CV-6239-18/HU
C. Stephen Hackeling, J.

Upon the following papers numbered 1 to 20 read on this motion to dismiss plaintiff’s complaint by Notice of Motion/Order to Show Cause and supporting papers 1,2,6; Notice of Cross Motion and supporting papers 7,8,13; Answering Affidavits and supporting papers 7,8,13; Replying Affidavits and supporting papers 14-18,20; Filed papers; Other exhibits: 3-5,9-12,19; (and after hearing counsel in support of and opposed to the motion), it is,

ORDERED that the motion by defendant to dismiss plaintiff’s complaint pursuant to CPLR 3211(a)(3), on the ground that plaintiff lacks legal capacity to sue in the State of New York, pursuant to BCL §1312(a), is denied, with prejudice; and it is further

ORDERED that the alternative motion by defendant to compel discovery and a deposition of plaintiff, is denied; and it is further

ORDERED that the cross-motion by plaintiff for summary judgment pursuant to CPLR 3212, and plaintiff’s request for an order pursuant to CPLR 3212(g), are both denied.

Plaintiff health service provider, a limited liability corporation,^[FN1] seeks reimbursement of No-Fault benefits in the sum of $7,943.11, as assignee of a New York No-Fault claimant, for medical and surgical services rendered to its Brooklyn assignor, at its New Jersey surgical center on 05/04/2018, stemming from an automobile accident of 1/08/2018.

Plaintiff lists its address as 6 Chestnut Ridge Road, Montvale, New Jersey 07645 on the summons, and the submitted, uncertified medical records (see CPLR 4518) not objected to by defendant, show the same address as the location of the surgery rendered on 5/04/2018.

Defendant now moves for dismissal pursuant to CPLR 3211(a) (3), arguing that plaintiff lacks standing to bring this action in the State of New York, because plaintiff has failed to register with the Secretary of State in New York to operate as a foreign corporation authorized to do business in New York, pursuant to BCL §1312(a). Defendant asserts plaintiff is a New Jersey corporation whose business activities within New York State are so systematic and regular as to manifest continuity of activity,^[FN2] and contends that online data activity demonstrates that plaintiff has over 627 pending cases against insurance companies in the New York State court system.

Alternatively, defendant moves pursuant to CPLR 3101 for an order compelling plaintiff to appear for deposition, to address the issue of plaintiff’s legal capacity to sue in the State of New York.^[FN3]

In opposition to the motion to dismiss, plaintiff denies it qualifies as a foreign corporation required to register with the New York Secretary of State to operate as a foreign corporation doing business in New York, stating its contact with the State of New York is “incidental” and not “systematic” as claimed by defendant. Plaintiff asserts a denial of its right to sue in a New York State Court, based upon an assignment of a New York No-Fault claim, is a violation of the interstate commerce clause of the U.S. Constitution.

Plaintiff further contends that plaintiff’s assignor is a New York resident (living in Brooklyn), who assigned his New York No-Fault contract to plaintiff, who brought the instant suit to collect for unpaid medical services rendered to plaintiff’s assignor at its New Jersey medical facility.

In addition, plaintiff cross-moves for summary judgment for the sums delineated in the complaint, contending it timely provided its claim to defendant, thirty days have since transpired, and defendant has not paid or denied the claim.

In the alternative, plaintiff seeks an order pursuant to CPLR 3212(g), stating that plaintiff [*2]has met its prima facie case in the event of trial.

In opposition to plaintiff’s motion for summary judgment, defendant contends that contrary to plaintiff’s statement, defendant has denied the claim within 30 days of its receipt, and attaches documents of proof in support of this contention.

Here, the Court determines that defendant has failed to satisfy its burden of demonstrating that plaintiff was a foreign corporation “doing business” in the State of New York, and was thereby subject to the registering conditions placed by BCL §1312 on foreign corporate capacity to sue in New York (see Pergament Home Ctrs. v Net Realty Holding Trust, 171 AD2d 736 [2nd Dept 1991]). Though there is no admissible proof that plaintiff is a New Jersey Corporation, plaintiff asserts in its complaint that it is a LLC. and has a New Jersey address. Plaintiff also asserts its business contact with the State of New York is “incidental” and not “systematic.” In addition, defendant contends that plaintiff is a New Jersey business, which plaintiff does not deny.

Therefore, the Court determines that defendant has failed to overcome the presumption that plaintiff is doing business in its state of incorporation, and not in the State of New York (see Highfill, Inc. v Bruce and Iris, Inc., 50 AD3d 742 [2nd Dept 2008]).

The Court further finds that there is no proof that plaintiff maintains an office or phone listing, or owns real property or has employees or sales reps, in the State of New York (see Uribe v Merchants Bank of New York, 266 AD2d 21, 22 [1st Dept 1999]; see also S & T Bank v Spectrum Cabinet Sales, Inc., 247 AD2d 373 [2nd Dept 1998]).

Indeed, though defendant broadly links over 627 pending cases in the State of New York court system brought by plaintiff against insurance companies, as evidence of plaintiff’s New York systemic activities, the linkage is disingenuous and unavailing. First, defendant’s proof is by inadmissible hearsay. Next, plaintiff’s activities in the State of New York, appear to be limited to collection lawsuits from assignments under New York’s No-Fault law, brought in New York courts for unpaid medical services rendered in its business as a health service provider and surgical center in the State of New Jersey.

Moreover, the instant action does not equate to an assignment of a collection of account receivables for consumer debt purchased by a plaintiff, for enforcement through the New York State court system (see Centurion Capital Corp. v Guarino, 35 Misc 3d 1219[A][Civ Ct, City of New York, 2012]), nor an assignment to recover money for goods sold in New York by an out-of-state (Pennsylvania) corporation (see S & T Bank v Spectrum Cabinet Sales, Inc., supra]).

The Court finds that the undisputed facts remain that plaintiff is a health service provider and surgical center, rendering services at its health care facility located in New Jersey, which requires incidental litigation for collection of its unpaid charging fees in the courts of the State of New York, where entrance as a plaintiff is contemplated through assignments under New York’s No-Fault law. It is not as a corporate entity whose actual business is as a systematic purchaser of assignments for collection enforcement in the courts of the State of New York.

The Court notes that even if plaintiff was required to register as a foreign corporation doing business in the State of New York, it is not a jurisdictional defect, and does not defeat the action, as a plaintiff may cure the failure to obtain a certificate pursuant to BCL §1312 at any time prior to resolution of the action by judgment (see Uribe v Merchants Bank of New York, supra; Hot Roll Mfg. Co. v Cerone Equipment Co., 38 AD2d 339 [3rd Dept, 1972]; see also Virgilio Flores, S.A. v Jerome Radelman, Inc., 567 F. Supp 577 [1982]). As a result, the instant circumstances do not create a true legal incapacity to sue within the meaning of CPLR 3211[a][3] [*3](see Paper Manufacturers Co. v Ris Paper Co., 86 Misc 2d 95 [City of New York, Civ Ct, 1976]).

Accordingly, the motion by defendant to dismiss plaintiff’s complaint pursuant to CPLR 3211(a)(3), on the ground that plaintiff lacks legal capacity to sue in the State of New York pursuant to BCL §1312(a), is denied, with prejudice.

Defendant’s alternative motion to compel discovery and a deposition of plaintiff “if defendant (sic) disputes that it lacks capacity to sue” is denied. The issue of plaintiff’s legal capacity to sue under BCL §1312(a) is now moot, given the Court’s instant ruling, thereby eliminating the need for defendant’s request for discovery and deposition for this purpose. Supervision of discovery and the setting of reasonable terms and conditions rests within the sound discretion of the Court (see Hernandez v City of Yonkers,74 AD3d 1025, 1026 [2nd Dept 2010]). Accordingly, defendant’s alternative motion to compel discovery and a deposition of plaintiff, is denied.

Plaintiff’s cross-motion for summary judgment pursuant to CPLR 3212, upon the grounds that defendant has failed to pay or deny the bills within 30 days of receipt of plaintiff’s claim or properly toll the time, for dates of service on 05/04/18, is denied (see 11 NYCRR 65-3.8[a][1]). Defendant has refuted plaintiff’s contentions with documents demonstrating that it timely provided a denial of claim to plaintiff,^[FN4] thereby creating a question of fact on this issue requiring a trial (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557,562 [1980]).

Furthermore, the Court finds that plaintiff has failed to demonstrate a prima facie case in support of summary judgment, as the necessary element provided by the Assignment of Benefits form submitted by plaintiff’s assignor, states it is for an accident which occurred on 3/19/18, not the subject accident of 1/08/18 (see Alvarez v Prospect Hospital, supra; Winegrad v New York Univ. Med. Ctr.,supra; Zuckerman v City of New York, supra).

Any remaining contentions lack merit.

The foregoing constitutes the decision and order of this Court.

Dated: January 20, 2020

J.D.C.

Footnotes

Footnote 1:Though defendant claims plaintiff is a New Jersey corporation, there is no admissible evidence substantiating this claim.

Footnote 2:Defendant’s papers are contradictory, in that paragraph 10 of the affirmation in support of the motion states plaintiff did not do any business in New York, while paragraph 13 states plaintiff has been doing large amounts of New York business. Furthermore, defendant states in paragraph 18 that plaintiff lists a New York business address, which is clearly false, as demonstrated by the New Jersey address listed in the summons and the lack of any other address listed in any other papers.

Footnote 3:Defendant’s Notice of Motion seeks an order compelling plaintiff to appear for deposition, only, but its affirmation supports discovery of plaintiff (¶ 3) and documentary discovery (¶ 20), on the issue of plaintiff’s legal capacity to sue in the State of New York.

Footnote 4:In paragraph 12 of the Affirmation in Support, Defendant cites Amer-A-Med Health Products, Inc. v GEICO Ins. Co., 2010 NY Slip Op 32258(U)(Sup Ct Nass Cty). However, the correct cite is 2010 NY Slip Op 31032, and the case does not stand for the proposition “that foreign No-Fault providers must comply with BCL §1312(a).”

[*1]

District Court of Suffolk County, Third District, December 6, 2019

APPEARANCES OF COUNSEL

Nicolini, Paradise, Ferretti & Sabella, PLLC, Mineola, for defendant.

Law Offices of Gabriel & Shapiro, LLC, Wantagh, for plaintiff.

