DWI defense non-upheld: mailing, denials and affidavits gone awry

Westchester Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 2011 NY Slip Op 01458 (2d Dept. 2011)

If it could have gone wrong, it did.

“In opposition to the plaintiff’s motion, the defendant failed to raise a triable issue of fact as to whether it timely denied the plaintiff’s claim. The defendant’s denial of claim form NF-10 dated December 18, 2009, was fatally defective because it omitted several material items of information (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123, 1124; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564, 565; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665). The defendant also failed to submit sufficient evidence that it mailed the second denial of claim form NF-10 bearing the date December 31, 2009, to establish compliance with the 30-day period (see Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564; Hospital for Joint Diseases v Nationwide Mut. Ins. Co., 284 AD2d 374, 375).”

Denials

Five Boro Psychological Servs., P.C. v Progressive Northeastern Ins. Co.

2011 NY Slip Op 51528(U) [32 Misc 3d 136(A)]

Decided on August 4, 2011

Appellate Term, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 4, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

PRESENT: : PESCE, P.J., WESTON and STEINHARDT, JJ
2009-2456 K C.

Five Boro Psychological Services, P.C. as Assignee of GEORGETTE BECKVERMIT, Appellant,

against

Progressive Northeastern Insurance Co., Respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Dawn Marie Jimenez, J.), entered September 21, 2009. The order granted defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order granting defendant’s motion for summary judgment dismissing the complaint.

Plaintiff argues on appeal that, because defendant failed to attach a copy of the bill at issue in this case to its motion papers, the Civil Court could not have been able to identify the bill at issue and, thus, defendant’s motion should have been denied. This contention is without merit. The complaint in this matter identified the sole bill at issue (see CPLR 3013), and defendant attached the complaint to its motion papers as required by CPLR 3212 (b). Accordingly, there could not have been any question as to the identity of the bill which is the subject of this action.

Next, plaintiff correctly argues that defendant could not rely on defendant’s denial of claim forms “for the purposes of asserting the information contained within them,” such as “the dates of services, the services performed, the fees charged per service provided, etc.” However, defendant was not relying on them for that purpose. It is plaintiff’s burden, not defendant’s, to prove the elements of plaintiff’s cause of action. Defendant submitted the denial of claim form to show that it was sent and that the claim was therefore denied (see Five Boro Psychological Servs., P.C. v Progressive Northeastern Ins. Co., 27 Misc 3d 141[A], 2010 NY Slip Op 50991[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Quality Health Prods., Inc. v NY Cent. Mut. Fire [*2]Ins. Co., 27 Misc 3d 141[A], 2010 NY Slip Op 50990[U] [App Term, 2d, 11th & 13th Jud Dists 2010]). Since defendant did not submit the denial of claim form for a hearsay purpose, defendant was not required to lay a CPLR 4518 foundation for its admissibility (see Five Boro Psychological Servs., P.C., 27 Misc 3d 141[A], 2010 NY Slip Op 50991[U]; Quality Health Prods., Inc., 27 Misc 3d 141[A], 2010 NY Slip Op 50990[U]).

In view of the foregoing, and as plaintiff’s remaining contentions similarly lack merit (see Alfa Med. Supplies v Progressive Northeastern Ins. Co., 29 Misc 3d 128[A], 2010 NY Slip Op 51733[U] [App Term, 2d, 11th & 13th Jud Dists 2010]), the order is affirmed.

Word of the day: Prejudice

One of many thorny issues in PIP litigation involves the defective denial rule.  Specifically, when is a denial defective?  The test, as it has been understood, involves the making of numerous mistakes or material mistake(s) in the denial of claim form.  The test is fact specific and whenever anyone asks me whether a denial of claim form is defective, it is many times quite difficult to give a definitive answer.

Today’s case only makes the waters murkier – as if the waters weren’t contaminated enough – since the court now holds that a denial is not defective if the mistakes are: inconsequential or do not prejudice the claimant.  So, now we have more parameters to litigate within this realm of no-fault practice.

