Court addresses lack of meritorious defense and fails to evaluate reasonable excuse

Hu-Nam-Nam v Allstate Ins. Co., 2017 NY Slip Op 50685(U)(App. Term 2d Dept. 2017)

“Defendant moved by order to show cause in the Civil Court to vacate the default judgment, claiming, as an excuse for the default, that it had no record of receiving the summons and complaint, but if defendant had been served, then defendant’s failure to answer the complaint was the result of clerical error and office failure.”

“In support of its motion to vacate the default judgment, defendant was required to [*2]demonstrate both a reasonable excuse for its default and the existence of a potentially meritorious defense (see CPLR 5015 [a]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138 [1986]; New York Hosp. Med. Ctr. of Queens v Nationwide Mut. Ins. Co., 120 AD3d 1322, 1323 [2014]). While plaintiff’s complaint in the Civil Court asserted that the accident at issue had occurred on June 20, 2010, defendant’s proffered evidence of a staged accident referred to a June 21, 2010 collision. Consequently, defendant failed to demonstrate that the alleged injuries did not arise out of the June 20, 2010 insured incident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). Similarly, the Supreme Court declared that defendant is not obligated to reimburse plaintiff for claims “relating to the June 21, 2010 accident.” Thus, we cannot find that the order in the declaratory judgment action, which relieves defendant of liability for claims relating to a June 21, 2010 accident, is a conclusive determination barring plaintiff’s recovery in the Civil Court for injuries sustained by its assignor in a June 20, 2010 accident. In the absence of an explanation of the discrepancy in the dates of the accident, defendant failed to demonstrate the existence of a potentially meritorious defense to the action. In view of the foregoing, it is unnecessary to consider whether defendant proffered a reasonable excuse for its default.”

Aside from a mix up in dates and Plaintiff prevailing on a case it should not have, the court ducked “reasonable excuse”.  It would be a close call on reasonable excuse because denial of receipt is usually not a reasonable excuse in the Second Department.

Notice of Entry

Wells Fargo Bank, N.A. v Frierson, 2017 NY Slip Op 03984 (2d Dept. 2017)

“”[I]t is axiomatic that before an order may be enforced, notice of such order must be given to the party against whom it is sought to be enforced” (Matter of Raes Pharm. v Perales, 181 AD2d 58, 62; see Holmes v Minnamon, 122 AD3d 1285). Thus, ” [w]here the rights of a party are or may be affected by an order, the successful moving party, in order to give validity to the order, [*2]is required to serve it on the adverse party'”

“Contrary to the defendant’s contention before the Supreme Court, the plaintiff’s failure to properly serve a copy of the summary judgment order with notice of entry did not render that order null and void (see CPLR 2004). However, since the plaintiff failed to establish that a copy of the summary judgment order with notice of entry was properly served upon the defendant, its motion to confirm the referee’s report and for a judgment of foreclosure and sale was properly denied on that ground”

This occurs in DJ practice.  The Appellate Term has held that the failure to serve an order with notice of entry is not fatal to the res judicata application.  I will not say this conflicts.  I would say, however, that a dismissal may not be warranted where Notice of Entry was never served.  But,  DJ order without Notice of Entry is clearly a defense to a no-fault action.  CPLR 2004.

Declaratory judgment actions against the city

Country-Wide Ins. Co. v. Dejean, 2017 NY Slip Op 30752(u)(Sup. Ct. NY Co. 2017)

I have not had to deal with one of these in awhile.  Also, unless you are sending out EUO letters within 60 days of the loss (C-wide is not), an action for the failure to attend an EUO will plainly not lie against NYC.  I also tend to wonder if a DJ action that fails to allege with some type of factual allegation that the letters are timely relative to the billing has even stated a cause of action.

This case is interesting because the acts forming the loss occurred in Brooklyn.  The insurance carrier is based out of NY County.  The city tries to apply the portion of the unconsolidated law mandating that venue lie in the county where the activities occurred underlying the cause of action.  The Court here correctly held that since this is a breach of contract action and the breach occurred in Manhattan, jurisdiction is properly laid in New York County.