Plaintiff’s cross motion seeking summary judgment is granted. Defendant’s motion, seeking an order dismissing the within complaint, upon the grounds that the plaintiff billed amounts exceeding the New York State Workers’ Compensation Board medical fee schedule, is denied.

The facts are not in dispute. This sole issue presented for consideration by the court is whether 11 NYCRR 65-3.8 (g) (1) (ii) is inconsistent with the express dictates of the Insurance Law and is therefore constitutionally void, as violative of article III, § 1 of the New York State Constitution.

The court notes that the New York State Attorney General was served with a copy of the plaintiff’s cross motion, pursuant to CPLR 1012 (b), but chose not to intervene to defend the constitutionality of 11 NYCRR 65-3.8 (g) (1) (ii), regarding the fee schedule defense, which provides:

“(g) (1) Proof of the fact and amount of loss sustained pursuant to Insurance Law section 5106(a) shall not be deemed supplied by an applicant to an insurer and no payment shall be due for such claimed medical services under any circumstances:

“(i) when the claimed medical services were not provided to an injured party; or

“(ii) for those claimed medical service fees that exceed the charges permissible pursuant to Insurance Law sections 5108(a) and (b) and the regulations promulgated thereunder for services rendered by medical providers.”

Article III, § 1 of the New York State Constitution provides: “The legislative power of this state shall be vested in the senate and assembly.”

Section 5106 (a) of the Insurance Law provides:

“(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid{**66 Misc 3d at 466} within thirty days after such proof is supplied.”

This legislative statute establishes the legal doctrine that defenses to claims not raised within 30 days after receipt of a no-fault claim are precluded. The preclusion rule has been consistently recognized and enforced by the Court of Appeals. (See Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 [2015]; Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997].)

In 2013 the New York State Insurance Commissioner, under his rule-making power, promulgated regulation 65-3.8 which purports to remove fee schedule defenses from the statutory “preclusion doctrine.” An administrative agency’s rule-making power is limited and may not circumvent or be contrary to the legislature’s determination. (See NY Const, art III, § 1; Matter of Nicholas v Kahn, 47 NY2d 24 [1979].) Such inconsistent regulations are “preempted” by statutory dictate. (See e.g. Boreali v Axelrod, 71 NY2d 1 [1987].) Removing the fee schedule defense from the statutory preclusion rule via regulation is an unconstitutional overreach, and shall be disregarded by this court as being invalid and in contravention of the historical statutory 30-day time period given to defendants to pay or deny claims (or be subject to preclusion).

Accordingly, the defendant’s fee schedule defense became nonviable 30 days after the claim was received without denial or demand for further verification. The defendant’s motion to dismiss is denied as moot and the plaintiff’s cross motion seeking summary judgment is granted.

CV-4230-15/HU
Janine A. Barbera-Dalli, J.

Upon the following papers numbered 1 to 37 read on this motion by defendant to strike Notice of Trial, compel discovery, and for dismissal (Seq 001); by defendant for summary judgment dismissing complaint (Seq 002); by 1st Notice of Motion/Order to Show Cause and supporting papers (Seq 001) 1,2,6 ; Notice of Cross Motion and supporting papers (Seq 003) by plaintiff for partial summary judgment for relief demanded in complaint 7-9 ; Answering Affidavits and supporting papers 7-9 ; by 2nd Notice of Motion/Order to Show Cause and supporting papers (Seq 002) 10-16,32 ; Answering Affidavits and supporting papers 33,35 ; Replying Affidavits and supporting papers 36,37; Filed papers ; Other exhibits: 3-5,17-31,34 ; and after hearing counsel in support of and opposed to the motion) it is,

ORDERED that the motions submitted and categorized as Seq #001, Seq #002 and Seq #003, are hereby consolidated and the Court’s decision is rendered herein; and it is further

ORDERED that the motion by defendant for summary judgment dismissing plaintiff’s complaint pursuant to CPLR 3212 (Seq #002) is granted. The complaint is dismissed; and it is further

ORDERED that the motion by defendant striking plaintiff’s Notice of Trial, and dismissing the complaint on the ground that discovery is not complete (Seq #001), is denied, as being academic; and it is further

ORDERED that the motion by plaintiff for partial summary judgment pursuant to CPLR 3212(e),(g), is also denied.

Defendant moves by summary judgment for dismissal of plaintiff’s complaint, which seeks reimbursement of first-party no-fault benefits for medical services rendered to plaintiff’s assignor as the result of an automobile accident of 01/16/12 in the total sum of $6,523.31.

The grounds for dismissal are the failure of plaintiff’s assignee to attend two (2) duly scheduled Examinations Under Oath (“EUO’s”) set by defendant for 05/07/12, and the follow-up for 05/30/12. Defendant asserts the failure to attend the EUO’s breached a condition precedent for payment under defendant’s no-fault insurance policy, thereby voiding the policy. As a result, defendant issued NF-10 denial of claim forms dated 06/01/12.

In opposition to defendant’s motion, plaintiff asserts that defendant’s proof in support of the motion for summary judgment is insufficient to satisfy defendant’s prima facie burden of showing the timely and proper mailing of the notices for the EUO’s, the lack of appearance at the noticed EUO’s, and for showing the NF-10 denial of claims were mailed within 30 days of the last EUO date. In addition, plaintiff asserts that defendant also failed to provide “good reasons” to justify the EUO of plaintiff’s assignee.

A proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]); see also Manhattan Medical v State Farm Mut. Ins. Co., 20 Misc 3d 1144[A][Civ. Ct. Richmond Cty. 2008]).

A summary judgment motion must be supported by an affidavit of a person having knowledge of the facts and the affidavit shall recite all the material facts and show there is no defense to the cause of action or that the cause of action or defense has no merit (see CPLR 3212[b]). A conclusory affidavit or an affidavit by an individual who lacks personal knowledge of the facts does not satisfy the proponent’s prima facie burden (see JMD Holding Corp. v Congress Financial Corp., 4 NY3d 373 [2005]).

A failure to comply with an insurer’s demand to submit to an EUO, is a material breach of the policy, precluding recovery of the policy proceeds (see Interboro Ins. Co. v Clennon, 113 AD3d 596 [2nd Dept 2014]; Unitrin Advantage Ins. Co. v Bay Shore Physical Therapy, PLLC., 82 AD3d 559 [2nd Dept 2011]).

Here, the Court finds that defendant insurer has demonstrated by proof in admissible form that it twice demanded an EUO of plaintiff’s assignee (see Palafox PT, P.C. v State Farm Mut. Auto. Ins. Co., 49 Misc 3d 143[A][App Term, 2nd, 11th & 13th Jud Dists 2015]), for 05/07/12, and the follow-up EUO for 05/30/12, by scheduling letters which were properly mailed in accordance with defendant’s standard office practices and procedures, and in accordance with no-fault regulations (see St. Vincent’s Hosp. of Richmond v GEICO, 50 AD3d 1123, 1124 [2nd Dept 2008]; Gutierrez v Elrac, Inc., 48 Misc 3d 138[A][App Term, 2nd, 11th & 13th Jud Dists 2015]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Mis3d 140[A][App Term, 2nd, 11th & 13th Jud Dists 2010]).

The submitted proof also demonstrated defendant’s mailing methods were sufficient to create a rebuttable presumption of proper mailing (see New York Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2nd Dept 2006]). “. . . Proof of proper mailing gives rise to a presumption that the item was received by the addressee” (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2nd Dept 2001]).

Here, plaintiff does not deny receipt of the timely mailings, thereby failing to rebut the [*2]presumption of receipt raised by defendant’s proof of mailings (Id.; see also S & M Supply Inc. v GEICO, 2003 NY Slip Op. 51192[U][App Term, 2nd & 11th Jud Dists 2003]; Harbor Medical & Diagnostics P.C. v Allstate Ins. Co., 11 Misc 3d 1063[A][Civ Ct, New York City 2006]). Nor has plaintiff sufficiently demonstrated that it timely and legally satisfied its duty to communicate with defendant with a statement of why it could not provide what the EUO verifications sought (see Dilon Med. Supply Corp. v Travelers Ins. Co.,7 Misc 3d 927, 931-932 [NY City Civ. Ct. 2005]).

The Court further finds that plaintiff’s assignee failed to appear at both duly scheduled EUO’s, without excuse, or timely notice, as demonstrated by the affirmation of defendant’s attorney, Edward Ryan, Esq., who was present and assigned to conduct the EUO on each scheduled date (see Delta Dignostic Radiology, P.C. v Esurance, 48 Misc 3d 138[A][App Term, 2nd, 11th & 13th Jud Dists 2015]; Natural Therapy Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 42 Misc 3d 137[A][App Term, 2nd, 11th & 13th Jud Dists 2014]).

The Court also determines that the NF-10 denial of claim forms were timely mailed to plaintiff in accordance with defendant’s standard office practices and procedures to ensure that items were properly addressed and mailed, especially for the generating and mailing of NF-10 denial of claim notices (see 11 NYCRR 65-3.8[a][1]; St. Vincent’s Hosp. of Richmond v GEICO, supra; Ortho-Med Surgical Supply, Inc. v MVAIC, 28 Misc 3d 139[A] [App Term, 2nd, 11th & 13th Jud Dists 2010]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16, 18 [App Term, 2nd, 11th & 13th Jud Dists 2007]). The NF-10 denial of claim forms were dated 06/01/12 and timely mailed within the 30 day period within which defendant was required to pay or deny the claim (see 11 NYCRR §65-3.8[a][1]). Defendant has shown that its standard office practices and procedures ensured plaintiff’s receipt of the denial of claim forms, and created an additional, rebuttable presumption for such mailings (see New York Presbyt. Hosp. v Allstate Ins. Co., supra).

Furthermore, the Court finds that defendant provided sufficient reasons in the first notice of 04/04/12 and 04/11/12, and in the second notice of 05/10/12 and 05/25/12, to justify the EUO of plaintiff’s assignee.