St. Barnabas Hosp. v Penrac, Inc., 2010 NY Slip Op 09122 (2d Dept. 2010):

Plaintiff argued that “[d]efendant’s denial of the claim…was invalid because the denial of claim form mistakenly identified the hospital’s collection agent, rather than the hospital, as the claimant and provider of services.”

“[w]hile the hospital based its own motion for summary judgment, and its opposition to the defendant’s motion, on its assertion that the defendant’s denial of claim form contained errors which rendered it fatally defective and a nullity (see e.g. St. Barnabas Hosp. v Allstate Ins. Co., 66 AD3d 996; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664), the errors complained of were inconsequential and posed no possibility of confusion or prejudice to the hospital under the circumstances [*2]of this case.

Counterclaim based upon precludable fraud rebuffed

Quality Psychological Servs., P.C. v GEICO Ins. Co., 2010 NY Slip Op 51423(U)(Civ Kings. 2010) Here are the five statements from this case that are important.

(1) “In an action to recover assigned first party no-fault benefits, defendant seeks leave to amend its answers, strike the notices of trial, and compel discovery, including a deposition.”

(2) “Though defendant admits that it did not deny plaintiff’s bills on the basis of fraudulent billing, it maintains that it has a cause of action to recover benefits paid under a theory of fraud or unjust enrichment.  Defendant therefore seeks leave to amend its answers to interpose counterclaims for fraud and unjust enrichment.”

(3) “Herein, defendant’s counterclaims for fraud and unjust enrichment are palpably insufficient and patently devoid of merit because the claims were not denied on the grounds of fraudulent billing.”

(4) “As all evidence indicates that the counterclaims pertain to a precluded defense, defendant may not assert them in an amended answer. See Cornell Med., P.C., 24 Misc 3d at 60 (App. Term, 2d Dept. 2009) (“In our opinion, since defendant’s proposed counterclaim [for unjust enrichment] pertains to a defense which is precluded due to defendant’s untimely denials, the Civil Court properly denied the branch of defendant’s motion seeking leave to amend the answer to assert the counterclaim.”).”

Civil Court decided to cite Cornell Medical twice, which is fine.  But does anyone out there even factually know what Cornell was about? Cornell was not about fraud.  Never was and never will be.  It involved a medical provider who believed that every visit within his practice was a consultation, and that the ground rule that limits x-ray reimbursement to 75% for each subsequent x-ray on the same date of service should not apply to that Plaintiff.   Cornell involved “greedy billing” or “stupid billing”.  However, it did not involve fraud.

The Appellate Term in Cornell made an unnecessarily broad statement when it held that a counterclaim would not be allowed for any precludable defense.  Insofar as Cornell did not involve “fraud”, the portion of the holding which held that a counterclaim would not lie upon any precludable defense, including fraud, should be read as dicta. As to this case, we never reached the merits of what the so-called fraud is.  But, if it really was fraud, then why would anyone prosecute that case?  Then again, if a civil action that seeks to recoup moneys paid out to a provider who engaged in some type of fraud may not be maintained, then perhaps I am wrong for even suggesting that this type of case should not be prosecuted.

Appellate Term holds CPLR 3212(f) relief is inappropriate under three separate circumstances

Bath Med. Supply, Inc. v Allstate Indem. Co., 2010 NY Slip Op 20059 (App. Term 2d Dept. 2010)

First, the Appellate Term, Second Department, appears to have, for the first time that  I can recall, denied a 3212(f) application when the defense is based upon a corporate structure issue.  The court found it relevant that many of the corporate documents, which the 3212(f) defense was based upon, are readily available.

Second, the portion of the 3212(f) application, which was based upon the purported need for an EBT of the assignor based upon an allegation that the assignor received the supplies, was denied since the defense may have been precluded.

Third, even if the defense was not precluded, a deposition of the assignor without a subpoena, as we know, is palpably improper.

“The court denied plaintiff’s motion for summary judgment pursuant to CPLR 3212 (f) on the ground that defendant was entitled to discovery pertaining to its contention that plaintiff had billed insurance companies for medical supplies which were never provided. However, defendant failed to make any showing that its denial of claim forms were timely mailed and that it is not precluded from raising fraudulent billing as a defense (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Consequently, the court’s determination that discovery was necessary to obtain facts relevant to this precluded defense was improper, and, thus, plaintiff’s motion for summary judgment should not have been denied on that basis.

