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Why does a Malella defense surive an untimely disclaimer, while a workers compensation defense doesn't? November 8, 2009

In New York First Acupuncture, P.C. v. State Farm Mut. Auto Ins. Co., 2009 NY Slip Op 52217(u), the Appellate Term in the context of an improper incorporation defense stated again that:

“Plaintiff’s contention, that the defense of fraudulent incorporation must be asserted in a timely denial of claim form, is without merit (Multiquest, P.L.L.C. v Allstate Ins. Co., 17 Misc 3d 37, 38-39 [App Term, 2d & 11th Jud Dists 2007]).”

What is interesting, and I have stated this before, is that it seems illogical that a Workers Compensation defense requires a timely disclaimer in order to be preserved (Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009), while a Mallela styled defense is exempt from the timely disclaimer requirement of Ins. Law 5106(a).  Both of these defenses do not implicate coverage.  Rather, these defenses are based upon whether a party has standing to prosecute an action.  Compare 11 NYCRR 65-3.16(a)(12), with, 11 NYCRR 65-3.16 (a)(9).

A little consistency would be nice.

The chiropractor rate is all that an acupuncurist is entitled to November 5, 2009

The Appellate Term is starting to sound like a broken record.  Yet, each time they play the record it seems that the message is more emphatic.

In New Wave Acupuncture v. Geico, 2009 NY Slip Op 52211(u)(App. Term 2d Dept. 2009), the Court stated the following: “For the reasons stated in Great Wall Acupuncture v GEICO Gen. Ins. Co. (16 Misc 3d 23 [App Term, 2d & 11th Jud Dists 2007]), it was proper for defendant to use the workers’ compensation fee schedule for acupuncture services performed by chiropractors to determine the amount which plaintiff was entitled to receive.”

Note: The court as of this case and Ava Acupuncture v. Geico does not require the carrier to provide evidence as to why it chose to pay chiropractor fee schedule rate as opposed to another rate.  The chiropractor fee schedule amount is acceptable as a matter of law.  Period, the end.

Now, let’s assume that you are in a stipped in trial and the sole issue is whether or not the billing was in accordance with the “fee schedule”.  Based on New Wave Acupuncture v. Geico and  Ava Acupuncture v. Geico, this is what the defendant’s portion of the trial should look like:

Exhibit “A” [Comes in through stip]

(1) Denial of claim form with explanation of benefits

Exhibit “B” [Comes in as a government document through judicial notice Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co, 61 AD3d 13 (2d Dept. 2009)].

(2) Fee schedule with CPT 97810, 97811, 97813, 97814;

Exhibit “C” [Comes in as a government document through judicial notice Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co, 61 AD3d 13 (2d Dept. 2009)].

(3) Chiropractor conversion factor [5.78];

Exhibit “D” for identification:

(4) Shiny Sharpe brand Calculator

Exhibit “E” for reference: New Wave Acupuncture v. Geico and  Ava Acupuncture v. Geico

(5) Give copies to the Judge and Plaintiff’s counsel.

(6) Tell Plaintiff and judge: “No, I do not need to bring a claim rep.  This is why…”

(7) With calculator, take the relative value, multiply by the Region IV conversion factor of 5.78 and announce the result to the court.  If you want, read the portion of the fee schedule that tells the court that this is how you arrive at the compensable amount.  You will find this in the introduction section of the fee schedule.

Now, do this for each billed for code.  Does the amount you calculated match the amount paid on the denial of claim form?  If yes, go to next step.

(7) Motion for directed verdict.

(8a) If win smile

(8b) If lose APPEAL and do not forget to enter a judgment for costs and disbursements including the prospective marshal fee after the judgment is reversed without costs.  The without costs only refers to appellate costs.

(8c) Tell the marshal you want to enforce the $105 judgment you just entered.  See what the marshal  says.  I know first hand what you will be told.  But, insist that the marshal collects the judgment.  He is duty-bound to do this.  I guarantee you will have a check in the mail in no time.  One warning however: the next time you call that marshal, you will be told that you have the wrong number.  Don’t worry – there are plenty of marshals out there.

IME No-Show – Personal Knowledge November 5, 2009

For those who are unsure what satisfies the “personal knowledge” prong of an IME no-show defense, the Appellate Term in uncharacterstic fashion spelled it out:

Radiology Today v. Geico Ins. Co. 2009 NY Slip Op 52208(u)(App. Term 2d Dept. 2009).

“The affirmations and affidavits of the medical professionals who were to perform the IMEs established that plaintiff’s assignor failed to [*2]appear for said IMEs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]; Tuncel v Progressive Cas. Ins. Co., 21 Misc 3d 143[A], 2008 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2008]).”

