[*1]

Supreme Court, Appellate Term, Second Department, December 8, 2006

APPEARANCES OF COUNSEL

Rivkin Radler LLP, Uniondale (Evan H. Krinick, Cheryl F. Korman, Stuart M. Bodoff and Melissa M. Murphy of counsel), for appellant. Alden Banniettis, Brooklyn (Jeff Henle of counsel), for respondent.

{**14 Misc 3d at 75} OPINION OF THE COURT

Memorandum.

Order, insofar as appealed from, affirmed without costs.

In an action to recover first-party no-fault benefits for health care services provided to an assignor, a plaintiff establishes a prima facie entitlement to summary judgment by proof that it submitted a claim, setting forth the fact and amount of the loss sustained and that payment of no-fault benefits is overdue (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 2003]). While in its motion papers, plaintiff proved that it prepared a claim setting forth the fact and amount of the loss, plaintiff’s proof that it submitted the claim to defendant was inadequate. We have held that a no-fault benefits applicant may cure deficiencies in its proof of mailing by annexing to its motion papers an insurer’s denial of claim form wherein the insurer acknowledges the claim’s receipt (e.g. Fair Price Med. Supply Corp. v ELRAC Inc., 12 Misc 3d 119 [App Term, 2d & 11th Jud Dists 2006]). Where, as here, plaintiff failed to annex the defendant’s denial of claim form to its motion papers, and the defendant annexes the denial of claim form to its opposing papers, the deficiency is similarly cured.

We are aware of the well-established principle that the failure of a proponent of a motion for summary judgment to make a prima facie showing of entitlement to judgment as a matter of [*2]law requires denial of the motion regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). Moreover, it has been said that where a movant fails to demonstrate its entitlement to judgment as a matter of law, it is unnecessary for the court to even consider{**14 Misc 3d at 76} the sufficiency of the opposition papers (see New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2006]). While opposition papers should not be reviewed for the sufficiency of the opposition, i.e., in order to determine whether a triable issue of fact has been raised, since in such cases the burden of proof will not have shifted to the party opposing the motion (see Alvarez v Prospect Hosp., 68 NY2d 320 [1986]), this is not to say that where a movant fails to establish a prima facie case, the court may never review the opposition papers. Where the missing elements of a movant’s prima facie showing of entitlement to judgment as a matter of law (such as here, plaintiff’s submission of the claim forms) are supplied in the opposition papers, it is our opinion that the court may, in its discretion and pursuant to its power to search the record (CPLR 3212 [b]), find that a prima facie case exists, thereby shifting the burden of proof, notwithstanding the evidentiary deficiencies in the moving papers. Indeed, CPLR 3212 (b) authorizes the court to grant a motion for summary judgment, if upon “all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party” (emphasis added). The discretion of the court to review the opposition papers may be viewed as akin to the court’s discretionary power to grant reverse summary judgment in an appropriate case. This discretion exists both in the motion court and, in the first instance, in an intermediate appellate court (see e.g. Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 112 [1984]). Thus, the opposition papers may, in the court’s discretion, be perused to determine whether the record as a whole establishes the movant’s prima facie entitlement to judgment. Were we to interpret the law otherwise, a court could not, for example, grant summary judgment to a plaintiff whose moving papers are insufficient, even where there has been a concession of liability in defendant’s opposition papers.

Accordingly, where a movant has not made out a prima facie entitlement to summary judgment, while a motion court need not consider the opposition papers, it is not necessarily an improvident exercise of discretion for it to do so in order to determine whether the record as a whole will establish a party’s prima facie case. In the instant case, we exercise our discretion to search the record, as we have done in prior cases (see e.g. Dilon Med. Supply Corp. v State Farm Mut. Ins. Co., 12 Misc 3d 140[A], 2006 NY Slip Op 51344[U] [App Term, 2d & 11th Jud{**14 Misc 3d at 77} Dists 2006]; M.G.M. Psychiatry Care P.C. v Utica Mut. Ins. Co., 12 Misc 3d 137[A], 2006 NY Slip Op 51286[U] [App Term, 2d & 11th Jud Dists 2006]; Vista Surgical Supplies, Inc. v State Farm Mut. Ins. Co., 12 Misc 3d 134[A], 2006 NY Slip Op 51189[U] [App Term, 2d & 11th Jud Dists 2006]; Vista Surgical Supplies, Inc. v Metropolitan Prop. & Cas. Ins. Co., 12 Misc 3d 130[A], 2006 NY Slip Op 51047[U] [App Term, 2d & 11th Jud Dists 2006]; First Help Acupuncture P.C. v State Farm Ins. Co., 12 Misc 3d 130[A], 2006 NY Slip Op 51043[U] [App Term, 2d & 11th Jud Dists 2006]; Careplus Med. Supply Inc. v State-Wide Ins. Co., 11 Misc 3d 29 [2005]; PDG Psychological P.C. v Utica Mut. Ins. Co., 11 Misc 3d 128[A], 2006 NY Slip Op 50246[U] [App Term, 2d & 11th Jud Dists 2006]), and find that plaintiff’s prima facie entitlement to summary judgment was established, thereby shifting the burden to defendant to raise a triable issue of fact (Alvarez v Prospect Hosp., [*3]68 NY2d 320, 324 [1986]).

Defendant’s denial was untimely (Insurance Law § 5106 [a]; 11 NYCRR 65.15 [g] [3], now 11 NYCRR 65-3.8 [c]), and defendant failed to establish a tolling of the statutory 30-day claim determination period (New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512 [2006]) by proof that it issued a proper and timely verification request (11 NYCRR 65.15 [d] [1], now 11 NYCRR 65-3.5 [a]). Defendant alleged that it requested that assignor submit to an examination under oath (EUO) in December 2001. However, “the insurance regulations in effect prior to April 5, 2002 did not provide for EUOs as a form of verification” (A.M. Med. Servs., P.C. v Nationwide Mut. Ins. Co., 12 Misc 3d 143[A], 2006 NY Slip Op 51425[U] [App Term, 2d & 11th Jud Dists 2006]; see also King’s Med. Supply v Kemper Auto & Home Ins. Co., 3 Misc 3d 131[A], 2004 NY Slip Op 50401[U] [App Term, 2d & 11th Jud Dists 2004]), and the absence of an EUO provision in the former verification scheme “may [not] be remedied by reference to policy provisions requiring that an insured cooperate with the insurer’s investigation of a claim, even if a clause therein explicitly provides for cooperation in that form” (Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92, 93 [App Term, 2d & 11th Jud Dists 2004]).

While the untimely denial did not preclude defendant from interposing the defense that the assignor’s injuries did not arise from a covered incident, i.e., an incident alleged to have been staged to defraud defendant (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 752 [2002]; see also State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490, 491 [2003]), it{**14 Misc 3d at 78} remained defendant’s burden to demonstrate “a founded belief” that the injuries did not result from an insured event (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]), and we agree with the court below that defendant failed to establish a triable issue of material fact as to fraud. The facts set forth in the affirmation of defendant’s counsel were without probative value as she had no personal knowledge of those facts (e.g. Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92, 94 [2004], supra), and none of the attached documents are sworn or supported by an affidavit by someone alleging personal knowledge of their preparation (A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 10 Misc 3d 50, 52 [App Term, 2d & 11th Jud Dists 2005]; see Rue v Stokes, 191 AD2d 245, 246 [1993]). In his affidavit, defendant’s claims representative likewise asserted no personal knowledge of defendant’s investigation into the incident and even if this case presented the “certain circumstances” meriting consideration of proof that would be inadmissible at trial (Kwi Bong Yi v JNJ Supply Corp., 274 AD2d 453 [2000]), the facts established little more than “unsubstantiated hypotheses and suppositions” (Penny v Pembrook Mgt., 280 AD2d 590, 591 [2001]), a “legally insufficient [basis] to support [a] defendant’s fraud allegation” (Amstel Chiropractic v Omni Indem. Co., 2 Misc 3d 129[A], 2004 NY Slip Op 50088[U], *1-2 [App Term, 2d & 11th Jud Dists 2004]).

Golia, J. (dissenting and voting to reverse the order, insofar as appealed from, and denying plaintiff’s motion for summary judgment). Initially, I note with dismay the finding of the motion court. That determination is patently incorrect. The determination, which granted plaintiff summary judgment, stated that “plaintiff proved that it submitted a timely and proper notice of claim pursuant to the No-Fault [*4]statute.” With regard to that fact, the Appellate Term unanimously disagrees and finds that plaintiff failed to prove that it submitted the claim at all.

I further note, although not addressed by the majority, that the notice of claim which plaintiff provided was not a “proper notice of claim pursuant to the No-Fault statute.” The majority responds that due only to defendant’s failure to request a timely verification or raise a defense as to the propriety of the claim form, the defendant was precluded from raising those issues. I submit that a defendant’s failure to contest improper forms is not the same as a finding that the forms were proper.

My dissent, however, is predicated primarily upon the inappropriate expansion of the majority’s willingness to assist the plaintiff to establish its prima facie case in this no-fault matter.{**14 Misc 3d at 79}

The plaintiff here did not even meet the relaxed standard of making out a prima facie case that was first enunciated by the Appellate Term in a previous no-fault proceeding (see Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists 2003]) and its progeny. That case held that a health care provider need only prove that it submitted a properly completed claim form to establish its prima facie entitlement to summary judgment. It need not establish any medical necessity for providing the medical supplies or services performed. Indeed, in the event the defendant is precluded from raising a defense as to the propriety of the claim form in whole or in part, the plaintiff is then not even required to affirmatively establish that the claim form was “properly completed.”