A defense that plaintiff may be ineligible to recover no-fault benefits because it failed to adhere to applicable statutes (cf. State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) is not precluded, notwithstanding defendant’s failure to demonstrate that its denial of claim forms were timely sent. However, defendant has offered no factual basis for its contention that plaintiff was not properly incorporated as a provider of durable medical equipment or failed to obtain any license that may have been required at the time it delivered medical equipment to its assignor. Further, in light of the availability of public records documenting plaintiff’s licensing status, defendant “failed to demonstrate that discovery was needed in order to show the existence of a triable issue of fact (see CPLR 3212 [f])” (Delta Diagnostic Radiology, P.C. v Interboro Ins. Co., 25 Misc 3d 134[A], 2009 NY Slip Op 52222[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; see also Corwin v Heart Share Human Servs. of NY, 66 AD3d 814, 815 [2009] [summary judgment should be deferred pending discovery only when the opponent “offer[s] an evidentiary basis to suggest that discovery might lead to relevant evidence and that facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff”]).”

We note that, insofar as the order conditioned the grant of defendant’s cross motion on the nonappearance of plaintiff’s assignor for an examination before trial, the order was improper. As plaintiff’s assignor is neither a party to this action nor under plaintiff’s control (Leon v Martinez, 84 NY2d 83, 88 [1994]; Cardtronics, LP v St. Nicholas Beverage Discount Ctr., Inc., 8 AD3d 419, 420 [2004]; 6A NY Jur 2d, Assignments §§ 59, 85), the sanctions provided by CPLR 3126 (3) for nondisclosure cannot be imposed on plaintiff for failing to produce its assignor for an examination before trial (MIA Acupuncture, P.C. v Mercury Ins. Co., ___ Misc 3d ___, 2009 NY Slip Op 29509 [App Term, 2d, 11th & 13th Jud Dists 2009]).

The failure to specifically object to a deficiency in a denial of claim form at the nisi prius court forever waives this objection

This is not a new concept.   If you do not preserve your objection, then you waive the right to challenge the proffered piece of evidence.  In the no-fault context, we saw it in Continental v. Mercury, where Plaintiff’s failure to specifically object to the admissibility of an affidavit rendered the argument waived.  There also are a legion of 2309(c) cases where this issue crops up.  Also, in a case that never seems to get noticed, the Appellate Division in St. Vincent’s Hosp. & Medical Center v. Nationwide Mut. Ins. Co., 42 AD3d 523 (2d Dept. 2007), addressed a similar issue as set forth below:

“The Supreme Court correctly denied that branch of the motion which was for summary judgment in favor of St. Vincent’s on the first cause of action. The Supreme Court correctly concluded that the defendant issued a timely denial of claim on the prescribed N-F 10 form…and, accordingly, raised a triable issue of fact on the first cause of action

We decline to consider the issue of the adequacy of the defendant’s denial of claim, and specifically, St. Vincent’s argument that the N-F 10 form failed to adequately set forth the reason that the nofault claim was denied. St. Vincent’s raised this issue for the first time in its reply papers, and there is no evidence that the defendant had an opportunity to submit a sur-reply.”

While St. Vincent did not discuss the issue regarding raising issues for the first time on appeal, the reasoning of the Appellate Division and the fact pattern in St. Vincent bears a striking resemblance to this interesting case that was decided immediately prior to Christmas, 2009 entitled Mid Atl. Med., P.C. v Electric Ins. Co., 2009 NY Slip Op 52597(U) (App. Term 2d Dept. 2009):

Plaintiff further argues that defendant is precluded from relying upon plaintiff’s untimely notice of claim because defendant’s denial of claim form did not advise plaintiff that “late notice will be excused where the applicant can provide reasonable justification of the failure to give timely notice,” as required by Insurance Department Regulations (11 NYCRR) § 65-3.3 (e). Said issue was likewise raised for the first time on appeal, as it differs from plaintiff’s contention in the Civil Court, which did not challenge the sufficiency of defendant’s denial of claim form but, [*2]rather, asserted that defendant did not demonstrate that plaintiff had failed to provide a reasonable justification for the untimely notice of claim. Consequently, this contention by plaintiff is similarly waived. Accordingly, the order is affirmed.”

