[*1]

Civil Court of the City of New York, Richmond County, June 22, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola, for plaintiff. Bruno Gerbino & Macchia, LLP, Melville, for defendant.

OPINION OF THE COURT

Peter P. Sweeney, J.

This action to recover first-party no-fault benefits presents a novel issue. After receiving each of the disputed claims, defendant made timely requests for additional verification thereby tolling the 30-day period in which it had to pay or deny the claims. When plaintiff did not provide the verification, defendant made an additional request for the verification 28 calendar days later. When plaintiff failed to provide the verification, defendant denied the claims citing plaintiff’s failure to provide the verification as its only defense. The issue presented is whether, under these circumstances, defendant’s denials of claim, all of which were issued more than 30 days after it received the claims, were timely. The court concludes that they were not.

Factual Background

This action involves three claims for first-party no-fault benefits totaling $5,698.45 for electrodiagnostic testing of plaintiff’s two assignors. The trial of the action was scheduled for April 19, 2006. At that time, the parties waived their right to a trial and agreed to submit the matter to the court for resolution based on stipulated facts. The parties stipulated that defendant received each of the claims on February 13, 2003; that on February 25, 2003, defendant requested additional verification of each claim, i.e.—a letter of medical necessity from the referring physician; that on March 25, 2003, defendant made a second request for the same verification; that the requested verification was never provided; and that on January 26, 2004, defendant denied each of the claims citing plaintiff’s failure to provide verification as its only defense. The claim forms, an assignment of benefits for each assignor, defendant’s first and second requests for verification and defendant’s denials of claim were all stipulated into evidence.

Defendant maintains that it properly denied the claims and that it is therefore entitled to judgment dismissing the action.

Plaintiff maintains that while defendant’s initial requests for additional verification were timely and tolled the 30-day period in which defendant had to pay or deny the claims, the toll was eviscerated when defendant failed to send out a follow-up request for the additional verification within the 10-day time period specified in 11 NYCRR 65-3.6 (b). Plaintiff correctly points out that defendant mailed out the second requests only 28 days after the first requests had been [*2]mailed. Plaintiff contends that pursuant to 11 NYCRR 65-3.6 (b), defendant was required to wait at least 30 calendar days before it re-requested the verification.

Discussion

It is well settled that an insurer is required to pay or deny a claim for no-fault benefits within 30 days after the claimant provides proof of the claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997]) and that its failure to do so will preclude it from raising most defenses to the claim (see Presbyterian Hosp. in City of N.Y., 90 NY2d at 282).

An insurer may extend the 30-day period in which it has to pay or deny a claim by making a request for additional verification of the claim “within 15 business days of receipt [of one] of the prescribed verification forms” (11 NYCRR 65-3.5 [b]; see also Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96 [2d Dept 2005]; New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583, 584-585 [2d Dept 2002]; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699, 700 [2d Dept 2001]). If the verification is not provided 30 calendar days after the original request, “[a]t a minimum . . . the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested, either by telephone call, properly documented in the file, or by mail” (11 NYCRR 65-3.6 [b]).

In Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co. (233 AD2d 431, 432 [2d Dept 1996], lv denied 90 NY2d 802 [1997]), the Court addressed the consequences of an insurer’s failure to seek additional verification of a claim in compliance with the no-fault regulations then in effect. The defendant in that case timely requested that plaintiff provide a copy of the hospital record of its assignor as additional verification of the claim. When plaintiff did not provide the hospital record within 30 calendar days, defendant did not do any of the follow-up required by 11 NYCRR former 65.15 (e) (2), which, in relevant part, provided:

“At a minimum, if any requested 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 originally requested, either by a telephone call, properly documented in the file, or by mail.”

Although plaintiff ultimately provided the hospital record, defendant did not receive it until more than 30 days had elapsed since the claim was submitted. The hospital record indicated that plaintiff’s assignor was intoxicated at the time of accident and based on the record, defendant denied the claim asserting the intoxication of plaintiff’s assignor as a defense.

In affirming the judgment entered in plaintiff’s favor in the court below, the Appellate Division for the Second Department concluded that defendant was precluded from raising intoxication as a defense inasmuch as defendant denied the claim more than 30 days after its receipt. The Court based its decision on the principle that “[w]hen an insurance company fails to comply with its duty to act expeditiously in processing no-fault claims, it will be precluded from raising most defenses” (Presbyterian, 233 AD2d at 432 [citation omitted]). The Court reasoned that by failing to do the follow-up required by 11 NYCRR former 65.15 (e) (2), which it concluded had to be “strictly construed” (Presbyterian, 233 AD2d at 432), defendant did not act diligently in processing the claim (Presbyterian, 233 AD2d at 433 [citations omitted]).

The courts have consistently followed the holding in Presbyterian (see King’s Med. Supply v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450[U] [App Term, 2d & 11th Jud Dists]; Bronx Med. Servs., P.C. v Windsor Ins. Co., 2003 NY Slip Op 50885[U] [App [*3]Term,1st Dept]; Ocean Diagnostic Imaging P.C. v Allstate Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50140[U] [App Term, 2d & 11th Jud Dists]).

This case is not on all fours with Presbyterian or the other cases cited above. In all of those cases, when the plaintiff failed to provide the verification that had been requested, the defendant did not do any follow-up whatsoever. Here, defendant did follow up but not within the 10-day period specified in 11 NYCRR 65-3.6 (b). While defendant certainly acted more diligently in processing the claims than the defendant in Presbyterian or the other cases cited above, it did not strictly adhere to the dictates of 11 NYCRR 65-3.6 (b), nonetheless. The court must be guided by the principle that the no-fault regulations are in derogation of the common law and must be strictly construed (Presbyterian, 233 AD2d at 432; Presbyterian Hosp. in City of N.Y. v Atlanta Cas. Co., 210 AD2d 210, 211 [2d Dept 1994]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 226 AD2d 613, 614 [2d Dept 1996]).