In supporting its claim that the Appellate Term has the authority to search the record in order to find missing elements to establish a prima facie case in plaintiff’s motion, the majority cites to CPLR 3212 (b); specifically, that the motion can be granted upon “all the papers and proof submitted” (emphasis added). They did not include the first two sentences of that section which read:

“A motion for summary judgment shall be supported by affidavit[s], by a copy of the pleadings and by other available proof, such as depositions and written admissions. The affidavit shall be by a person having knowledge of the facts . . . and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit.”

When read together, one should conclude that this section imposes upon the movant a minimum requirement in order to establish a prima facie case. I emphasize that a motion for summary judgment must be supported within the four corners of the motion itself. To lessen this burden, as the majority now does in this no-fault proceeding, I submit, is unsupported in the law.

There is an Appellate Division, First Department case, Bowery Sav. Bank v 130 E. 72nd St. Realty Corp. (173 AD2d 364 [1991]), which “appears” to support the majority’s contention that a court may grant summary judgment upon information in the record that was not provided by the moving party. However, a careful reading of that case and the record on appeal reveals that this issue was never briefed. More importantly, it was not{**14 Misc 3d at 80} even considered by the trial court. [*5]In fact the unpublished decision from the Supreme Court cites to Alvarez v Prospect Hosp. (68 NY2d 320 [1986]) for the proposition that the initial burden lies upon the movant. That court then goes on to indicate that the defendant does not dispute certain issues but fails to raise sufficient allegations to raise a triable issue of fact.

At no point does the Supreme Court or the Appellate Division assert that it has the right to search the record in order to bolster the movant’s applications. There is clearly a distinction between discounting a technical failure that is not at issue and, on the other hand, combing through the record in order to search for missing elements of plaintiff’s prima facie case.

Until now, a plaintiff did, at least, have the initial burden to prove that the claim form was actually sent to the defendant. The Appellate Term has long held that such proof could be established by annexing the defendant’s denial form thereby proving that the claim was received. My colleagues now no longer require that plaintiff establish a prima facie case within the four corners of its motion as long as the majority can find the proof upon a complete search of the record.

Although the majority acknowledges the “well-established principle that the failure of a proponent of a motion for summary judgment to make a prima facie showing of entitlement to judgment as a matter of law requires denial of the motion regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985])” (at 75), it nevertheless decided to search this record here and find that a prima facie case exists.

The majority then cites to the Court of Appeals case of Alvarez v Prospect Hosp. (68 NY2d 320 [1986]) which cites Winegrad, and which substantially stands for the same proposition. Nevertheless, the majority asserts that “this is not to say that where a movant fails to establish a prima facie case, the court may never review the opposition papers” (at 76). What they fail to explain is how they reached that conclusion given the following language in Alvarez: “As we have stated frequently, the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law . . . Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers” (Alvarez, 68 NY2d at 324 [emphasis added]).{**14 Misc 3d at 81}

For the majority now to say that Alvarez does not preclude them here from reviewing the opposition papers and finding a prima facie case for the movant upon the entire record is, in my opinion, misrepresenting the clear language enunciated by the Court of Appeals. That Court unequivocally stated that such failure mandates a denial of the motion despite the sufficiency of the opposing papers, a ruling which this court is duty bound to follow.

Finally, I submit, the majority engages in an argument of pure sophistry. It asserts that the Appellate Term has the authority to search the record and grant reverse summary judgment even in the absence of a cross motion or an appeal seeking such relief. I agree. It goes on to conclude that the Appellate Term must therefore have the authority to search this record in order to grant summary judgment even in the absence of the movant making out its prima facie case. I [*6]do not agree.

There is no question that this court has the authority to search the record and grant reverse summary judgment (see Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106 [1984]). That does not mean, however, that the Appellate Term can use that authority to correct this no-fault movant’s failure to establish its prima facie entitlement to judgment. In my view, the majority’s decision would permit a trial court to exercise its discretion in an open and relaxed manner and would, consequently, result in varied and conflicting decisions based upon the same or similar facts. The result can only lead to confusion and increased appellate litigation. Clearly, in no-fault matters, where the Appellate Term has provided the plaintiff with the simplest of requirements to establish a prima facie case as a matter of law, it now holds that even less is required.

Pesce, P.J., and Rios, J., concur; Golia, J., dissents in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, December 1, 2006

APPEARANCES OF COUNSEL

Cambio, Votto, Cassata & Gullo, LLP, Staten Island (Michael Gullo, Junmin Zou and Michelle Titone of counsel), for appellant. Alden Banniettis, Brooklyn (Jeff Henle of counsel), for respondent.

{**14 Misc 3d at 45} OPINION OF THE COURT

Memorandum.

Order reversed without costs, plaintiff’s motion for summary judgment denied, and matter remanded to the court below for a determination de novo of defendant’s cross motion.

In this action by a health care provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was supported by an affirmation from plaintiff’s counsel, an affidavit by a “corporate officer” of plaintiff, and various documents annexed thereto. The affidavit executed by plaintiff’s “corporate officer” stated in a conclusory manner that the documents attached to plaintiff’s motion papers were plaintiff’s business records. Defendant opposed plaintiff’s motion and cross-moved to compel depositions of plaintiff, plaintiff’s assignor, and the assignor’s treating physicians. In opposition to plaintiff’s motion, defendant argued that the affidavit by plaintiff’s “corporate officer” was insufficient to establish personal knowledge of the facts set forth therein because the “corporate officer” did not demonstrate that he possessed sufficient personal knowledge of plaintiff’s office practices to lay a proper foundation to establish that the documents submitted by plaintiff were admissible pursuant to the business records exception to the hearsay rule (see CPLR 4518). Among other [*2]things, defendant submitted an affidavit executed by one of its special investigators, and a report prepared by said investigator, which set forth why the special investigator believed that the injuries allegedly sustained by plaintiff’s assignor were not causally related to a covered accident. The court granted plaintiff’s motion for summary judgment and implicitly denied defendant’s cross motion. Upon this appeal, defendant argues, inter alia, that plaintiff did not demonstrate a prima facie case because it failed to lay a proper foundation for the admission of its documents and that plaintiff’s motion should be denied because there was an issue of fact as to whether the alleged injuries were the product of a staged accident. Defendant further asserts that its cross motion should have{**14 Misc 3d at 46} been granted because there is an issue of fact concerning the causation of the alleged injuries.

It is well settled that summary judgment is appropriate when sufficient evidence in admissible form is presented to demonstrate the absence of any material issues of fact (Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Zuckerman v City of New York, 49 NY2d 557 [1980]). Since defendant’s opposing papers contained a timely objection asserting that plaintiff’s motion papers did not make a prima facie showing in admissible form due to plaintiff’s failure to demonstrate that the “corporate officer” possessed personal knowledge concerning plaintiff’s office practices with regard to the subject claim forms, this issue was not waived (cf. Christopherson v Queens-Long Is. Med. Group, P.C., 17 AD3d 393 [2005]; Teig v First Unum Ins. Co., 282 AD2d 669 [2001]; Sam v Town of Rotterdam, 248 AD2d 850 [1998]).

The affidavit submitted by plaintiff’s “corporate officer” failed to demonstrate that he possessed sufficient personal knowledge of plaintiff’s office practices and procedures so as to lay a foundation for the admission of the annexed documents as business records (see CPLR 4518; Hefte v Bellin, 137 AD2d 406, 408 [1988] [“In order to lay the foundation for the doctor’s business record, (the party seeking admission of the record) was required to call a witness with personal knowledge of the doctor’s business practices and procedures”]; Dayanim v Unis, 171 AD2d 579 [1991]; Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 132[A], 2006 NY Slip Op 51879[U] [App Term, 2d & 11th Jud Dists 2006] [affirmation by an attorney who lacked personal knowledge was insufficient to lay a foundation for a determination that his clients’ documents were admissible as business records]).

A review of the record in Delta Diagnostic Radiology, P.C. v GEICO Ins. Co. (12 Misc 3d 147[A], 2006 NY Slip Op 51557[U] [App Term, 9th & 10th Jud Dists 2006]) reveals that the affidavit which plaintiff submitted in said case was similar to the affidavit in the instant case, in that both affidavits were executed by unspecified “corporate officers.” The Appellate Term for the Ninth and Tenth Judicial Districts stated, “the affidavit plaintiff submitted in support of its motion for summary judgment was sufficient to allow the annexed claim forms, mailing receipts, denials (indicating that defendant received the claims) and other documents to{**14 Misc 3d at 47} be considered by the court.” (Id. at *1.) However, the argument raised by the defendant in the court below in said case was that plaintiff failed to make a prima facie showing because plaintiff’s affiant did not demonstrate that he possessed personal knowledge of the facts set forth in such records. The Appellate Term for the Ninth and Tenth Judicial Districts rejected this argument. An affiant need only demonstrate that he or she possesses personal knowledge of the office practices such that the affiant can lay a sufficient foundation to establish that such documents are business records (see CPLR 4518; see generally William Conover, Inc. v Waldorf, 251 AD2d 727 [1998]; Matter of [*3]Brooke Louise H., 158 AD2d 425 [1990]; Plymouth Rock Fuel Corp. v Leucadia, Inc., 117 AD2d 727 [1986]). Given the limited argument raised by defendant in said case, the Appellate Term for the Ninth and Tenth Judicial Districts was not called upon to rule upon the issue presented in this case, to wit, whether the affidavit by the “corporate officer” sufficiently set forth a foundation for the admissibility of the purported business records annexed to said affidavit. We hold that the instant affidavit is insufficient to lay a foundation for the admission of the annexed documents as business records (see CPLR 4518; Hefte, 137 AD2d at 408).

