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.

Expansion of Mallela

Liberty Mut. Ins. Co. v Raia Med. Health, P.C., 2016 NY Slip Op 04916 (2d Dept. 2016)

As I wait every week for the results of one of my appeals, I see some interesting cases.  Pat McDonnell’s firm did a solid job on this from what I can tell.  This is an issue that has vexed me for years as you will see below.

The facts of this case appear straightforward.  Dr. Raia owns a diagnostic facility but admitted in connection with his Socrates venture in affidavit form that he cannot  read MRIs or perform MRIs .  Liberty Mutual is seeking to void out receivables under a Mallela theory, and although not cited in the opinion, I suspect the thrust of the brief was in accordance with the Appellate Term, Second Department matter of Quality Medical Care, P.C. v. New York Cent. Mut. Fire Ins. Co., 26 Misc.3d 139(A)(App. Term 2d Dept. 2010), which voiced out acupuncture billing when a physician was not certified in acupuncture.  The Quality Medical Court reasoned that one cannot bill for a service the owner is unable to perform.

Quality Medical came after  Healthmakers Medical Group, P.C. v. Travelers Indem. Co., 13 Misc.3d 136(A)(App. Term 1st Dept. 2006), which on similar facts to Quality Medical said a physician owned PC owned by a non-certified acupuncturist could bill for acupuncturist services that an LAC provided, as long as it was in accordance with the LAC’s rate.

I think Healthmakers from a policy standpoint makes sense because if a physician wishes to hire people that are legally competent to perform the service, why should the owner be ineligible to receive services because although he is a physician, he lacks the skill to perform the services?  Put a slight different way, if proper insurance and safeguards are in place, then is patient safety and accuracy of the machinery sacrificed because the owner of the facility who is legally liable for the practice cannot render the service?  Consider how Article 28’s and hospitals are run before you comment.  But that is just my opinion from a policy standpoint.  I also think medical providers should have to prove prima facie medical necessity.

Legally, the Second Department followed the Quality approach, and again, I am not saying the Appellate Division did anything legally incorrect.  The opinion is well supported and fosters the competing policy goal of making sure medical corporations are in business for the care of patients and not as a vehicle to launder money.

On balance, the Second Department found the competing policy goal to trump the policy of goal of fostering easier access and less regulatory hurdles to businesses that are presumptive otherwise capable to render quality care.

Here is the bolded part of the decision of which you should be aware:

“[H]ere, the plaintiffs demonstrated a likelihood of success on the merits on their declaratory judgment causes of action. “Insurance Law § 5102 et seq. requires no-fault carriers to reimburse patients (or, as in this case, their medical provider assignees) for basic economic loss'” (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 320). However, “[a] provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York” (11 NYCRR 65-3.16[a][12]). “State law mandates that professional service corporations be owned and controlled only by licensed professionals” (One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738, 740), and provides that a professional service corporation may issue shares only to individuals, inter alia, “who are or have been engaged in the practice of such profession in such corporation or a predecessor entity” (Business Corporation Law § 1507[a]). In this case, the plaintiffs established that RMH provided only radiological services consisting of X rays, and MRI and CT scans, and produced an affidavit from Raia, in which he admitted that he had “no training or experience in the field of radiology, including the performance and/or interpretation of MRI studies and/or x-rays.” Raia also averred that he did not consider himself “competent [in] either (i) interpreting MRI studies and/or x-ray studies that are performed on patients; or (ii) supervising the interpretations of MRI studies and/or x-ray studies.” The plaintiffs also submitted an affidavit from an investigator for the plaintiff Liberty Mutual Insurance Company within its Special Investigations Unit, who concluded that RMH was merely a “reincarnation” of Socrates Medical Health, P.C. (hereinafter Socrates), a predecessor professional corporation purportedly owned by Raia which was actually controlled by a nonphysician. The investigator indicated, among other things, that Socrates’s medical director, who was also RMH’s initial medical director, had previously faced “charges by the Attorney General of New Jersey that included being employed by unlicensed MRI facilities and negligently misreading MRI studies,” and had “agreed to pay $60,000.00 and be subject to monitoring for two years.” Thus, the plaintiffs’ submissions demonstrated a likelihood of success on the merits.