A DJ to nowhere

Kemper Independence Ins. Co. v Adelaida Physical Therapy, P.C., 2017 NY Slip Op 00916 (1st Dept. 2016)

“Although the failure of a person eligible for no-fault benefits to appear for a properly noticed EUO constitutes a breach of a condition precedent, vitiating coverage (see 11 NYCRR 65-1.1; see also Hertz Corp. v Active Care Med. Supply Corp., 124 AD3d 411 [1st Dept 2015]; Allstate Ins. Co. v Pierre, 123 AD3d 618 [1st Dept 2014]), plaintiff failed to supply sufficient evidence to enable the court to determine whether the notices it had served on the injury claimants for EUOs were subject to the timeliness requirements of 11 NYCRR 65-3.5(b) and 11 NYCRR 65-3.6(b) (see Mapfre Ins. Co. of N.Y. v Manoo, 140 AD3d 468, 470 [1st Dept 2016]) and, if so, whether the notices had been served in conformity with those requirements (see National Liab. & Fire Ins. Co. v Tam Med. Supply Corp., 131 AD3d 851 [1st Dept 2015]). Specifically, plaintiff failed to provide copies of any completed verification forms it may have received from any of the health service provider defendants or any other evidence reflective of the dates on which plaintiff had received any such verification forms, or otherwise assert that it never received such forms.

The Court has delimited the proof necessary to demonstrate that a no show is timely, relative to the receipt of billing.  Manoo involved verification of treatment forms that were dated after the EUO letters, showing timeliness on its fact.  An affidavit from a claims representative expressing when billing per provider or per claim was received would be the “other evidence reflective of the dates on which plaintiff had received any such verification forms”.  The Court held in this manner in AT v. Vance and AT v. Longevity.

In light of the caselaw that has been established since 2015, this perfection of this appeal seemed strange as the result was preordained, and there does not appear anything in the face of this opinion that would cause a shift in the law.  Plus with Manoo at the Court of Appeals, the vitality of Unitrin may or may not be dead by years end.

 

Punted satisfaction case

J.K.M. Med. Care, P.C. v Interboro Ins. Co., 2016 NY Slip Op 26348 (App. Term 2d Dept. 2016)

(1) In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that the action was barred by virtue of a November 21, 2011 judgment which had been entered against plaintiff in a declaratory judgment action in the Supreme Court, Nassau County. Plaintiff cross-moved for summary judgment. By order dated April 23, 2014, the Civil Court (Robin S. Garson, J.) denied defendant’s motion and granted plaintiff’s cross motion, directing plaintiff to enter judgment in the principal sum of $556.78, plus statutory interest and attorney’s fees. In July 2014, plaintiff submitted a proposed judgment in the total sum of $988.34. A judgment was ultimately entered on September 19, 2014 in the sum of $993.34.

(2) In August 2014, prior to the entry of judgment in this action, defendant moved for summary judgment dismissing the complaint, as the amount which was due and owing had been satisfied, or, in the alternative, in the event that a judgment had been entered while defendant’s motion was pending, for an order granting it a satisfaction of such entered judgment, pursuant to CPLR “5020 (c),”[FN1] and plaintiff opposed the motion. By order entered April 23, 2015, the Civil Court (Robin Kelly Sheares, J.) denied defendant’s motion in its entirety on the ground that it was an improper successive motion for summary judgment.

(3) Although defendant’s second motion sought summary judgment dismissing the complaint, [*2]defendant sought such relief only in the event that no judgment had been entered while its motion was pending. Since a judgment had been entered on September 19, 2014, defendant’s request for primary relief in the form of summary judgment became academic, and, thus, the branch of defendant’s motion seeking the alternative relief requested, i.e., for an order, pursuant to CPLR 5021 (a) (2), directing the entry of a satisfaction of judgment, became operative. However, in denying defendant’s motion in its entirety, the Civil Court did not consider the merits of the branch of defendant’s motion seeking the alternative relief of the entry of a satisfaction of judgment. Consequently, the matter is remitted to the Civil Court for a determination thereof.