In light of the foregoing, plaintiff failed to tender sufficient proof in evidentiary form to establish its prima facie case (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 132[A], 2006 NY Slip Op 51879[U] [2006], supra; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists 2003]). To the extent defendant issued denial of claim forms (NF-10s) or admitted receipt of plaintiff’s claim forms, such admissions did not concede the facts asserted in the claim forms and it remained plaintiff’s burden to proffer such evidence in admissible form, which it failed to do (see Midborough Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 132[A], 2006 NY Slip Op 51879[U] [2006], supra). As a result, plaintiff’s motion for summary judgment should have been denied.

We note that, even if plaintiff had established a prima facie case, in the instant matter, plaintiff’s motion for summary judgment should, in any event, have been denied because defendant’s{**14 Misc 3d at 48} opposition to plaintiff’s motion for summary judgment demonstrated the existence of a triable issue of fact as to whether “the alleged injur[ies] do[ ] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]).

Inasmuch as defendant’s cross motion to compel depositions was, in effect, denied as academic in light of the Civil Court’s conclusion that plaintiff was entitled to summary judgment, the matter is remanded to the Civil Court for a determination de novo of defendant’s cross motion.

Pesce, P.J., Weston Patterson and Belen, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, November 28, 2006

APPEARANCES OF COUNSEL

Alden Banniettis, Brooklyn (Jeff Henle of counsel), for appellant.

{**14 Misc 3d at 35} OPINION OF THE COURT

Memorandum.

Order reversed without costs, plaintiff’s motion for summary judgment granted, defendant’s cross motion for summary judgment denied, and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees.

In this action to recover first-party no-fault benefits for health care services provided its assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (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 2003]). Plaintiff submitted, inter alia, defendant’s timely claim denial forms, which conceded receipt of the four claims and asserted only the lack of medical necessity for the services provided as the ground for the denials, citing in the first three denials a peer review report, and in the final denial, additionally, the report of an independent medical examination (IME). [*2]

It is well settled that “a timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12 Misc 3d 8, 10 [App Term, 2d & 11th Jud Dists 2006], quoting Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004]; see also Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]). While defendant was not required to attach to its denial forms either the peer review report upon which the denials were purportedly based or the IME report cited in the final denial (see 11 NYCRR 65-3.8 [b] [4]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 7 Misc 3d 132[A], 2005 NY Slip Op 50605[U] [App Term,{**14 Misc 3d at 36} 2d & 11th Jud Dists 2005]), the lack of medical necessity defense is properly interposed when the claim denial form, and any other documentation submitted within the 30-day claim determination period, “set[s] forth with sufficient particularity the factual basis and medical rationale for [the] denial” (A.B. Med. Servs. PLLC v GEICO Cas. Ins. Co., 12 Misc 3d 30, 31 [App Term, 2d & 11th Jud Dists 2006]). The denials herein were couched entirely in conclusory language and contained no facts to satisfy the NF-10 claim denial form’s requirement that the insurer state the reason for a denial “fully and explicitly” (see also 11 NYCRR 65-3.2 [e] [“Claim practice principles to be followed by all insurers . . . . (e) Clearly inform the applicant of the insurer’s position regarding any disputed matter”]; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564, 565 [2005] [“A proper denial of claim must include the information called for in the prescribed denial of claim form”]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664 [2004] [“A proper denial . . . must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated’ “], quoting General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]).

In our view, a claimant’s entitlement to a copy of a peer review report upon demand (11 NYCRR 65-3.8 [b] [4] [“If the specific reason for a denial of a no-fault claim . . . is a . . . peer review report requested by the insurer, the insurer shall release a copy . . . to the applicant . . . upon . . . written request”]) creates no exception to the requirement that the statutorily-mandated NF-10 form (which provides that the insurer must “attach extra sheets if needed”) state the ground for the denial with the “high degree of specificity” required by regulation and case law. We do not read the reference to a peer review report as the “specific reason” for a denial to mean that the bare recitation of reliance on such a report satisfies the requirement that a denial based on the lack of medical necessity, which this court has held on numerous occasions to require the assertion of facts and a medical rationale based thereon, is satisfied by the mere invocation of a peer review report as the basis of a denial. Rather, the regulation merely guarantees a claimant’s right to obtain a copy of the report upon written demand when its content is specifically alleged to justify a claim’s denial.

Finally, the sufficiency of either report to establish a triable issue of medical necessity need not be addressed as “even assuming said reports’ admissibility and that they set forth a sufficient{**14 Misc 3d at 37} factual basis and medical rationale for denial of the claims, they cannot remedy the factual insufficiency of defendant’s denials” (A.B. Med. Servs. PLLC v GEICO Cas. Ins. Co., 12 Misc 3d at 32). Therefore, because defendant failed properly to interpose the medical necessity defense at the “claim stage” and failed to establish any defense that survived the preclusion sanction, defendant’s cross motion for summary judgment should have been denied and plaintiff’s motion for summary judgment granted. [*3]

Accordingly, the matter is remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Golia, J.P. (concurring with the result only): I am constrained to agree with the disposition reached by the ultimate majority. However, I wish to note that I do not agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.

In this regard, I note my dissent in A.B. Med. Servs. PLLC v GEICO Cas. Ins. Co. (12 Misc 3d 30 [App Term, 2d & 11th Jud Dists 2006]) in which I assert that a denial of claim predicated upon a peer review report is sufficient to comply with the regulations.

The plaintiff herein claims that it sent a written request to the defendant for a copy of the peer review report which, plaintiff insists, it never received, and that the defendant “ignored the request.” However, plaintiff failed to establish any proof regarding the mailing of such request, and absent such proof, this court should not consider the alleged failure of the defendant to provide a copy of the report. The Appellate Term has consistently rejected an insurer’s proof of its claim denial form upon a finding that defendant failed to proffer acceptable proof of mailing (e.g. PDG Psychological P.C. v Utica Mut. Ins. Co., 11 Misc 3d 128[A], 2006 NY Slip Op 50246[U] [App Term, 2d & 11th Jud Dists 2006]). I submit, the Appellate Term should likewise reject plaintiff’s papers upon plaintiff’s failure to proffer appropriate proof of mailing.

Notwithstanding, the defendant’s alleged failure to provide a copy of the peer review report is a nonissue. In point of fact, the regulations do not require the defendant to provide a copy of the report. They only require the defendant to pay or deny a{**14 Misc 3d at 38} claim within 30 days of receipt. Had the defendant sent such a denial after 30 days, or had it sent the denial within 30 days but failed to proffer sufficient proof of mailing, the majority, I submit, would have applied their former holdings and granted summary judgment to the plaintiff. In this case the majority concedes a timely denial and proper proof of mailing.

I would, however, prefer to find that the defendant complied with all the rules and regulations and met the clear language of 11 NYCRR 65-3.8 (b) (4) which provides,

“If the specific reason for a denial of a no-fault claim, or any element thereof, is a medical examination or peer review report requested by the insurer, the insurer shall release a copy of that report to the applicant for benefits, the applicant’s attorney, or the applicant’s treating physician, upon the written request of any of these parties” (emphasis added).

In order to substantiate their position, my colleagues claim that the language in the form promulgated by the Insurance Department provides that additional pages “must” be attached. The mere fact that the form allows for additional pages is not equivalent to a mandate requiring additional pages as needed, nor does it establish that the reason for a denial must be long winded and verbose.

In the present case, the plaintiff filed a claim for payment and the defendant thereupon submitted the claim file for an independent peer review. Upon receiving the peer review report, defendant sent out a timely denial predicated upon the peer review report containing the specific grounds of the denial.

This procedure is entirely within the terms and conditions of the regulations. If the plaintiff wished to learn the particulars of the report, it need only send a written request appropriately mailed, and defendant would be required to provide a copy of that report. Although plaintiff claims to have done so in this case, it failed to provide any proof of mailing. Consequently, the request should not be considered.

To hold as the majority does, in my opinion, would usurp the regulations which require the Department of Insurance to promulgate its own rules and regulations. It would require the defendant to produce the peer review report within 30 days of the claim despite the fact that the regulations do not require that the report be produced at all, unless requested in writing by the plaintiff. This is a burden the regulations do not impose upon an insurer.{**14 Misc 3d at 39}

It is very clear to me that the regulations provide for a logical and reasonable procedure for the disposition of a claim, and that my colleagues’ analysis is strained. The majority acknowledges that the regulations do not require a defendant to annex a copy of the doctor’s independent medical examination (IME) report to the NF-10 denial of claim form which is predicated upon that report; however, they assert that the NF-10 form must include reasons for the denial with a “high degree of specificity.”

In order to comply with the mandates as set forth by the majority, a defendant insurance company must direct their claim examiners (many of whom are not medical doctors) to do the following: they must first read and understand the IME report which was written by a medical doctor, digest all the medically salient points, and then draft a denial of claim which lists all those salient medical points with a “high degree of specificity.” The other alternative is to simply send an NF-10 form with the notation “see attached IME report” as the reason for the denial and, of course, attach a copy of the report.

The problem with this analysis is that the first alternative is burdensome, inefficient and downright unnecessary, whereas the second alternative is clearly and specifically not required by the regulation.

A more reasonable analysis is to simply follow the requirements set forth by the regulation. The defendant insurance carrier receives a copy of an IME report which asserts that the medical treatments, or the medical examination, or the medical supplies provided, were not medically necessary for the medical reasons enumerated in the IME report. The carrier then sends an NF-10 denial of claim form which asserts that the claim is being denied for the specific reason that the IME doctor issued a report recommending denial. In the event the provider wishes to learn the precise medical reasons that led to that result, it need only send a written request, and a copy of the IME report will be sent to it free of charge.

Simple, reasonable and effective, and most importantly, the aforesaid procedure is in [*5]accordance with the regulations.

I would prefer to deny plaintiff’s motion for summary judgment.

Rios and Belen, JJ., concur; Golia, J.P., concurs in a separate memorandum.