Further, under the circumstances of this case, the plaintiffs demonstrated the likelihood of irreparable injury absent the granting of the preliminary injunction, based on the multiplicity of actions and arbitrations, and the risk of inconsistent results

Judicial notice of the Supreme Court file

IMA Acupuncture, P.C. v Hertz Co., 2016 NY Slip Op 50258(U)(App. Term 2d Dept. 2016)

This res judicata decision is interesting because it tests the outer of bounds of Judicial Notice.

“In any event, this court may take judicial notice of undisputed court records and files, including the judgment in the Supreme Court declaratory judgment action (see Renelique v State-Wide Ins. Co., ___ Misc 3d ___, 2016 NY Slip Op 50096[U] App Term, 2d Dept, 2d, 11th & [*2]13th Jud Dists 2016]; see also Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13 [2009]; Matter of Khatibi v Weill, 8 AD3d 485 [2004]; Matter of Allen v Strough, 301 AD2d 11 [2002]). In light of the Supreme Court’s declaratory judgment, defendant’s cross motion to dismiss should have been granted under the doctrine of res judicata”

The Court uses the word “may”.  May requires a request in your papers?

A DJ without a purpose

Permanent Gen. Assur. Co. v Thomas, 2016 NY Slip Op 30071(U)(Sup. Ct. NY. Co. 2016)

I put this DJ on the same category as the legal geniuses who brought us  “Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C.”    I will explain my rationale.  Thomas involved a 2011 motor vehicle accident and my reading of the case file showed that only active claims involved the MUA’s that the upstate facilities let by Dr. Tracy the third and his minions.  All of the other “defendants” were dead claims.  Phantom claims as of 2016.  Thus, the DJ centered around 3 or  4 claims where arbitration demands were made.  I get where the carrier was going and what defense counsel recommended or sold.  But what bugged me is that the DJ was brought in Manhattan.  There was no link to Manhattan.  The carrier does not even have an office in New York (although they are opening one) and the treatment was in Erie Country.  It was an obnoxious DJ in that there was no downstate nexus.  The result, besides making DJ’s more difficult to bring, represented a sense of poetic justice you could say.

The holding?  Well if there is an arbitration that is brought, the DJ should be dismissed.  I would note while there are a few trial court cases that say otherwise, I did not see any cited in the insurance carrier’s papers.  The other issue I would note when reviewing the DJ is that 11 NYCRR 3.5(d) is sui generis to each bill.  One cannot produce a bill that complies with 3.5(d) (a timely bill from Scott Croce was provided) and say the DJ is timely to each provider and each bill.

Happy President’s day.




Trial de novo summary judgment motion appealed

AutoOne Ins./Gen. Assur. v Eastern Is. Med. Care, P.C., 2016 NY Slip Op 00916 (2d Dept. 2016)

The reason I appealed

“Contrary to the Supreme Court’s determination, the affidavit of the plaintiff’s branch manager, submitted by the plaintiff in support of its motion for summary judgment, was sufficient to establish, prima facie, that its denial of claim forms were timely mailed in accordance with the plaintiff’s standard and appropriate office mailing practices and procedures (see Preferred Mut. Ins. Co. v Donnelly, 22 NY3d 1169; cf. Progressive Cas. Ins. Co. v Infinite Ortho Prods., Inc., 127 AD3d 1050, 1051). In opposition, the defendant failed to raise a triable issue of fact as to the timeliness of the denial of claim.”

