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Counterclaim based upon precludable fraud rebuffedAugust 17, 2010

Quality Psychological Servs., P.C. v GEICO Ins. Co., 2010 NY Slip Op 51423(U)(Civ Kings. 2010) Here are the five statements from this case that are important.

(1) “In an action to recover assigned first party no-fault benefits, defendant seeks leave to amend its answers, strike the notices of trial, and compel discovery, including a deposition.”

(2) “Though defendant admits that it did not deny plaintiff’s bills on the basis of fraudulent billing, it maintains that it has a cause of action to recover benefits paid under a theory of fraud or unjust enrichment.  Defendant therefore seeks leave to amend its answers to interpose counterclaims for fraud and unjust enrichment.”

(3) “Herein, defendant’s counterclaims for fraud and unjust enrichment are palpably insufficient and patently devoid of merit because the claims were not denied on the grounds of fraudulent billing.”

(4) “As all evidence indicates that the counterclaims pertain to a precluded defense, defendant may not assert them in an amended answer. See Cornell Med., P.C., 24 Misc 3d at 60 (App. Term, 2d Dept. 2009) (“In our opinion, since defendant’s proposed counterclaim [for unjust enrichment] pertains to a defense which is precluded due to defendant’s untimely denials, the Civil Court properly denied the branch of defendant’s motion seeking leave to amend the answer to assert the counterclaim.”).”

Civil Court decided to cite Cornell Medical twice, which is fine.  But does anyone out there even factually know what Cornell was about? Cornell was not about fraud.  Never was and never will be.  It involved a medical provider who believed that every visit within his practice was a consultation, and that the ground rule that limits x-ray reimbursement to 75% for each subsequent x-ray on the same date of service should not apply to that Plaintiff.   Cornell involved “greedy billing” or “stupid billing”.  However, it did not involve fraud.

The Appellate Term in Cornell made an unnecessarily broad statement when it held that a counterclaim would not be allowed for any precludable defense.  Insofar as Cornell did not involve “fraud”, the portion of the holding which held that a counterclaim would not lie upon any precludable defense, including fraud, should be read as dicta. As to this case, we never reached the merits of what the so-called fraud is.  But, if it really was fraud, then why would anyone prosecute that case?  Then again, if a civil action that seeks to recoup moneys paid out to a provider who engaged in some type of fraud may not be maintained, then perhaps I am wrong for even suggesting that this type of case should not be prosecuted.

3 Responses

  1. Raymonc Zuppa says:

    Oh J.T. get off the high horse with the “why would anyone prosecute this case.” An insurance company allegation is always true.

    When you take the medical necessity case and you see the ridiculous peer review written by one of the usual suspects — [edited for content] do you ask yourself “why would I defend this case.”

    When I got the murder case a few years ago did I say “why should I defend this.” No. I found out who really did the killing and won the case.

    I am all for suing lawyers for representing parties. I hear that’s catching on at the defense side. Let’s have at it.

    • JT says:

      It if it is a garbage case, I call the claim rep and seek to dispose of the matter before we sit in the hallway of doom in queens. If I cannot get authority, I can at least say I did my job.

  2. Raymond Zuppa says:

    There is never anything unkosher about my cases. I sit my client down. Look him in the eye and say: “If there is anything unkosher about this case its done. You get no money … I am leaving the room now. Think about it and tell me if there is anything unkosher when I come back.” I leave the room for about 3 mississippis and then come back. The client has always told me: “The case is totally kosher.”

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