Supreme Court, New York County

105241/06

Eileen Bransten, J.

Pursuant to CPLR 7502 and 7503, Allstate Insurance Company (“Allstate”) petitions for a Judgment, among other things, staying an arbitration commenced by respondent Sallie Merrick (“Ms. Merrick”).

Background

By Denial of Claim form dated September 27, 1996, Allstate informed Ms. Merrick that “all no-fault claims benefits will be denied effective 10/04/96.” Affirmation in Support (“Supp.”), Ex. B.

Ms. Merrick contends that in April 2002, “within the six-year period of the statute of limitations,” she “properly commenced” an arbitration before the American Arbitration Association (“AAA”), contesting Allstate’s denial of no-fault benefits. Affirmation in Opposition (“Opp.”), at ¶ 3. In May 2002, Ms. Merrick provided additional information responsive to an inquiry from AAA.

On January 9, 2003, after receiving no further communications, a paralegal for Ms. Merrick’s counsel contacted AAA to ascertain a date for arbitration proceedings. The paralegal swears that AAA advised her that “they were unable to locate the file” and that an Arbitration Request Form and check for $40 should be resubmitted. Opp., Ex. C, at ¶ 7. That very day, the paralegal resubmitted the materials. Id.

Again, the paralegal contacted AAA inquiring about the status of Ms. Merrick’s arbitration. She “continued to call every six months and received the same response that [Ms. Merrick] would be hearing by way of a letter indicating the name of the Arbitrator and the date of the arbitration.” Opp., Ex. C, at ¶ 8. After “many calls,” the paralegal was advised to resubmit yet another set of papers. Id., at ¶ 9. On February 17, 2005, Ms. [*2]Merrick’s attorney forwarded the papers to AAA, along with a new check and a letter indicating that “the enclosed request was previously submitted.” Opp., Ex. E. AAA returned the arbitration request because it was incomplete. Opp., Ex. F.

AAA received additional papers on June 8, 2005. Supplemental Affirmation from Allstate (“Allstate Aff.”), Ex. A. On June 15, 2005, AAA confirmed “acceptance of an arbitration request.” Id.

On September 19, 2005, in response to an email from the AAA no-fault conciliator assigned to the matter informing Allstate that there was “no record of receiving a submission from Allstate to date,” a Staff Claim Adjuster explained that the company had “no notice of this arbitration * * * This case has never been assigned we never [received AAA] notice.” Allstate Aff., Ex. A. That very day, the conciliator offered to forward Allstate a copy of the filings and notices. Id.

Subsequently, in a September-26-2005 email to the AAA no-fault conciliator, an Allstate Senior Staff Claim Service Representative noted that the file on the claim was old and stated: “I would suspect that there are some statute of limitations applicable here.” Allstate Aff., Ex. C. (There is no indication that Ms. Merrick’s attorney received a copy of the email.)

On October 19, 2005, counsel for Ms. Merrick and Allstate were informed that an arbitrator had been appointed and that a hearing was scheduled for November 22, 2005. Supplementary Affirmation in Opposition (“Supp. Opp.”), Ex. A. Counsel were advised to “attend promptly with * * * witnesses and be prepared to present * * * proofs.” Id. A few days before the hearing, on November 17, 2005, attorney Peter C. Merani wrote the AAA case manager assigned to Ms. Merrick’s claim, advising that “the above captioned matter has been assigned to our office to appear as counsel to the insurer in the pending No-Fault arbitration. Please note your files accordingly, advise us of all scheduled hearing dates, adjourned dates, direct all correspondences and awards to our offices.” Supp. Opp., Ex. B.

Proceedings were conducted on November 22, 2005. “Briefs were submitted and testimony was taken on that day.” Opp., at ¶ 10. Attorney Sammy Lesman, an associate in the office of Peter C. Merani, Esq., delivered an opening statement and cross-examined Ms. Merrick. Supp. Opp., at ¶ 6. After “oral testimony was declared closed” by the arbitrator, Mr. Lesman requested to respond by producing Allstate’s No-Fault records regarding Ms. Merrick’s claim. Id., at ¶ 7. On November 25, 2005, Mr. Lesman sent “a copy of [Allstate’s] submissions for the No-Fault Matter” to the AAA, requesting that the materials be forwarded to the assigned arbitrator. Allstate’s counsel made no mention of any statute of limitations defense at the hearing or in its post-hearing submissions. Opp., at ¶ 10; Supp. Opp., at ¶ 9.In late February, the Arbitrator requested production of Ms. Merrick’s 1996-1997 tax returns and proof that she did not work following the accident. [*3]Opp., at ¶ 11; Supp. Opp., at ¶ 11. Ms. Merrick’s attorney submitted the materials to AAA and Allstate’s counsel on March 3, 2006. Opp., at ¶’11. On March 10, 2006, Ms. Merrick’s attorney was notified that a further hearing was scheduled for April 18, 2006. Id. He was subsequently advised, however, that the April 18, 2006 hearing was cancelled and “that there would be a decision fairly soon.” Opp., at ¶ 11.

On April 17, 2006, Allstate commenced this proceeding, seeking a Judgment staying Ms. Merrick’s arbitration on the ground that more than six years passed since denial of no-fault benefits. Supp., at ¶ 6. Allstate contends that a “review of the Arbitration Request[] Forms of Sallie Merrick stamped by [AAA] as found on their website adr.org, and in her submission shows that the earliest possible receipt date of her application is February 22, 2005,” which is beyond the statute of limitations. Supp., at ¶ 5. Allstate also requests an Order “staying the enforcement of any judgment” entered in accordance with the arbitration. Order to Show Cause, at 2; Supp., at ¶ 7.

The following day, “an attorney from the Law Offices of Peter C. Merani appeared on behalf of [Allstate] for the hearing on April 18, 2006.” Reply, at ¶ 9. Ms. Merrick’s counsel, believing that the session had been canceled, did not appear. Supp. Opp., at ¶ 12.

On April 19, 2006, Ms. Merrick’s attorney received Allstate’s Verified Petition. Supp. Opp., at ¶ 13. Ms. Merrick strongly opposes Allstate’s application. She urges that she should not be prejudiced simply because her submissions were misfiled once in 2002, and again in 2003. Opp., at ¶ 14. Ms. Merrick points out that the initial April 2002 arbitration request was sent to Allstate’s counsel; thus, Allstate had notice of the dispute and the AAA filing within the statute of limitations.

Analysis

Because Allstate participated in the arbitration proceeding—Allstate’s counsel made an opening statement, cross-examined Ms. Merrick and submitted evidence—it waived its rights to seek a judicial stay. CPLR 7503(b) provides that “a party who has not participated in the arbitration * * * may apply to stay arbitration on the ground that * * * the claim sought to be arbitrated is barred” by the statute of limitations applicable to the same causes of action under New York law. See also, Matter of Civil Service Employees Assn. [County of Erie], 303 AD2d 1050, 1051 (4th Dept. 2003) (“participation in the arbitration constituted a waiver of any right * * * to raise a statute of limitations defense in court or obtain a stay of arbitration on statute of limitations grounds”); Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C7503:2 (“participation in the arbitration will constitute a waiver of the right to seek a judicial stay and thus foreclose raising, in court, threshold defenses relating to arbitrability and the statute of limitations. The opponent’s participation in arbitration is deemed inconsistent with his position that the dispute is nonarbitrable”); Siegel, NY Prac. § 592, [*4]at 1043 (4th ed.).

Allstate argues that because Ms. Merrick did not comply with the provisions of CPLR 7503(c), which provides that a “party may serve upon another party a demand for arbitration or notice of intention to arbitrate” that must be served in a particular manner and must set forth specified information, it is still free to seek a stay notwithstanding its participation. Allstate is wrong.

CPLR 7503(c) affords a party desirous of arbitrating a claim with a mechanism to impose a very short and strict 20-day deadline for challenging arbitrability, including raising the argument that arbitration is time barred. Within 20 days of proper service of a valid CPLR 7503(c) notice or demand, a party seeking to avoid arbitration on statute-of-limitations grounds must apply to stay arbitration or suffer the consequences of being precluded from raising the argument in court at any time—before or after the arbitration—regardless of whether the party actually participates in the proceedings. See, CPLR 7503(c); CPLR 7511(b)(2)(iv).

In contrast, when, as here, there has been no CPLR 7503(c) notice or demand to arbitrate, there is no strict 20-day limit for applying to stay arbitration and a party that did not participate in the proceedings retains the right to challenge the award because the arbitrated claim was time barred. CPLR 7503(c), however, does not in any way nullify the rule that a participant in the arbitration cannot subsequently seek a judicial stay based on passage of the statute of limitations.

That Allstate informed the AAA in an informal email that it suspected “there are some statute of limitations” issues, is equally unavailing. To obtain a judicial stay on statute-of-limitations grounds, Allstate was required to commence a special proceeding before participating in the arbitration. It cannot make arguments before the arbitrator, conduct cross-examination and submit evidence—costing all of the parties time and money—and then, for the first time, argue to the Court that the matter should never have gone to arbitration in the first place because the claim is time barred.

Accordingly, it is

ORDERED and ADJUDGED that the petition is denied and the proceeding is dismissed.

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

Dated: New York, New York

August 17, 2006

E N T E R

[*5]

Hon. Eileen Bransten

[*1]

Supreme Court, Appellate Term, First Department, August 15, 2006

APPEARANCES OF COUNSEL

McDonnell & Adels, P.C., Garden City (Martha S. Henley of counsel), for appellant. Baker, Barshay & Neuwirth, LLP, Mineola (Michael C. Rosenberger of counsel), for respondent.

{**13 Misc 3d at 23} OPINION OF THE COURT

Per Curiam.

Order entered March 18, 2005, reversed, with $10 costs, and the matter remanded for a new trial.