Triable issue of fact – medical necessity

The medical necessity issue (first tine the Appellate Division, Second Department actually dealt with a Pan Chiro issue)

“Furthermore, with respect to the medical necessity of the services provided by the defendant, the plaintiff submitted affirmed medical evaluations which made a prima facie showing [*2]that the services at issue were not medically necessary (see Gaetane Physical Therapy, P.C. v Great N. Ins. Co., 47 Misc 3d 145[A], 2015 NY Slip Op 50698[U] [App Term, 2d Dept, 9th & 10th Jud Dists]; Dr. Todd Goldman, D.C., P.C. v Kemper Cas. Ins. Co., 36 Misc 3d 153[A], 2012 NY Slip Op 51713[U] [App Term, 2d Dept, 11th & 13th Jud Dists]).

However, in opposition to the motion, the defendants submitted affidavits and various medical records relating to Coyotl’s treatment which were sufficient to raise a triable issue of fact as to the necessity of that treatment (see Westcan Chiropractic, P.C. v Hertz Claim Mgt., 48 Misc 3d 133[A], 2015 NY Slip Op 51066[U] [App Term, 2d Dept, 9th & 10th Jud Dists]; Lenox Hill Radiology & Mia, P.C. v Great N. Ins. Co., 47 Misc 3d 143[A], 2015 NY Slip Op 50680[U] [App Term, 2d Dept, 9th & 10th Jud Dists]; Fine Healing Acupuncture, P.C. v Country-Wide Ins. Co., 33 Misc 3d 55 [App Term, 2d Dept]).

Accordingly, the Supreme Court properly denied the plaintiff’s motion for summary judgment, as further proceedings are necessary to determine the issue of the medical necessity of the treatment rendered to Coyotl.”

Partial summary judgment

“[f]urther proceedings are necessary to determine the issue of the medical necessity of the treatment rendered to Coyotl.”

I do not think I should have had costs awarded against me.  I accomplished what needed to get done.



DJ victory

Best Touch PT, P.C. v American Tr. Ins. Co.,2015 NY Slip Op 51789(U)(App. Term 2d Dept. 2015)

(1) October 23, 2011 accident. By order dated May 22, 2013, the Supreme Court (Julia I. Rodriguez, J.) granted ATIC’s motion for entry of a declaratory judgment, on default, declaring that ATIC was not obligated to pay any claims for no-fault benefits submitted by the parties named as defendants in the declaratory judgment action.

(2) In August 2013, plaintiff herein moved for summary judgment. Defendant cross-moved for summary judgment dismissing the complaint, contending that this action was barred by virtue of the May 22, 2013 order of the Supreme Court. Plaintiff did not oppose defendant’s cross motion. By order entered April 29, 2014, the Civil Court granted plaintiff’s motion and denied defendant’s cross motion.

(3)Based upon the May 22, 2013 order of the Supreme Court, this action is barred under the doctrine of res judicata

I recall that Judge Feinman said that since this was a First Department DJ, she did not have to follow it.  So silly.

Staged accident not proven – very sloppy papers

This just goes to show the attention to detail that is necessary in order to prevail on summary judgment on a staged accident.

Nationwide Gen. Ins. Co. v Linwood Bates III, 2015 NY Slip Op 06122 (2d Dept. 2015)

(1) The plaintiff asserted that several defendants failed to attend their scheduled depositions, which was purportedly a breach of Bates’s insurance contract with the plaintiff. The plaintiff, however, failed to submit evidence from someone with personal knowledge of the mailings of the deposition requests

(2) ” In addition, the uncertified police accident reports submitted by the plaintiff were not admissible”

(3) “Further, the unsigned and unsworn deposition transcript of the defendant Miguel Ortiz was inadmissible”

(4) ” The plaintiff submitted an affidavit of its investigator, but the investigator relied, mostly, on inadmissible evidence, and lacked personal knowledge of the facts surrounding the three collisions.”

It just does not get worse than this.  The Court pretty much stated that some people have no business filing staged accident DJ actions.  I almost imagine that if counsel had immaculate papers, a different result would arise.