DJ went south

Unitrin Advantage Ins. Co. v All of NY, Inc., 2018 NY Slip Op 00810 (1st Dept. 2018)

In the approximately  10 years, since Unitrin brought the notion of the condition precedent DJ.  And now, 9 years later, it has almost been destroyed on a less than stellar record.  You should read the record and then look at the oral argument (nobody asked a question except to point certain documentation was missing and it continued with the apology that it was a long day).

Point I

“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, Unitrin was still required to provide sufficient evidence to enable the court to determine whether the notices it served on Dr. Dowd for the EUOs satisfied to the timeliness requirements of 11 NYCRR 65—3.5(b) and 11 NYCRR 65—3.6(b) (see Kemper Independence Ins. Co. v Adelaida Physical Therapy, P.C., 147 AD3d 437, 438 [1st Dept 2017], citing Mapfre Ins. Co. of N.Y. v Manoo, 140 AD3d 468, 470 [1st Dept 2016]). The bills for the first and second dates of medical services, May 15, 2013, and May 22, 2013, were both received by Unitrin on June 17, 2013. In accordance with 11 NYCRR 65-3.5(b), Unitrin had 15 business days to request the EUO, or by July 1, 2013. Unitrin’s July 15, 2013 scheduling letter, even if properly mailed, was not timely as to either date of service.”

Two problems here.  First this was a provider EUO.   The record discloses, establishes and  discuss the fact that the patient EUO gave cause (allegedly) for the provider EUOs.  Yet, no discussion of that timeline was set forth in the motion (see Quality v. Utica – allowing the tolling of a provider EUO based upon a prior patient EUO).  I don’t get it.  the EUO process started before the received billing.  Had this been discussed, the 3.5(b) issue would be non-existent and I think the case would have been affirmed.

Also, did counsel discuss the one day off the back for each day between 15 business days and 30-calendar days?  I sense that discussion did not occur.

Point II

Now, a bad global denial is fatal? ” The second examination date, August 12, 2013, is not mentioned, and therefore did not sufficiently apprise the provider as to the reason for denial (see Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 664-665 [2d Dept 2004]).”

It is like anything else – some cases need to settle.  This was one of them – watch the argument and you will see what I mean.  Luckily, Manoo settled or the First Department DJ as we know it would probably be dead.  That was a complete disaster in motion.

I think Defendant is entitled to attorney’s fees if the EIP was a driver or insured.

Many issues here will await another fully contested appeal.





EUO no-show: Declaratory Judgment substantiated

Hertz Vehs. LLC v Significant Care, PT, P.C., 2018 NY Slip Op 00456 (1st Dept. 2018)

The affidavit of the Hertz claims handler personally assigned to this claim, as corroborated by the NF-10 denial of claim form (Wausau Bus. Ins. Co. v 3280 Broadway Realty Co. LLC, 47 AD3d 549, 549 [1st Dept 2008]; see also American Tr. Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 842 [1st Dept 2015]), stated that the date Pavlova’s bill was received by the insurer was July 18, 2014. Hertz therefore established its compliance with 11 NYCRR 65-3.5(b) by generating the first EUO scheduling letter within 15 days of receipt of the provider’s bill, and compliance with 11 NYCRR 65-3.6(b), by generating the second EUO scheduling letter less than 10 days after the first nonappearance on August 7, 2014.

Hertz also established proof of mailing because it included an affidavit of service, which was executed by the person who mailed the EUO notices and who attested that each was mailed by regular mail to the address provided on the claimant’s claim form, as well as to claimant’s attorney, in a “postpaid, properly addressed wrapper, in an official depository under the exclusive care and custody of the United States Postal Service within the State of New York” (see American Tr. Ins. Co. v Lucas, 111 AD3d 423, 424 [1st Dept 2013]; see also Deluca v Smith, 146 AD3d 732, 732 [1st Dept 2017]).