In this action to recover assigned first-party no-fault benefits, the parties stipulated to defendant’s receipt of plaintiff’s no-fault bills, the issuance of a timely denial by defendant, and that the sole defense was the lack of medical necessity for diagnostic computerized range of motion and muscle tests conducted by plaintiff. Defendant’s peer review doctor and trial expert testified that his peer review report and conclusion of lack of medical necessity were based upon a review of the records and reports prepared by plaintiff. Plaintiff moved to preclude the expert’s testimony on the ground that his testimony was based upon medical records not in evidence. The court granted plaintiff’s motion to preclude and directed judgment in favor of plaintiff.

We reverse. Plaintiff’s challenge to the reliability of the medical records and reports relied upon by defendant’s expert is unavailing given the fact that the records were prepared by plaintiff’s own principal, who personally treated the assignor and conducted the tests in question (cf. Hambsch v New York City Tr. Auth., 63 NY2d 723, 725 [1984]). In these circumstances, plaintiff may not be heard to argue that defendant’s expert opinion was not derived from a “professional[,] reliable” source or to otherwise challenge the reliability of its own medical records and reports. Moreover, defendant’s expert, in forming his opinion, relied upon the records only to the extent that they documented the assignor’s injuries, plaintiff’s diagnosis [*2]and the treatment rendered.

Davis, J.P., Gangel-Jacob and Schoenfeld, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, July 26, 2006

APPEARANCES OF COUNSEL

McDonnell & Adels, P.C., Garden City (David S. Rubackin of counsel), for appellant. Gary Tsirelman, P.C., Brooklyn, for respondent.

{**13 Misc 3d at 59} OPINION OF THE COURT

Memorandum.

Order reversed, without costs, plaintiff’s motion for summary judgment denied and defendant’s cross motion to dismiss the complaint granted to the extent of directing that plaintiff shall respond to those discovery demands which seek information regarding whether plaintiff was fraudulently incorporated, within 30 days of the date of the order entered hereon or within such other reasonable time period as the parties stipulate to in writing.

In this action to recover $1,107.51 in first-party no-fault benefits for health care services rendered to its assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (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 2003]). Defendant failed to deny the claims within the 30-day claim determination period and failed to establish that it tolled the statutory time period by mailing verification and follow-up requests to plaintiff (see e.g. Ocean Diagnostic Imaging P.C. v Travelers Indem. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50644[U] [App Term, 2d & 11th Jud Dists 2005]). Consequently, defendant is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Nevertheless, the defense that plaintiff, a provider of health care services, is not eligible for reimbursement of no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) is not subject to preclusion (see A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co., 11 Misc 3d 137[A], 2006 NY Slip Op 50504[U] [App Term, 2d & 11th Jud Dists 2006]). Moreover, summary judgment should be denied where{**13 Misc 3d at 60} the opposition papers set forth that facts essential to justify opposition may exist but cannot then be stated (see CPLR 3212 [f]).

In Mallela (4 NY3d 313 [2005], supra), the Court of Appeals found that insurers may withhold payment of first-party no-fault benefits provided by fraudulently licensed medical service corporations to which patients have assigned their claims. Consequently, we find that discovery requests seeking information to determine whether the owners of a medical service corporation are improperly licensed are germane to the question of whether said corporation is eligible for reimbursement. 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 necessary to perform such service[s] in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.”

The Education Law provides that only persons licensed or certified can practice acupuncture in the State of New York (see Education Law § 8212). The Business Corporation Law provides that each shareholder, director or officer of the corporation must be licensed to practice the profession for which the corporation was organized (see Business Corporation Law § 1503 [b]; § 1507).

We find that defendant’s papers establish that so much of defendant’s discovery requests as seek information regarding whether plaintiff was fraudulently incorporated are material and necessary (see CPLR 3101) and, thus, defendant’s papers set forth that facts essential to justify opposition may exist but cannot now be stated. Consequently, plaintiff’s motion for summary judgment is premature pending the completion of discovery (see CPLR 3212 [f]). It is noted that plaintiff did not oppose the cross motion in the court below. Accordingly, plaintiff’s motion for summary judgment is denied and defendant’s cross motion is granted to the extent of directing that plaintiff shall respond to defendant’s discovery demands which seek information regarding the ownership, control and licensing of plaintiff corporation within 30 days of the date of the order entered hereon.{**13 Misc 3d at 61}

Golia, J.P. (concurring with the result only). While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I am constrained to agree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.

Rios and Belen, JJ., concur; Golia, J.P., concurs in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, July 26, 2006

Metroscan Imaging, P.C. v GEICO Ins. Co., 8 Misc 3d 829, affirmed.

APPEARANCES OF COUNSEL

Baker, Barshay & Neuwirth, LLP, Mineola (David M. Barshay and Michael C. Rosenberger of counsel), for appellant. Cadwalader, Wickersham & Taft LLP, New York City (William J. Natbony of counsel), and Stern & Montana LLP, New York City (Robert Stern of counsel), for respondent.

{**13 Misc 3d at 36} OPINION OF THE COURT

Memorandum.

Order, insofar as appealed from, affirmed without costs.

This appeal raises the question of whether, as a result of the Court of Appeals decision in State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]), a medical corporation that was fraudulently incorporated under Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c) is entitled to be reimbursed by insurers for medical services rendered by licensed medical practitioners prior to the effective date of 11 NYCRR 65-3.16 (a) (12).^[FN*] In [*2]Mallela, the New York Court of Appeals was asked the following certified question by the United States Court of Appeals, Second Circuit:

“Is a medical corporation that was fraudulently incorporated under N.Y. Business Corporation Law §§ 1507, 1508 and N.Y. Education Law § 6507(4)(c) entitled to be reimbursed by insurers, under New York Insurance Law §§ 5101 et seq. and its implementing regulations, for medical services rendered by licensed medical practitioners” (State Farm Mut. Auto. Ins. Co. v Mallela, 372 F3d 500, 509 [2004]).

The New York Court of Appeals stated that such medical corporations were not entitled to reimbursement (see 4 NY3d at 320). In addition to certifying the preceding question to the New York Court of Appeals, the Second Circuit stated that “defendants raise another issue of New York law that would arise only if the initial question is answered as State Farm wishes. This is: would the applicable revised regulation, 11 N.Y.C.R.R. § 65-3.16(a)(12), if it is read to bar reimbursement, be given retroactive effect” (372 F3d at 508). Consequently, the Second Circuit “welcome[d]” the Court of Appeals’ “guidance with respect to any issues that could arise depending on its answer to the question certified” (id. at 509-510). In Mallela, the Court of Appeals did not explicitly state whether 11 NYCRR 65-3.16 (a) (12) was to be given retroactive effect so as to bar{**13 Misc 3d at 37} reimbursement to a medical corporation that was fraudulently incorporated under Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c). Rather, the only portion of the Court of Appeals decision which expressly dealt with the retroactivity of the regulation concerned an insurer’s ability to maintain a cause of action sounding in fraud or unjust enrichment to recoup payments made by the insurer to a fraudulently incorporated medical corporation prior to the effective date of the regulation. On this question, the Court of Appeals indicated that the regulation was not to be applied retroactively, but rather prospectively (4 NY3d at 322).

The court below concluded that because the claims at issue in Mallela arose prior to the effective date of 11 NYCRR 65-3.16 (a) (12), the Court of Appeals held that the regulation applied to unpaid claims for medical services rendered without regard to the date on which such services were rendered (8 Misc 3d 829 [2005]). Although the court below was not alone in reaching this conclusion (see Allstate Ins. Co. v Belt Parkway Imaging, P.C., 11 Misc 3d 810 [2006]; A.T. Med., P.C. v State Farm Mut. Ins. Co., 10 Misc 3d 568 [2005]; Multiquest, PLLC v Allstate Ins. Co., 9 Misc 3d 1031 [2005]), other trial courts have reached a contrary determination (see Multiquest, PLLC v Allstate Ins. Co., 10 Misc 3d 1069[A], 2005 NY Slip Op 52209[U] [2005]; Multiquest, PLLC v Allstate Ins. Co., 10 Misc 3d 1061[A], 2005 NY Slip Op 52071[U] [2005]; Multiquest, PLLC v Allstate Ins. Co., 10 Misc 3d 1061[A], 2005 NY Slip Op 52069[U] [2005]; Multiquest, PLLC v Allstate Ins. Co., 10 Misc 3d 877 [2005]). While the Court of Appeals did not expressly address whether 11 NYCRR 65-3.16 (a) (12) was applicable to unpaid claims for assigned first-party no-fault benefits arising from medical services [*3]which were rendered prior to the effective date of said regulation, we nevertheless read the Court of Appeals decision as holding that, irrespective of the date on which the medical services were rendered, a provider of medical services may not recover therefor if it is a fraudulently incorporated medical corporation.

In Mallela, the medical corporation defendants which were allegedly fraudulently incorporated in violation of Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c) asserted that they were entitled to reimbursement notwithstanding their alleged fraudulent incorporation because the medical care rendered to their assignors was within the scope of the licenses of those who treated the assignors and{**13 Misc 3d at 38} thus the medical corporation defendants were within the regulatory framework for reimbursement. In advancing such an argument, some of the defendants’ separate briefs to the Court of Appeals relied, in part, upon the Court of Appeals decision in Charlebois v Weller Assoc. (72 NY2d 587 [1988]).