Moreover, in as much as defendant demonstrated the failure of plaintiff’s assignee to timely respond to or appear at the EUO verification dates, without excuse, plaintiff waived its defenses and is therefore estopped from contesting the reasonableness of the EUO requests (see Natural Therapy Acupuncture, P.C. v State Farm Mut. Auto.Ins. Co., 42 Misc 3d 137[A][App Term, 2nd Dept 2014]; see also Morris Med., P.C. v Amex Assur. Co., 37 Misc 3d 140[A][App Term, 2d, 11th & 13th Jud Dists 2012]). The defendant should not be put in the position of second guessing why plaintiff failed to respond to the EUO verification requests (see Canarsie Chiropractic, P.C. v State Farm Mut. Ins. Co., 27 Misc 3d 1228[A][NY City Civ Ct 2008]). Plaintiff’s inaction to defendant’s timely notifications is fatal to its causes of action for alleged medical services rendered (see Crescent Radiology PLLC. v American Transit Ins. Co., 31 Misc 3d 134[A][App Term, 9th & 10th Jud Dist 2011]; Interboro Ins. Co. v Clennon, supra).

Therefore, the Court finds that defendant has made a prima facie showing of entitlement to summary judgment dismissing the complaint, as a matter of law, sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hospital, supra; Winegrad v New York Univ. Med. Ctr., supra; Zuckerman v City of New York, supra).

Once a showing of entitlement to summary judgment has been made, the burden shifts to the party opposing the motion for summary judgment, to produce evidentiary proof in admissible [*3]form sufficient to establish the existence of material issues of fact which require a trial of the action (see CPLR 3212 [b]; Alvarez v Prospect Hospital, supra).

Here, the Court finds that plaintiff has failed in its burden to produce evidentiary proof in admissible form sufficient to establish material issues of fact which require a trial of the action.

It is not necessary for the Court to rule upon any remaining contentions of the parties, as they have been rendered academic.

The foregoing constitutes the decision and order of this Court.

Dated: May 4, 2018
HON. JANINE A. BARBERA-DALLI
J.D.C.

[*1]

District Court of Suffolk County, Third District, December 19, 2017

APPEARANCES OF COUNSEL

Law Office of Aloy O. Ibuzor, Melville, for defendant.

Gabriel & Shapiro, P.C., Wantagh (Steven F. Palumbo of counsel), for plaintiff.

It is ordered that the motion by defendant seeking an order granting summary judgment for dismissal of the complaint, pursuant to CPLR 3212, is denied; and it is further[*2] ordered that defendant’s uncontested request for partial summary judgment concerning the timely and proper mailing of its verification requests is granted; and it is further ordered that the cross motion by plaintiff seeking an order granting summary judgment for the relief demanded in the complaint is granted.

Defendant moves by summary judgment motion for dismissal of plaintiff’s complaint which seeks reimbursement of assigned first-party no-fault benefits for medical services provided to plaintiff’s assignor from June 4, 2015, through June 16, 2015, in the aggregate sum of $6,396.08, as the result of an automobile accident on March 11, 2015. The grounds for dismissal are the failure of plaintiff’s assignor to fully comply with defendant’s written verification requests, thereby rendering the action premature.

Defendant alternatively seeks partial summary judgment in the event its motion for summary judgment is denied, asserting it has demonstrated a prima facie showing that timely and proper mailing procedures were used to send its verification requests to plaintiff.

In opposition, plaintiff asserts that defendant has failed to demonstrate any “good reasons” to support its verification requests as required by insurance regulation 11 NYCRR 65-3.2 (c). Plaintiff alleges that defendant has made onerous and burdensome “Mallela” type verification requests which plaintiff brought to defendant’s attention in its three responding “objection” letters dated July 28, 2015, September 4, 2015, and October 23, 2015. These letters were timely provided to defendant in response to its verification requests, and plaintiff contends defendant ignored the “objection” letters with its responsive letter dated August 5, 2015, where it refused to narrow the verification requests to the issues of plaintiff’s reimbursement claims and stated it was entitled to all the requested information pursuant to law.{**58 Misc 3d at 859}

Plaintiff also cross-moves for summary judgment for the relief demanded in the complaint. Plaintiff asserts that defendant has failed to properly respond to plaintiff’s “objection” letters and the 30 calendar days to pay or deny the claim has expired, thereby requiring payment by defendant.

A proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; see also Manhattan Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 1144[A], 2008 NY Slip Op 51844[U] [Civ Ct, Richmond County 2008]).

A summary judgment motion must be supported by an affidavit of a person having knowledge of the facts and the affidavit shall recite all the material facts and show there is no defense to the cause of action or that the cause of action or defense has no merit (see CPLR 3212 [b]). A conclusory affidavit or an affidavit by an individual who lacks personal knowledge of the facts does not satisfy the proponent’s prima facie burden (see JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373 [2005]).

No-fault regulations mandate that a written proof of claim for health service expenses rendered on or after April 1, 2013 (see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3]), is overdue if not paid or denied by the defendant (or insurer) within 30 calendar days of receipt (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]). An insurer may toll the 30 day period by requesting additional verification of the claim within 15 days from its receipt of the claim (see 11 NYCRR 65-3.5 [b]; New York & Presbyt. Hosp. v Allstate Ins. [*3]Co., 30 AD3d 492, 493 [2d Dept 2006]). If the insurer has not received requested verification from the plaintiff (or applicant) within 30 calendar days of the initial request, the insurer may send a follow-up verification request by phone or mail within 10 calendar days (see 11 NYCRR 65-3.6 [b]). At the same time, the insurer shall inform the applicant and its attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested (see 11 NYCRR 65-3.6 [b]).

An insurer may not issue a denial of claim form (NF-10) prior to its receipt of verification of all relevant information requested by the insurer (see Insurance Law § 5106 [a]; 11{**58 Misc 3d at 860} NYCRR 65-3.8 [b] [3]; 65-3.5 [c]). A verification demand by an insurer will extend the 30 day period until such time as the requested verification is received (see 11 NYCRR 65-3.8 [a] [1]; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432 [2d Dept 2004]). Where a requested verification is not provided an insurer is not required to pay or deny the claim (see 11 NYCRR 65-3.8 [b] [3]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]; St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338 [2d Dept 2002]).

However, an insurer may issue a denial of claim for health service expenses rendered on or after April 1, 2013, if more than 120 calendar days have transpired after the initial request for verification, and the applicant has not submitted the verification requested under the applicant’s control or possession or written proof providing reasonable justification for the failure to comply, provided the verification request so advised the applicant as required in section 65-3.5 (o) (see 11 NYCRR 65-3.8 [b] [3]).

A plaintiff applicant has a duty to respond to a proper and timely verification request from a defendant insurer, even where a plaintiff anticipates it will be unable to fully satisfy the insurer’s request or the request is unintelligible (see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [2d Dept 1999]). Also, any additional verification sought from plaintiff’s assignor can be sought from plaintiff’s assignee, as an assignee stands in the shoes of the assignor (see Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489 [2d Dept 2001]).

A defendant also has a duty to act, by payment or denial of the claim or request for further verification, upon receipt of plaintiff’s response to defendant’s verification request, so long as plaintiff’s documentation is arguably responsive to defendant’s verification request (see All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907 [Civ Ct, Queens County 2004]; 11 NYCRR 65-3.8 [a]). Where a defendant remains silent in the face of plaintiff’s verification response, this inaction constitutes a waiver of all defenses (id.).

Though an insurer is entitled to request and receive information necessary to the processing and verifying of the applicant’s claim (see 11 NYCRR 65-3.5 [c]), the scope of the requested materials is not unlimited (see generally 11 NYCRR 65-3.6 [b]). Insurance regulations require the existence of “good {**58 Misc 3d at 861}reasons” to demand verification (see 11 NYCRR 65-3.2 [c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 2d Dept, 9th & 10th Jud Dists 2007]). Also, insurance regulations require an insurer to clearly inform an applicant of the insurer’s position concerning any disputed matter (see 11 NYCRR 65-3.2 [e]). In addition, the insurance regulations require insurers to follow the basic principle of providing prompt and fair payment (see 11 NYCRR 65-3.2 [a]). In this regard, the insurance regulations provide that an insurer is to assist an applicant in the processing of a claim (see 11 NYCRR 65-3.2 [b]) and insurers are directed to not treat the applicant as an adversary (see 11 NYCRR 65-3.2 [b]).

Insurance carriers are entitled to withhold reimbursement of no-fault claims “provided by fraudulently incorporated enterprises to which patients have assigned their claims” (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319 [2005]). Consequently, a medical provider which is not wholly owned and controlled by physicians (see Business Corporation Law §§ 1507 [a]; 1508 [a]) is ineligible to collect no-fault reimbursements and insurers can examine how a medical practice is owned and controlled to determine whether unlicensed individuals were violating state and local laws (Mallela at 321). However, insurers cannot delay payments of no-fault claims to pursue investigations unless they have “good cause” (id. at 322; see also 11 NYCRR 65-3.2 [c] [for “good reasons”]).

Here, the court determines that defendant has failed to demonstrate a prima facie entitlement to summary judgment for dismissal, with proof in admissible form sufficient to establish there are no material issues of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Hempstead Gen. Hosp. v New York Cent. Mut. Fire Ins. Co., 232 AD2d 454 [2d Dept 1996]).

It is uncontested that defendant has demonstrated it timely requested verification of facts on July 22, 2015 (first request), and on August 26, 2015 (second request), from plaintiff, with mailings in accordance with defendant’s standard office practices and procedures, as shown by the supporting affidavits of Joyce Mooney and Patricia S. Pierce, which is uncontradicted by plaintiff (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2d Dept 2008]; Elmont Open MRI & Diagnostic Radiology, P.C. v Travelers Indem. Co., 30 Misc 3d 126[A], 2010 NY Slip Op 52223[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2010]). Therefore, defendant’s request for partial summary judgment concerning the timely and proper{**58 Misc 3d at 862} mailing of the verification requests is granted. Defendant has demonstrated a prima facie showing that timely and proper mailing procedures were used to send its verification requests to plaintiff.

However, the court finds that defendant has failed to establish an objective, reasonable basis for the contents of the verification demands mailed to plaintiff, for the four contested bills totaling $6,396.08, for medical services rendered from June 4, 2015, through June 16, 2015 (see 11 NYCRR 65-3.2 [c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 2d Dept, 9th & 10th Jud Dists 2007]).

The evidence shows that the verification requests from defendant for each bill were identical, and contained 34 unnumbered or unlettered bullet point demands, for the short time span of the medical reimbursement requests of June 4, 2015, through June 16, 2015. The court notes that if plaintiff wished to respond to specific verification requests, it had no method by which to refer to a specific request, since the voluminous requests were not numbered or lettered or presented in any cogent way with specificity. It is difficult to imagine this was not by deliberate design, adding further difficulty to an already voluminous verification list.

