Account stated – failure to annex the bills requires automatic denial of motion

American Express Centurion Bank v Cutler, 2011 NY Slip Op 01227 (2d Dept. 2011)

“Here, the plaintiff failed to make a prima facie showing of its entitlement to judgment as a matter of law on the cause of action to recover on an account stated. The plaintiff’s evidentiary submissions did not include the monthly credit card billing statements which form the basis of its cause of action to recover on an account stated, and the affidavit of the plaintiff’s employee contained no facts showing that the defendant retained the subject billing statements for an unreasonable period of time without objecting to them, or that he made partial payment on the billing statements”

Assuming you are prosecuting a PIP case outside the Second Department (or a hospital case that begins in the Supreme Court in the Second Department) and the Court applies an account stated theory of liability, see the above.

Appellate Term, Second Department – first application of Matter of Carothers

Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 2011 NY Slip Op 21039 (App. Term 2d Dept. 2011)

When Carothers was decided, people on here commented that a third-party biller would now be able to establish a prima facie case provided certain prerequisites were met.  This was based upon the following language in Carothers:

“Further, although a proper foundation can be established by a recipient of records who does not have personal knowledge of the maker’s business practices and procedures, there must still be a showing that the recipient either incorporated the records into its own records or relied upon the records in its day-to-day operations”.  Andrew Carothers, M.D., P.C. v. Geico Indem. Co., 79 A.D.3d 864, 865 (2d Dept. 2010).

Admittedly, I tended to agree with the comments.  But like many, I failed to look  at the cases Carothers cited, particularly Plymouth Rock Fuel Corp.  And, I of all people should have known better because when I wrote the losing appellant’s brief in Pine Hollow v. Progressive many years ago, my main argument was consistent with Plymouth Rock: the owner or other custodian employed at the medical facility can incorporate the records of the biller, not the other way around.  I lost at that time, and perhaps that is why I acquiesced to the comments that were posted here.

In any event, the Etienne case proves that I was actually correct 7 years ago.  Perhaps now, I can sleep better at night.  The pertinent quote of Etienne is as follows:

“In each of those cases, an entity sought to admit a third party’s records into evidence, pursuant to the business records exception to the hearsay rule, through the testimony of the entity’s own employee. In the case at bar, however, it was plaintiff that sought to admit its own claim forms, pursuant to the business records exception to the hearsay rule, through the testimony of an employee of its third-party biller. Further, it appears that, in DiSalvo and Plymouth Rock Fuel Corp., the third party had a business duty to report accurate information to the entity seeking to use those records. In this case, although plaintiff’s biller asserted that plaintiff had a contractual duty to provide accurate information to its billing company, plaintiff did not submit any evidence of such a duty”.

Aside from making it almost impossible for medical practices that are not in business anymore to satisfy a prima facie case, there was something really interesting in the opinion that I have to put in here:

“Finally, the fact that the claim forms are prescribed by regulation does not render them inherently [*4]trustworthy or reliable. As recognized by the Court of Appeals, incidents of no-fault fraud are prevalent in New York, including instances where corrupt medical clinics “generate stacks of medical bills for each passenger, detailing treatments and tests that were unnecessary or never performed” (see Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854 [2003]).”

This should be contrasted to what the Appellate Term, First Department said on the exact issue, while also construing Matter of Medical Socy. of State of NY v Serio:

“Our conclusion that a plaintiff provider can use admissions obtained through a notice to admit to establish its entitlement to recover overdue assigned first-party no-fault benefits is consonant with the purposes underlying the No-Fault Law, which “were to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists” (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 860 [2003])”

Really interesting stuff.

The Appellate Division, Second Department has again held that a prima facie case involves a business record foundation for the entry of the bills into evidence

Matter of Carothers v GEICO Indem. Co. 2010 NY Slip Op 09256 (2d Dept. 2010)

“The testimony of an employee of the company that handled the plaintiff’s medical billing was insufficient to lay a foundation for the admission of the claim forms under the business records exception of the hearsay rule (see Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644)….  Since the subject documents were inadmissible, the plaintiff failed to establish its prima facie case, and the Appellate Term properly reversed the judgment in the plaintiff’s favor.”

You often have to wonder why the courts cannot be consistent on some issues, especially those that impact tens of millions of dollars of claims every year.  This prima facie issue is one of them.  I recall after Art of Healing was published, the same Appellate Division in numerous Henig Hospital cases found the existence of a prima facie case through merely the submission of a bill.  A review of any of Henig’s papers will show less of a foundation than what was probably found in the record in the above Carothers matter.

Maybe there is a separate prima facie rule for hospitals, as opposed to medical providers?

I think the answer to this riddle will some day have to be decided by the Court of Appeals.  Yet, what is to stop the Court of Appeals from adopting the majority approach and requiring affirmative proof of medical necessity and causation as part of a prima facie case?  I think the Plaintiffs bar is walking on coals when seeking further redress on this issue.

An account stated must be supported by evidence in admissible form

Velocity Invs., LLC v Cocina, 2010 NY Slip Op 06854 (4th Dept. 2010)

“We agree with defendant that Supreme Court erred in granting the motion inasmuch as plaintiff failed to submit nonhearsay evidence to support the cause of action for an account stated. We therefore modify the judgment accordingly. Although plaintiff submitted copies of credit card statements allegedly sent to defendant, who failed to pay or to object to them, plaintiff failed to lay a proper foundation for the admission of those documents as business records pursuant to CPLR 4518 (a) (see West Val. Fire Dist. No. 1 v Village of Springville, 294 AD2d 949), which was the only basis proffered by plaintiff for their admissibility.”