My review of the file shows there was an issue with the granted declaratory judgment action.  The DJ action, however, was granted and a cost/disbursement judgment in the sum of $1200 was entered.  Since the amount due and owing in no-fault benefits was less than that sum, the idea was issue to an offsetting partial satisfaction against the Supreme Court judgment.   The Appellate Term punted.  I suppose we will be back up next decade.

Judgment in declaratory judgment action does not need to rendered against Assignor to be effective

Infinity Chiropractic Health, P.C. v Republic W. Ins. Co., 2016 NY Slip Op 51564(U)(App. Term 2d Dept. 2016)

The eventual order and/or judgment does not need to be entered against assignor directly.

(1)  “However, insofar as is relevant to this appeal, the Civil Court denied the branches of defendant’s unopposed motion seeking summary judgment dismissing the fifth through eighth causes of action, which causes of action related to services that plaintiff had rendered to assignor Lawrence Jones, on the ground that the order in the declaratory judgment action had not been granted as against Lawrence Jones, individually. Defendant appeals from so much of the order as denied the branches of its motion seeking summary judgment dismissing the fifth through eighth causes of action.”

(2) “Plaintiff was named and served in the declaratory judgment and ultimately defaulted therein. As plaintiff’s right to recover as an assignee of Lawrence Jones was fully litigated in the Supreme Court action, notwithstanding defendant’s admitted failure to serve Lawrence Jones individually in that action, and notwithstanding that the declaratory judgment made no determination as against Lawrence Jones, individually, the order in the declaratory judgment action was a conclusive final determination barring plaintiff from recovering for any services it rendered to Lawrence Jones arising from the July 16, 2010 accident.”

Default granted but summary judgment motion denied

Global Liberty Ins. Co. v W. Joseph Gorum, M.D., P.C., 2016 NY Slip Op 06680 (2d Dept. 2016)

(1) “Here, the Supreme Court found that the plaintiff submitted proof of service of the summons and complaint upon Gorum (seeBusiness Corporation Law § 306[b][i]; CPLR 3215[g][4][i]) and that Gorum had not answered or appeared in this action, thereby admitting all traversable allegations (see Rokina Opt. Co. v Camera King, 63 NY2d 728, 730). However, the court erred in denying that branch of the plaintiff’s motion which was for leave to enter a default judgment against Gorum on the basis that its expert’s affirmation, in the form of a peer review, did not have an original signature (see CPLR 2101[e]; Rechler Equity B-1, LLC v AKR Corp., 98 AD3d 496, 497; Billingy v Blagrove, 84 AD3d 848, 849; Campbell v Johnson, 264 AD2d 461, 461). Further, the plaintiff’s expert’s affirmed peer review demonstrated facts constituting the cause of action asserted against Gorum (see Woodson v Mendon Leasing Corp., 100 NY2d at 71). Thus, the court should have granted the plaintiff leave to enter a default judgment against Gorum.”

The “original signature” is a relic of the 1970s and 1980s.  Certain judges fail to appreciate that a copy or a holographic signature (and electronic signature in the 1st Department or electronic signature with authentication in the Second Department) are sufficient to allow the document to be considered.

(2)  “The peer review reports and medical records submitted in support of this motion failed to demonstrate as a matter of law that the surgery performed by Diwan on Souffront was not medically necessary.”

Admittedly, this is the standard type of peer reports that  the insurance carriers utilize to show lack of medical appropriateness.   It is for this reason that surgery peer reviews necessitate expert testimony.  My hope is one day, the industry will compel the orthopedists to fill in the gaps in the peer reviews so that the can stand on their own two feet.

Preliminary injunction denied – the analysis is questionable

Liberty Mut. Ins. Co. v Branch Med., P.C., 2016 NY Slip Op 31706(U)(Sup. Ct. NY Co. 2016)

(1)  In connection with one such claim, at an examination under oath (EUO) held on March 31, 2014, Nicholas testified that he and his brother, Scott, solely owned and controlled Branch, that their compensation was tied to company profits, and that defendant Mark Levitan served as Branch’s “administrative executive,” overseeing company staff, marketing, bookkeeping, and internal HIPAA procedures, with online access to Branch’s bank account. He was not a physician. When questioned further about Levitan, Nicholas was instructed by counsel not to answer questions about Levitan’s compensation relative to his and Scott’s, nor whether Levitan had been involved in any business owned by Nicholas before Branch.