Plaintiff asserts it tried to have defendant narrow the voluminous items of information demanded, by mailing “objection” letters which challenged the requested verifications as being “unduly burdensome and abusive” and seeking further clarification, but was rebuffed by defendant who stated it was entitled to each item as a matter of law.

The court finds that plaintiff provided reasonable justification for the failure to comply with defendant’s verification requests (see 11 NYCRR 65-3.5 [o]), by providing its “objection” letters dated July 28, 2015, September 4, 2015, and October 23, 2015.

This occurred despite defendant’s failure, under the insurance regulations, to advise the applicant in the same verification requests that “the insurer may deny the claim if the applicant does not provide within 120 calendar days from the date of the initial request either all such verification under the applicant’s control or possession or written proof providing reasonable justification for the failure to comply” (see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3]).

Plaintiff contends in its opposition papers that the delay verification demands from defendant were sensitive “Mallela” {**58 Misc 3d at 863}type corporate information, which were imposed without any explanation or reason. Plaintiff points to defendant’s verification demands, where it requests

“a copy of the lease, sublease and/or financial agreement between Joseph Quashie MD and Devonshire Surgical Facility LLC . . . verification of employment of Dipti Patel DC (W-2 or 1099 and/or current paystub) by Pro-Align Chiropractic . . . copy of lease, sublease and or financial agreement between Pro-Align Chiropractic and Devonshire Surgical Facility . . . copy of the lease, sublease and/or financial agreement between Total Chiropractic PC and NYS Diagnostic Medicine PC . . . copy of the lease, sublease and/or financial agreement between Total Chiropractic PC and Life Circles Healthcare Medical PC . . . copy of the lease, sublease and/or financial agreement between Pro-Align Chiropractic PC and NYS Diagnostic Medicine PC . . . verification of employment (W-2 or 1099 and/or current paystub) for Sarl Ramzan DC with Total Chiropractic PC.”

Plaintiff asserts these verification requests failed to show a link with plaintiff, are abusive discovery demands absent any explanation or reasons, and are part of an improper “fishing expedition” by defendant.

Plaintiff also points to the lack of any SIU^[FN*] affidavit from defendant in support of its verification demands, or in answer to plaintiff’s “objection” letters, which it implies would link an ongoing insurance investigation with a plaintiff medical provider which is a fraudulently incorporated enterprise (see State Farm Mut. Auto. Ins. Co. v Mallela at 319).

The court notes that defendant does not address plaintiff’s claims of “Mallela” type verification requests in any responsive letters to plaintiff, or in any opposition papers. Therefore, the court accepts these circumstances as an admission by defendant.

The court further finds that plaintiff properly fulfilled its duty to respond to defendant’s timely verification requests, by mailing its “objection” letters dated July 28, 2015, September 4, 2015, and October 23, 2015, even though plaintiff anticipated{**58 Misc 3d at 864} in the letters it would be unable to fully satisfy the insurer’s request (see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co.).

However, the court also finds that though defendant properly fulfilled its duty to act upon plaintiff’s responsive “objection” letters with its responsive letter dated August 5, 2015 (see All Health Med. Care v Government Empls. Ins. Co.), it remained silent in the face of plaintiff’s “Mallela” type verification responses, which inaction constituted a waiver of all defenses (id.).

Plaintiff’s correspondence also invited further discussion if defendant disagreed with the position taken by plaintiff. Plaintiff’s three “objection” letters of July 28, 2015, September 4, 2015, and October 23, 2015, ended with the last letter stating defendant had ignored its prior letters and did not address plaintiff’s concerns, and that payment or denial was overdue.

The court’s review of the evidence finds the closest statement by defendant which provides an explanation for its verification demands is through the affidavit of Joyce Mooney, [*5]the claim litigation representative for defendant, who simply states: “the claim was directed to a claims representative for processing. The claims representative determined additional information was needed to process the claim and therefore, sent a request for additional information to PRO-ALIGN CHIROPRACTIC, PC dated 7/22/2015″ (see para 10 [emphasis added]).

The court’s review of the affidavit of Patricia S. Pierce, unit manager of the mail service center for defendant, shows it does not address any explanation for the basis of the verification requests.

The court’s review of the affirmation of defendant’s counsel reveals defendant received bills from plaintiff on July 2, 2015, in the amount of $78.20 for medical services on June 4, 2015; on July 13, 2015, in the amount of $2,105.96 for medical services on June 9, 2015; on July 8, 2015, in the amount of $2,105.96 for medical services on June 11, 2015; and on July 14, 2015, in the amount of $2,105.96 for medical services on June 16, 2015. Counsel then states: “Upon receipt, a determination was made to request further verification in order to process the bills in dispute as additional information was needed” (see para 11 [emphasis added]).

Counsel for defendant further states: “Travelers mailed timely verification requests respective to the bill as stated{**58 Misc 3d at 865} above. Such an event effectively tolled the time within which Defendant had to either pay or deny the claims” (see para 14).

Defendant’s responding letter dated August 5, 2015, to plaintiff’s “objection” letters which protested the verification requests stated the following:

“We are in receipt of your 7 letters dated 7/28/2015 that contained none of the requested verification. Please note the following:

“Please be advised that we are in receipt of your 7 letters dated 7/28/15. In your letter, you state that our letter is improper and asks for a ‘large amount of information of all kinds’ which you find ‘unduly burdensome and abusive.’ In addition, you request that we resubmit a request that is narrowly tailored to the specific provider and dates of service at issue.

“To the contrary, we disagree that our letter is ‘improper or unduly burdensome and abusive.’ The letter is specific to a particular claim and provider, as is referenced in the letter. The information is necessary in order to verify this claim. Furthermore, we only seek information that is necessary to verify the claim. As such, the letter is already as ‘narrowly tailored’ as possible.

“Are you aware, pursuant to 11 NYCRR 65-3.5[c] an insurer is entitled to receive all items necessary to verify the claim. Thus, please forward such information so that the claim can be reviewed” (emphasis added).

Defendant asserts that no responsive verification was provided by plaintiff. In support, the affidavit of Joyce Mooney states that “no notations were found in the computer indicating that any response or the remaining requested documents had been received from Pro-Align Chiropractic P.C.” (see para 32). In addition, “a search of the physical file was also conducted. No documents and/or correspondence of any kind were found in response to Travelers requests for additional verification” (see para 32).

However, the court notes that her sworn statement is contradicted by the affirmation of defendant’s counsel, who admits receipt from plaintiff of:

a partial response on July 31, 2015, to defendant’s verification requested on July 22, 2015 (see para 17);{**58 Misc 3d at 866}

a partial response on August 5, 2015, to defendant’s verification requested on July 28, 2015 (see para 19);

a partial response on September 9, 2015, to defendant’s verification, responded to by defendant on September 18, 2015 (see paras 22, 24), and responded to by defendant on November 18, 2015 (see para 29);

a partial response on September 18, 2015, to defendant’s verification requested on September 9, 2015 (see para 24); and

a partial response on October 27, 2015, to defendant’s verification (see para 27).

The court finds that there is no sworn statement from anyone with knowledge, which provides a reasonable basis for the verification demands. The affirmation of Joyce Mooney, the claim litigation representative for defendant, states in pertinent part, “The claims representative determined additional information was needed to process the claim.” This statement is hearsay and conclusory, and does not satisfy the proponent’s prima facie burden for summary judgment (see JMD Holding Corp. v Congress Fin. Corp.). There is also no statement from the claims representative.

The court notes that the affirmation of defendant’s counsel also states in pertinent part, “a determination was made to request further verification in order to process the bills in dispute.” This statement is also hearsay and conclusory and does not satisfy the proponent’s prima facie burden for summary judgment (id.).

In addition, the statement of defendant’s counsel is not based upon personal knowledge, and is therefore without probative value or evidentiary significance (see Warrington v Ryder Truck Rental, Inc., 35 AD3d 455, 456 [2d Dept 2006]; see also Wesh v Laidlaw, 59 AD3d 534 [2d Dept 2009]).

Finally, the court notes that defendant’s responsive letter dated August 5, 2015, to plaintiff’s “objection” letters, which states “the information is necessary in order to verify this claim” and “we only seek information that is necessary to verify the claim,” is a replay of the same statements provided by Joyce Mooney and defendant’s counsel. The statements are conclusory, provide no information used as the basis for the verification requests and do not satisfy the proponent’s prima facie burden for summary judgment (see JMD Holding Corp. v Congress Fin. Corp.).

Moreover, the court determines that all the pertinent statements do not satisfy the insurance regulation which requires{**58 Misc 3d at 867} an insurer to provide “good reasons” to demand verification (see 11 NYCRR 65-3.2 [c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co.). Consequently, without the required “good reasons” to demand verification, an insurer cannot delay payments of no-fault claims to pursue investigations (see State Farm Mut. Auto. Ins. Co. v Mallela at 322).

Furthermore, though defendant correctly states in its letter of August 5, 2015, to plaintiff that “an insurer is entitled to receive all items necessary to verify the claim” pursuant to 11 NYCRR 65-3.5 (c), there are other duties which defendant failed to follow.

The court finds that defendant failed to satisfy its obligation to clearly inform applicant of the insurer’s position concerning any disputed matter (see 11 NYCRR 65-3.2 [e]); failed to satisfy the regulation to follow the basic principle of providing prompt and fair payment (see 11 NYCRR 65-3.2 [a]); failed to assist applicant in the processing of the claim (see 11 NYCRR 65-3.2 [b]); and failed to not treat the applicant as an adversary (see 11 NYCRR 65-3.2 [b]).

Moreover, defendant’s verification demands seek certain documents from plaintiff, but reject in advance certain documents which do not meet its criteria. On point, defendant’s demand states that “initials, electronic signatures, and/or stamped signatures are not acceptable.” This raises issues of fact for the reasonableness of the verification demands, since the requested documents speak for themselves and cannot be changed by plaintiff to meet the criteria of defendant’s demands.

Therefore, the court determines defendant has failed to establish a prima facie showing of entitlement to summary judgment dismissing the complaint as a matter of law.

Accordingly, the motion for summary judgment by defendant dismissing plaintiff’s complaint pursuant to CPLR 3212 is denied.

Defendant’s motion for partial summary judgment concerning that timely and proper mailing procedures were used to send its verification requests to plaintiff is granted.

Plaintiff’s cross motion for summary judgment seeking an order granting summary judgment for the relief demanded in the complaint is granted.

