—[*1] Jaffe & Koumourdas, LLP, New York, N.Y. (Jean H. Kang of counsel), for appellant.

In an action to recover assigned first party no-fault medical payments under an insurance contract, the defendant appeals, by permission, as limited by its brief, from so much of an order of the Appellate Term, Second, Eleventh, and Thirteenth Judicial Districts, dated May 8, 2009, as modified a judgment of the Civil Court of the City of New York, Queens County (Lebedeff, J.), entered February 19, 2008, which, upon an order of the same court (Lebedeff, J.), dated January 23, 2008, inter alia, granting the plaintiff’s motion for summary judgment and denying its cross motion for summary judgment dismissing the complaint, is in favor of the plaintiff and against it in the principal sum of $2,856.45 only to the extent of reducing the award to the principal sum of $2,627.90.

Ordered that the order dated May 8, 2009, is reversed insofar as appealed from, on the facts and in the exercise of discretion, with costs, the judgment of the Civil Court of the City of New York, Queens County, entered February 19, 2008, is reversed, the plaintiff’s motion for summary judgment is denied, the defendant’s cross motion for summary judgment dismissing the complaint is granted, without prejudice to the commencement of a new action, and the order dated January 23, 2008, is modified accordingly.

Contrary to the conclusion of the Appellate Term, under the circumstances of this case, the defendant insurer’s submission of follow-up verification requests to the plaintiff medical provider on the 30th day after the defendant sent its initial verification requests was not premature or “without effect” (Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862, 864 [2009]). Furthermore, since the plaintiff did not fully comply with the defendant’s verification requests, the 30-day period within which the defendant was required to pay or deny the claim did not commence to run (see 11 NYCRR 65-3.8 [a] [1]; [b] [3]; Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d at 865; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]). Thus, the action was commenced prematurely (see Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007]; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432 [2004]).

Accordingly, the plaintiff’s motion for summary judgment should have been denied, and the defendant’s cross motion for summary judgment dismissing the complaint should have been granted (see [*2]Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d at 553; see generally Alvarez v Prospect Hosp., 68 NY2d 320 [1986]), without prejudice to commencement of a new action. Prudenti, P.J., Angiolillo, Florio and Sgroi, JJ., concur.

—[*1] Jaffe & Koumourdas, LLP, New York, N.Y. (Jean H. Kang of counsel), for appellant.

In an action to recover assigned first-party no-fault benefits under an insurance contract, the defendant appeals, by permission, from an order of the Appellate Term, Second, Eleventh, and Thirteenth Judicial Districts, dated May 8, 2009, which affirmed an order of the Civil Court of the City of New York, Queens County (Lebedeff, J.), dated August 1, 2007, denying the defendant’s motion for summary judgment dismissing the complaint.

Ordered that the order dated May 8, 2009, is reversed, on the facts and in the exercise of discretion, with costs, the order of the Civil Court of the City of New York, Queens County, dated August 1, 2007, is reversed, and the defendant’s motion for summary judgment dismissing the complaint is granted, without prejudice to the commencement by the plaintiff of a new action.

Contrary to the conclusion of the Appellate Term, under the circumstance of this case, the defendant insurer’s submission of follow-up verification requests to the plaintiff medical provider on the 30th day after the defendant sent its initial verification requests was not premature or “without effect” (see St. Vincent Med. Care, P.C. v Country-Wide Ins. Co., 80 AD3d 599 [2011] [decided herewith]).

Accordingly, the defendant’s motion for summary judgment dismissing the complaint should have been granted. Prudenti, P.J., Angiolillo, Florio and Sgroi, JJ., concur.

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

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

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

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

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

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

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

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

SUPREME COURT OF THE STATE OF NEW YORK

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

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

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

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

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

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

[*1]

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

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

APPEARANCES OF COUNSEL

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

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

Memorandum.

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

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

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

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

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

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

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

[*1]

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

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

APPEARANCES OF COUNSEL

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

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

Memorandum.

Ordered that the order is affirmed, without costs.

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

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

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

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

SUPREME COURT OF THE STATE OF NEW YORK

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

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

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

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

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

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

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

SUPREME COURT OF THE STATE OF NEW YORK

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

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

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

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

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

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

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

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

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

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

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

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

In light of the foregoing, the judgment is affirmed.

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

SUPREME COURT OF THE STATE OF NEW YORK

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

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

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

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

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

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

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

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

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, First District (Michael A. Ciaffa, J.), dated May 21, 2009. The order denied defendant’s motion for, among other things, summary judgment dismissing the complaint.