The clear language of 11 NYCRR 65-3.6 (b) required defendant to follow up with the plaintiff for the verification at least once in the 10-day period specified therein. This defendant clearly did not do so. The court finds that when defendant failed to follow up as required by 11 NYCRR 65-3.6 (b), the toll occasioned by defendant’s initial requests for verification dissipated ab initio. Thus, it necessarily follows that defendant’s denials of claim, all of which were issued more than 30 days after defendant received the claims, were untimely as a matter of law. Defendant was precluded from raising most defenses, including the defense asserted in each of its denials.

Having established that it submitted the claims setting forth the fact and the amounts of the loss sustained and that payment of no-fault benefits was overdue, plaintiff is entitled to judgment in the amount sued for (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]).

Accordingly, it is hereby ordered and adjudged that judgment be entered in plaintiff’s favor in the amount of $5,698.45, together with interest and attorneys’ fees as provided for under the No-Fault Law and the regulations promulgated thereunder, as well as costs and disbursements.

[*1]

Civil Court of the City of New York, Richmond County, June 9, 2006

APPEARANCES OF COUNSEL

Sanders, Grossman, Fass & Muhlstock P.C., Mineola, for plaintiff. Bruno, Gerbino & Soriano LLP, Melville, for defendant.

OPINION OF THE COURT

Peter P. Sweeney, J.

In this action to recover assigned first-party no-fault benefits, the issue presented is whether the testimony of the peer expert called by defendant at trial to establish its defense of lack of medical necessity should have been precluded on the ground that he did not prepare the peer review reports upon which defendant relied in denying the claims. The court holds that since the peer review expert, whose identity had been disclosed to plaintiff prior to trial, was limited to testifying to the facts and opinions contained in the peer review reports defendant relied upon in denying the claims, there was no basis to preclude his testimony.

Facts

Plaintiff SK Medical Services, P.C. commenced this action to recover first-party no-fault benefits for medical services provided to three assignors, Mamia Kashia, Zaza Kacharava and Malkhaz Gvaladze. All three assignors were allegedly injured on December 27, 2002, in the same motor vehicle accident. Each assignor appeared at plaintiff’s facility on January 21, 2003 for a “neurodiagnostic consultation” by Dr. Larisa Tsaur. On the same day, Dr. Tsaur performed essentially identical electrodiagnostic testing on each assignor. The tests included nerve conduction velocity studies and electromyography studies.

Plaintiff submitted four bills to defendant, one in the amount of $3,673.07 for services provided to Mamia Kashia, another in the same amount for services provided to Zaza Kacharava and two bills totaling $3,976.66 for services provided to Malkhaz Gvaladze. Along with each bill, plaintiff submitted a copy of the neurodiagnostic consultation report of Dr. Tsaur.

Upon receipt of the bills, defendant retained Dr. Joseph C. Cole to do a peer review for each submission. Dr. Cole prepared three peer review reports, one for each assignor, and recommended that defendant pay only for the neurodiagnostic consultations. He concluded that the extensive electrodiagnostic testing of plaintiff’s assignors, performed less than a month following the accident, was not medically necessary in light of Dr. Tsaur’s clinical findings.

In accordance with Dr. Cole’s recommendations, defendant paid plaintiff for the [*2]neurodiagnostic consultations and denied the remainder of the bills asserting lack of medical necessity as a defense. Each of defendant’s denials included a copy of the peer review report upon which it was based.

The trial of this action took place on March 2, 2006. At the outset of the trial, the parties stipulated that defendant received the NF-3 claim forms (the bills), which included Dr. Tsaur’s neurodiagnostic consultation reports, and that defendant timely denied the claims on the ground of lack of medical necessity based on Dr. Cole’s peer review reports. The NF-3 claim forms, the neurodiagnostic consultation reports and each of defendant’s denials, which included Dr. Cole’s peer review reports, were stipulated into evidence.

At the time of trial, Dr. Cole was not available to testify. To establish its defense of lack of medical necessity, defendant called Peter Gastaldi, D.C. Plaintiff objected and moved to preclude him from testifying. Plaintiff’s counsel maintained that since defendant’s denials of claim were based on Dr. Cole’s peer reviews, defendant was limited to calling Dr. Cole to establish lack of medical necessity. Plaintiff’s counsel further maintained that since defendant never exchanged a copy of Dr. Gastaldi’s peer review report or properly responded to plaintiff’s demand for expert disclosure, Dr. Gastaldi should be precluded from testifying.

Plaintiff’s demand for expert information required defendant to provide

“(a) the name and address of each and every person [defendant] expect[ed] to call as an expert witness at the time of trial of this action; (b) the subject matter on which each expert is expected to testify; (c) the substance of the facts and opinions on which each expert is to testify; (d) the qualifications of each expert; and (e) a summary of the grounds for each expert’s opinion.”

In response, defendant provided Dr. Gastaldi’s name and address but the only information provided as to the particulars of his expected testimony was that he would “be relied upon at trial to provide testimony as to the findings of a lack of medical necessity as set forth in the denial.”

Defendant’s counsel represented that Dr. Gastaldi never prepared a peer review report and that he would testify to the same facts and opinions as set forth in Dr. Cole’s reports. Defendant therefore maintained that plaintiff had no legitimate argument that it would be prejudiced if Dr. Gastaldi were allowed to testify.