Footnotes

Footnote *:Plaintiff does not provide a definition of its use of the term SIU; however, the court assumes it to be a reference to an investigative unit since this relates to the subject matter plaintiff speaks about.

[*1]

District Court of Suffolk County, Third District, November 27, 2017

APPEARANCES OF COUNSEL

Law Offices of Buratti, Rothenberg & Burns, East Meadow, for defendant.

Baker Sanders, LLC, Garden City, for plaintiff.

After due deliberation, it is hereby ordered that defendant’s motion for summary judgment is granted solely to the extent that the amount in dispute is reduced to $9,160.08 based upon the uncontested merits of its fee schedule defense. In all other respects, defendant’s motion is denied. Based upon the submissions of the parties, the court finds that plaintiff has established its prima facie case and defendant has established its timely denial of the assigned no-fault benefits at issue. There exist material facts in dispute as to the medical necessity of the treatment provided to plaintiff’s assignor, which must be decided at a trial.

This is an action to recover assigned no-fault benefits for treatment rendered to plaintiff’s assignor for injuries claimed to have been sustained in a motor vehicle accident which occurred on December 30, 2012. Defendant’s motion for summary judgment seeks dismissal of the [*2]complaint on three separate grounds: (1) lack of medical necessity for the treatment; (2) billing in excess of the applicable fee schedule; and (3) lack of authority to do business in the State of New Jersey where the treatment was rendered, by reason of the failure of plaintiff corporation to obtain a certificate of authority to transact business, prior to the time the treatment was rendered.

As to the issue of medical necessity, both sides submitted detailed affidavits of qualified professionals regarding the reasons why the treatment rendered was or was not medically necessary. Based upon a careful review of these affidavits, the court is constrained to rule that relevant and material factual issues exist regarding the medical necessity of the subject services.

Regarding the fee schedule defense, defendant submits proof in the form of an affidavit by Timothy Schultz, a certified coder, to establish that the amount allowable by the applicable New Jersey fee schedule for the services rendered is $9,160.08.{**58 Misc 3d at 405} Plaintiff did not submit any evidence to rebut this proof. Accordingly, the court grants this branch of defendant’s motion and reduces the amount in issue to $9,160.08.

Defendant also seeks dismissal of all of the claims because plaintiff, a New York professional corporation, was not authorized to transact business in the State of New Jersey as of the dates of the treatment for which payment is sought herein. That fact is not disputed. Plaintiff became authorized to transact business in the State of New Jersey on January 5, 2015. This action was commenced on December 1, 2016 when service was duly effectuated on defendant. Plaintiff claims that the failure to obtain the requisite certificate of authority was a technical violation that does not warrant granting the drastic relief of claim preclusion urged by defendant. The parties submitted conflicting arbitration awards on this issue. It appears that this is a case of first impression as the court is not aware of any other judicial determinations of this issue.

The reasoning urged by defendant and set forth in the arbitration awards relied upon is that plaintiff violated the New York no-fault regulations by not having been qualified to do business in New Jersey by reason of having failed to obtain a certificate of authority as required by New Jersey law at New Jersey Statutes Annotated § 14A:13-3. The New York regulation relied upon by defendant is found at 11 NYCRR 65-3.16 (a) (12), which provides as follows:

“(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 in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed” (emphasis added).

Defendant urges the court to interpret the pertinent part of the regulation to be that the failure of the plaintiff health care corporation to timely obtain the requisite certificate of authority for a foreign corporation to transact business means the insurer is not obligated to pay for otherwise valid billing for medical treatment. The court disagrees. There is no dispute that the health care professionals who rendered treatment for which payment is demanded met all of the licensing requirements of the State of New Jersey to perform the health care{**58 Misc 3d at 406} services rendered to plaintiff’s assignor. The court therefore concludes that no violation of the New York no-fault regulations has been established under the facts presented in this case. The court determines that the cited regulation does not apply to the corporate certificate requirement at issue in this case.

However, even if the court were to find that the aforesaid no-fault regulation applied in this case, the court would still conclude that the failure to obtain the certificate of authority to [*3]transact business in New Jersey would not in and of itself preclude recovery of payment for the no-fault health care benefits provided. New Jersey law explicitly proscribes the impact of transacting business without the certificate of authority. New Jersey Statutes Annotated § 14A:13-11 provides as follows:

“14A:13-11. Transacting business without certificate of authority

“(1) No foreign corporation transacting business in this State without a certificate of authority shall maintain any action or proceeding in any court of this State, until such corporation shall have obtained a certificate of authority. This prohibition shall apply to

“(a) any successor in interest of such foreign corporation, except any receiver, trustee in bankruptcy or other representative of creditors of such corporation; and

“(b) any assignee of the foreign corporation, except an assignee for value who accepts an assignment without knowledge that the foreign corporation should have but has not obtained a certificate of authority in this State.

“(2) The failure of a foreign corporation to obtain a certificate of authority to transact business in this State shall not impair the validity of any contract or act of such corporation, and shall not prevent such corporation from defending any action or proceeding in any court of this State.

“(3) In addition to any other liabilities imposed by law, a foreign corporation which transacts business in this State without a certificate of authority shall forfeit to the State a penalty of not less than $200.00, nor more than $1,000.00 for each calendar year, not more than 5 years prior thereto, in which{**58 Misc 3d at 407} it shall have transacted business in this State without a certificate of authority. Such penalty shall be recovered with costs in an action prosecuted by the Attorney General. The court may proceed in such action in a summary manner or otherwise.”

This statute provides that the non-authorized foreign corporation may not maintain an action in New Jersey until such corporation has obtained a certificate of authority to transact business. Even if this were to apply to a New York action, the plaintiff was in fact authorized to transact business in New Jersey at the time the action was commenced. The statute also expressly provides that the failure to obtain the certificate “shall not impair the validity of any contract or act of such corporation” (NJ Stat Ann § 14A:13-11 [2]). This clearly includes the validity of the assignment of an insured’s contractual right to no-fault benefits, as well as the “acts” of the duly licensed health care professional rendering the treatment for which payment is sought. Finally, the statute imposes monetary penalties for failure to obtain the requisite certificate of authority to transact business.

Thus, the State of New Jersey has in place the means by which foreign corporations who fail to obtain a certificate of authority are penalized. None of the statutory penalties includes the relief requested by defendant in its motion. The harsh penalty of claim preclusion requested by defendant is not required by New Jersey law and would thwart the purpose and intent of the New York No-Fault Law and regulations. It would amount to a windfall for insurers who would otherwise be obligated to pay for medically necessary services rendered to victims of motor vehicle accidents.

The court also notes that failure to obtain the certificate of authority in this case does not [*4]amount to fraud that would be “good cause” for denial of payment as set forth in State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313, 322 [2005]). Without proof of fraudulent intent, the court finds the failure to obtain a certificate of authority to transact business in this case was a technical violation for which alternate penalties are provided by New Jersey law. Therefore, such conduct cannot be solely relied upon by insurers to delay or withhold payment of otherwise valid no-fault billing.

HUCV 2206-16
James F. Matthews, J.

Upon the following papers numbered 1 to 21 read on this petition for an order vacating the decision in part of a master arbitrator; by Notice of Petition /Order to Show Cause and supporting papers 1-3, ; Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 10,11 ; Replying Affidavits and supporting papers18,21 ; Filed papers ; Other exhibits: 4-9,12-17,19,20 ; (and after hearing counsel in support of and opposed to the motion), it is

ORDERED that the petition to vacate the part of the award and remand rendered by a Master Arbitrator’s decision dated June 27, 2016, which vacated the lower Arbitrator’s award dated March 8, 2016 for $4,329.19 to petitioner, and then remanded the matter to lower arbitration for consideration of respondent’s Mallela defense of fraudulent incorporation, is granted. That part of the award of the Master Arbitrator dated June 27, 2016, which vacated the lower Arbitrator’s award of $4,329.19 to petitioner, and then remanded the matter to arbitration for consideration of respondent’s Mallela defense, is vacated; and it is further

ORDERED that the remaining part of the award rendered by the Master Arbitrator’s decision dated June 27, 2016, which confirmed the decision of the lower Arbitrator dated March 8, 2016, is confirmed.

Petitioner asks the Court to vacate that part of the award of a Master Arbitrator dated June 27, 2016, which vacated the lower Arbitrator’s award of $4,329.19 to petitioner, and then remanded the matter to lower arbitration for consideration of whether respondent’s Mallela defense of fraudulent incorporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) was appropriate.

The respondent opposes the relief sought by petitioner, and requests that the Master Arbitrator’s award dated June 27, 2016, be confirmed.

The lower arbitration decision dated March 8, 2016, awarded the sum of $4,329.19 to petitioner, based upon a finding that mailing requests for two Examinations Under Oath [*2](“EUO’s”) set for June 24, 2015 and July 16, 2015, respectively, were ignored and unattended by petitioner, but the mailing requests were nonetheless facially untimely, in that the first EUO scheduling request was mailed four and one-half (4 1/2) years after the claim was submitted, thereby rendering the EUO requests a nullity, as related to the billing at issue, and rendering all other issues moot. The lower arbitration also found respondent failed to persuasively support their fee schedule defense and awarded the disputed sum of $4,329.19 to petitioner.

The Master Arbitrator’s decision dated June 27, 2016 leaves only a single issue for determination by the Court: respondent contends the lower arbitrator’s decision did not render a determination concerning respondent’s Mallela defense of fraudulent incorporation, which issue it asserts was raised before the arbitrator and was not precluded due to time constraints.

The Master Arbitrator found that the decision of the lower arbitrator was imperfectly rendered pursuant to CPLR 7511(b) (1)(iii) and 11 NYCRR 65-4.5(s), based upon the lack of a specific determination addressing respondent’s Mallela defense of fraudulent incorporation. It therefore vacated the award of $4,329.19 to petitioner, and remanded the matter back to arbitration for consideration of the Mallela contentions concerning fraudulent incorporation.

Petitioner contends that both the lower arbitration and the Master Arbitration found the EUO scheduling notices to be untimely, thereby precluding respondent’s fee schedule defense due to failure of a timely denial of the claim.

