Declaratory judgments: the minimum necessary to obtain collateral estoppel effect

Metro Health Prods., Inc v Nationwide Ins., 2015 NY Slip Op 25203 (App. Term 2d Dept. 2015)

The short-form order:

“[Nationwide]’s unopposed motion for a default judgment on this declaratory judgment action pursuant to CPLR 3215 is granted, there being no opposition.   Settle judgment on notice.”

The effect of the non-settled judgment

“Since the Supreme Court’s December 5, 2012 order in the declaratory judgment action did not make a declaration determining the rights of the parties involved…, but rather directed the insurer to settle the judgment on notice (which [*2]defendant did not demonstrate that it had done), the order cannot be considered a conclusive final determination. Therefore, the Supreme Court order has no preclusive effect on the instant no-fault action.”

Ultimate Health Prods., Inc. v American Tr. Ins. Co., 2015 NY Slip Op 50906(U)(App. Term 2d Dept. 2015)

“By order dated October 26, 2012, the Supreme Court granted the motion therein for a default judgment, which order stated, among other things, that “[t]his action was brought for a declaration that defendant Hiyomailys Lachapelle, (Lachapelle), and the medical provider[s] . . . of Lachapelle are not entitled to no-fault coverage with a motor vehicle accident that occurred on November 10, 2010 . . . [American Transit’s] motion for default judgment against [Lachapelle and Ultimate Health Products, Inc.] . . . is granted.”

“[T]he Supreme Court’s order is a conclusive final determination notwithstanding that it was entered on default, and res judicata applies to an order or judgment taken by default which has not been vacated”

As the reader can see, an order that does not set forth any decretal paragraphs is without probative value.

First Department upholds EUO DJ victory

Allstate Ins. Co. v Pierre, 2014 NY Slip Op 08921 (1st Dept. 2014)

“Plaintiff established that defendants are not entitled to no-fault benefits because their assignors failed to appear at scheduled examinations under oath (EUOs). This Court in Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011], lv denied 17 NY3d 705 [2011]) held that the failure to submit to requested independent medical examinations (IMEs) constitutes a breach of a condition precedent to coverage under a no-fault policy and voids coverage regardless of the timeliness of the denial of coverage (id. at 560). Although the instant case involves the failure to appear at EUOs, and not IMEs, this Court’s holding in Unitrinapplies to EUOs (see e.g. Interboro Ins. Co. v Perez, 112 AD3d 483, 483 [1st Dept 2013]; Seacoast Med., P.C. v Praetorian Ins. Co., 38 Misc 3d 127[A] [App Term, 1st Dept 2012]; Interboro Ins. Co. v Clennon, 113 AD3d 596, 597 [2d Dept 2014]). Defendants do not dispute that their assignors failed to appear at their first EUOs, and plaintiff established, through admissible evidence, that the assignors failed to appear at their second EUOs (see Arco Med. NY, P.C. v Metropolitan Cas. Ins. Co., 41 Misc 3d 140[A], 2013 NY Slip Op 52001[U], *2 [App Term, 2d Dept 2013]; Quality Psychological Servs., P.C. v Interboro Mut. Indem. Ins. Co., 36 Misc 3d 146[A], 2012 NY Slip Op 51628[U] [App Term, 2d Dept 2012]). Plaintiff also established that the statements on the record were business records (see e.g. People v Cratsley, 86 NY2d 81, 90-91 [1995]; One Step Up, Ltd. v Webster Bus. Credit Corp., 87 AD3d 1, 11-12 [1st Dept 2011]). Although plaintiff was required to show (and did show) that the assignors each failed to appeared at two EUOs (see DVS Chiropractic, P.C. v Interboro Ins. Co., 36 Misc 3d 138[A], 2012 NY Slip Op 51443[U], *2 [App Term, 2d Dept 2012]), plaintiff was not required to demonstrate that the assignors’ nonappearances were willful (see Unitrin, 82 AD3d at 561).

Defendants’ argument that plaintiff failed to establish that it had mailed the EUO notices to the assignors’ correct addresses is unpreserved (see e.g. Ta-Chotani v Doubleclick, Inc., 276 AD2d 313, 313 [1st Dept 2000]) and unavailing (see American Tr. Ins. Co. v Leon, 112 AD3d 441, 442 [1st Dept 2013]). Similarly, their argument that plaintiff waived the defense of the assignors’ nonappearance because plaintiff did not establish that it ever denied defendants’ claims is unpreserved (see 276 AD2d at 313). In any event, the argument is unavailing, as defendants’ own verified answer alleged that plaintiff had denied their claims.

Defendants failed to show that summary judgment is premature due to outstanding discovery (see Interboro, 113 AD3d at 597).”