The court reserved decision on the motion and permitted Dr. Gastaldi to testify. The court precluded him, however, from testifying to facts or opinions that were not set forth in Dr. Cole’s reports. The court agreed to strike his testimony if plaintiff’s motion were granted.

Discussion

After careful consideration, the court finds that there was no legitimate basis to preclude Dr. Gastaldi from testifying. Each of defendant’s denials of claim, which asserted lack of medical necessity as a defense, was timely issued (Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]), contained the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664 [2d Dept 2004]), and, with the inclusion of the peer review report upon which it was based, “promptly apprise[d] the claimant[s] with a high degree of specificity of the ground . . . on which [it was] predicated” (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]; see also, Nyack Hosp., 11 AD3d at 664 [2d Dept 2004]; Keith v Liberty Mut. Fire Ins. Co., 118 AD2d 151, 153 [2d Dept 1986]). Defendant therefore preserved its right to defend the claims at trial on the [*3]ground of lack of medical necessity for the reasons stated in Dr. Cole’s peer review reports.

While it is true that an insurer may not, after repudiating liability, assert new grounds for its refusal to pay a claim (Han-Ki Lee v American Tr. Ins. Co., 304 AD2d 713, 714 [2003]; Lentini Bros. Moving & Stor. Co. v New York Prop. Ins. Underwriting Assn., 53 NY2d 835, 836 [1981]) and must “stand or fall upon the defense upon which it based its refusal to pay” (Beckley v Otsego County Farmers Coop. Fire Ins. Co., 3 AD2d 190, 194 [1957]; see also, King v State Farm Mut. Auto. Ins. Co., 218 AD2d 863, 865 [1995]), permitting Dr. Gastaldi to testify did not violate these principles since Dr. Gastaldi was not permitted to assert any new ground justifying defendant’s refusal to pay the claims. Contrary to plaintiff’s contention, there is no requirement in the no-fault regulations, or under common law, requiring an insurer to exchange a copy of the report of a peer review expert it intends to call at trial. Although 11 NYCRR 65-3.8 (b) (4) requires an insurer upon written demand to provide an applicant, the applicant’s attorney or the applicant’s treating physician with a copy of a peer review report upon which its denial is based, nothing contained in this regulation, nor in any other regulation promulgated under the No-Fault Law, suggests that an insurer is limited to calling the peer expert whose report was exchanged as its expert witness at trial. No plausible argument has been put forth why this court should impose such a limitation. If an insurer wishes to elicit expert testimony at trial to establish the factual basis of a properly asserted defense, it must simply comply with the rules pertaining to expert disclosure.

In this case, contrary to plaintiff’s assertion, defendant sufficiently complied with plaintiff’s demand for expert disclosure. In its response, defendant identified Dr. Gastaldi as a potential expert and indicated that he would “be relied upon at trial to provide testimony as to the findings of a lack of medical necessity as set forth in the denial[s].” As stated above, each of defendant’s denials included the report of Dr. Cole upon which it was based, and Dr. Gastaldi was limited to testifying to the facts and opinions contained therein. Accordingly, defendant’s expert disclosure sufficiently set forth “the substance of the facts and opinions on which” the expert was expected to testify (CPLR 3101 [d] [1] [i]; see, Barrowman v Niagara Mohawk Power Corp., 252 AD2d 946, 946-947 [1998], lv denied 92 NY2d 817 [1998]) and “demonstrable prejudice or surprise” to the plaintiff had not been shown (Rook v 60 Key Ctr., 239 AD2d 926, 927 [1997]).

For all of the above reasons, plaintiff’s motion to preclude is denied.

The court finds Dr. Gastaldi to be a credible witness. His testimony did not go beyond the facts and opinions contained in Dr. Cole’s reports. He gave persuasive testimony that the extensive testing performed on each of plaintiff’s assignors on January 21, 2003 was not medically necessary in light of Dr. Tsaur’s clinical findings. The court credits his testimony in all respects. No witnesses were called by the plaintiff to rebut his testimony. The court therefore finds that defendant established by a preponderance of the credible evidence that the testing at issue was not medically necessary.

Accordingly, it is hereby ordered that judgment be entered in favor of the defendant dismissing the complaint.

Civil Court of the City of New York, Richmond County

6195/2005

Peter P. Sweeney, J.

Upon the foregoing papers the within motion and cross-motion are decided as follows:

Plaintiff commenced this action pursuant to Insurance Law § 5101 et seq. to recover $3,673.07 in assigned first-party no-fault benefits, as well as statutory interest and attorney’s fees, for medical services provided to its assignor. Defendant now moves for an order inter alia striking plaintiff ‘s complaint due to its failure to provide discovery. Plaintiff cross-moves for summary judgment.

In support of its motion to strike plaintiff’s complaint, defendant demonstrated that the plaintiff has not complied with various discovery demands which were served on June 22, 2005. The demands included interrogatories, a notice of examination before trial, a request for expert disclosure, a demand for party statements and a notice for discovery and inspection. Several of the demands sought information regarding plaintiff’s corporate structure and licensing status, and others sought information concerning whether the physicians who treated plaintiff’s assignor were plaintiff’s employees or independent contractors.

Plaintiff opposed the motion and cross-moved for summary judgment. The papers [*2]submitted by the plaintiff established that it submitted the claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue. Plaintiff correctly asserts that its submissions established its prima facie entitlement to summary judgment ( see Insurance Law § 5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). Plaintiff maintains that to withstand the cross-motion, it was incumbent upon the defendant to submit competent proof raising a triable issue of fact (Alvarez v. Prospect Park Hospital, 68 NY2d 320 [1986]) and that pending a determination of the cross-motion, defendant’s motion to strike the complaint should be stayed pursuant to CPLR 3212, which in pertinent part, provides: “Service of a notice of motion under CPLR 3211, 3212, or section 3213 stays disclosure until a determination of the motion unless the court orders otherwise.” Significantly, there is no indication in either defendant’s or plaintiff’s papers that plaintiff raised timely objections to defendant’s interrogatories in accordance with CPLR 3133 or timely objections to defendant’s other various demands pursuant to CPLR 3122.