In addition, petitioner asserts that the lower arbitration decision included the statement that “all other issues are moot,” thereby including sufficient language to satisfy respondent’s Mallela contentions. Petitioner argues that respondent failed to provide its Mallela contentions with any type of factual allegations, which is why the lower arbitration decision was written in the manner provided. Respondent’s mere cite to Mallela contentions without factual support is legally insufficient (see generally Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C., 2016 NY Slip Op 37157 [NY Supp 2016] [wherein the Court focused on petitioner’ belief that respondent may have been ineligible for benefits as an unlawfully incorporated professional corporation, but “petitioner nowhere specifies how respondent failed to meet that burden at the arbitration”]).

The Master Arbitrator’s decision implies that the lower arbitrator was obligated to disclose the basis for its decision, which is why the matter was remanded to lower arbitration for further consideration on the Mallela contentions. However, in actuality, an arbitrator is not obligated to reveal the basis for its award (see Hausknecht v Comprehensive Med. Care of New York, P.C., 24 AD3d 778 [2nd Dept 2005]; Matter of Nationwide Mut. Ins. Co. v Steiner, 227 AD2d 563 [2nd Dept 1996]).

The standard of review for an arbitration award is limited to a determination of whether the award was arbitrary, capricious or incorrect as a matter of law. A master arbitrator’s powers in reviewing an initial arbitrator’s decision are limited to the grounds stated in CPLR 7511, and additionally, under insurance regulations, is limited to whether the initial arbitrator ruled on factual and procedural issues in a manner that was arbitrary, capricious, irrational or without a plausible basis (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207, 211 [1981]; In the Matter of Allstate Ins. Co. v Keegan, 201 AD2d 724 [2nd Dept 1994]).

If a challenge is based upon a factual error in the arbitration, “the master arbitrator must uphold the determination if it has a rational basis” (see In the Matter of Richardson v Prudential Prop. & Cas. Ins. Co., 230 Ad2d 861 [2nd Dept 1996]). Moreover, an arbitrator’s award must be upheld “when the arbitrator ‘offer[s] even a barely colorable justification for the outcome [*3]reached'” (see In the Matter of Susan D. Settenbrino. P.C. v Barroga-Hayes, 89 AD3d 1094, 1095 [2nd Dept 2011]). Indeed, for an award to be irrational, there must be “no proof whatsoever to justify the award” (see In the Matter of Gaymon v MTA Bus Co., 117 AD3d 735, 736 [2nd Dept 2014]; In the Matter of Susan D. Settenbrino. P.C. v Barroga-Hayes, supra ). Moreover, “an arbitrator is not bound by principles of substantive law or rules of evidence, and may do justice and apply his or her own sense of law and equity to the facts as he or she finds them to be” (Id. at 1095).

Here, the Court finds that the petition before the Court is timely (see CPLR 7511[a]). Furthermore, the Court finds that the record demonstrates there was a rational basis for the initial arbitrator’s decision and the award dated March 8, 2016 was justified. It was supported by sufficient evidence in the record, and was not arbitrary, capricious, irrational or incorrect as a matter of law.

The Court further finds that the Master Arbitration award dated June 27, 2016, prejudiced petitioner by exceeding its powers (see CPLR 7511[b][1][iii]), and is irrational (see Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530 [2010]). Therefore, the petition is granted, to the extent that the part of the award of the Master Arbitrator dated June 27, 2016, which vacated the lower Arbitrator’s award of $4,329.19 to petitioner, and then remanded the matter to arbitration for consideration of respondent’s Mallela defense, is vacated.

The remaining part of the award rendered by the Master Arbitrator’s decision dated June 27, 2016, which confirmed the decision of the lower Arbitrator dated March 8, 2016, is hereby confirmed (see CPLR 7511[e]).

The foregoing constitutes the decision and order of this Court.

Dated: October 16, 2017
J.D.C.

HUCV 1227-16
James F. Matthews, J.

Upon the following papers numbered 1 to 15 read on this motion by defendant for an order granting summary judgment of dismissal ; by Notice of Motion /Order to Show Cause and supporting papers 1,2,9 ; Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 10,12 ; Replying Affidavits and supporting papers 13,15; Filed papers; Other exhibits: 3-8,11,14 ; (and after hearing counsel in support of and opposed to the motion), it is,

ORDERED that the motion by defendant for summary judgment dismissing plaintiff’s complaint pursuant to CPLR 3212, is denied.

Defendant moves by summary judgment for dismissal of plaintiff’s complaint which seeks to recover first-party no-fault benefits for medical services rendered to plaintiff’s assignor on 02/24/15 in the total amount of $878.67 as the result of an automobile accident of 12/05/14.

The grounds for dismissal are the failure of plaintiff to fully comply with defendant’s 3rd request for additional verification dated 05/07/15, by providing “a copy of the decision-making report from the referring doctor demonstrating the medical necessity and/or need for the MRI(s).” In addition, defendant asserts plaintiff failed to provide “documentation identifying the relationship between each individual involved in the rendering of services and the professional corporation, including the manner in which the person is compensated [ie: W-2, 1099).” Also, plaintiff failed to provide verification of documents “that establishes the licensure, certification or credentials for each individual involved in the rendering of the services for which payment is sought”; the name and model number of the MRI machine used on the above date[s] of service”; [*2]and “the completed NF-3 Form with original signature[non-stamped]”).^[FN1] Defendant contends that the above stated verification requests remain outstanding to date, though defendant acknowledges receipt on 04/20/15 of a “partial response” containing certain items previously requested.

In support of the motion, defendant asserts the first verification request was sent on 03/18/15 within 15 business days of receipt of plaintiff’s claim on 03/04/15. Upon non-compliance, a second verification request was sent on 04/20/15. After 120 days elapsed without receipt of the requested verification, defendant denied the claim by mailing a NF-10 Denial of Claim form dated 09/17/15 with an Explanation of Review (“EOR”) stating inter alia “that your claim has been denied as you have failed to submit the requested verification of additional relevant information under your control of possession, or written proof providing reasonable justification for the failure to comply, within 120 calendar days of the initial request.”

In opposition to the motion, plaintiff asserts defendant failed to demonstrate by admissible evidence, that the verification requests were timely and properly mailed to plaintiff. Plaintiff contends the affidavits submitted in support of defendant’s motion, have not provided a foundation for admission of its business records, a necessary part of demonstrating defendant’s office practice and procedures. Plaintiff further asserts defendant has not shown “good reasons” for demanding the verifications which would toll the time from which defendant had to pay or deny the claims.

No-fault regulations mandate that a written proof of claim for health service expenses are overdue if not paid or denied by the insurer within 30 calendar days (see Insurance Law §5106[a]; 11 NYCRR §65-3.8[a][1]). An insurer may toll the 30 day period by requesting additional verification of the claim within 15 business days from its receipt of the claim (see 11 NYCRR 65-3.5[b]). If the insurer has not received verification from the plaintiff within 30 days of the initial request, the insurer may send a follow-up verification request by phone or mail within 10 calendar days (see 11 NYCRR 65-3.6[b]). An insurer may not issue a denial of claim form (NF-10) prior to its receipt of verification of all relevant information requested by the insurer (see Insurance Law §5106[a]; 11 NYCRR §65-3.5[c]). However, an insurer may deny the claim after 120 calendar days if plaintiff does not provide all of the requested verification under its control or possession, or written proof providing reasonable justification for its failure to comply (see 11 NYCRR §65-3.5[o], for all claims submitted after 4/1/13). Also, an insurer’s “non-substantive, technical or immaterial defect or omission, as well as an insurer’s failure to comply with a prescribed time frame” shall not “negate an applicant’s obligation to comply with the request or notice” (see 11 NYCRR §65-3.5[p], for all claims submitted after 4/1/13).

Here, the Court determines that defendant has failed to make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]); see also Manhattan Medical v State Farm Mut. Ins. Co., 20 Misc 3d 1144[A][Civ. Ct. Richmond Cty. 2008]).

Defendant’s sole Affidavit of its No-Fault Litigation Supervisor, is insufficient to establish the timeliness and propriety of the mailing of its verification request, follow-up [*3]verification requests, and the NF-10 denial of claim. The affidavit’s statements are conclusory and based upon hearsay, and fail to sufficiently demonstrate defendant’s standard office practice and procedures used to ensure the proper mailing of its verification requests and denials (see St. Vincent’s Hosp. of Richmond v Government Employees Ins. Co., 50 AD3d 1123 [2nd Dept 2008]; Ortho-Med Surgical Supply, Inc. v MVAIC, 28 Misc 3d 139[A][App Term 2nd, 11th & 13th Jud Dists 2010]; Delta Diagnostic Radiology, P.C. v Chubb Group of Insurance, 17 Misc 3d 16, 18 [App Term 2nd & 11th Jud Dists 2007]). The Court notes the lack of an affidavit from a claims representative and/or a mailroom employee, who would be familiar with defendant’s office practice and procedures for mailing verification requests and denials, especially as it applied in the instant matter.

As a result, defendant has failed to create a presumption of timely and proper mailing (see S & M Supply Inc. v GEICO, 2003 NY Slip Op. 51192[U][App Term, 2nd & 11th Jud. Dists. 2003]; Harbor Medical & Diagnostics P.C. v Allstate Ins. Co., 11 Misc 3d 1063[A][Civ Ct, New York City 2006]).

Moreover, defendant claims “a copy of the decision-making report from the referring doctor demonstrating the medical necessity and/or need for the MRI(s)” has not been provided to date. However, defendant’s own evidence demonstrates that plaintiff provided a Physician’s Letter of Medical Necessity dated 02/16/15 to defendant with its letter dated 04/15/15 (see defendant’s Exhibit “C” and plaintiff’s Exhibit “1”). As a result, defendant has failed to demonstrate a prima facie case.

In addition, defendant has failed to demonstrate that it informed “the applicant AND its attorney of the reason why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested.” Defendant’s prima facie proof fails to show defendant informed the applicant and his attorney, in compliance with 11 NYCRR §65-3.6(b).

Accordingly, the motion by defendant for summary judgment dismissing plaintiff’s action against it pursuant to CPLR 3212, is denied.

It is not necessary for the Court to reach any remaining contentions.

The foregoing constitutes the decision and order of this Court.

Dated: June 14, 2017

Hon. James F. Matthews
J.D.C.

Footnotes

Footnote 1: The language for the additional verification requests is taken from defendant’s Explanation of Benefits, attached as exhibit B).

HUCV 371-16
James F. Matthews, J.

