead Gen. Hosp.^[FN5] the Court interpreted 11 NYCRR 65.17 (b) (6) (iii) and (v) as requiring awards of attorney’s fees to be calculated on a “per claim” basis. Plaintiff contends that since the language of 11 NYCRR 65.17 (b) (6) (iii) and (v) is virtually identical to the language of 11 NYCRR 65-4.6 (c) and (e), the holdings in Smithtown Gen. Hosp. and Hempstead Gen. Hosp. are controlling. The court disagrees. The holdings in Smithtown Gen. Hosp. and Hempstead Gen. Hosp. have little bearing on the precise issue presented here, whether the court should defer to the Department of Insurance’s interpretation of 11 NYCRR 65-4.6. This issue was not before the Court in either Smithtown Gen. Hosp. or Hempstead Gen. Hosp. Indeed, at the time those cases were decided, the Department of Insurance had yet to interpret 11 NYCRR 65-4.6 or the predecessor regulations governing attorney’s fee awards.

Further, defendant correctly points out that the holding in Smithtown Gen. Hosp. is not at all inconsistent with the Department of Insurance’s interpretation of 11 NYCRR 65-4.6. [*5]While the Court in Smithtown Gen. Hosp. held that attorney’s fees should be calculated on a “per claim” basis, the complaint^[FN6] filed in Smithtown reflects that each of the 21 claims at issue in the action was submitted on behalf of a different assignor. The holding is therefore perfectly consistent with the Department of Insurance’s view, as stated in the opinion letter, that attorney’s fee awards should be based on “the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured” (Ops Gen Counsel NY Ins Dept No. 03-10-08 [emphasis added]).^[FN7]

For all of the above reasons, the court adopts the Department of Insurance’s interpretation of 11 NYCRR 65-4.6 and holds that for each assignor in the action, plaintiff is entitled to an attorney’s fee in the amount of $60 or 20% of the total amount of the first-party benefits awarded for services provided to that assignor, plus interest thereon, whichever amount is greater, subject to a maximum of $850.

Accordingly, it is hereby ordered that judgment be entered in plaintiff’s favor in accordance with the stipulation of settlement together with interest and attorney’s fees, as provided for under the No-Fault Law and the regulations promulgated thereunder, as well as costs and disbursements.

Footnotes

Footnote 1: Neither of these subdivisions apply in this case.

Footnote 2: The only statutory provision dealing with attorney’s fees under the No-Fault Law is Insurance Law § 5106 (a), which, in pertinent part, provides that “[i]f a valid claim [for first-party benefits] 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.”

Footnote 3: In Ocean Diagnostic Imaging P.C., S & M Supply and Bronx Med. Servs., P.C., the various Appellate Terms held that the Department of Insurance’s interpretation of a regulation as articulated in an advisory “Circular Letter” is entitled to great deference. The court sees no reason why the Department of Insurance’s interpretation of a regulation as articulated in an opinion letter should be treated differently.

Footnote 4: In Smithtown, the Court stated:

“Concerning attorneys’ fees, once a court action has been commenced, 11 NYCRR 65.17 (b) (6) (v) grants an attorneys’ fee on no-fault insurance claims of 20% of the amount of first-party benefits awarded plus interest, with a ceiling of $850 per claim. Further, pursuant to 11 NYCRR 65.17 (b) (6) (iii), with certain exceptions not here applicable, there is a minimum fee of $60 on each such claim. Here, although the court awarded attorneys’ fees, it failed to follow the formula provided under 11 NYCRR 65.17 (b) (6) (v), 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. Accordingly, upon remittitur, the Supreme Court is directed to calculate the attorneys’ fee due in accordance with 11 NYCRR 65.17 (b) (6) (v), and (iii)” (207 AD2d at 339 [emphasis added]).

Footnote 5: In Hempstead General Hosp., the Court stated:

“Once an action to recover no-fault insurance benefits has been commenced, 11 NYCRR 65.17 (b) (6) (v) grants attorney’s fees of 20% of the amount of the first-party benefits awarded, plus interest, with a ceiling of $850 per claim. . . . Further, pursuant to 11 NYCRR 65.17 (b) (6) (iii), with certain exceptions not applicable to this case, there is a minimum fee of $60 per claim. Accordingly, upon remittitur, the Supreme Court is directed to calculate the attorney’s fees due in accordance with 11 NYCRR 65.17 (b) (6) (v) and (iii)” (208 AD2d at 501 [emphasis added]).

Footnote 6: Defendant provided the court with a copy of the complaint in support of its position.