_______________

What is crazy about this case is that I see a body of work I created both good (American Transit v. Leon; Interboro v. Clennon; Quality v. Interboro) and bad (Interboro v. Perez; DVS v. Interboro) cited herein.  Perhaps a deja vu moment for me?  I have Rybak to thank for another great appeal.  And at the rate Rybak is going, the insurance carriers will not even need an affidavit to prove they mailed something.

In actuality, I thought this was going to get reversed because the second EUO no-shows were placed on the record and the EUO bust statements were missing the Court reporter’s certificate.   Also, the record was devoid of an NF-2 or any record proof from where the address came.  Not a bad case to take up actually, but a disastrous result for the providers.  It looks like the Court took the scheduling affidavit where the EUO transcripts were deemed business records and the Court went along with it.  The Court expanded “Leon” and said the carrier does not have to provide record evidence as to where it got the addresses of the Claimants.   Clever, and indeed a good job by Allstate.  Yet, a very sloppy set of motion papers.  Quixotic.

Declaratory judgment action and Special proceeding are identical – dismissal denied

Mordini Estates, Inc. v Punto Zero, Inc., 2014 NY Slip Op 51661(U)

“In support of the branch of tenant’s motion seeking to dismiss the petition pursuant to CPLR 3211 (a) (4), tenant failed to demonstrate that the relief sought in tenant’s pending declaratory judgment action was the same or substantially the same as that sought by landlord in this holdover proceeding to recover possession. ” Dismissal on the ground of prior proceeding pending is not appropriate where substantially the same relief is not being sought in the two proceedings’ ”

The quick and dirty of this case is that where a declaratory action and the plenary action or special proceeding seek similar or the same relief, a dismissal motion may be appropriate.  I would note that the Court is Solorzano did not find the no-fault action (seeking recovery on overdue bills) and the declaratory judgment action (seeking a broad coverage based determination) are similar for purposes of this rule.

Failure to settle declaratiory judgment not fatal to summary judgment motion in underlying Civil Court action

New Milennium Medical Imagine, P.C. v. American Transit Ins. Co., Index #: 4588/13 (Civ. Ct. Kings Co. 2013)

The Appellate Term held this month that a Notice of Entry is not a necessary to enforce a judgment under a theory of collateral estoppel.  Of course, the next question to be asked is what happens when you obtain summary judgment in a declaratory judgment action, yet fail to enter a judgment on the underlying judgment?

Certain Plaintiff’s argue that the declaratory judgment is not enforceable.  Not surprisingly, certain judge’s followed that logic.  Enter Justice Ottley, who blew through the smoke and mirrors and held

“Plaintiff argues that due to defendant’s failure to demonstrate tha tit cimplied with the declaratory judgment order to settle judgment, defendant’s motion for a default judgment in the Supreme Court matter should be considered abandoned and result in the declaratory judgment order being deemed moot.  Contrary to plaintiff’s argument, the court finds that defendant’s failure to settle judgment within 60 days as proscribed, did not amount to defendant’s abandonment of the declaratory action.  Rather, defendant is entitled to settle judgment non pro tunc.  See, Elliott Zaretsky v. ok Hui Kin, et. al., 17 AD3d 455 (2d Dept. 2005)

Walking out of an EUO leads to a disclaimer and a whole lot more

American States Ins. Co. v Huff, 2014 NY Slip Op 05366 (1st Dept. 2014)

(1) “[p]laintiff’s motion for summary judgment as sought a declaration that plaintiff properly disclaimed coverage of its insured…”

(2) “Plaintiff commenced this action, in effect, seeking a declaration that it is not obligated to pay these no-fault benefits to defendants because, among other reasons, Huff failed to complete an examination under oath (EUO), as required by the subject insurance policy. Thus, plaintiff asserts that Huff breached a condition precedent to coverage under the policy, and defendant medical providers are not entitled to recover Huff’s no-fault benefits.”

(3) “We find that Supreme Court properly granted summary judgment in plaintiff’s favor. In support of its motion, plaintiff relied primarily upon Huff’s EUO, which was corroborated by the affidavit of plaintiff’s investigator who was present at the examination. The EUO established that Huff appeared for his EUO, but departed before questions regarding the accident and his injuries had been asked. The aborted EUO of Huff, the named insured, established a prima facie case that Huff had breached a condition precedent to coverage under the policy.”

(4) “In opposition, defendants do not dispute what occurred at the EUO. Instead, defendants argue that the transcript of the EUO was inadmissible. We find, however, that the EUO [*2]transcript of Huff was admissible evidence on the motion for summary judgment as it was certified by the court reporter and is considered a party admission (see Zalot v Zieba, 81 AD3d 935, 936 [2nd Dept 2011], lv denied 117 NY3d 703 [2011]))”

(5) “Insofar as defendants complain that plaintiff did not seek another EUO, the record demonstrates that Huff, represented by counsel, was advised of the ramifications of his refusal to continue the EUO, and confirmed that he understood.”