Upon the following papers numbered 1 to 27 read on this motion by plaintiff for an order to quash subpoena and defendant’s motion to strike Notice of Trial by Notice of Motion / Order to Show Cause and supporting papers 1-10, 11-16; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 17-22 ; Replying Affidavits and supporting papers 23-27 ; Filed papers; Other; it is,

ORDERED that the motion by plaintiff brought by order to show cause, seeking to quash the subpoena issued to its non-party bank, J.P. Morgan Chase Bank, by defendant’s counsel, and the notice of motion brought by defendant, seeking to strike the plaintiff’s Notice of Trial and Certificate of Readiness, and to remove the matter from the trial calendar, are consolidated; and it is further

ORDERED that the motion by plaintiff seeking to quash the subpoena issued by defendant’s counsel to plaintiff’s non-party bank, J.P. Morgan Chase Bank, is denied; and it is further

ORDERED that the stay issued by the Court, is hereby vacated, and the subpoena duces tecum issued by defendant to J.P. Morgan Chase Bank is valid and enforceable by the issuing party; and it is further

ORDERED that the motion by defendant to strike the Notice of Trial and Certificate of Readiness dated December 22, 2016, filed by plaintiff pursuant to 22 NYCRR §212.17(a), is granted, and the action shall be stricken from the trial calendar pursuant to 22 NYCRR §212.17(c).^[FN1] The Clerk of the Court is directed to strike the action from the trial calendar.

This is an action by plaintiff health care provider seeking recovery of payment for [*2]medical services rendered on 10/04/12- 02/21/13 in the total sum of $7,286.21, as the result of a car accident of plaintiff’s assignor, under New York’s No-Fault Law.

Defendant caused a subpoena duces tecum to be served, by fax, on plaintiff’s non-party bank, J.P. Morgan Chase Bank, of which receipt and acceptance was acknowledged in a letter attached as an exhibit by defendant. It required production of bank records, including copies of banking statements, canceled checks, deposit slips, signature cards, corporate resolutions, account authorizations, bank account registers, ledgers and electronic transfers for plaintiff for the years 2012 through the present, for all accounts titled in the name of Harden Street Medical, PC, including Account number 978760122.

Plaintiff moves by order to show cause for a protective order pursuant to CPLR 2304, seeking to quash the subpoena duces tecum. Plaintiff objects to the service by fax on the non-party bank, J.P. Morgan Chase Bank, stating it was improperly served. Plaintiff complains the subpoena is being improperly used as a “fishing expedition” for discovery or for the existence of evidence. Plaintiff also protests the subpoena fails to set forth factual predicates for the relief sought, and the material requested is overbroad and an unsupportable demand for discovery.In opposition to plaintiff’s motion to quash, defendant submits an affidavit from an employee and Manager of the Medical Fraud Division, who was previously a Fraud Investigator for defendant, as well as an employee in claims and the Special Investigative Units. He submits the factual findings of his investigative report, which include certain patterns that are notoriously indicative of fraudulent situations involving no-fault claims, including inter-relationships with different named medical entities and management companies, and named individuals, based at the same address. Defendant asserts its demands are properly within a subpoena duces tecum, and are material and necessary to search for Mallella fraud claims (see State Farm v Mallella, 4 NY3d 313 [2005]).^[FN2]

Defendant also moves by motion to strike the Notice of Trial and Certificate of Readiness dated 12/22/16, which was filed by plaintiff pursuant to 22 NYCRR §212.17.^[FN3] Defendant asserts that plaintiff has failed to comply with the discovery demands of defendant, and yet filed a Certificate of Readiness and Notice of Trial with the Court.

The Court notes that plaintiff has not denied defendant’s assertion that plaintiff has not complied with the discovery demands of defendant, including outstanding interrogatories, notice for discovery and inspection pursuant to CPLR 3101, and notice to take deposition upon oral examination. Indeed, counsel for defendant submits his affirmation in support of the motion to strike, stating that “there is pending discovery in the within matter, this matter is not ready to be [*3]placed on the trial calendar, and the Court has been incorrectly informed by plaintiff’s counsel that discovery has been completed…”

Here, the Court finds that defendant has complied with the notice requirement of CPLR 3101[a][4] in stating on the face of the subpoena “the circumstances or reasons such disclosure is sought or required” (see Matter of Kapon v Koch, 23 NY3d 32 [2014]; Jamaica Wellness Med. P.C. v USAA Cas. Ins. Co., 49 Misc 3d 926 [Civ Ct of City of New York, Kings Cty 2015]).

The Court further determines that defendant has demonstrated its discovery demands are both material and necessary (see CPLR 3101[a]; State Farm Mut. Auto. Ins. Co. v Mallela, supra), and “is in keeping with this state’s policy of liberal discovery” (see Matter of Kapon v Koch, supra at 39). There is no requirement that the subpoenaing party demonstrate that it cannot obtain the requested disclosure materials from any other source (Id. at 38). The use of the words “material and necessary” must be interpreted to require disclosure “of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” (Id. at 38, citing Allen v Crowell-Collier Publ. Co., 21 NY2d 403 [1968]).

Disclosure from a non-party “requires no more than a showing that the requested information is relevant to the prosecution or defense of the action” (see Bianchi v Galster Management Corp., 131 AD3d 558 [2nd Dept 2015]). Therefore, plaintiff’s objections to the disclosure demands in the subpoena lack sufficient merit (see also One Beacon Ins. Group, LLC. v Midland Med. Care, P.C., 54 AD3d 738 [2nd Dept 2008]; Q-B Jewish Med.Rehabilitation, P.C. v Allstate Ins. Co., 33 Misc 3d 64 [App. Term, 2nd Dept 2011]).

The Court also determines that plaintiff’s motion to quash the subpoena has failed in its burden to demonstrate that the discovery sought is “utterly irrelevant” to the action or that the “futility of the process to uncover anything legitimate is inevitable or obvious” (Id. at 34; CPLR 3103[a]). The burden is on the moving party to establish the need for a protective order (see Vivitorian Corp. v First Cent. Ins. Co., 203 AD2d 452, 453 [2nd Dept 1994]; CPLR 3103[a]). Also, a motion for a protective order is addressed to the sound discretion of the Court (see Jamaica Wellness Med. P.C. v USAA Cas. Ins. Co., supra).

In the view of the Court, defendant is entitled to financial records to ascertain whether the health care provider is actually ineligible to recover assigned no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, supra; All Boro Psychological Services, P.C. v Auto One Ins. Co., 35 Misc 3d 136[A][App Term, 2nd, 11th & 13th Jud Dists, 2012]), including corporate tax returns and tax records (see 62-41 Woodhaven Med. P.C. v Adirondack Ins. Exch., 30 Misc 3d 131[A][App Term, 2nd, 11th & 13th Jud Dists 2011], and bank records to show whether disproportionate shares of a professional corporation’s revenue is evidence of ownership and/or control by an unlicensed individual (see One Beacon Ins. Group, LLC. v Midland Med. Care, P.C., supra).

Moreover, plaintiff’s argument that defendant improperly served the subpoena duces tecum, by fax, on plaintiff’s non-party bank, is unavailing. The bank accepted service of the subpoena without objection.

Therefore, plaintiff’s motion to quash the subpoena duces tecum served by defendant on plaintiff’s non-party bank, J.P. Morgan Chase Bank, is denied. The stay by the Court is lifted and the subpoena duces tecum remains valid and enforceable by defendant.

The motion by defendant to strike the Notice of Trial and Certificate of Readiness dated [*4]December 22, 2016, filed by plaintiff, is granted, to the extent that the action shall be stricken from the calendar pursuant to 22 NYCRR §212.17(c). The Clerk of the Court is directed to strike the action from the calendar.

The foregoing constitutes the decision and order of this Court. Submit judgment.

Dated: May 11, 2017

Hon. James F. Matthews J.D.C.

Footnotes

Footnote 1:Defendant’s counsel seeks to strike plaintiff’s Notice of Trial and Certificate of Readiness pursuant to 22 NYCRR §208.17, however, the correct cite is 22 NYCRR §212.17.

Footnote 2:Mallella permits insurance carriers with no-fault claims to pursue fraud investigations for good cause and withhold reimbursement from fraudulently licensed medical corporations.

Footnote 3:The Court notes that defendant does not move to compel discovery pursuant to CPLR 3124. Therefore, the Court makes no ruling in this regard, other than stated within this decision.The Court also notes the motion to strike the Notice of Trial and Certificate of Readiness was timely brought within 20 days pursuant to 22 NYCRR §212.17[c], and this was not raised by any party as an issue. Both motions, by plaintiff and by defendant, were marked submit on the same date, and have been consolidated by the Court for the within rendered decision.

[*1]

District Court of Nassau County, Third District, March 1, 2017

APPEARANCES OF COUNSEL

Law Offices of Peter C. Merani, New York City, for defendant.

Israel, Israel & Purdy, LLP, Great Neck, for plaintiff.

{**55 Misc 3d at 795}The plaintiff commenced this action to recover no-fault benefits for medical services provided to its assignor, Adam Rivera-Martinez, arising out of a motor vehicle accident on August 22, 2011.

The plaintiff served the summons and complaint in April of 2012 and an answer was filed in May of 2012. After a notice of trial was filed on May 23, 2012, the matter was sent to arbitration before Frank Lattanzio, Esq. Both sides were represented by counsel at the March 12, 2014 hearing, after which the arbitrator found in favor of the plaintiff in the amount of $3,723.72. The defendant, by its then counsel (the Law Offices of Robert P. Tusa), demanded a trial de novo. On March 11, 2015, this matter came on for trial. The court found in favor of the plaintiff in the amount of $3,723.72 plus statutory interest, costs and attorney’s fees. On July 29, 2015, judgment was entered in the sum of $7,784.06, which included statutory interest and attorney’s fees, along with costs and disbursements.

After the judgment was entered, the Law Offices of Peter C. Merani served an amended answer dated October 28, 2015. Initially, the amended answer was rejected by plaintiff’s counsel, as the Law Offices of Peter C. Merani was not the attorney of record for the defendant. In November of 2015, the Law Offices of Peter C. Merani was substituted as counsel for the defendant, but plaintiff’s counsel again rejected the defendant’s answer, as the time within which to file and serve an amended answer had expired (see CPLR 3025).

