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Consolidation and belated discovery deniedJuly 19, 2010

SEE COMMENTS FROM DAMIN TOELL, ESQ. – for further explanation of this case.

Kipor Medicine, P.C. v GEICO, 2010 NY Slip Op 51247(U)(App. Term 2d Dept. 2010)

The branch of defendant’s motion seeking consolidation should have been denied since defendant failed to demonstrate that the actions it sought to consolidate had common questions of law or fact (see CPLR 602 [a]; S & B Neurocare, P.C. v GEICO Ins. Co., 20 Misc 3d 132[A], 2008 NY Slip Op 51450[U] [App Term, 2d & 11th Jud Dists 2008]). In addition, the branch of [*2]defendant’s motion seeking leave to amend the answer should have been denied since defendant’s papers presented no evidence that the proposed amendment might have merit (see CPLR 3025 [b]; Ingrami v Rovner, 45 AD3d 806, 808 [2007]). Defendant sought to amend its answer to assert that plaintiff’s certificate of incorporation had been revoked following the surrender, in April 2006, of the medical license of plaintiff’s sole shareholder. Plaintiff, however, is entitled to wind up its affairs and seek to recover no-fault benefits for the services it rendered to its assignors prior to April 2006 (see e.g. A.B. Med. Servs., PLLC v Travelers Indem. Co., 26 Misc 3d 69 [App Term, 9th & 10th Jud Dists 2009]). Defendant has not demonstrated that the facts herein are akin to a fraudulent incorporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).

Moreover, since defendant failed to submit an affidavit specifying that any unusual or unanticipated conditions had developed after the notice of trial had been filed which made it necessary for defendant to engage in further pretrial proceedings (see Uniform Rules for New York City Civ Ct [22 NYCRR] § 208.17 [d]; S & B Neurocare, P.C. v GEICO Ins. Co., 20 Misc 3d 132[A], 2008 NY Slip Op 51450[U]), the branch of defendant’s motion seeking to compel plaintiff to respond to discovery demands and produce its sole shareholder for an examination before trial should also have been denied.

Two points.  One, consolidation motions seem to have the same rules as severance motions.  While it is easy to sever, it is equally as difficult to consolidate.  Two, belated discovery following the filing of a notice of trial is shunned upon.

A better question is assuming the facts as presented by Justice Golia are accurate (see below), why would anybody prosecute this type of action.  Does this make the law firm prosecuting this action a co-conspirator or accessory after the fact to a fraud?  I am not sure –

“Unlike the majority, I do not find that defendant failed to demonstrate that the actions it sought to consolidate had common questions of law or fact,” or that defendant’s papers presented no evidence that the proposed amendment might have merit,” or that additional discovery should also have been denied.” Notwithstanding the foregoing, I agree with the majority in the ultimate result in that defendant waited nearly two years from the time it knew that Dr. Meisher had committed insurance fraud and was losing his medical license. Indeed, it was this very defendant, GEICO, that was the named victim” in the case to which Dr. Meisher entered his guilty plea. I can find no valid reason for this particular defendant to have ignored these concerns for such an extended period of time. Certainly, if defendant had submitted the same motion within a reasonable time, I would have voted to affirm the order of the Civil Court.”

6 Responses

  1. “A better question is assuming the facts as presented by Justice Golia are accurate (see below), why would anybody prosecute this type of action. Does this make the law firm prosecuting this action a co-conspirator or accessory after the fact to a fraud? I am not sure -”

    Really, Jason? I’m the attorney who represented Kipor Medicine, P.C. in the appeal (and did the brief, the oral argument, etc.).

    Some points:

    Dr. Meisher pleaded guilty to insurance fraud for activity unrelated to Kipor Medicine, P.C. All of the services at issue in the actions contemplated by the appeal were rendered prior to the surrendering of Dr. Meisher’s license. There is no founded suggestion by GEICO or anyone else, beyond mere fantasy, that Kipor Medicine, P.C. was fraudulently incorporated, or that the services at issue were not actually rendered (the latter of which could not be an issue for litigation in these matters, anyway). There was no “fraud admittedly perpetrated by plaintiff,” despite Justice Golia’s statement in his concurrence. Following the surrendering of Dr. Meisher’s license, the Department of Health specifically ordered that Kipor Medicine, P.C. is entitled to collect on its outstanding accounts receivable. Kipor Medicine, P.C. has never faced criminal charges, nor has Dr. Meisher ever faced such charges with respect to Kipor Medicine, P.C. Similarly, OPMC never brought charges against Kipor Medicine, P.C. or against Dr. Meisher with respect to Kipor Medicine, P.C.