(6) “An assignee “stands in the shoes” of an assignor and thus acquires no greater rights than its assignor (see Arena Const. Co. v Sackaris & Sons, 282 AD2d 489 [2d Dept 2001]; see also Dilon Med. Supply Corp. v Travelers Ins. Co., 7 Misc 3d 927, 930 [Civ Ct, Kings County 2005]). Since the defense of the breach of a condition precedent to coverage under the policy may indisputably be raised by plaintiff against Huff, it is available as against defendants, who accepted assignments of no-fault benefits (see Hammelburger v Foursome Inn Corp., 54 NY2d 580, 586 [1981]; Losner v Cashline, L.P., 303 AD2d 647, 648 [2nd Dept 2003]).”

This is perhaps the DJ of the year so far.  So many principles of law have been established and/or confirmed.  First, the medical provider and or assignor must cooperate with the EUO, i.e., attend it and answer questions.  Second, the failure to cooperate during the EUO through walking out during it, objecting too many times, engaging in obstructionist behavior can lead to a violation of a condition precedent to coverage, provided Park v. Long Island Insurance Company warnings are set forth.

The unsettled question that may play out now is: what constitutes obstructionist behavior?  We know the outter bounds of what constitutes this behavior.  But, how many objections is required before a disclaimer may be issued?  What happens if an EIP or medical provider lies during the EUO?  How does Utica v. Timms (you can lie and not lose your benefits) work into this equation?  There a lot of unanswered questions.  In my mind, the extremes will allow for a disclaimer.  Misrepresentations and a few inappropriate objections will probably not trigger a Huff remedy.

On top of that, the contents of the EUO transcript are admissible without further foundation against the medical provider.  Counsel for Defendant was successful at making that argument in Civil Court Kings County against me a few years ago, i.e., you cannot use the contents of the EUO transcript against the innocent assignee.  I thought it was an incredulous argument, which would be shot down at the Appellate Term or Appellate Division.

Funny enough, counsel in the Civil Kings case pressed his luck in front of the First Department and rightfully saw what five learned jurists had to say about that argument.  These are all good things in my mind.

I believe that this case is probably somewhere between the ATIC dj appeals and Unitrin as to its precedential value.

 

No reasonable excuse found

DTG Operations, Inc. v Excel Imaging, P.C., 2014 NY Slip Op 05030 (1st Dept. 2014)

(1) “In this declaratory judgment action seeking a declaration that the medical provider defendants have no right to collect no-fault benefits for medical services allegedly provided to the claimant defendants, defendants-respondents failed to offer a reasonable excuse for their default and a meritorious defenseIn this declaratory judgment action seeking a declaration that the medical provider defendants have no right to collect no-fault benefits for medical services allegedly provided to the claimant defendants, defendants-respondents failed to offer a reasonable excuse for their default and a meritorious defense”

(2) “In support of their motion to vacate the default, defendants-respondents submitted, among other things, the affidavit of their office and billing manager who stated that she “d[id] not recall” any court papers on this matter, but did not deny receiving any. She further stated that the office location had moved, but did not specify whether that move occurred before or after the date reflected in the affidavits of service. She further asserted that the “summons” did not provide any information from which to link this action to the claimant treated by defendants-respondents. However, the concise, 10-page complaint named defendants-respondents and claimants as defendants in the caption and plainly states that claimants sought medical treatment from defendants-respondents for which plaintiff sought a declaration that defendants-respondents were not entitled to reimbursement.”

(3)  “Further, defendants-respondents’ proffered defense, that the examinations under oath requested by plaintiff are improper, is contrary to law” (see 11 NYCRR 65-1.1).

Another IME no-show victory shrowded in American Transit citations

Healthy Way Acupuncture, P.C. v Allstate Ins. Co.,  2014 NY Slip Op 50841(U)(App. Term 1st Dept. 2014)

“The defendant-insurer made a prima facie showing of entitlement to summary judgment dismissing the action for first-party no-fault benefits by establishing that it timely and properly mailed the notices for independent medical examinations (IMEs) to plaintiff’s assignor, and that the assignor failed to appear (see American Tr. Ins. Co. v Lucas, 111 AD3d 423 [2013]; American Tr. Ins. Co. v Solorzano, 108 AD3d 449 [2013]). In opposition, plaintiff did not specifically deny the assignor’s nonappearance or otherwise raise a triable issue with respect thereto, or as to the mailing or reasonableness of the underlying notices (see Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [2011], lv denied 17 NY3d 705 [2011]).Accordingly, when [plaintiff’s]; assignor[]; failed to appear for the requested medical exams, [defendant]; had the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued” (American Tr. Ins. Co. v Lucas, 111 AD3d at 424), and even though defendant initially denied the claims on different grounds (see Unitrin, 82 AD3d at 560).”