(2) “Nothing in Nicholas’s testimony evidences fraud, nor do the unanswered verification requests. Moreover, the requests were improper. (See Is. Chiropractic Testing, P. C. v Nationwide Ins. Co., 35 Misc 3d 1235[A], 2012 NY Slip Op 51001[U], *2 [Dist Ct, 3d Dist, Suffolk County 2012] [request for documents pertinent to fraudulent incorporation defense inappropriate for verification request]”

(3) “Even if the alleged gaps in Nicholas’s testimony support an inference that Levitan earned more than him and Scott, it is consistent with Levitan, as staff, earning a salary, whereas Nicholas and Scott, as owners/shareholders, earned compensation based on the corporation’s profits. And even if Levitan was affiliated with a prior business owned by Nicholas, it proves nothing absent evidence he owned or controlled it.”

(4) Plaintiffs’ remaining allegations are unsubstantiated and based on speculation, and to the extent that plaintiffs rely on Springer’s EUO, they fail to provide or point to the pertinent portions of his testimony. Plaintiffs thus fail to establish, by clear and convincing evidence, the likelihood of success on the merits of their claim that Branch and Windsor were fraudulently incorporated and ineligible to receive no-fault benefits”

This one is interesting.  I never liked the whole directing not to answer thing.  The questions were relevant regarding compensation of the administrator of the practice.  Ultimately, the amount of his compensation relative to his bona-fide verifiable job duties would lead to legitimate verification requests for financial documents.  The Court got that wrong, simple.

As to the Court applying District Court decisions disallowing verification of financial documentation, the regulations prefer that these document exchanges take place pre-suit.  Remember the case where Supreme Court was reversed when the Court granted discovery in the form of financials during arbitration?  The Court cited 65-3.5 and 65-3.6.

I think the decision is wrong and should be appealed.  Unless, I am missing something?

By the way, I do not disagree that a practice manager could or maybe should make more than the principals.  But, the insurance carrier should have been entitled to ask more questions at the EUO and, only if the answers to the questions raise legitimate concerns, should further documentary discovery be required.

 

What do these cases have in common?

Country-Wide Ins. Co. v Castro, 2016 NY Slip Op 31505(U)(Sup. Ct. NY CO. 2016)

American Tr. Ins. Co. v Tavarez, 2016 NY Slip Op 31601(U)(Sup. Ct. NY CO. 2016)

American Tr. Ins. Co. v Garcia, 2016 NY Slip Op 31602(U)(Sup. Ct. NY CO. 2016)

All of these no-show default motions were struck by 11 NYCRR 65-3.5(d) or 65-3.5(b), 65-3.6(b).   Under the post Longevity and Tam Medical Supply cases, DJs involving IMEs and EUOs that are not scheduled upon receipt of the notice of the loss will rarely achieve the goal that is sought through a DJ, absent perjury.

The Court comments on a copy and paste job

Infinity Ins. Co. v Nazaire, 2016 NY Slip Op 31454(U)(Sup. Ct. Kings Co. 2016)

This is a PA rescission case based upon a garaging issue.  The Court caught on to something interesting.  First, the EUO of the Defendant was not annexed to the moving papers.  Second, the Court found the investigator affidavit to be hearsay.

Third, the footnote said:

“The affidavit of the plaintiffs litigation specialist appears to be, in the antiquated words of one court, a “mere mechanical job of paste pot and shears” (TC. Theatre Corp. v Warner Bros. Pictures, 113 F Supp 265, 271 [SD NY 1953], rearg denied 125 F Supp 233 [SD NY 1953]). The boilerplate text of her affidavit is formatted in regular size font, while the variables are highlighted in bold size font to make it easier for her to make changes depending on the facts of a particular claim.  Her affidavit here does not have all of the correct variables. Notably, para  23 of her affidavit refers to one Nandslie Jean Louis as the policyholder, rather than Jude.”

Interesting read.  My advice to Plaintiff insurance carrier counsel: slow down and proof read.  Being a speed demon does not make friends in the judiciary…