In opposition to plaintiff’s cross-motion for summary judgment, defendant maintained that there are triable issue of fact as to whether the injuries for which plaintiff’s assignor received treatment were causally related to the motor vehicle accident underlying the claims. Defendant asserted this defense in its denial of claim dated August 6, 2003 wherein defendant acknowledged having received the claims on May 5, 2005. Defendant’s denial was therefore untimely as a matter of law. Although defendant’s untimely denial did not preclude the defendant from raising this defense (see, Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; Mount Sinai Hosp. v. Triboro Coach, 263 AD2d 11, 18-19 [1999] ), for the reasons set forth below, the court need not address whether defendant’s submissions raised a triable issue of fact.

Discussion:

In State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313, 319 [2005], the Court of Appeals held that an insurer may withhold payment of a first-party no-fault claim “for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims.” In so holding the Court noted that Business Corporation Law § 1507 provides, “A professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice. . .” (id. at 319 n. 1) and that pursuant to 11 NYCRR 65-3.16(a)(12), “A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement. . .” (id. at n. 2). The Court concluded that a medical corporation that is owned or controlled by non-physicians violates these provisions and therefore can not recover assigned first-party no-fault benefits (id. at 320).

Although the Mallela court did not squarely address the issue of whether an insurer ‘s untimely denial of a claim precludes it from asserting the defense that a plaintiff medical corporation was a fraudulently incorporated, in A.B. Medical Services PLLC v. Utica Mut. Ins. Co., 2006 NY Slip Op. 26068[App. Term, 2nd & 11th Jud. Dists.] the court held that an insurer may assert the defense even though it was not asserted in a timely denial of claim. The court in A.B. Medical Services PLLC v. Utica Mut. Ins. Co., supra., further held that where an insured [*3]served demands for discovery seeking information concerning whether the plaintiff medical corporation was a fraudulently licensed (i.e. – information regarding corporate structure and licensing status), which were not palpably improper or privileged and which were not objected to in accordance with CPLR 3122, the insurer was entitled to the discovery (id.) and that until such discovery was provided, a motion for summary judgment made by the plaintiff should be denied as premature pursuant to CPLR 3212(f) (id.). Finally, the court held that the insurer’s discovery demands, to the extent they seek information regarding defenses that the insurer was precluded from raising due to its failure to timely deny the claim, were palpably improper, and that the plaintiff did not have to comply with such demands regardless of whether they were timely objected to (id.).

In accordance with A.B. Medical Services PLLC v. Utica Mut. Ins. Co., supra., this Court finds that defendant is entitled to compliance with its various discovery demands to the extent they seek information regarding plaintiff’s corporate structure and licensing status, and that until such discovery is provided, plaintiff’s cross-motion for summary must be denied as premature.The court further finds that the holding in A.B. Medical Services PLLC v. Utica Mut. Ins. Co. necessarily requires that plaintiff provide responses to defendant’s discovery demands to the extent they seek information regarding other defenses that the defendant is not precluded from raising due to the untimely denial of the claim. These defenses include the defense that a billing provider is ineligible to recover assigned first-party benefits for treatment performed by an independent contractor (see Rockaway Blvd. Medical P.C. v. Progressive Ins., 9 Misc 3d 52 [App. Term, 2d & 11th Jud. Dists. 2005]; A.B. Medical Services PLLC v. New York Cent. Mut. Fire Ins. Co., 8 Misc 3d 132(A), 801 N.Y.S.2d 776 [App. Term, 2d & 11th Jud. Dists. 2005]) and any defense to coverage, including but not limited to the defense that the injuries for which treatment was provided were not causally related to the accident (see Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; Mount Sinai Hosp. v. Triboro Coach, 263 AD2d 11, 18-19 [1999]) and the defense that the collision underlying the claim was a staged event in furtherance of an insurance fraud scheme (see Central Gen. Hosp., 90 NY2d at 199; Matter of Metro Med. Diagnostics v. Eagle Ins. Co., 293 AD2d 751 [2002]; A .B. Med. Servs. v. CNA Ins. Co., 2 Misc 3d 138[A], 2004 NY Slip Op 50265[U] [App Term, 2d & 11th Jud. Dists.]. There is no logical reason to distinguish an insurer’s entitlement to discovery regarding these non-waivable defenses and the type of defenses recognized in Mallela.

Finally, defendant’s interrogatories and other demands, to the extent that they seek information regarding the defenses defendant is now precluded from raising due to its untimely denial of claim, must be stricken.

Accordingly, it is hereby

ORDERED that plaintiff’s cross-motion for summary judgment is DENIED without prejudice to renewal upon completion of discovery; it is further

ORDERED that defendant’s motion to strike plaintiff’s complaint is granted unless within 60 days of service of this order with notice of entry, plaintiff complies with defendant’s discovery demands to the extent they seek information regarding those defenses that defendant is not precluded from raising due to its untimely denial of claim; it is further

ORDERED defendant’s discovery demands to the extent they seek information regarding defenses defendant is precluded from raising due to its untimely denial of the claim are hereby [*4]stricken; and it is further

ORDERED that if within 15 days of the date of this order, the parties do not agree in writing as to what discovery must be provided pursuant to this order, the parties are directed to contact the undersigned at (718) 390-5429 to arrange for a discovery conference.