In Charlebois, the Court of Appeals held that a contract which required payment to an unlicensed business corporation for engineering services performed by an independent licensed professional engineer was valid because the corporation was not engaged in the unauthorized practice of engineering. By contrast, in Mallela, although the medical treatments were rendered by apparently licensed medical practitioners, said licensed practitioners were not the “providers” for billing purposes under the No-Fault Law. Instead, the “providers” for no-fault billing purposes were their employers, medical service corporations, which were incorporated in violation of Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c). This critical distinction apparently prompted the Court of Appeals, in Mallela, to reject the defendants’ position stating, “The fact remains that the reimbursement goes to the medical service corporation that exists to receive payment only because of its willfully and materially false filings with state regulators” (4 NY3d at 321).

In so holding, the Court of Appeals implicitly recognized that medical service corporations which are fraudulently incorporated in violation of Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c), i.e., which “fail[ed] to meet the applicable state licensing requirements” (4 NY3d at 320), were not entitled to reimbursement since their authority to render professional services was obtained through fraudulent means and possession of such authority was a prerequisite to reimbursement (see Education Law § 6507 [4] [c]; see also Business Corporation Law § 1503; Valley Physical Medicine & Rehabilitation v New York Cent. Mut. Ins. Co., 193 Misc 2d 675 [App Term, 9th & 10th Jud Dists 2002]). Such a result is in accord with the common law, which has historically denied compensation to unlicensed providers of services for which a regulatory license is required (see Spivak v Sachs, 16 NY2d 163 [1965]; Bendell v De Dominicis, 251 NY 305 [1929]; Mavco Realty Corp. v M. Slayton Real Estate, Inc., 12 AD3d 575 [2004]; Price v Close, 302 AD2d 374 [2003]; Gordon v Adenbaum, 171 AD2d 841 [1991]; P.C. Chipouras & Assoc. v 212 Realty Corp., 156 AD2d 549{**13 Misc 3d at 39} [1989]; Unger v Travel Arrangements, 25 AD2d 40, 44 [1966]; 13 NY Jur 2d, Businesses and Occupations § 61), and the regulations, which permit a medical service corporation to recover for medical services provided so long as the treating medical practitioner was an employee of the medical service corporation as opposed to an independent contractor (see 11 NYCRR former 65.15 [j] [1], now 11 NYCRR 65-3.11 [a]; Rockaway Blvd. Med. P.C. v Progressive Ins., 9 Misc 3d 52 [App Term, 2d & 11th Jud Dists 2005] [because a billing [*4]provider is not a “provider” of the medical services if the medical services were rendered by an independent contractor rather than by an employee of the billing provider, it is not permitted to recover direct payment of assigned no-fault benefits from an insurer]; A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc 3d 36 [App Term, 2d & 11th Jud Dists 2005]). Indeed, where an action is based upon a contract which violates public policy or which is being used to circumvent public policy, courts have refused to enforce such a contract and have left the parties where they stand (see Spivak v Sachs, 16 NY2d at 168; McConnell v Commonwealth Pictures Corp., 7 NY2d 465 [1960]; Veazey v Allen, 173 NY 359 [1903]; Matter of Ungar v Matarazzo Blumberg & Assoc., 260 AD2d 485 [1999]; LoMagno v Koh, 246 AD2d 579 [1998]; United Calendar Mfg. Corp. v Huang, 94 AD2d 176 [1983]). Accordingly, under the common law, prior to the effective date of 11 NYCRR 65-3.16 (a) (12), such fraudulently incorporated medical corporations were not entitled to recover a judgment against an insurer for assigned first-party no-fault benefits. The promulgation of 11 NYCRR 65-3.16 (a) (12) by the Superintendent of Insurance merely codified the common-law rule to the extent it barred recovery by unincorporated or fraudulently incorporated medical service corporation providers for assigned first-party no-fault benefits.

Our reading of Mallela is buttressed by the Court of Appeals holding therein that a cause of action by an insurance carrier sounding in fraud or unjust enrichment would not lie prior to the effective date of 11 NYCRR 65-3.16 (a) (12). This too comports with the common-law rule, to wit, the lack of a required license will prevent recovery for services rendered, but the lack of a license does not permit recovery of the fee by the payer after it was paid (see Johnston v Dahlgren, 166 NY 354 [1901]; Goldman v Garofalo, 71 AD2d 650 [1979]; see also 13{**13 Misc 3d at 40} NY Jur 2d, Businesses and Occupations § 68). However, we read Mallela as holding that the promulgation of 11 NYCRR 65-3.16 (a) (12) by the Superintendent of Insurance altered the common law prospectively such that an insurance carrier may maintain a cause of action against a fraudulently incorporated medical service corporation to recover assigned first-party no-fault benefits which were paid by the insurer to such medical service corporation after the regulation’s effective date (4 NY3d at 322). [*5]

In light of the foregoing, the order, insofar as appealed from, is affirmed.

Golia, J.P., Rios and Belen, JJ., concur.

Footnotes

Footnote *: Insofar as is relevant, the regulation provides: “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” (11 NYCRR 65-3.16 [a] [12]).

[*1]

Supreme Court, Appellate Term, Second Department, July 26, 2006

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants. Carman Callahan & Ingham, LLP, Farmingdale (Paul A. Barrett of counsel), for respondent.

{**13 Misc 3d at 26} OPINION OF THE COURT

Memorandum.

Appeal as taken by plaintiff Lvov Acupuncture P.C. dismissed.

Order modified by granting so much of the motion as sought summary judgment on behalf of plaintiffs A.B. Medical Services PLLC and D.A.V. Chiropractic P.C. to the extent of awarding partial summary judgment to plaintiff D.A.V. Chiropractic P.C. in the principal sum of $370.70 and awarding summary judgment to plaintiff A.B. Medical Services PLLC in the principal sum of $8,682.82, and matter remanded to the court below for the calculation of statutory interest and attorney’s fees thereon and for all further proceedings on the remaining claims; as so modified, affirmed insofar as reviewed without costs.

In this action to recover first-party no-fault benefits for health services rendered to their [*2]assignor, plaintiffs A.B. Medical Services PLLC and D.A.V. Chiropractic P.C. established their prima facie entitlement to summary judgment by proof that they submitted claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term, 2d & 11th Jud Dists 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]). The burden shifted to defendant to show a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Contrary to the determination of the court below, plaintiffs did not have to establish the validity of the assignments as part of their prima facie case. Defendant’s failure to seek verification of the assignments, or to allege any deficiency in the assignments in its denial of claim forms, constitutes a waiver of any defenses with respect thereto (see New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2004]; Presbyterian{**13 Misc 3d at 27} Hosp. in City of N.Y. v Aetna Cas. & Sur. Co., 233 AD2d 433 [1996]; Medwide Med. Supply Inc. v Country-Wide Ins. Co., 8 Misc 3d 131[A], 2005 NY Slip Op 51078[U] [App Term, 2d & 11th Jud Dists]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 6 Misc 3d 70 [App Term, 2d & 11th Jud Dists 2004]).

It is uncontroverted that defendant timely denied plaintiff A.B. Medical Services PLLC’s $604.24 claim based upon the conclusions of an affirmed peer review report which was annexed to the denial. Plaintiff contends that the report is insufficient since defendant did not provide its reviewer with the narrative report and the follow-up reports it had previously provided to defendant. Indeed, the reviewer stated that he was not provided with reports from any of the assignor’s health care providers and, therefore, medical necessity could not be established. In view of the foregoing, since the peer review report was incomplete in that it did not take into account all of the documents plaintiff provided to defendant, the denial was inadequate to establish a factual basis and medical rationale sufficient to demonstrate the lack of medical necessity (see Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004]).

Defendant also timely denied plaintiff A.B. Medical Services PLLC’s $1,999.12, $71.40 and $752.62 claims, by its denial of claim form dated April 30, 2003, on the ground that the assignor failed to appear for independent medical examinations (IMEs). However, in opposition to plaintiffs’ motion for summary judgment, defendant merely established the mailing of a single IME request. The insurance regulations provide that if any verification request is not supplied to the insurer within 30 calendar days after the original request, then, within 10 calendar days, the insurer shall follow up with the party from whom the verification was sought (see 11 NYCRR 65-3.6 [b]). Inasmuch as defendant did not show that it complied with the follow-up verification regulation, it has failed to rebut plaintiff’s prima facie showing as to these claims (see e.g. Metro Med. Diagnostics v Lumbermens Ins. Co., 189 Misc 2d 597 [App Term, 2d & 11th Jud Dists 2001]).

As to plaintiff A.B. Medical Services PLLC’s remaining claims, defendant failed to show a triable issue of fact since its denial of claim form dated June 10, 2003 is incompletely filled out and is, thus, insufficient to assert a defense.

“A proper denial of claim must include the information called for in the prescribed denial of claim form{**13 Misc 3d at 28} (see 11 NYCRR 65-3.4 [c] [11]) [*3]and must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated’ . . . Moreover, ‘[a] timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law’ (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [2004])” (Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664-665 [2004]).

Furthermore, although plaintiff D.A.V. Chiropractic P.C. contends that it is entitled to summary judgment in the principal sum of $1,586.44, a review of the claim forms annexed to its moving papers as exhibit E indicates that said plaintiff is only entitled to $370.70 since the mailing receipts annexed to establish its mailing of its other three claims list the provider as A.B. Medical Services PLLC. Accordingly, upon the record presented, there has been an insufficient showing that D.A.V. Chiropractic P.C. mailed said three claims to defendant. As noted above, defendant’s June 2003 denial of claim form is insufficient and, therefore, does not raise a triable issue of fact or rebut plaintiff’s prima facie showing as to its $370.70 claim (see Nyack Hosp., 11 AD3d at 664).

In view of the foregoing, plaintiff A.B. Medical Services PLLC is awarded summary judgment in the principal sum of $8,682.82 and plaintiff D.A.V. Chiropractic P.C. is awarded partial summary judgment in the principal sum of $370.70, and the matter is remanded to the court below for entry of judgment and the calculation of statutory interest and attorney’s fees thereon pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder, and for all further proceedings on the remaining claims.