At bar is the defendant’s motion for a protective order pursuant to CPLR 5240, staying the sale of defendant’s property pending the resolution of the instant application; an order pursuant to CPLR 5019 and 5240, modifying the judgment to reflect that the policy of insurance has been exhausted and that nothing more is owed to the claimant; an order compelling the plaintiff to execute and file a full satisfaction of judgment pursuant to CPLR 5020; and an order pursuant to CPLR 5021, directing the Clerk of the Court to make an entry that the judgment has been partially satisfied. Said motion is determined as follows.

Defense counsel maintains that the underlying insurance policy has been exhausted and that the plaintiff is attempting to execute on a judgment for a sum which is in excess of the policy limits. Counsel states that it is well settled that “where, as here, an insurer has paid the full monetary limits set forth in the policy, its duties under the contract of insurance cease” {**55 Misc 3d at 796}(Presbyterian Hosp. in City of N.Y. v Liberty Mut. Ins. Co., 216 AD2d 448, 448 [2d Dept 1995]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 571 [2004]; Hospital for Joint Diseases v Hertz Corp., 22 AD3d 724, 725 [2d Dept 2005]).

In support of its motion, defendant has submitted an affidavit by Kristina Cunningham, defendant’s claim representative assigned to this case (notice of motion, exhibit A). In her affidavit, Ms. Cunningham maintains that she has personal knowledge of the defendant’s practices and procedures and the governing no-fault procedures. She specifically addresses the issue that the plaintiff’s assignor was a pedestrian and that “[t]he relevant policy of insurance provided pedestrians, such as the injured/assignor ADAM RIVERA-MARTINEZ, with $50,000 of Personal Injury Protection benefits” (exhibit A ¶ 29). She states the dates on which checks were issued, and avers that as of May 16, 2014, $76,304.79 was paid by the defendant for medical bills. All but one of the checks (in the amount of $1,136.83) listed in this affidavit were issued before the time the defendant filed its answer. Exhibit A-2 of Ms. Cunningham’s affidavit consists of copies of the cashed checks which the defendant has paid out under the policy. As such, the affiant posits that the defendant has already paid more than what is owed to the claimant.

In further support of its motion to modify the judgment, the defendant relies upon Hospital for Joint Diseases v Hertz Corp. (22 AD3d 724 [2005]), in which the Appellate Division, Second Department, modified the judgment after the plaintiff had been awarded summary judgment and judgment had been entered. The Appellate Court held “[that] the defendants were not collaterally estopped from raising the issue of whether the limits of the policy were exhausted, as the defendants were not . . . afforded a full and fair opportunity to contest that issue” (Hospital for Joint Diseases at 725-726).

Five years later, in St. Barnabas Hosp. v Country Wide Ins. Co. (79 AD3d 732, 733 [2d Dept 2010]), the Second Department again held that after the plaintiff was awarded summary judgment in a no-fault action, the defendant was not collaterally estopped from seeking to modify the amount of the judgment based upon its contention that the policy limits had been exhausted. The Court reasoned that the only issues raised in the motion for summary judgment were the questions of whether the defendant had failed to pay or deny the relevant claim within the statutory time frame, and whether the defendant had received verification on that claim.{**55 Misc 3d at 797}

Hence, defense counsel contends that an insurance company is not required to pay no-fault benefits beyond the policy limits, even if the issue is raised after judgment is entered. In this case, counsel argues that since the defendant has paid the applicable policy limits, it is not required to pay this judgment, which should be modified to zero, to reflect that the policy has been exhausted. Further, the defendant’s attorney maintains that the plaintiff should be required to file a satisfaction of judgment.

In opposition, the plaintiff points out that the defendant’s own exhibits establish that it was aware of the amount of money left on the policy as of the time of trial. Counsel asserts that the defendant then had a full and fair opportunity to raise the defense that the subject policy limit had been exhausted, but failed to do so at trial. Therefore, counsel maintains that the defendant’s motion should be denied in all respects.

A review of the defendant’s answer reveals that one of the defenses included in the “ELEVENTH AFFIRMATIVE DEFENSE” is that the policy provisions have been exhausted. “A party shall plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading” (CPLR 3018 [b]). Showing that the policy limits have been exhausted is not a requisite part of plaintiff’s case; it is the defendant’s burden to plead and then prove this affirmative defense.

In the cases relied upon by the defendant, summary judgment had been granted without the insurance company having had a full and fair opportunity to contest the policy limitations. However, the case at bar does not involve summary judgment. In fact, no such motion was ever made in the instant matter. To the contrary, the defendant pleaded the affirmative defense of exhaustion of the policy limits in its answer. On March 11, 2015, the defendant then proceeded to trial and wholly failed to raise and/or present evidence of the subject defense, notwithstanding having had the opportunity to do so. This is despite the fact that as is evident from the affidavit of Kristina Cunningham, the defendant was aware, over three years prior to trial, that the policy limits had been exceeded. Indeed, the policy limits had been exhausted months before the defendant’s service of its answer.{**55 Misc 3d at 798}

On this record, the defendant’s motion is denied, in its entirety.

[*1]

District Court of Suffolk County, Third District, June 8, 2016

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville (Michael A. Callinan of counsel), for defendant.

Law Office of Gabriel & Shapiro, LLC, Wantagh (Steven Miranda of counsel), for plaintiff.

Ordered that this motion by defendant for an order pursuant to CPLR 3212 granting summary judgment in its favor against plaintiff dismissing the complaint in this action for assigned first-party no-fault benefits is denied, and plaintiff’s cross motion for summary judgment in its favor against defendant is granted.

Defendant denied the no-fault claims at issue based on the failure of plaintiff Avalon Radiology, P.C. to appear for two examinations under oath (EUOs) on April 10, 2014 and May 1, 2014. Defendant’s first EUO request, dated March 26, 2014, stated that the examination would consist of questions pertaining to Avalon’s corporate entity, the medical condition of the eligible injured party, and Avalon’s corporate relationship with any and all other professional and nonprofessional corporations (exhibit I to moving papers). Avalon responded to the first EUO request with a letter dated April 3, 2014, requesting the good faith, objective reason for defendant’s request for an EUO pertaining to Avalon’s incorporation and licensure, as well as the basis for suspecting it had engaged in fraudulent behavior (exhibit K). In response to Avalon’s letter of April 3, 2014, defendant sent a second letter dated April 14, 2014, stating that it was not required to provide the specific objective justification for its EUO request and rescheduling the EUO for May 1, 2014 (exhibit L), as well as a third letter dated April 18, 2014, also setting forth the May 1, 2014 EUO date (exhibit H). The claims were denied following Avalon’s failure to appear for the May 1, 2014 EUO (exhibits R, S, T).

Appearance at an EUO is required as a condition precedent to no-fault coverage (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2d Dept 2006]). A duty of reasonableness and cooperation is, however, imposed on both parties in the verification process (see Diagnostic Radiographic Imaging, P.C. v GEICO, 42 Misc 3d 1205[A], 2013 NY Slip Op 52247[U] [Civ Ct, Kings County 2013]; 11 NYCRR 65-3.5 [e]).{**52 Misc 3d at 838}

In pertinent part, the applicable no-fault regulation, 11 NYCRR 65-3.5 (e), provides as follows:

“When an insurer requires an examination under oath of an applicant to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination. Insurer standards shall be available for review by department examiners.”

An insurer is not required as a precondition to a demand for an EUO to provide the justification for the request. Where the recipient of a duly made demand for an EUO fails to request the justification for the demand, the right to receipt of such justification is waived as to that recipient. Thus, the failure to respond to a duly made demand for an EUO relieves the insurer of an obligation to demonstrate the reasonableness of the requests. (Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]; Morris Med., P.C. v Amex Assur. Co., 37 Misc 3d 140[A], 2012 NY Slip Op 52260[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists]; Crescent Radiology, PLLC v American Tr. Ins. Co., 31 Misc 3d 134[A], 2011 NY Slip Op 50622[U] [App Term, 2d Dept, 9th & 10th Jud Dists]; see also IDS Prop. Cas. Ins. Co. v Stracar Med. Servs., P.C., 116 AD3d 1005 [2d Dept 2014]; Interboro Ins. Co. v Clennon, 113 AD3d 596 [2d Dept 2014]; NY Rehab Pain Mgt. & Med. Servs., PC v State Farm Auto Ins. Co., 51 Misc 3d 1226[A], 2016 NY Slip Op 50821[U] [Sup Ct, Nassau County 2016] [provider did not timely (prior to date scheduled for EUO) request insurer to provide the reason for EUO demands].)

Thus, Avalon’s request for the objective reason in response to the first EUO request triggered an obligation on the part of the defendant insurer to respond by providing the specific objective justification for the EUO request. The insurer’s response in this case to the effect that it was not obligated to do so is plainly wrong. The insurer clearly had an obligation to comply with no-fault regulation section 65-3.5 (e) and supply the requesting party, in this case the provider, with the “specific objective justification supporting the use of such examination.” The regulations do not allow the insurer to use an EUO as a fishing expedition. There must be a specific objective reason for the request. (See American Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441 [1st Dept 2015]; American Tr. Ins. Co. v Curry, 45 Misc 3d 171 [Sup Ct, NY County 2013].) If the court were to conclude otherwise, the cited language of the applicable regulation would be rendered meaningless.{**52 Misc 3d at 839}

Because the defendant insurer failed to provide the requisite “specific objective justification supporting the use of such examination” in response to the plaintiff’s timely demand for same, the initial and subsequent EUO requests were noncompliant with the regulations. Clearly, the plaintiff’s response to the defendant’s initial request did not constitute an absolute refusal to appear for an EUO. Had a sufficient response been made by the defendant, plaintiff would have been obligated to appear at a subsequently scheduled EUO, the first request having [*3]been vitiated by plaintiff’s timely response in the form of a request for the justification for the EUO. (See Metro Psychological Servs., P.C. v Mercury Cas. Co., 49 Misc 3d 143[A], 2015 NY Slip Op 51644[U] [App Term, 1st Dept 2015]; Palafox PT, P.C. v State Farm Mut. Auto. Ins. Co., 49 Misc 3d 144[A], 2015 NY Slip Op 51653[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015].) Defendant therefore has not demonstrated that plaintiff twice failed to appear for properly scheduled EUOs (see Palafox PT, P.C. v State Farm Mut. Auto. Ins. Co.).

In accordance with the foregoing, defendant’s motion for summary judgment is denied, and plaintiff’s cross motion for summary judgment in its favor against defendant is granted.