This constitutes the decision and order of the court.

Dated: April 5, 2006 ________________________________

PETER P. SWEENEY

Civil Court Judge

[*1]

Civil Court of the City of New York, Richmond County, November 22, 2004

APPEARANCES OF COUNSEL

Joseph Sparacio, Staten Island, for plaintiff. Bruno Gerbino & Macchia, LLP, Melville, for defendant.

{**6 Misc 3d at 580} OPINION OF THE COURT

Judith R. McMahon, J.

The genesis of this first-party benefits action is a motor vehicle accident that occurred on March 8, 2003. The plaintiff’s assignor, Augusto Espinoza, was involved in this vehicular accident and as a result of his alleged injuries, sought medical treatment from Dr. Lev. Thereafter, Dr. Lev referred Mr. Espinoza to plaintiff, Dr. Hellander, for diagnostic testing, including a paraspinal ultrasound of the cervical paraspinal region, the thoracic paraspinal region, lumbar paraspinal region, and the trapezius muscles bilaterally. Dr. Hellander performed the requested diagnostic modalities on March 26, 2003 and sent a timely bill to Mr. Espinoza’s insurer, the defendant, pursuant to the No-Fault Insurance Law. (See, 11 NYCRR 65-3.11.) At the time of the testing, Mr. Espinoza signed a standard assignment of benefits form and a signature stamp containing Dr. Hellander’s name was affixed to the form.

After receipt of Dr. Hellander’s bill, State Farm Insurance Company issued a timely denial (NF-10). As a result of the denial, plaintiff instituted an action for payment of first-party benefits pursuant to the No-Fault Insurance Law. In its answer, State Farm alleged, inter alia, lack of standing on behalf of the plaintiff and lack of medical necessity of the diagnostic testing performed on March 26, 2003. After a filing of the notice of trial, a nonjury trial was held in this matter on September 20, 2004.

At the time of trial, plaintiff established a prima facie case by submitting into evidence the statutory forms of proof of claim, the amount of the claim and the defendant’s denial form (NF-10) which indicated proof of service upon defendant in a timely fashion. (See Park Health Ctr. v Prudential Prop. & Cas. Ins. Co., 2001 NY Slip Op 40650[U] [2001].)

During the trial, plaintiff attempted to place the assignment of benefits into evidence. Defendant objected based upon the lack of authentication of the assignor’s signature. The burden of proving an affirmative defense of lack of standing should be on the defendant. In the case at [*2]bar, State Farm did not come forward with any evidence to challenge the effectiveness of the assignor’s signature. Merely, upon voir dire of Dr. Hellander, the defendant elicited that the procedure in the office of the plaintiff is that the assignment of benefits form is signed by the patient outside the presence of the doctor. The doctor’s signature stamp is then placed on the form. Further, the plaintiff testified that it was {**6 Misc 3d at 581}the customary procedure in his office that the technician or the technician’s office personnel be present at the time the assignor signs the assignment of benefits form. Therefore, following the holding in Elm Med., P.C. v American Home Assur. Co. (2003 NY Slip Op 51357[U] [2003]) and even assuming, arguendo, that the plaintiff must proffer a proper assignment of benefits, the testimony as to the custom and procedure of this physician’s office established the propriety of the assignment of benefits.

A signature without authentication adequately explained by the physician as being obtained in the ordinary and customary procedure in the office should be sufficient to defeat the claim of lack of standing. The authenticity of the signature, therefore, may be reasonably inferred since the patient signed the assignment of benefits form as part of the usual and customary procedure as detailed by the physician’s testimony and underwent the testing as described in the billing records. “Circumstantial evidence may satisfy the requirement that a writing be authenticated before it may be introduced.” (Elm Med., P.C. v American Home Assur. Co., 2003 NY Slip Op 51357[U], *7; see, Anzalone v State Farm Mut. Ins. Co., 92 AD2d 238 [1983].)

Defendant’s second argument that the testing performed by plaintiff was medically unnecessary is novel since the claim is, not that the test was unnecessary for the complaints and symptomatology presented by the assignor, but, that the particular tests performed by plaintiff are without any clinical benefit in most instances. Specifically, defendant’s denial form (NF-10) states the following:

“According to the American College of Radiology, the American Institute of Ultrasound and Medicine and the American Chiropractic College of Radiology, the use of spinal ultrasound currently has no proven clinical utility as a screening diagnostic or adjunctive imaging tool for the evaluation of pain, fluid in the tissues, nerve disorders, or subtle abnormalities adjacent to the spine. Therefore, this procedure is denied. The named insured is not responsible for payment.”

At the trial, defendant called Dr. William Ross, an internist and gastroenterologist. Dr. Ross, in brief, testified on direct examination that based upon the opinion statement by the American College of Radiology in 1996 that spinal ultrasound has no clinical {**6 Misc 3d at 582}utility, he found the testing performed by plaintiff to be unnecessary. Upon cross-examination, Dr. Ross’ opinion became, at best, equivocal as is revealed in the following portions of testimony:

“Q. Doctor, do you agree or disagree with the following statement contained on page 573 of the 2003 Practice Guidelines, etcetera, which reads: ‘These guidelines are an educational tool designed to assist practitioners in providing appropriate radiologic care for patients,’ do you agree or disagree with that, doctor?

“A. I don’t see why I wouldn’t agree with that.

“Q. Do you agree or disagree with the statement on the same page that goes on to say, ‘they are not inflexible rules or requirements of practice and are not intended, nor should they be used, to establish a legal standard of care,’ do you agree or disagree with that from this book?

“A. Sounds very reasonable” (at 33, lines 1-15).