A general challenge to a denial’s validity is insufficient.  The appellate courts require that this challenge be specific to the denials’ purported deficiency.

What really happened in St. Barnabus v. Allstate

I previously posed on this case.  I was trying to figure out what the factual basis was behind the following Appellate Division holding: “Contrary to Allstate’s contention, however, the Supreme Court properly determined that the denial of claim, which incorrectly stated the amount of the claim and gave an invalid reason for the denial was fatally defective”

I examined the motion papers at the Nassau County Clerk’s office and copied the relevant portions of the affirmations, affidavits and exhibits that comprised the underlying motion practice.  If you wish to download these papers, click on the hyperlink that follows this sentence. St. Barnabus motion papers

What appeared to have happened was that the carrier did not obtain written notice of the loss within 30-days of the loss (“30-day rule defense”).  However, there was oral notification of the loss.  The carrier after obtaining oral notification of the loss then sought to obtain an NF-2.  While this was happening, the Hospital (a few months after the loss), submitted a bill.  The bill was submitted more than 45-days after the discharge of the patient from the hospital.

The bill was timely denied based upon the 30-day rule defense.  Perhaps the carrier meant to also deny the bill upon the 45-day rule defense?  Furthermore, the amount stated on the denial was the full UB-92 amount, and not the DRG rated amount.

Upon reading the motion papers, there appeared to be a viable 30-day rule defense.  The claims affidavit annexed to the moving papers, however, failed to set forth in a non-conclusory fashion that written notice was not given within 30-days.  The affidavit focused on the failure to obtain an NF-2, despite Allstate’s valiant attempts to obtain the same.  We all know that written notice of loss may take the form of a police report, holographic correspondence or other means.  In other words, an NF-2 is just one way to obtain written notice of the loss.  Thus, a request to obtain an NF-2 is a verification request (Olympic Chiropractic, P.C. v. American Transit Inc. Co. 14 Misc.3d 129[A][App. Term 2d Dept. 2007]), which is satisfied upon receipt of an NF-2 or NF-5.

Yet, in this case, the record suggests that there was no written proof of loss prior to receipt of the NF-5.

I therefore think that the issue in this case was not so much that the denial was defective, but that the insurance carrier’s affidavit was lacking in substance.  The record revealed a viable 30-day rule defense.  Thus, as frequently happens in no-fault practice, the validity of the defense is contingent upon the language of the affidavit.  Here, the language of the affidavit was insufficient.

The Materiality of the Mistake in the Denial Renders it Per Se Invalid

St. Barnabus Hosp. v. Allstate Ins. Co., 2009 NY Slip Op 07824 (2d Dept. 2009)

“Contrary to Allstate’s contention, however, the Supreme Court properly determined that the denial of claim, which incorrectly stated the amount of the claim and gave an invalid reason for the denial

Note that this case does not really change the governing law as it relates to what is required to be stated on a denial to preserve the underlying defense.  First, there is an “and” in the holding of the decision, which denotes that multiple defects or omissions are usually required to render a denial invalid.  Second, the case clearly holds that the failure to articulate in the denial what the proffered defense was is fatal per se.

First: the “and” in the holding of this decision comes from the line of cases which held that a denial was invalid because of multiple mistakes and omissions that appeared on the face of the denial.  Those cases were cited in the decision: Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d at 565 (2d Dept. 2006); Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d at 665 (2d Dept. 2006).