Footnote 7: Whether the holding in Hempstead Gen. Hosp. conflicts with the Department of Insurance’s interpretation of 11 NYCRR 65-4.6 remains unclear.

Civil Court of the City of New York, Richmond County

8104/06

Attorney for Plaintiff, Andrew Carothers, M.D., P.C. (In Both cases):

Gregory Cherchione, Esq.

2444 Broadway, Suite 362

New York, NY 10024

Tel.: (212) 285-3800

Attorneys for Liberty Mutual Insurance Company (In Both Actions):

Burke, Lipton Puleo, McCarthy & Gordon

10 Bank Street, Suite 1040

White Plains, NY 10606

Tel.: (914) 997-8100

Peter P. Sweeney, J.

In this action to recover assigned first-party no-fault benefits, defendant moves for an order changing the venue of this action to Bronx County.

The venue provision of the Civil Court Act that governs transitory actions is Civil Court Act § 301. Civil Court Act § 301[a], as it pertains to the issue at hand, provides that “an action. . . shall be brought in . . .the county in which one of the parties resides at the commencement thereof.” Defendant contends that plaintiff improperly set venue in Richmond because neither plaintiff nor the defendant are residents of Richmond County.

In support of its contention that plaintiff is not a resident of Richmond County, defendant annexed various medical records indicating that plaintiff’s assignor resides in Bronx County. “If the plaintiff is an assignee of the cause of action, the original owner of the cause of action shall be deemed the plaintiff for the purpose of determining proper venue” (Civil Court Act § 305[a] ).

In support of its contention that defendant is not a Richmond County resident, defendant submitted the affidavit of one of its claims managers who stated that “Liberty does not have any claims, sales or offices of any kind in Richmond County, NY All no-fault bills are submitted to the New York State No-Fault office in Suffolk County.” The nearest claims office is in Nassau County. The nearest sales office to Richmond County is located in Kings County at 4201 Avenue M in Brooklyn. The nearest legal office is in New York County.”

Under the Civil Court Act, “[a] corporation . . . shall be deemed a resident of any county wherein it transacts business, keeps an office, has an agency or is established by law ” (Civil Court Act § 305[b]). The issue presented, as the court sees it, is whether defendant’s submissions demonstrated that defendant does not “transact business” within Richmond County within the meaning of (Civil Court Act § 305[b]). The Court holds that they do did not.

Defendant’s submissions did not foreclose the very distinct possibility that defendant issues insurance policies covering Richmond County residents. Likewise, defendant’s [*2]submissions did not foreclose the distinct possibility that defendant engaged in purposeful activity in Richmond County by regularly corresponding, by mail and/or telephone, with its policy holders in Richmond County by delivering insurance policies, sending invoices and seeking and collecting premiums from them. These acts, in the court’s view, would be sufficient to establish that defendant transacts business in Richmond County (see Mingmen Acupuncture Services, P.C. v. American Transit Ins. Co., 183 Misc 2d 270, 280 [Civ. Ct, Bronx County, 1999, Victor, J.]; Neurologic Services, P.C. v. American Transit Ins. Co., 183 Misc 2d 496, 498 [Civil Ct., Bronx County 1999, Ruiz, J.]; see also Rung v. United States Fidelity and Guaranty Co., 139 AD2d 914, 915 [4th Dep ‘t 1988] ). The court respectfully disagrees with the opposite result reached in Quality Medical Healthcare, P.C. v. American Transit Ins. Co., 182 Misc 2d 991 [Sup. Ct., Bronx County, 1999, Brigantti-Hughes, J.].

Accordingly, it is hereby

ORDERED that defendant’s motion is in all respects DENIED.

This constitutes the decision and order of the court.

Dated: September 22, 2006_____________________________

PETER P. SWEENEY

Civil Court Judge

Civil Court, Richmond County

005741/05

Peter P. Sweeney, J.

The plaintiff commenced this action pursuant to Insurance Law § 5101 et seq to recover assigned first-party no-fault benefits for medical service provided to its Assignors, Guillermo Rios and Criselda Rodriquez.

The trial of the action took place on April 12, 2006. Neither party called a witness. To establish a prima facie case, plaintiff relied solely upon defendant’s failure to respond to a notice to admit it was served on November 30, 2005 pursuant to CPLR 3123(a).

The notice to admit requested admissions of the following facts:

1.The defendant received the claim(s) for No-Fault benefits that are the subject of this action.

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

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

4. The defendant has not paid the bill(s), claim(s), and/or N-F-3 referenced in 1 through 3 above.

5.The defendant received an Assignment of Benefits Forms(s) for the claims that are the subject of this action.