ORDERED that the order is modified by providing that the branch of defendant’s motion seeking summary judgment dismissing the complaint is granted; as so modified, the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint and for an award of costs and sanctions. Plaintiff opposed the motion, and the District Court denied the
motion, finding that the affidavit of defendant’s senior litigation examiner was insufficient to establish the timely mailing of the denial of claim forms, and that the peer review report submitted by defendant failed to establish that the services rendered lacked medical necessity since the medical records and/or documents relied upon by the peer review doctor in making his determination were not annexed thereto. The instant appeal by defendant ensued.

Contrary to the determination of the District Court, the affidavit of defendant’s senior litigation examiner was sufficient to establish that defendant had timely mailed the denial of claim forms in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]). The claims were denied on the ground that the services rendered were not medically necessary. [*2]

Defendant’s affirmed peer review report, submitted in support of its motion, established, prima facie, that there was a lack of medical necessity for the services at issue. The fact that defendant’s peer review doctor considered medical records from plaintiff, as well as from other providers who had treated the assignor, in forming his opinion as to the medical necessity of the relevant services, does not warrant a contrary result. Plaintiff may not challenge the reliability of its own medical records (see Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; PLP Acupuncture, P.C. v Progressive Cas. Ins. Co., 22 Misc 3d 142[A], 2009 NY Slip Op 50491[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Cross Cont. Med., P.C. v Allstate Ins. Co., 13 Misc 3d 10 [App Term, 1st Dept 2006]). With respect to the medical records of other providers who had rendered treatment to this assignor, it is noted that plaintiff stands in the shoes of its assignor and acquires no greater rights than its assignor (see Zeldin v Interboro Mut. Indem. Ins. Co., 44 AD3d 652 [2007]; Long Is. Radiology v Allstate Ins. Co., 36 AD3d 763 [2007]; West Tremont Med. Diagnostic, P.C. v Geico Ins. Co., 13 Misc 3d 131[A], 2006 NY Slip Op 51871[U] [App Term, 2d & 11th Jud Dists 2006]). As a result, defendant was not required to consider plaintiff’s bills in a vacuum and to ignore medical records which defendant had received either from plaintiff’s assignor or from another provider who had submitted such records on behalf of the assignor (see Urban Radiology, P.C., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U]).

Moreover, we note that, while defendant’s peer review doctor may have considered medical records received from other providers who had rendered treatment to the assignor, defendant was not seeking to use such records to establish the truth of the facts set forth therein. In the case at bar, defendant was not attempting to prove that the assignor was injured as documented in his medical records, or that he was treated as set forth in those records. Instead, defendant’s peer review doctor simply opined that, assuming the facts set forth in the assignor’s records were true, the treatment allegedly provided by plaintiff was not medically necessary. Therefore, such underlying medical records were not being used for a hearsay purpose (see e.g. Matter of State of New York v Wilkes, ___ AD3d ___, 2010 NY Slip Op 07006 [4th Dept 2010]; Dawson v Raimon Realty Corp., 303 AD2d 708 [2003]; Splawn v Lextaj Corp., 197 AD2d 479 [1993]). This is distinguishable from a situation in which a medical expert relies upon medical records to establish the fact of an injury (see e.g. Hambsch v New York City Tr. Auth., 63 NY2d 723 [1984]; Wagman v Bradshaw, 292 AD2d 84 [2002]). Consequently, plaintiff’s argument that defendant failed to establish the reliability of the underlying medical records in support of its claim that the treatment provided by plaintiff was not medically necessary is irrelevant.

We further note that plaintiff did not demonstrate that it needed the records from the other providers in order to raise a triable issue of fact as to whether the services at issue which plaintiff provided were medically necessary when they were rendered (see CPLR 3212 [f]; GZ Med. & Diagnostic, P.C. v Mercury Ins. Co., 26 Misc 3d 146[A], 2010 NY Slip Op 50491[U] [App Term, 2d, 11th & 13th Jud Dists 2010]), and that it had served discovery demands during the ample opportunity that it had to commence discovery proceedings to obtain such records before the instant summary judgment motion was brought (see Meath v Mishrick, 68 NY2d 992 [1986]). Consequently, plaintiff failed to establish a basis to defeat the branch of defendant’s motion seeking summary judgment. [*3]

Defendant’s remaining contention, to wit, that it was entitled to costs and sanctions for plaintiff’s allegedly frivolous conduct, lacks merit.

Accordingly, the order is modified by providing that the branch of defendant’s motion seeking summary judgment dismissing the complaint is granted

Nicolai, P.J., Molia and LaCava, JJ., concur.
Decision Date: December 16, 2010