This is a fitting decision as the author of this appeal was my co-author in American Transit v. Solorzano, James F. Sullivan, Esq.

Finally, I was informed that Plaintiff’s main argument was that the IME letters were sent more than 15-business to 30-calendar days after receipt of no-fault billing, therefore the IME letters were not timely.  If I were writing this decision, I would state clearly that the time frames deal with the 10-day follow-up period and that the a denial is not needed.  While the Court reaches this conclusion, it never spells it out.  I believe some of the appeals from Justice Billings’ decisions will force the Court to explicitly spell out the “time frames” the Court is referencing.

EUO no-show DJ is successful (for the most part)

IDS Prop. Cas. Ins. Co. v Stracar Med. Servs., P.C., 2014 NY Slip Op 02902 (2d Dept. 2014)

It is well established that the failure to comply with the standard policy provision requiring disclosure by way of submission to an examination under oath, as often as may be reasonably required, as a condition precedent to performance of the promise to indemnify, constitutes a material breach” of the policy, precluding recovery of the policy proceeds (Bulzomi v New York Cent. Mut. Fire Ins. Co., 92 AD2d 878, 878; see Interboro Ins. Co. v Clennon, 113 AD3d 596; Argento v Aetna Cas. & Sur. Co., 184 AD2d 487, 487-488). In support of that branch of its motion which was for summary judgment, the plaintiff, upon renewal, submitted evidence establishing “that it twice duly demanded an examination under oath” from the assignees, that the assignees twice failed to appear, and that the plaintiff “issued a timely denial of the claims” arising from the assignees’ provision of medical services to the assignors (Interboro Ins. Co. v Clennon, 113 AD3d at 597). Based upon the foregoing, the plaintiff established its prima facie entitlement to judgment as a matter of law. see id.; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721).

“The assignees also failed to raise a triable issue of fact as to the reasonableness or propriety of the demands for the examinations under oath”

“In light of our determination, we need not reach the plaintiff’s remaining contention.”

The Court did not cite to Unitrin, but instead cited to Fogel and Clennon.  It appears that Clennon is now the new Westchester Lincoln, except the carrier won Clennon.  The Court punted the pure Unitrin coverage issue; my hope is that whoever brings this argument has a good record with which to work.

 

Trial De Novo reqires each award to be equal to or greater than $5000

Imperium Ins. Co. v Innovative Chiropractic Servs., P.C, 2014 NY Slip Op 50697(U)(App. Term 1st Dept. 2014)

The plaintiff insurer commenced the underlying actions, consolidated below, seeking declaratory relief and review by way of trial de novo of five separately issued master arbitrator’s awards issued in favor of defendant medical providers on their claims for first-party no-fault benefits. While Civil Court had jurisdiction to entertain the lawsuit (see CCA 212-a; Brooks v Rivera, 40 Misc 3d 133[A], 2013 NY Slip Op 51191[U] [App Term, 1st Dept 2013]), we sustain the dismissal of the consolidated actions on the merits. De novo review of a master arbitrator’s award is limited to the grounds set forth in CPLR article 75 unless the award is in the amount of $5,000 or more, in which case the dispute is subject to a “plenary judicial adjudication” pursuant to Insurance Law § 5106(b) (see Matter of Greenberg [Ryder Truck Rental], 70 NY2d 573, 576-577 [1987])

Compare this to: Liberty Mut. Ins. Co. v Bayside Pain & Rehabilitation Medicine, P.C., 39 Misc.3d 148(A)(App. Term 2d Dept. 2013)(construing DISTRICT COURT act).  I am curious why the Legislature gave a broader grant of jurisdiction in the NYCCCA as opposed to the UDCA.  As to the $5,000 rule, my only remark is that the Appellate Term has now incentivized the splitting of no-fault billings to avoid eventual de-novo review.

Declaratory judgment action given preclusive effect

Flatlands Med., P.C. v Kemper Ins. Co., 2014 NY Slip Op 50419(U)(App. Term 2d Dept, 2014)

“In support of its motion, defendant established that a declaratory judgment had been entered on default in a Supreme Court, New York County, action, which provided that the named defendants in that action, including plaintiff herein, “are not entitled to recover assigned first-party no-fault benefits stemming from the accident at issue.” As the instant action seeks to recover for assigned first-party no-fault benefits arising from the same accident at issue in the Supreme Court case, defendant’s motion was properly granted”