Pavlova’s argument, raised for the first time on appeal, that the second EUO nonappearance date was not a non-appearance because the claimant’s counsel was present, and because there was a statement on the record which not only acknowledged claimant’s nonappearance, but also agreed to reschedule the EUO, is unpreserved and unavailing.

Failure to cooperate

Country-Wide Ins. Co. v Gotham Med., P.C., 2017 NY Slip Op 07538 (1st Dept. 2017)

(1) “The refusal by defendant’s principal, Dr. Alexandre Scheer, to answer questions at an examination under oath (EUO) about his compliance with a consent agreement and order he had entered into with the Office of Professional Medical Conduct (OPMC) constituted a failure to comply with the request for an EUO, a condition precedent to coverage under the insurance policy (see Hertz Corp. v Active Care Med. Supply Corp., 124 AD3d 411 [1st Dept 2015]).”

This is the second time the Appellate Division opined on the issue of not answering questions at the EUO.  The intentional refusal to comply “voided” coverage.

(2) “Defendant also argues that plaintiffs had no independent right to determine whether Scheer was in compliance with the consent agreement and order and that any determination by them of noncompliance would not render him “unlicensed” to practice medicine. This argument is unavailing. The consent agreement and order provides that any medical practice in violation of the term permitting Scheer to practice only when monitored “shall constitute the unauthorized practice of medicine.” An unlicensed health care provider is ineligible to receive no-fault reimbursement (11 NYCRR 65-3.16[a][12]), and an insurer may make a good faith determination that a medical provider assignee seeking no-fault benefits is ineligible to receive such benefits (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 322 [2005]).”

The facts on this one were highly advantageous to the insurance carrier.  You had a wounded warrior, tried to put the dagger into him and he refused to allow that to occur.

(3) “Defendant waived the defenses of res judicata and award and arbitration (CPLR 3211[e]; see Mayers v D’Agostino, 58 NY2d 696 [1982]). While the arbitral awards in its favor were not issued until after it had filed its answer in this action, there is no indication on the record before us that defendant ever moved to amend its answer to assert either of those defenses.”

I think this is the most important point to take from this case.  It is the danger of being forced to allow these matters to proceed to arbitration.

The sad man’s DJ

Mapfre Ins. Co. of N.Y. v Soltanov, 2017 NY Slip Op 31520(U)(Sup. Ct. NY Co. 2017)

We previously discussed that the poor man’s DJ that did not go over too well.  This is the sad man’s DJ.  I read the papers last weekend.  Justice Bluth, who is not afraid to call out fraud (V.S. Med. Servs., P.C. v. Allstate Ins. Co., 11 Misc. 3d 334, 335 [Civ. Ct. 2006], was not impressed either.

The allegations are far reaching and serious.  And to be honest, I would not be surprised if they may be true.   It pleads common law fraud and Mallela causes of action at its base.  Following that, it pleads causes of action based upon “self referral” and “independent contractor actions”.  The former is never actionable on a no-fault claim (Allstate Prop. & Cas. Ins. Co. v. New Way Massage Therapy P.C., 134 A.D.3d 495 [1st Dept 2015], leave to appeal denied, 28 N.Y.3d 909 [2016]).  The latter is only actionable if the claim is timely denied on that basis.

Thus, this is a Mallela and fraud case.

The evidence is the DOH admonishing Dr. Arguilles, SIU investigators discussing matters (some of which is clearly outside their expertise) and an expert who says the billing is fraudulent.  Missing was what you need to prove this type of case: EUO testimony and claims specific evidence to back up the allegations.  An expert who opines on matters without a factual basis is guilty of promoting junk science.    I learned that – in all places- at  matrimonial CLE.

For instance, I just read a Rico on an Allstate case.  Putting aside the substantive issue in that case of whether pattern act mail fraud was committed, presented was EUO testimony to attempt to prove some of the allegations presented in the complaint.

This DJ is based upon information and belief and innuendo.  So, while I give myself the title for the poor man’s DJ, this should get the award for the sad man’s DJ.