Dr. Hellander had testified that the tests he performed would, in his opinion, assist the referring physician in making a diagnosis and in formulating a treatment plan.

In the case at bar, plaintiff established a prima facie case by submitting the statutory forms of proof of claim and the amount of the loss. (See Liberty Queens Med., P.C. v Liberty Mut. Ins. Co., 2002 NY Slip Op 40420[U] [App Term, 2d & 11th Jud Dists 2002].) Once plaintiff has established his case, the burden of proof shifts to the defendant on the claim of lack of medical necessity stated in defendant’s affirmative defense. In determining whether services are medically necessary the following analysis has been utilized:

“[F]or treatment or services to be medically necessary, it must be reasonably determined by the health care professional in consultation with the patient, that the treatment or services are consistent with the patient’s condition, circumstances and best interest of the patient with regard to the type of treatment or services rendered, the amount of treatment or services rendered, and the duration of the treatment or services rendered. To find treatment or services are not medically necessary, it must be reasonably shown by medical evidence, in consideration of the patient’s condition, circumstances, and best interest of the patient, that the treatment or services {**6 Misc 3d at 583}would be ineffective or that the insurer’s preferred health care treatment or lack of treatment would lead to an equally good outcome.” (Fifth Ave. Pain Control Ctr. v Allstate Ins. Co., 196 Misc 2d 801, 807-808 [2003].)

Applying the aforementioned standard to the case at bar it becomes clear that defendant’s expert’s testimony is equivocal and does not meet the burden of proof necessary to establish that [*3]the testing done by plaintiff was not medically necessary. In the instant matter, we have here, not a specific symptom, not a specific disease, not a specific complaint that was addressed in a medically ineffective way, according to defendant; rather, according to defendant’s denial form (NF-10) the defendants have a blanket claim that the ultrasound of the paraspinal area is ineffective, regardless of complaint or symptomatology. This court is not willing to find a diagnostic tool utilized by physicians to be ineffective in all forms of complaints concerning the spine based on teetering testimony by defendant’s expert and guidelines instituted by the American College of Radiology which clearly establish that doctors are to use their own judgment in ordering different tests and that their conclusions are not binding upon any medical personnel. Furthermore, we have testimony by the physician, Dr. Hellander, stating that his test would be useful to the referring physician to form a proper prognosis and diagnosis of the patient.

Moreover, in reviewing the standard concerning medical necessity, it is quite clear that this is to be viewed on a patient-by-patient basis and that testing, whether medically necessary or not, should be based upon the symptomatology and complaints and disease entities of the patient/assignor involved.

This does not mean, of course, that this court would not find that a paraspinal ultrasound would not be medically necessary to a particular patient; however, it is not a court’s function based upon the testimony presented in this matter to rule a diagnostic modality ineffective for all spinal treatments when the College of Radiology is perplexed about the effectiveness or ineffectiveness of such. A broad stroke of the brush in such an instance would not be beneficial to the medical profession and, in particular, to the patients they treat. Accordingly, judgment is rendered for the plaintiff in the amount of $1,894.42.

Civil Court Of The City Of New York, Richmond County

Index No. 40049/03

For Plaintiffs: Joseph Sparacio, Esq. 2555 Richmond Avenue Staten

Island, NY 10314

(718) 966-0055

For Defendants: Richard C. Mulle , Esq. Martin, Fallon & Mulle 100

East Carver Street Huntington, NY 11743 (631) 421-1211

PHILIP S. STRANIERE, J.

Recitation, as required by CPLR 2219(a), of the papers considered in the review of this

MOTIONS TO COMPEL.

Papers Numbered

Notices of Motion and Affidavits Annexed……………………………………..1&2

Order to Show Cause and Affidavits Annexed.………………………………

Answering Affidavits……………………………………………………………………

Replying Affidavits………………………………………………………………………

Exhibits………………………………………………………………………………………..

Other……………………………………………………………………………………………

[*2]Upon the foregoing cited papers, the Decision/Order on this Motion is as follows:

“The answer my friend is blowin’ in the wind. The answer is blowin’ in the wind.”

We all are familiar with this refrain from Bob Dylan’s 1960’s protest song. Unfortunately it has become the cry of too many litigants in New York City’s Civil Court. Currently before the Court are three motions made by defendant State Farm Mutual Automobile Insurance Company. In each motion the defendants sought to compel the plaintiff, Richmond Pain Management, P.C. as assignee of Kenneth Bevel (40049/03); as assignee of Clifford Whaley(40050/03); and as assignee of Lorna Sterling (40051/03) to provide discovery previously requested and to reimburse the defendant the $45.00 defendant had to

expend in each action to purchase an index number. The discovery issues were resolved by a “so ordered”stipulation in each action. The defendant however insisted on submitting the issue of its entitlement to be reimbursed the $45.00 to the Court for decision.

The Court is left to decide the rather novel ^[FN1] issue of whether or not a defendant who purchases an index number in Civil Court can recover that money either by making a motion or in a judgment issued at the end of the litigation.