What really happened in St. Barnabus v. Allstate November 5, 2009

I previously posed on this case.  I was trying to figure out what the factual basis was behind the following Appellate Division holding: “Contrary to Allstate’s contention, however, the Supreme Court properly determined that the denial of claim, which incorrectly stated the amount of the claim and gave an invalid reason for the denial was fatally defective”

I examined the motion papers at the Nassau County Clerk’s office and copied the relevant portions of the affirmations, affidavits and exhibits that comprised the underlying motion practice.  If you wish to download these papers, click on the hyperlink that follows this sentence. St. Barnabus motion papers

What appeared to have happened was that the carrier did not obtain written notice of the loss within 30-days of the loss (“30-day rule defense”).  However, there was oral notification of the loss.  The carrier after obtaining oral notification of the loss then sought to obtain an NF-2.  While this was happening, the Hospital (a few months after the loss), submitted a bill.  The bill was submitted more than 45-days after the discharge of the patient from the hospital.

The bill was timely denied based upon the 30-day rule defense.  Perhaps the carrier meant to also deny the bill upon the 45-day rule defense?  Furthermore, the amount stated on the denial was the full UB-92 amount, and not the DRG rated amount.

Upon reading the motion papers, there appeared to be a viable 30-day rule defense.  The claims affidavit annexed to the moving papers, however, failed to set forth in a non-conclusory fashion that written notice was not given within 30-days.  The affidavit focused on the failure to obtain an NF-2, despite Allstate’s valiant attempts to obtain the same.  We all know that written notice of loss may take the form of a police report, holographic correspondence or other means.  In other words, an NF-2 is just one way to obtain written notice of the loss.  Thus, a request to obtain an NF-2 is a verification request (Olympic Chiropractic, P.C. v. American Transit Inc. Co. 14 Misc.3d 129[A][App. Term 2d Dept. 2007]), which is satisfied upon receipt of an NF-2 or NF-5.

Yet, in this case, the record suggests that there was no written proof of loss prior to receipt of the NF-5.

I therefore think that the issue in this case was not so much that the denial was defective, but that the insurance carrier’s affidavit was lacking in substance.  The record revealed a viable 30-day rule defense.  Thus, as frequently happens in no-fault practice, the validity of the defense is contingent upon the language of the affidavit.  Here, the language of the affidavit was insufficient.

Can a Declaration of Non-Coverage that Arises from a Co-Defendant’s Default be Considered Collateral Estoppel Against the Appearing and Answering Defendant? November 1, 2009

State Farm Ins. Co., v. Frias, 2009 NY Slip Op 07825 (2d Dept. 2009)

Dave Gottlieb at No-Fault Paradise posted on this case, and offered his thoughts.  Here are the pertinent facts:

“Of the 10 defendants named in this action, only 3, Luccme, Urena, and Pedro Fernandez, answered the complaint, and the Supreme Court granted State Farm’s motion for leave to enter a default judgment against the other defendants…  Supreme Court entered a judgment against the defaulting defendants. The judgment declared that State Farm was not required to provide insurance coverage to the defaulting defendants because the incident of January 24, 2002, resulted from an intentional act; that, by reason of no coverage and the failure of State Farm’s insured to cooperate, State Farm was not obligated to defend or indemnify Frias or Abreu in any current or future proceeding, including the underlying action; and that State Farm was not required to pay any damages, awards, or benefits to any of the other defaulting defendants in any current or future proceedings, including the underlying action.”

“Inasmuch as State Farm initially moved for leave to enter a default judgment against the defaulting defendants only, the resulting judgment binds only those defendants, and may not be given preclusive effect to deprive Luccme and Urena, who appeared in the action, of their right to litigate the issues pertaining to coverage”

In Frias, there was no privity between the defendants.  Consequently, the Appellate Division was probably correct in its holding, when it declined to give collateral estoppel effect to the declaration of non-coverage that arose from the co-defendants’ default.

But, the real question this case raises – and one that I know will find its way to the Appellate Division soon – is whether a court would reach the same result if the non defaulting party was in privity with the defaulting party.  Why is this question raised?

Well, assume that a no-fault claimant (hereinafter “injured person”) receives treatment from a medical provider and executes an assignment of benefits in favor of the medical provider.  The injured person and the healthcare provider would be in privity of contact.   Furthermore, assume that an insurance carrier has a coverage based defense against the injured person and commences a declaratory action against the injured person and the assignee healthcare providers.

Also, assume that the injured person in the above scenario defaults, while the medical provider interposes an answer.  A default motion is then filed and a judgment is entered against the injured person, similar to that in Frias.  Similar to Frias, assume that a summary judgment motion is made against the healthcare provider based upon the injured person’s default.

Would the result be similar to Frias?

I am not sure…   I have my thoughts though…