As a stay was not granted and discovery (should the matter survive a 3211[a][7] motion and appeal) will be ongoing, this looks to be an exercise in something.

The poor man’s DJ is no more

Fresh Acupuncture, P.C. v Interboro Ins. Co., 2017 NY Slip Op 27214 (App. Term 2d Dept. 2017)

The Appellate Term about seven years ago gave us  Five Boro Psychological Servs., P.C. v AutoOne Ins. Co., 27 Misc.3d 89 (App. Term 2d Dept. 89), which broadly gave Civil Court DJ jurisdiction for matters involving insurance companies where the amount in dispute is less than $25,000.   Today, that Court took it away from us.  So goes the “poor man” DJ, i.e., $45 for an index number, no motion fee and no RJI fee.

As to a background on this, we obtained a judgment from Supreme Court that various providers were not entitled to no-fault benefits for whatever the reason was.  We never knew about Fresh Acupuncture.  Remembering Five Boro, I said, lets bring a poor man’s DJ in Manhattan.  Apparently, this new panel of judges believe CCA 212-a should be given a narrow reading.  Well, what can I say, they wear the robes; I am just a practitioner who keeps a blog and writes tons of motions and appeals.

But I think the real issue here is with the trial de-novos that rumor has certain firms like to bring in Civil New York.  It would seem like the smart practitioner would default on those and move to confirm the underlying arbitration award in Civil Court, Queens County.

I have no real opinion as to whether this decision is “right” or “wrong”.  I think practically, the lower courts should all have broad subject matter jurisdiction of matters that is within their monetary limits.  I also think the concept of a Village Court and Town Court should be abolished.  Term limits would be nice.  Thus, I am voting to hold a constitutional convention this election day.

Manoo goes up

Mapfre Ins. Co. of N. Y. v Manoo, 2016 NY Slip Op 86914(U)(1st Dept. 2016)

“Defendant-respondent having moved for reargument of, or in the alternative, for leave to appeal to the Court of Appeals, from the decision and order of this Court, entered on June 9, 2016 (Appeal No. 126),

Now, upon reading and filing the papers with respect to the motion, and due deliberation having been had thereon, It is ordered that the motion, to the extent it seeks reargument, is denied. The motion, to the extent it seeks leave to appeal to the Court of Appeals, is granted and this Court, pursuant to CPLR 5713, certifies that the following question of law decisive of
the correctness of its determination, has arisen, which in its opinion ought to be reviewed by the Court of Appeals:

“Was the order of this Court, which reversed the order of the Supreme Court, properly made?”

This Court further certifies that its determination was made as a matter of law and not in the exercise of discretion.”



Proof insufficient to comply with 65-3.5(b), 65-3.6(b)

Liberty Mut. Insurance Co. v K.O. Med., P.C., 2016 NY Slip Op 06166 (1st Dept. 2016)

Violation of 3.5(b); 3.6(b)

(1)  Plaintiffs seek, inter alia, a declaration that defendant is not entitled to no-fault insurance benefits because it failed to appear for examinations under oath (EUOs). However, plaintiffs failed to demonstrate that the EUOs were properly noticed (see e.g. Interboro Ins. Co. v Perez, 112 AD3d 483 [1st Dept 2013]). Counsel’s affirmation may be sufficient proof that the requests for EUO were mailed (see Liberty Mut. Ins. Co. v Five Boro Med. Equip., Inc., 130 AD3d 465 [1st Dept 2015]), but neither the affirmation nor anything else in the record establishes that the requests were mailed in accordance with the time frames set forth in the no-fault implementing regulations. Under the circumstances, the timeliness of plaintiffs’ claim denials is immaterial (see Interboro Ins. Co., 112 AD3d 483).