The civil action part of the Civil Court, like some other courts of limited jurisdiction, retains a system for commencement of an action that is a relic of days gone by. The civil action part is governed by a “commence by service” statute, Civil Court Act Article 4. Not only is this system in conflict with “commence by filing” as provided in CPLR 304, it is also not in conformity with how in Civil Court a summary proceeding is commenced in the landlord-tenant part or a small claims action is started in that part. To commence a suit in either of these parts requires the litigant to purchase an index number from the clerk of the court. More importantly, when a self-represented litigant wants to commence an action, CCA 401(a) requires the clerk to issue the summons if “the plaintiff appears without an attorney” and collect the appropriate fee.^[FN2]

When the CPLR was amended to cover actions commenced in the Supreme and County Court, § 400 was added to the Civil Court Act to specifically preclude the Civil Court from the commence by filing provisions and preserve the out-dated system of commencement by service. This was done even though the civil jurisdiction of the County Court and Civil Court are practically identical (NY State Constitution Article 6 § 11 and 15). CCA 400 also provides that [*3]“a special proceeding is commenced by service of a notice of petition or order to show cause.” The implication of CCA 400 in regard to special proceedings, which are governed by CPLR Article 4, is that they too are commenced by service. However, that contradicts CCA 401 (c) which requires the notice of petition and petition in a summary proceeding to be issued by the Court. This sentence probably should read “a special proceeding, other than a summary proceeding commenced under CCA 204” since summary proceedings are currently commenced by filing the notice of petition and petition with the clerk (CCA 401 (c)).

This case points out the serious deficiency in retaining the current commencement by service system in the Civil Court. CCA 401(b) requires that any summons issued contain language that directs the defendant to file an answer with the clerk within 20 days if personally delivered to the defendant in the city of New York, and if served by a means other than personal delivery within the city if New York the defendant must file an answer within thirty days of the plaintiff filing proof of service with the clerk (CCA 402). Meanwhile CCA 409 requires the plaintiff to file a copy of the summons with proof of service with the clerk within fourteen days after service is made within the city of New York regardless of how it was served. This procedure is seemingly not that complicated. However, this is when theory and practice collide.

For instance, defendant is served on March 1 and on March 2 within the time set forth in the summons, files an answer as directed by the summons. The answer is received by the clerk who determines that there is no index number for the action since the plaintiff has not filed the summons. If the answer is personally delivered to the clerk and the clerk checks the filings immediately, perhaps the defendant can be told to hold onto the answer and file it later after the plaintiff comes in and files the summons. This of course punishes the diligent defendant and may require multiple trips to the courthouse for the defendant to protect his or her rights. What if the answer was filed by mail or the clerk accepts the in person filing of the answer and only later determines no index number has been purchased? Invariably after the clerks check the filing and learn there is no index number, the answer is held in the clerk’s office and as summonses are filed by the plaintiff, the clerk will often attempt to check and see if an answer has been filed. A number of times a match can be made. The problem of course is when the answer is received prior to the plaintiff purchasing an index number; the plaintiff finally purchases an index number and files the summons and proof of service as required by statute; a court file is created and the clerk cannot subsequently locate the filed answer from among hundreds if not thousands of other filed answers. In these cases, a default judgment may be entered against a defendant who timely filed an answer. The judgment might not be discovered until the defendant tries to obtain credit, purchase a house or buy a car. The Court will then be entertaining a motion to vacate a wrongfully entered default judgment against the defendant and possibly have to lift restraining orders and executions. All this is a waste of judicial and legal resources and imperils the rights of diligent defendants.

The Office of Court Administration has proposed eliminating commencement by filing in the Civil Court, District Courts and City Courts. In support of the change in the statute OCA pointed out: “Aside from the expenditure of time and resources, the current system causes a [*4]financial toll. The clerks’ futile searches for filed summonses are expenditures of time for which there is no revenue stream in return….A further concern is that the summonses are being served but intentionally not filed in an effort to harass or frighten defendants. Requiring that an index number be purchased before the service of papers would generate revenue, conserve clerks’s time, and protect defendants from untoward use of the suit commencement system….”

What further complicates these matters are the tens of thousands of “no-fault” reimbursement cases filed under the Insurance Law presently flooding the court system. The plaintiffs in hundreds of these cases, as in this case, may be the same medical service provider while the defendant is the same carrier. An additional problem is that the plaintiff may be the assignee of benefits from the same patient on more than one claim against the same defendant. So even if the clerk matches the parties based on the names from the caption, the complaint and answer may not coincide as the provider may have delivered service on more than one occasion to a particular insured. Why should the clerk of the court be burdened with matching the correct complaint to the correct answer as if it were some huge game of “Concentration?” Especially when the plaintiff is the party that caused the situation. The court system is becoming the uncompensated servant for some attorneys’ collection practices. This is not in the job description.

LEGAL ISSUES:

A. Is the Current System Constitutional?

As outlined above, CCA 400 excluded the Civil Court from the application of the commencement by filing statute of the CPLR. On their face CCA 400 and CCA 409 appear to be constitutional. However, it is apparent that in the implementation of the Civil Court’s commencement by service rules, due process and equal protection rights of individuals are being violated. In regard to civil actions, the statute permits lawyers to issue and serve summons without first purchasing an index number, while at the same time requiring a self-represented plaintiff to expend that money. The statute creates two classes of litigants potentially seeking the same relief with the criteria being the financial ability to retain an attorney. An individual who can afford to retain counsel can issue a summons and perhaps collect money due and owing merely by serving the process on the defendant, while a person too poor or for any other reason unable to retain counsel, such as the amount being sought not warranting the hiring of a lawyer, cannot use the threat of suit to collect the debt; that person must actually commence the suit and expend $45.00 for the suit. A credit card company, commercial collection agencies or other business that provides a large volume of litigation to an attorney obtains a benefit that an individual self-represented plaintiff does not get from the court system. Likewise, the defendant in the self-represented plaintiff commenced suit is incurring court costs that have to be reimbursed to the plaintiff that a represented person or entity might not have to pay. Considering that landlord-tenant summary proceedings and small claims actions both require the prepaying for an index number to commence a law suit, it can only be concluded that the statute as written and the system and practice it engendered create two classes of litigants in the Civil Court civil [*5]actions: paying and non-paying customers. This is a clear violation of the equal protection clause of the New York State Constitution Article 1 § 11. There is no reasonable or rational basis for such a distinction, especially when there exists a system used in all other parts of the Civil Court and in the Supreme and County Courts which eliminates these differences. This is an example as to why the New York Court system may be “unified” but not “uniform.”