    There’s nothing there.

    How in the world am I possibly a co-conspirator or an accessory after the fact to fraud, when no fraud was committed?

    Following Hurricane Katrina, is any attorney who represents State Farm a co-conspirator or an accessory after the fact, as well (even if they bought their way out of an indictment)?

    In any event, publicly questioning the potential criminality of your adversaries is no way to build up good relationships going forward.

    • JT says:

      Hey Damin,

      My comment was solely based on what Justice Golia said. It was pretty explicit. I sure as heck was not accusing anyone of anything. It was conditioned on the truth of the dissent.

      Seriously, assuming what Justice Golia said is true, then it begs the question why anyone would want to get involved with that entity. I am aware of the Fair Price paradigm and that “fraud” is precludable. Still, if there is dispositive evidence of fraud out there, despite whether it is precludable, then should a practitioner represent that client? In any event, I think what I said is what everyone thought based on what Justice Golia’s dissent said. According to his dissent, it was “crystal clear” and “iron clad” that the attorney appeared to be collecting upon a debt that the attorney knew or should have known was obtained through fraud.

      Anyway, it appears that the dissent may not have been completely accurate, so I stand corrected and feel better now. I have no ill feelings to you and hope the feeling is mutual.

  2. It should also be noted that GEICO did not seek to amend its Answers to include the defense that Kipor Medicine, P.C. was fraudulently incorporated.

    GEICO sought to amend its Answers to include two (2) additional purported affirmative defenses: that Dr. Meisher surrendered his medical license (which, it was undisputed, occurred subsequent to the rendering of the services at issue), and that Kipor Medicine, P.C.’s Certificate of Incorporation was revoked (which was solely based on the corporation no longer having a licensed shareholder following Dr. Meisher’s license surrender).

    Neither of these are actually defenses to payment of no-fault claims. That is, even if the facts were proven as a matter of law on a motion for summary judgment, for example, Defendant could never succeed in litigation on that basis alone. Moreover, given OPMC’s specific order that Kipor Medicine, P.C. is entitled to collect on its outstanding accounts receivable subsequent to the revocation of the Certificate of Incorporation, the latter proposed affirmative defense was particularly without merit.

    Theoretically, the proposed affirmative defenses could could be used as factual elements of some other affirmative defense (e.g., fraudulent incorporation, although the logical connection is tenuous at best), but they do not remotely suffice as affirmative defenses on their own, as the majority correctly acknowledged. Justice Golia’s position that Defendant’s motion could have “establish[ed] the need for defendant to amend the answer” ignores the fact that no possible motion could transform non-defenses into valid affirmative defense for which amendment could ever be available. GEICO might as well have sought to add as an affirmative defense that Dr. Meisher has a beard.

    (By the way, I should correct my prior comment – OPMC did bring a single charge against Kipor Medicine, P.C.: that, following Dr. Meisher’s surrendering his license, the corporation no longer had a licensed shareholder. No charges were ever brought against Kipor Medicine, P.C. relative to an activity during the time it existed as an active corporation prior to the surrendering of Dr. Meisher’s license.)

  3. raymond zuppa says:

    Well J.T. it just goes to show you that you cannot believe everything you read. You have to look at the source and do a little due dilligence.

    This reminds me of something similar. Russ Feingold and myself did not believe that Iraq had weapons of mass destruction when Fox News told us. Everyone else bought it because of the quality of the source.

    • JT says:

      “There are two sides to every story and the truth lies somewhere in between.” Different conclusions tend to flow from either side of the story.

      To address your comment, I also never believed Iraq had WMD.

  4. Raymond Zuppa says:

    There are no real stories just physical facts. We need to understand that we live in a world of physics and chemistry. Not a world of interpretation and story. Words cannot stop a Zuppa right hook.

    But did you buy the Osama/Hussein connection. Probably. The one intelligent person in this Country — Me — understood that in order to keep the various religous sects and faiths in his country together Hussein had to be secular in approach although religious in appearance.

    Hussein hated Osama. Iraq had nothing to do with 9-11. It was all Saudi. Bush’s friends. That’s why Bush redacted all material having to do with the Saudis from the 9-11 Report.

    An Israeli Intelligence Officer commented to an American General after the fall of Baghdad — “Now what.”

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