In this case, the insurance carrier sought to EUO the provider regarding  various bills that were received from numerous Assignors  If you read the papers, there is no mention of when the billing was received.  There was proof of mailing of the EUO letters and uncertain bust statements.  The court in light of the recent holdings correctly found that there was no evidence that the EUO’s were timely scheduled relative to the receipt of the bills

Failure to prove the no-show

(2) “Plaintiffs also failed to establish prima facie defendant’s failure to appear for the EUOs. The transcripts submitted to show defendant’s failure to appear on certain dates were uncertified and unsworn (see Rue v Stokes, 191 AD2d 245, 246-247 [1st Dept 1993]), and no evidence was submitted with respect to the other dates.”

This struck me as odd since the proofs in this case were neither better nor worse than the proofs in Allstate v. Pierre.  The carrier should have put a business record foundation paragraph for the EUO bust statements in the affidavit.  Of course, Pierre would have been decided differently under the current standard of law.

This could be chronicled under the headline: the perils of DJs when people answer.

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.


Supreme Court got it wrong but I saw a tactical error in the EUO

State Farm Mut. Auto. Ins. Co. v Thompson, 2016 NY Slip Op 51222(U)(Sup. Ct. Kings Co. 2016)

This was a  non-contact DJ Case.  Plaintiff relied on the EUO of its insured who said he never hit the EIP.  The EUO was properly sworn to.  The court held that the EUO was inadmissible.  I will just say look at where the opinion came from.

My bewilderment centers around what happened at the EUO of the insured.  At this EUO, the interlocutor discussed the EUO that took place of the EIP.  And what was missing from the motion? The EUO of the EIP.

Now, I get it: the EIP says the insured driver hit her.  The driver says otherwise.  Why put in evidence that will defeat a prima facie showing?  I get that.  My problem is that when you confront your insured about what happened at the EUO of the EIP, you invite a Court to ask for what? The EUO of the EIP.  And of course, that EUO will defeat a 3212(b) application and a 3215(f) application.

Just an observation.

Unpleaded affirmative defense is sufficient

Metro Health Prods., Inc. v Nationwide Ins., 2016 NY Slip Op 51122(U)(App. Term 2d Dept. 2016)

“Nationwide had no basis to assert the defenses of collateral estoppel and res judicata before January 28, 2013, when the declaratory judgment was entered in the Supreme Court (see 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]). While plaintiff contended in the Civil Court that Nationwide had failed to move to amend its answer, the answer may be deemed amended to include the affirmative defenses of collateral estoppel and res judicata (see Barrett v Kasco Constr. Co., 84 AD2d 555 [1981], affd 56 NY2d 830 [1982]), and a waiver of such defenses (see CPLR 3211 [e]) will not result where, as here, the defendant’s failure to assert the defenses in its answer did not take the plaintiff by surprise (see Renelique, 50 Misc 3d 137[A], 2016 NY Slip Op 50096[U]; see e.g. Olean Urban Renewal Agency v Herman, 101 AD2d 712, 713 [1984]; see also Rogoff v San Juan Racing Assn., 77 AD2d 831 [1980], affd 54 NY2d 883 [1981]). We note that, notwithstanding plaintiff’s conclusory assertion of prejudice, an examination of the record reveals none. “Indeed, 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]; see also Lerwick v Kelsey, 24 AD3d 918, 919 [2005]; Allen v Matthews, 266 AD2d 782 [1999])” (Renelique, 50 Misc 3d 137[A], 2016 NY Slip Op 50096[U], *1).

Consequently, in light of the Supreme Court’s declaratory judgment, the Civil Court properly granted Nationwide’s motion for summary judgment under the doctrine of res judicata (see EBM Med. Health Care, P.C. v Republic W. Ins., 38 Misc 3d 1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), as any judgment in favor of plaintiff in this action would destroy or impair rights or interests established by the judgment in the declaratory judgment action (see Schuylkill Fuel Corp. v Nieberg Realty Corp., 250 NY 304, 306-307 [1929]; Flushing Traditional Acupuncture, P.C. v Kemper Ins. Co., 42 Misc 3d 133[A], 2014 NY Slip Op 50052[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]; EBM Med. Health Care, P.C., 38 Misc 3d at 2)”

We have seem this before.  And we will see it again.