Inasmuch as Lvov Acupuncture P.C. is not an aggrieved party, the appeal as taken by it is dismissed (see CPLR 5511).

Golia, J., dissents in part and concurs in part, and votes to affirm the order in the following memorandum:

At the outset, I concur with the majority in the dismissal of the appeal as taken by plaintiff Lvov Acupuncture P.C. As regards the claim of A.B. Medical Services PLLC and D.A.V. Chiropractic P.C., I find that plaintiffs are required, at the very least, to submit proof of a properly executed assignment. Here, plaintiffs A.B. Medical and D.A.V. Chiropractic failed to do so. Consequently, I respectfully dissent and vote to affirm.{**13 Misc 3d at 29}

The insurance regulations provide, in relevant part, that a health care provider must submit to the insurer “a properly executed assignment” on one of the following forms: (1) the prescribed verification of treatment by the attending physician or other provider of service form (NYS Form NF-3); (2) the prescribed verification of hospital treatment form (NYS Form NF-4), or the prescribed hospital facility form (NYS Form NF-5); or (3) the prescribed no-fault assignment of benefits form (NYS Form NF-AOB) (see 11 NYCRR 65-3.11 [b] [2]; see also A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 6 Misc 3d 70, 71 [App Term, 2d & 11th Jud Dists 2004]). The plain language of the regulations clearly mandate submission of a properly executed assignment, and since the No-Fault Law is in derogation of the common law, its regulations must be strictly construed (see Presbyterian Hosp. in City of N.Y. v Atlanta Cas. Co., 210 AD2d 210, 211 [1994]).

In my view, the submissions of A.B. Medical and D.A.V. Chiropractic fail, on their face, to demonstrate a properly executed assignment. As the court below correctly noted, the forms submitted by these plaintiffs appear to be copies of a single assignment form which was signed by the assignor in blank. Plaintiffs’ names were inserted thereafter on copies of the original form. Under these circumstances, it cannot [*4]be said that plaintiffs A.B. Medical and D.A.V. Chiropractic presented evidence of a properly executed assignment as required under the insurance regulations. Accordingly, plaintiffs’ motion for summary judgment was properly denied.

Pesce, P.J., and Weston Patterson, J., concur. Golia, J., dissents in part and concurs in part in a separate memorandum.

Supreme Court, Nassau County

9808/04

Locks Law Firm, PLLC

Attn: Seth R. Lesser, Esq.

Andrew P. Bell, Esq.

Attorneys for Plaintiff

110 East 55th Street

New York, NY 10022

Thomas W. Alfano, Esq.

Attorney for Plaintiff

400 Garden City Plaza

New York, NY 11530

Balesi & Donovan, P.C.

Attn: John Balesi, Esq.

Attorneys for Plaintiff

1225 Franklin Avenue

Suite 400

Garden City, NY 11501

O’Melveny & Myers, LLP Attn: Ralph P. DeSanto, Esq.

Attorneys for Defendant

Times Square Tower

7 Times Square

New York, NY 10036

Thomas P. Phelan, J.

Motion by plaintiff for an order: (a) granting plaintiff re-argument and/or granting his requested extension of time to serve the instant motion on or before March 3, 2006; and (b) certifying the above-captioned action, pursuant to CPLR 901 and 902, as a class action is denied, except that plaintiff’s time to serve this motion is extended nunc pro tunc to March 3, 2006 and is deemed timely.

In a prior order dated March 24, 2005, this Court dismissed plaintiff’s first, third and fourth causes of action. Plaintiff’s second cause of action for breach of contract remains as the only predicate for the proposed class action. As such, plaintiff, a retail supplier of durable medical equipment (DME), brings this breach of contract action to recover on behalf of the Class for defendant’s alleged refusal to pay the regulatory rate of reimbursement for DME no-fault claims submitted by entities and/or persons in New York State.

More specifically, plaintiff alleges that: “Defendant GEICO arbitrarily, unilaterally, and without any basis in law or pursuant to any contractual terms, reduced the amounts it would reimburse claimants and/or their assignees from New York State ( Claimants’) based upon the results of ad hoc surveys that a Geico claims examiner conducted to come up with their own idea of what should be a reasonable and customary’ charge for certain DMEs. [and that] In conjunction with reducing such reimbursements, Geico stated to each such Claimant that the claimed amounts were reduced to a reasonable reimbursement of 150%’ of the industry average’ or of the average retail price’ for the particular DME for which a claim was submitted.” (Plaintiff’s memorandum of law dated March 3, 2006 [plaintiff’s memo] at pp. 1-2; see complaint ¶¶2, 22-23, 39).

Plaintiff contends that: “This case is a perfect one for class certification. Under New York law, a determination of whether GEICO breached its contracts will not require the trier of fact to look at the circumstances of individual transactions” (plaintiff’s memo at p.2). The Court does not agree that this is a perfect case for class certification or that individual transactions will not have to be examined. On this motion, the burden of proof is on plaintiff to establish “compliance with the statutory requirements for class action certification under CPLR 901 and 902.” (Rallis v City of New York, 3 AD3d 525, 526). Plaintiff has not made the necessary showing.

CPLR 901 contains five enumerated “prerequisites”. CPLR §902 lists five additional “considerations”. These will be addressed seriatim.

The first prerequisite set forth in CPLR 901 (a) is that “the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable.” Plaintiff has failed to establish the first prerequisite. Counsel for plaintiff alleges in plaintiff’s memorandum of law that: while plaintiff contends that “the Class certainly numbers in the multiple dozens of entities encompassing hundreds if not thousands of claims on behalf of hundreds and thousands of individual New Yorkers who were injured, and through New York’s DME suppliers, filed claims for reimbursement” (plaintiff’s memo at p. 14), actual evidence showing numerosity is not provided. Class action certification will not be granted until there is a determination of “at least the approximate size of the class.” (82 NY Jur2d, Parties, § 276; see Spatz v Wide World Travel Service, Inc., 80 AD2d 519, 520; Simon v Cunard Line Ltd., 75 AD2d 283, 289).

The second prerequisite set forth in CPLR 901 (a) is that “there are questions of law or fact common to the class which predominate over any questions affecting only individual members.” Plaintiff has failed to establish the second prerequisite as well. Plaintiff contends that “there are no individual issues whatsoever, except as to the amount of damages recoverable by each Class member” (plaintiff’s memo, p. 15). The Court disagrees. There is only one legal question common to the alleged class — whether GEICO breached its insurance contracts with class members by unilaterally reducing the amounts of reimbursement based [*2]upon what GEICO determined was a “reasonable and customary” charge for certain DMEs. All of the other legal and factual questions are case specific.

Each DME transaction must be examined separately to see whether the class member has a prima facie case. First of all, each class member must submit an executed assignment of benefits form and copies of proofs of the claim which were mailed to GEICO. (See Inwood Hill Med. P.C. v Allstate Ins. Co., 3 Misc 3d 1110A, 2004 NY Slip Op 50565U at p. 12). Furthermore, class members “must document the cost of the supplies or equipment to the provider and must show that this cost was paid for the specific supplies or equipment provided to the assignor.” (Careplus Med. Supply Inc. v Allstate Indem. Co., 5 Misc 3d 1002A, 2004 NY Slip Op 51148U at p. 3). Of course, separate assessments of damages must be made for each class member who is found to be entitled to reimbursement.

Additionally, the timeliness of GEICO’s denial of all or part of a class member’s claim must be considered in order to determine whether defenses other than lack of coverage can be raised. The Court of Appeals has held that “an insurer, despite its failure to reject a claim within the 30-day period prescribed by Insurance Law § 5106 (a) and 11 NYCRR 65.15 (g) (3), may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident.” (Cent. Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199). This would include cases of fraud, which, “if proven, would establish that there was no coverage at all for the claim.” (Carepluss Med. Supply Inc. v State Farm Mut. Auto. Ins. Co., 5 Misc 3d 1014A, 2004 NY Slip Op 51373U at p. 3). It would not, however, include cases of fraud involving excessive DME costs. (See Valley Psychological, P.C. v Liberty Mut. Ins. Co., 2006 NY App Div LEXIS 7500, 2006 NY Slip Op 4480 at p. 2).

The third prerequisite set forth in CPLR 901 (a) is that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” The third prerequisite has been established. As alleged, “plaintiff and all other members of the Class have virtually identical claims: they all had claims for reimbursement of DMEs reduced by GEICO based upon an average price’ that GEICO unilaterally and illegally implemented” (plaintiff’s memo, p. 17). All that is required is that plaintiff’s claim arise out of the same practice or course of conduct and be based upon the same legal theory as the claims of the other class members. (See Freeman v Great Lakes Energy Partners, 12 AD3d 1170, 1171; Ackerman v Price Waterhouse, 252 AD2d 179, 201; Friar v Vanguard Holding Corp., 78 AD2d 83, 99). Such is the case here.

The fourth prerequisite set forth in CPLR 901 (a) is that “the representative parties will fairly and adequately protect the interests of the class.” Plaintiff has failed to establish the fourth prerequisite. The deposition testimony of Jean M. Francois, owner and President of P.Z.F. Management Co., Inc., d/b/a Globe Surgical Supply, (“Globe” or “PZF”) and the exhibits supplied by GEICO indicate that plaintiff, as the assignee of Remy Gallant, may not be able to [*3]prove Mr. Gallant’s no-fault claim against GEICO. In such case, the class action would fail as well. (82 NY Jur2d, Parties, § 267; see Banks v County of Suffolk, 133 AD2d 438; Estruch v Volkswagenwerk, 97 AD2d 978; Funderburke v Uniondale Union Free Sch. Dist. No. 15, 172 Misc 2d 963, 967, aff’d 251 AD2d 622).