7.The defendant did not mail requests for verification to the plaintiff for the claims that are the subject of this action.

8.The defendant issued a policy of insurance covering the vehicle plaintiff’s assignor was in at the time of the motor vehicle accident.

Plaintiff did not annex to the notice to admit copies of the bills, claims, and/or N-F-3s and requested and admissions as to their genuineness as CPLR 3123(a) permits. Further, the bills, [*2]claims, and/or N-F-3s were not received in evidence during the trial.

Plaintiff maintained that by failing to respond to the notice to admit, defendant admitted to the truth of all the facts alleged therein and that these facts were sufficient to make out a prima facie case.

Defendant maintained that it was not obligated to respond to the notice to admit since it was vague and ambiguous and sought admissions of ultimate issues of fact. Defendant further maintained that plaintiff was required to introduce the bills, claims, and/or N-F-3s into evidence to make out a prima facie case.

Discussion:

Defendant’s contention that it did not have to respond to the notice to admit is without merit. Plaintiff properly used the notice to admit to dispose of what it believed to be uncontroverted questions of facts which would have been easily provable at trial (The Hawthorne Group, LLC v. RRE Ventures, 7 AD3d 320, 324 [1st Dep’t 2004]; see also Meadowbrook-Richman, Inc. v. Cicchiello, 273 AD2d 6 [1st Dep’t 2000]; Samsung America, Inc. v. Yugoslav Korean Consulting & Trading Co.,199 AD2d 48 [1st Dep’t 1993] ). The notice to admit removed “from the case those uncontested matters which would [have] merely present[ed] a time-consuming burden at trial” (Villa v. New York City Housing Authority, 107 AD2d 619-620 [1st Dep’t 1985] ).

While a party is not obligated to furnish admissions in response to a notice to admit that improperly demands admissions of ultimate and fundamental issues that can only be resolved after a full trial or matters that are in actual dispute (see, Meadowbrook-Richman, Inc. v. Cicchiello 273 AD2d 6, 6; [1st Dep’t 2000]; Orellana v. City of New York, 203 AD2d 542, 543 [2nd Dep’t 1994]; Miller v. Hilman Kelly Co.,177 AD2d 1036, 1037 [4th Dep’t 1991] ), “[a]ll of the items in the notice to admit involve[d] clear-cut factual matters about which one would reasonably anticipate no dispute, and the immediate disposition of which would not unfairly prejudice the defendant and would help to expedite the trial” (Risucci v. Homayoon, 122 AD2d 260, 261 [2nd Dep’t 1986], citing , CPLR 3123[a]; Villa v. New York City Housing Auth., 107 AD2d 619, 620 [1st Dep’t 1985] ). That fact that a notice to admit will establish plaintiff’s prima facie case on paper does not bar its use (id.).

Simply because defendant denied many of the facts alleged in the notice to admit in its answer to plaintiff’s complaint did not establish that those facts were in actual dispute. To hold otherwise would preclude a plaintiff from requesting admissions of any fact initially denied by a defendant in its answer. If defendant actually disputed any of the facts alleged in the notice to admit, it should have submitted a timely response denying them.

The court rejects defendant’s contention that the notice to admit was vague and/or ambiguous.

Inasmuch as defendant did not respond to the notice to admit within 20 days, defendant is deemed to have admitted all of the facts alleged therein (CPLR 3123[a] ).

Notwithstanding the above, the court agrees with defendant that plaintiff did not make out a prima facie case. In A.B. Med. Servs. PLLC v. State Farm Mut. Auto. Ins. Co., 2005 NY Slip Op 50432[U] [App Term, 2d & 11th Jud Dists], the court held that “[b]y failing to append the necessary claim forms to their motion papers, plaintiffs did not establish their prima facie case” (see, also, Patil v. Countrywide Ins. Co., 2006 NY Slip Op. 50306(U) [App Term, 9th & 10th [*3]Jud Dists]; Maldonado v. Steiner, 2005 NY Slip Op. 51905(U) [App Term, 9th & 10th Jud Dists] ). It necessarily follows that to make out a prima facie case at trial, copies of the NF-3 claim forms or their functional equivalent must be received in evidence for the purpose of demonstrating exactly what was sent to and received by the defendant. In the instant case, neither the N-F-3s nor their functional equivalent were received in evidence nor did plaintiff annex them to the notice to admit and request an admissions as to their genuineness.

Accordingly, it is hereby

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

Dated: July 3, 2006_____________________________

PETER P. SWEENEY

Civil Court Judge