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…

Declaratory judgment – ability to oppose the motion en toto?


(1) “Smith lacks standing to appeal from an order granting a default judgment against Lenox, which failed to appear or answer the complaint and failed to oppose the motion for a default judgment”

(2) “Although Smith, as a named party, could have opposed Hermitage’s position on coverage (see Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 471 n [2005]), she elected to seek dismissal on procedural grounds. Thus, having been granted the relief she sought on her own behalf, and having failed to offer any substantive opposition to Heritage’s claim of untimely notice or to oppose Heritage’s request for a default judgment against Lenox, Smith was not aggrieved by that portion of the order that declared that Heritage was not obligated to defend and indemnify Lenox in the underlying action”

I am thinking that this has an effect on a declaratory judgment action when multiple defendants are named.  This stands for the proposition that through an EIP offering opposition to the dec action and showing why a default against non answering provider is wrong, (s)he can kill the dec action.  I get this from the part where it says “Smith could have opposed the position on coverage” and had the opportunity “to offer any substantive opposition to Heritage’s claim of untimely notice or to oppose Heritage’s request for a default judgment against Lenox….”


Unpleaded defense can serve as basis to move for summary judgmemnt

J.K.M. Med. Care, P.C. v Liberty Mut. Fire Ins. Co., 2016 NY Slip Op 51071(u)(App. Term 2d Dept. 2016)

“The rule is that “an unpleaded defense may serve as the basis for granting summary judgment in the absence of surprise or prejudice to the opposing party” (Sullivan v American Airlines, Inc., 80 AD3d 600, 602 [2011]). Here, defendant failed to include res judicata as an affirmative defense in its answer, or to move to dismiss the complaint on that ground pursuant to CPLR 3211 (a) (5) prior to serving its answer. Its remedy then was to move pursuant to CPLR 3025 (b) for leave to amend its answer in order to include that defense. Defendant never explicitly so moved and instead moved for summary judgment based on res judicata and also sought “such other and further relief as [the Civil Court] may deem just and proper.” As plaintiff, in opposition to defendant’s motion, failed to allege any prejudice (see Barrett v Kasco Constr. Co., 84 AD2d 555, 556 [1981], affd 56 NY2d 830 [1982]) or surprise (see CPLR 3018 [b]; Rogoff v San Juan Racing Assn., 54 NY2d 883, 885 [1981]; Renelique v State-Wide Ins. Co., 50 Misc 3d 137[A], 2016 NY Slip Op 50096[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]) resulting from defendant’s seeking summary judgment based on that unpleaded [*2]affirmative defense, under the circumstances, and in the interest of justice, we deem defendant’s answer amended to include the affirmative defense of res judicata”

The more expedient thing would be to plead all potential affirmative defenses in the initial answer.  An argument could be made that it is not proper to allege affirmative defenses that are not applicable.  Yet, the failure to plead anything under the sun leads to these types of cases.  It is better to plead everything that seems relevant and to let the adversary move to dismiss the affirmative defenses as lacking merit.  See e.g.  AutoOne Ins. Co. v Eastern Is. Med. Care, P.C., 2016 NY Slip Op 05354 (2d Dept. 2016)




Trial de novos and exhausting administrative remedies

AutoOne Ins. Co. v Eastern Is. Med. Care, P.C., 2016 NY Slip Op 05354 (2d Dept. 2016)

This case is interesting on a few levels since it addresses what could be categorized as unresolved issues involving provisions of the no-fault law that have not had much exercise in recent years.  Ironically, since the nature of the practice is more arbitration based, I am now more involved with appeals of trial de novo rulings and Article 75 rulings at the Supreme Court and the Appellate Division.  The nice part about this trend is that the carrier gets to chose the venue and I am not stuck in Civil Court.  This means the papers are read, “the briefing schedule” does not exist and real orders are generated.  Civility in practice.

This case it upon the issue of what happens when you file a master arbitration brief and chose not submit one.  Why would this happen?  Simply put, the award is in excess of $5,000 and there is no way to vacate the award through the arbitration system.  The question asked is why bother submitting a brief.  After this case, I have taken the position to put in a pro forma brief, whatever that is.  The Supreme Court did not rule on this issue but it was a large part of Defendant’s argument for dismissing the declaratory judgment action/trial de novo and seeking confirmation of the master arbitral award.

(1) The Court correctly held that: “the insurance regulations specifically provide that a master arbitration will proceed even if a party fails to appear or submit materials and that the master arbitrator must make a determination on the merits, not in favor of an appearing party solely on the default of the other party (see 11 NYCRR 65-4.10[d][8]). Thus, the plaintiff’s failure to file a brief with the master arbitrator was not determinative of whether it satisfied a condition precedent or exhausted its administrative remedies”

Secondly, how much time does an insurance carrier have to commence a trial de novo following a master arbitration award?  Supreme Court said that one only has 35-days to commence a trial de novo, relying on the uniform court rule.  The Court in applying 65-4.10(h)(2) said that the 90-day period to vacate an arbitration award would apply to this situation.

(2) “As this arbitration dispute was originally submitted to the American Arbitration Association (hereinafter AAA) and was not court-ordered, the 35-day timetable applied by the court pursuant to 28 NYCRR 28.12 was not applicable (see 22 NYCRR 28.2). Instead, the plaintiff had 90 days from the date the master arbitrator’s award was mailed to it to commence this action (seeInsurance Law § 5106[c]; CPLR 7511; 11 NYCRR 65-4.10[h][2]; see also Matter of Slater v Eagle Ins. Co., 294 AD2d at 369), and the plaintiff did so. Thus, the court erred in granting the defendant’s cross motion to confirm the award of the master arbitrator on the ground that this action was not timely commenced and in denying that branch of the plaintiff’s motion which was pursuant to CPLR 3211(b) to dismiss the third affirmative defense, which alleged that the action was not timely commenced.”