Second: the defect here involved the failure to state the correct defense.  In all areas of law, this defect in and of itself will render an otherwise timely disclaimer invalid.  This should be contrasted, however, with the situation where the denial correctly states the general reason of the defense but does not give explicit details regarding the defense. In the situation that I bolded, the denial will be deemed valid.  A.B. Medical v. Liberty Ins. Co., 39 AD3d 779 (2d Dept. 2009)(appraising the carrier of the medical necessity defense); Al Correa Neurologist, P.C. v. State Farm Ins. Co., 15 Misc.3d 140 (App. Term 1st Dept. 2009)(same).  The rule that has developed is that a denial, which does not put the medical provider on notice of what the underlying defense is, will be deemed invalid per se.

This case reinforces the two rules regarding the facial validity of denials that have developed over the last 5 years: (1) Numerous mistakes or omissions will be render the denial invalid; and (2) Failing to state the proper reason (or any reason) for denying benefits in the disclaimer will render the ensuing denial invalid per se.

For more insight on this topic, see No-Fault Paradise.

A no fault claim representative's affidavit may cure inaccuracies in the NF-10 form

We kind of saw it in a previous post involving a Mercury case where a claim representative’s sworn affidavit could explain typographical errors in a resulting NF-10. Some wondered why the Appellate Term never expounded on this point. Now, they have.

Bath Med. Supply, Inc. v Country Wide Ins. Co.
2009 NY Slip Op 51145(U)(App. Term 2 Dept. 2009)

The highlights are as follows:

“Plaintiff contends that defendant’s opposing papers did not establish that the claim determination period was tolled because, while the affidavit of defendant’s no-fault litigation supervisor sets forth the dates on which the verification requests were mailed, the denial of claim forms set forth incorrect dates as to when final verification was requested. However, the unsworn denial of claim forms do not purport to state the dates on which defendant first requested verification, whereas, in the sworn affidavit, defendant’s no-fault litigation supervisor states the dates on which verification was first requested, the dates on which the verification was received and the dates on which the denial of claim forms were mailed. To the extent the unsworn denial of claim forms suggest that defendant may have sent a further request for verification after receiving the verification it initially sought, they do not contradict the sworn statement by defendant’s no-fault litigation supervisor or otherwise nullify defendant’s position that the claim determination period was tolled.”

My observation is that the days of challenging denials for typographical errors have ended. We saw this starting with AB v. Liberty and extending through Al Correa v. State Farm, as well as other cases decided subsequent to Al Correa.

I suppose the best questions to ask are as follows. First, how much of an NF-10 needs to be filled out in order to preserve the defense(s) on it? Second, how many mistakes are allowed to be present on the NF-10, so as to preserve the defenses on the denial? We shall await the answer to these questions.

A no fault claim representative’s affidavit may cure inaccuracies in the NF-10 form

We kind of saw it in a previous post involving a Mercury case where a claim representative’s sworn affidavit could explain typographical errors in a resulting NF-10. Some wondered why the Appellate Term never expounded on this point. Now, they have.

Bath Med. Supply, Inc. v Country Wide Ins. Co.
2009 NY Slip Op 51145(U)(App. Term 2 Dept. 2009)

The highlights are as follows:

“Plaintiff contends that defendant’s opposing papers did not establish that the claim determination period was tolled because, while the affidavit of defendant’s no-fault litigation supervisor sets forth the dates on which the verification requests were mailed, the denial of claim forms set forth incorrect dates as to when final verification was requested. However, the unsworn denial of claim forms do not purport to state the dates on which defendant first requested verification, whereas, in the sworn affidavit, defendant’s no-fault litigation supervisor states the dates on which verification was first requested, the dates on which the verification was received and the dates on which the denial of claim forms were mailed. To the extent the unsworn denial of claim forms suggest that defendant may have sent a further request for verification after receiving the verification it initially sought, they do not contradict the sworn statement by defendant’s no-fault litigation supervisor or otherwise nullify defendant’s position that the claim determination period was tolled.”

My observation is that the days of challenging denials for typographical errors have ended. We saw this starting with AB v. Liberty and extending through Al Correa v. State Farm, as well as other cases decided subsequent to Al Correa.

I suppose the best questions to ask are as follows. First, how much of an NF-10 needs to be filled out in order to preserve the defense(s) on it? Second, how many mistakes are allowed to be present on the NF-10, so as to preserve the defenses on the denial? We shall await the answer to these questions.