Plaintiff, in its complaint, alleges that on February 10, 2001, Remy Gallant was injured in an accident with a GEICO policyholder and that, on July 26, 2001, Gallant purchased a Tens Unit (i.e., a device for relieving pain by electrical stimulation of nerves) from Globe pursuant to a doctor’s prescription [complaint, ¶12]. Plaintiff further alleges that: “The item cost Globe $340.00, and Globe obtained an assignment of Mr. Gallant’s claim in order to obtain reimbursement from [GEICO] under the provisions of the No-Fault Insurance Law” [Id.]. It is additionally alleged that: “On April 30, 2001, Globe submitted a claim to [GEICO], as Mr. Gallant’s assignee, setting forth a balance owed to Globe by [GEICO] … in the amount of $510.00 (which, as provided for in Part E [i.e., 11 NYCRR § 68, Appendix 17-C, Part E] is 150%, or, in this case less than 150%, of $340.00). On May 23, 2001, [GEICO] denied the claim and reimbursed Globe for only $200.00 for that item” [Id., ¶22].

Part of GEICO’s Exhibit G and of Exhibit C to Plaintiff’s Memorandum of Law is Remy Gallant’s claim to GEICO, dated April 30, 2001, for $1,048.25, which includes a Tens Unit for $510.00. Also included as part of these same exhibits is Invoice # 5692 from Certified Health Products, dated July 20, 2000, to Globe which includes a Tens Unit for $340.00. Since this July 20, 2000 invoice is dated almost seven (7) months prior to Mr. Gallant’s February 10, 2001 accident and more than one (1) year prior to the date Globe allegedly sold the Tens Unit to Mr. Gallant, it cannot be accepted as proof of what the Tens Unit allegedly sold to Mr. Gallant cost Globe.

Furthermore, at his February 21, 2006 deposition, Mr. Francois admitted to the practice of submitting the same invoices multiple times. (Transcript, pp. 138, 141-142, 146). Mr. Francois explained that he reuses the same invoices because it’s “convenient.” (Transcript, p. 138). With respect to the Tens Units, Mr. Francois testified that he randomly picks an invoice and sends it over and over. (Transcript, p. 146). Mr. Francois also testified that Globe was never asked by any company to provide a specific invoice corresponding to the exact date of purchase. (Transcript, p. 146). When asked whether he has the invoices for the Tens Units purchased from Certified Health Products which have not been produced, Mr. Francois answered: “I don’t know where they are.” (Transcript, p. 147).

Mr. Francois’ deposition testimony additionally indicates that he will be unable to produce a cancelled check showing that Globe actually paid for the Tens Unit allegedly sold to Mr. Gallant. At his February 21, 2006 deposition, Mr. Francois testified that in the ordinary course of business he would have paid invoices from Certified Health Products by check. (Transcript, p. 159). At the deposition, counsel for GEICO advised Mr. Francois that a subpoena had been sent to Washington Mutual Bank for “all checks drawn on the PZF [*4]Management account from 2000 until mid 2004.” (Transcript, p. 159). Counsel then asked Mr. Francois whether he could “explain why there are no checks to Certified Heath Products in the production from Washington Mutual Bank between the dates of 2000 and early 2004?” (Transcript, p. 160). Mr. Francois responded that he didn’t know. (Transcript, p. 160).

According to counsel for GEICO, Globe’s bank has produced only 6 checks written on PZF’s account to Certified Health Products, none of which relate to the DME transaction at issue. In this regard, Mr. Francois testified that there are no other bank accounts with respect to Globe and/or PZF other than the one at Washington Mutual Bank. (Transcript, p.162). Under the circumstances, the Court cannot find that Globe would make an adequate representative party. Mr. Francois’ practice of using the same invoices over and over again when filing no-fault claims to document the cost of DMEs gives the appearance of insurance fraud and is to be condemned. Furthermore, Mr. Francois’ inability to produce the actual invoice for the Tens Unit allegedly sold to Mr. Gallant and a cancelled check to prove payment adds to that appearance.

The fifth and final prerequisite set forth in CPLR 901 (a) is that “a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Plaintiff has failed to establish the fifth prerequisite. Pursuant to Insurance Law §5106[b], a no fault claimant has the option of submitting their disputed claim to binding arbitration. Further, a successful claimant is entitled to recover penalty interest at the rate of “two percent per month” plus attorneys’ fees (Insurance Law § 5106 [a]). Plaintiff has not shown how a one-issue class action is superior to the remedies provided to individual claimants by the Insurance Law.

The fifth prerequisite set forth in CPLR 901 (a) additionally ties into the third consideration set forth in CPLR 902, which requires the Court to take into account: “the extent and nature of any litigation concerning the controversy already commenced by or against members of the class.” While plaintiff has failed to present any evidence or information as to this consideration, GEICO has submitted copies of arbitration awards and court decisions showing the existence of litigation and arbitration proceedings concerning the issue sought to be determined in the proposed class action. (See GEICO’s Appendix of Unreported, Out-of-State and Other Legal Authorities, etc.). It is likely that an appellate court will decide the legal issue that is the basis for the proposed class action in the near future — a consideration which weighs against plaintiff’s application.

The first consideration set forth in CPLR 902 requires the Court to take into account: “the interest of members of the class in individually controlling the prosecution or defense of separate actions.” This consideration weighs against plaintiff’s application as well. The Appellate Division, First Department, has held that: “Where . . . a choice of remedies is available to each member of an alleged class, class action status should be denied.” (Martinez v American Export Industries, Inc., 48 AD2d 803; see, also, 82 NY Jur2d, Parties, § 280). The First Department has also held that “the fact that wrongs were committed pursuant to a [*5]common plan or pattern does not permit invocation of the class action mechanism where the wrongs done were individual in nature or subject to individual defenses.” (Mitchell v Barrios-Paoli, 253 AD2d 281, 291; see, also, 82 NY Jur2d, Parties, § 280). As noted above, the Insurance Law provides each claimant with a choice of remedies and the timeliness or untimeliness of GEICO’s denial of coverage will determine what defenses GEICO can raise.

The second consideration set forth in CPLR 902 requires the Court to take into account: “the impracticality or inefficiency of prosecuting or defending separate actions.” Plaintiff has failed to present evidence concerning this consideration. There is no proof that the relatively small amounts of each claim are discouraging any prospective class members from pursuing their claims individually. To the contrary, the arbitration awards and court decisions collected in GEICO’s Appendix of Unreported, Out-of-State and Other Legal Authorities, etc., show that separate actions and arbitrations are being pursued. Thus, this consideration too weighs against plaintiff’s application.

The fourth consideration set forth in CPLR 902 requires the Court to take into account: “the desirability or undesirability of concentrating the litigation of the claim in the particular forum.” Plaintiff has failed to show that this Court is a desirable forum for the proposed class action. With the relatively small amount of each claim, it seems unlikely that claimants from all over New York State would choose Supreme Court, Nassau County, as the forum to litigate their claims. This consideration also weighs against plaintiff’s application.

The fifth and last consideration set forth in CPLR 902 requires the Court to take into account: “the difficulties likely to be encountered in the management of a class action.” This consideration similarly weighs against plaintiff’s application. Once the one common legal issue is decided, each claim would have to be adjudicated separately, with evidence and witnesses coming from all over New York State. Coordinating the mini-trials of numerous small claims would present a logistical and scheduling nightmare.

Inasmuch as plaintiff has failed to establish four out of the five prerequisites for class action certification set forth in CPLR 901 and all five considerations set forth in CPLR 902 weigh against granting class action certification, plaintiff’s application for class action certification is denied.

This decision constitutes the order of the court.

Dated: JULY 19, 2006 THOMAS P. PHELAN

J.S.C.

Locks Law Firm, PLLC

Attn: Seth R. Lesser, Esq.

Andrew P. Bell, Esq.

Attorneys for Plaintiff

110 East 55th Street

New York, NY 10022

Thomas W. Alfano, Esq.

Attorney for Plaintiff

400 Garden City Plaza

New York, NY 11530

Balesi & Donovan, P.C.

Attn: John Balesi, Esq.

Attorneys for Plaintiff

1225 Franklin Avenue

Suite 400

Garden City, NY 11501

O’Melveny & Myers, LLP

Attn: Ralph P. DeSanto, Esq.

Attorneys for Defendant

Times Square Tower

7 Times Square

New York, NY 10036

[*1]

Supreme Court, Appellate Term, Second Department, June 30, 2006

APPEARANCES OF COUNSEL

Alden Banniettis, Brooklyn (Jeff Henle of counsel), for appellant. Troy & Troy, Lake Ronkonkoma (Patrick J. Morganelli of counsel), for respondent.

{**12 Misc 3d at 86} OPINION OF THE COURT

Memorandum.

Order affirmed without costs.

In this action to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. In order to establish a prima facie entitlement to summary judgment, plaintiff was required to prove that it submitted the subject claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (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 2003]). In support of its motion for summary judgment, plaintiff annexed an affidavit of one of its corporate officers. In said affidavit, plaintiff’s corporate officer did not specifically state that he mailed the claims, but rather, stated that proof that he mailed the claims was annexed. However, since no such proof was annexed, plaintiff did not establish that he actually mailed the claims. In addition, there was no admission by defendant acknowledging the receipt of the claims. While plaintiff subsequently submitted a document entitled “Submission by Stipulation of the Parties and Court,” which stated that the parties agreed that the letters annexed thereto from defendant established defendant’s receipt of the claims, said document is not enforceable as it was not signed by the defendant (see CPLR 2104). Since plaintiff failed to establish by competent proof that the claim forms were mailed to defendant (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]), plaintiff’s motion for summary judgment was properly denied. [*2]

Pesce, P.J., Rios and Belen, JJ., concur.