Now the case is remanded for a determination in the merits of Plaintiff’s motion for summary judgment.

EUO no-show from the First Department – lucky win by Mapfre?

Mapfre Ins. Co. of N.Y. v Manoo, 2016 NY Slip Op 04446 (1st Dept. 2016

This is an interesting one.  I believe (see below) the dissent was misconstrued.

“Plaintiff made a prima facie showing of its entitlement to summary judgment dismissing Active Care’s claim for first-party no-fault benefits by establishing that it timely and properly mailed the notices for EUOs to Manoo and that Manoo failed to appear at his initial and follow-up EUOs. The record establishes that plaintiff requested Manoo’s initial EUO by letter dated February 3, 2012. Although Active Care’s NF-3 form is dated February 7, 2012, plaintiff was entitled to request the EUO prior to its receipt thereof…..  The notification requirements for verification requests under 11 NYCRR 65-3.5 and 65-3.6 do not apply to EUOs that are scheduled prior to the insurance company’s receipt of a claim form…

Once Active Care presented its claim dated February 7, 2012, plaintiff was required to comply with the follow-up provisions of 11 NYCRR 65-3.6(b)…Plaintiff established that it fulfilled its obligation under § 65-3.6(b) by rescheduling Manoo’s EUOs within 10 days of his failure to appear at each scheduled exam (see Arco Med. NY, P.C. v Lancer Ins. Co., 37 Misc 3d 136(A) [App Term, 2d Dept 2012]). The second EUO scheduling letter was sent on February 23, 2012, which was just seven days after the February 16, 2012 nonappearance. The third EUO scheduling letter was sent on March 16, 2012, which was just seven days after the March 9, 2012 nonappearance.”

What is interesting here is that the Court I believe answered the question I thought was left open in the last EUO appeal from this Plaintiff’s law firm.  That is, remember where there were three EUO attempts (this was found in the record), the first two were appropriately scheduled and third EUO was scheduled more than 10-days after the second EUO?   Encompass Ins. Co. v. Rockaway Family Med. Care, P.C., 137 A.D.3d 582, 26 N.Y.S.3d 697 (N.Y. App. Div. 2016)

The Court now answered that the 10-day requirement applies to all follow-up EUO attempts.  Thus, Encompass (if decided today) would have been a loser.

What is also interesting is the Court again is distinguishing pre-claim and post-claim EUO protocols “after Manoo failed to appear at that EUO, and Active Care submitted its verification, plaintiff twice rescheduled the EUO in conformity with the requirements of 11 NYCRR 65-3.6(b)”  I do not understand the relevance of Active Care’s NF-3 forms as it relates to allowing the Assignor two attempts (and three here) to appear for an EUO.   This would be a red herring.

Finally, I think the majority mischaracterizes Justice Acosta’s dissent.  I read this dissent as saying that counsel for Mapfre failed to include in their moving papers an affidavit as to when Active Care’s NF-3 was received; and therefore, the motion was properly denied without regard to the lack of sufficiency of Plaintiff’s papers.  And I would say at this point, counsel for insurance carriers should know the contours of Unitrin.

It looks like Justice Acosta did not want to reward sloppy papers from an insurance carrier.  Legal papers before a Supreme Court should have more effort expended on them than that found in the value meal at the McDonalds drive-through.

“[p]laintiff failed to tender proof that it received Active Care’s verification. Thus, plaintiff did not demonstrate that it requested Manoo’s EUO subsequent to such receipt within the time prescribed in the Insurance Department Regulations (11 NYCRR) § 65-3.5[b] [“subsequent to the receipt of one or more of the completed verification forms, any additional verification required by the insurer to establish proof of claim shall be requested within 15 business days of receipt of the prescribed verification forms”] [emphasis added]). Plaintiff’s argument that it submitted evidence showing that its request for Manoo’s EUO was made prior to the date of Active Care’s claim is unavailing in the absence of proof of when the claim was received

A lucky win by Mapfre

Motion to dismiss complaint reversed – the interest clock continues

High Definition MRI, P.C. v Travelers Cos., Inc., 2016 NY Slip Op 02027 (1st Dept. 2016)

(1) “Here, the complaint standing alone failed to apprise defendant insurance companies of basic pertinent information to put them on notice of the claims against them, such as the patients treated and the insurance policies issued by defendant, under which plaintiff submitted claims for treatment rendered. However, in opposition to defendant insurance companies’ motion to dismiss, plaintiff submitted an affidavit from its principal with an exhibit attached providing such information. Thus, the complaint and affidavit submitted in opposition sufficiently apprise defendant insurance companies of the “transactions, occurrences, or series of transactions” that form the basis of the complaint (CPLR 3013).”

(2) “Contrary to defendant insurance companies’ further contention, the complaint sufficiently alleges that plaintiff is the assignee of claims under the policies issued by defendant insurance companies. Defendant insurance companies’ further contention that plaintiff failed to appear for [*2]examinations under oath, which is a condition precedent to coverage (Hertz Corp. v Active Care Med. Supply Corp., 124 AD3d 411 [1st Dept 2015]), presents a factual issue not amenable to resolution on a motion to dismiss pursuant to CPLR 3211(a)(7).”

Two points to see in this case.  First, a motion to dismiss for breach of no-fault contract requires that the pleader allege the person on whose behalf the contract is breached.  Second, the propriety of an EUO no-show defense is inappropriate on a motion to dismiss.