It is also apparent that the current system violates the due process clause of the New York State Constitution, Article 1 § 6. The prevailing arrangement punishes a defendant who complies with the statute, takes steps to protect his or her rights and timely files an answer, while at the same time it may potentially reward a procrastinating plaintiff who does not immediately purchase an index number or who in an even worse case, purchases it after the statutory fourteen day period. The plaintiff who actually files the summons with proof of service after fourteen days must make a nunc pro tunc application for the late filing of the summons and then give notice to the defendant and an additional opportunity to answer. However, even in this scenario, why would the defendant think it necessary to re-file an answer, since the defendant would not necessarily know that the answer previously submitted was not linked by the clerk to the proper summons.

The current system suffers too many constitutional problems to continue in effect. It must be replaced. “Our cases further establish that a statute or a rule may be held constitutionally invalid as applied when it operates to deprive an individual of a protected right although its general validity as a measure enacted in the legitimate exercise of state power is beyond question….(T)he right to a meaningful opportunity to be heard within the limits of practicality, must be protected against denial by particular laws that operate to jeopardize it for particular individuals…. (S)o too a cost requirement, valid on its face, may offend a particular party’s opportunity to be heard…the State owes to each individual that process, which in light of the values of a free society, can be characterized as due” (Boddie v Connecticut, 401 US 371, (1971)

B. Is the Defendant Entitled to Reimbursement?

In order to protect its rights, the defendant in these three actions purchased the index number so it could file an answer or otherwise move to take steps to protect its legal interests. In none of these cases did the plaintiff purchase an index number. In each case defendant waited thirty days after service of the process to file an answer and at that time learned that no index number was purchased. The defendant then expended $45.00 on each case in order to file its answer. CCA 1911 requires that the clerk collect as a court fee $45.00 upon the issuance of a summons (CCA 1911(a)) or upon the filing of a summons with proof of service or upon filing of the first paper in that county in any action (CCA 1911(b)). There does not appear to be any statutory or case law dealing specifically with the issue of whether the defendant can recover the $45.00 when it and not the plaintiff files the first paper. [*6]

CCA 1906 provides as follows: “Costs allowed by Court. The Court may in its discretion impose costs not exceeding fifty dollars in the following cases: (a) Upon granting or denying a motion….” Since defendant was required to make a motion to compel the plaintiff to comply with discovery demands and to pay the filing fee, the Court in its discretion could award the defendant “costs” involved in making the motion. But is a filing fee a legitimate “cost?”

CCA 1908 permits a prevailing party or a party to whom costs are awarded to recover “disbursements.” All fees paid to the clerk are recoverable as a disbursement (CCA 1908(a)). Under this statute, the defendant, if a prevailing party, could recover as a disbursement the filing fee that it paid to the clerk. The question remains, can the defendant collect the filing fee at this stage of the litigation, that is, before there is a final judgment on the merits.

If the plaintiff bought the index number and prevailed in the suit, the plaintiff would recover the expense as a taxable disbursement under the statute. If the defendant prevailed, the issue would be moot since the defendant did not incur the expense, there would be no money to recover. If the defendant purchased the index number, and the defendant prevailed, the defendant would recover the filing fee. If the defendant purchased the index number and the plaintiff prevailed, the plaintiff would not be able to recover the fee since the plaintiff did not expend the money initially. Since the plaintiff was the one who instituted the suit, the plaintiff would be obtaining a benefit because the defendant purchased the index number in the action and in doing so, permitted the plaintiff to continue the case. There is something inherently unfair in requiring the defendant to subsidize the plaintiff’s cause of action out of a necessity to protect the defendant’s rights. The Court could award the defendant the $45.00 by labeling it as a reasonable cost to be awarded for the motion; however, that would not deal with the underlying issue of the plaintiffs using the Civil Court as its collection agency by filing suits and not purchasing index numbers. As a matter of public policy and to prevent plaintiffs from abusing the system, the defendant is entitled to be reimbursed at this stage of the litigation.

CONCLUSION:

Defendant’s motion in each action is granted to the extent that the plaintiff is directed to reimburse defendant the sum of $45.00 in each of these actions. Defendant’s application for sanctions of $100.00 on each cause of action is dismissed. If plaintiff continues this practice in the future, the Court will consider entertaining an application for sanctions. If plaintiff’s counsel is not being compensated sufficiently by his clients, then he either should not take the cases or re-negotiate his compensation schedule with them.

Since a consumer is not involved as a litigant, the Court does not address the issue of whether if it is shown that a plaintiff had a continuous pattern of not filing or late filing summonses, would such a pattern constitute a “deceptive business practice” under General Business Law 349.

The foregoing constitutes the decision and order of the Court.

[*7]Court Attorney to notify both sides of this Decision/Order.

Dated:

PHILIP S. STRANIERE

Judge, Civil Court

ASN by on

Dated: March 23, 2004

Decision Date: March 23, 2004

Footnotes

Footnote 1: Novel is being used in the sense of unique rather than a reference to a tome by Tolstoy.

Footnote 2: It should also be noted that a name change application in Civil Court requires a filing fee of $65.00. This is another proceeding that is primarily commenced by self-represented individuals. Although CPLR Article 11 provides for access to the courts by persons who qualify as “poor persons” this protection is not relevant to the issues of this case involving two classes of applicants to the Civil Court.