Those who analogize a no-fault action to an account stated cause of action should take a minute to lament at what this case says.

Be careful what you ask for: Discovery by summary judgment motion

Elmont Open MRI & Diagnostic Radiology, PC v New York Cent. Mut. Fire Ins. Co., 2010 NY Slip Op 51588(U)(Dis. Ct. Nassau Co. 2010)

I would put this case in the “be careful what you ask for” category, because the insurance carrier got what it sought.  To briefly explain, the insurance carrier filed a summary judgment motion based upon the services lacking medical reasonableness in accordance with a peer review.  Plaintiff put in answering papers, bereft of an affidavit of merit.

District court ruled that the denial was timely mailed, but the submissions in support of the summary judgment motion were insufficient to prima facie establish a lack of medical necessity.  I will get to this point later.

Somebody filed a notice of trial, a demand for a trial de novo was somewhere filed, and now this matter is on for trial.  The insurance carrier seeks to have Plaintiff prove it mailed the claim forms, and to have Plaintiff lay a business record foundation for the admission of the bills into evidence.

At trial, District Court properly forced Plaintiff to lay a business record foundation for the admission of the claim forms into evidence, since Plaintiff never previously cross-moved for partial summary judgment and this issue was never adjudicated.  The District Court, however, properly found that the insurance carrier’s summary judgment motion rendered the mailing issue moot.  The fact is a summary judgment motion is the functional equivalent of a trial.  If an affidavit states a bill was received and was denied, then it is impossible for an insurance carrier to escape that element of a plaintiff’s prima facie case during a later proceeding, i.e., the trial.

But this brings me to the title of my post.  In a medical necessity case, an insurance carrier’s properly supported motion for summary judgment, includes the following: the denials, the affidavit of the claims representative indicating proof of receipt of the bill, the mailing of the denial, the IME or peer report and the underlying medical records.  This documentary evidence affords the medical provider or injured person all the discovery they need to proceed to trial, provided the summary judgment motion is properly defeated.  Furthermore, as seen above, this documentary evidence serves the exact function of verified interrogatories or an unanswered or admitted to Notice to Admit: admission of receipt of the bill and that the claim is overdue.

This now bring me to my last point.  Were the MRI’s referred and prescribed by the chiropractor?  If they were, then the case law seems to be that the medical reasonableness is determined through the shoes of the referring expert.  I discussed this issue in previous posts.  The point being that upholding the medical necessity based solely on Dr. Liguori’s medical records seems to be improper and an end around the chiropractor’s referral for the testing.  Also, were the reviewed documents provided for in the summary judgment motion?  If they were, then summary judgment should have been granted provided: the standard factual basis and medical rationale test was met and the said documents did not negate the peer review, i.e., Hillcrest MRI.

Perhaps this case should be appealed on the latter points?

Notice to Admit is successful in District Court

Meridan Health Acupuncture, P.C. v Auto One Ins. Co., 2010 NY Slip Op 51263(U)(Dis. Ct. Suffolk 2010)

In this case, the District Court allowed a Notice to Admit to satisfy a plaintiff’s prima facie burden.  It also found that a Defendant’s really cute, but completely inappropriate response, to the notice to admit to be deemed a nullity.  The net effect, in the eyes of the District Court, was to deem the allegations set forth in the notice to admit to be deemed admitted.

I would have no problem with the court’s findings of facts and conclusions of law, provided the District Court transplanted itself to the Grand Concourse from 1850 New York Avenue.  Thus, if the District Court, Third District, Huntington Part, sat in the hypothetical District Court, Third District, Bronx Part, then one should probably applaud this opinion.  Furthermore, if the Appellate Division, Second Department overturns, in effect, Art of Healing, which many of us think is probably going to happen, then this decision would probably be correct.  But, District Suffolk sits on Long Island, and cannot disregard the law as the Appellate Term in this Department has said it to be, viz, a prima facie case requires, among other things, a business record foundation for the entry of the bills into evidence.

But if you read this decision, note how the Court avoids citing Second Department precedent (when convenient), and even cites the one and only Appellate Division, First Department case that commented on what constitutes a prima facie case.

Why don't Defendant's start to use the Notice to Admit to establish their Prima Facie? Am I missing something?

This was a comment from Jerry Maline, of Richard Lau’s office, State Farm’s in-house counsel.  This is a really astute comment, and got me thinking for a second.  Now, just follow me on this to see if my logic makes sense.

According to the Appellate Term, Second Department, Notices to Admit and Interrogatories cannot be used to establish a prima facie case.  This is because a party cannot admit the genuineness of another party’s documents, as well as use these devices to establish a complete prima facie case.  In practice, this translates to disallowing an insurance carrier to lay a business record foundation for a provider’s bills or an injured person’s bills.

The corollary to this rule is that a medical provider cannot lay a business record foundation for an insurance carrier’s denials.

In contrast to the above, we now have learned that at the Appellate Term, First Department, interrogatories and notices to admit may be used to satisfy a prima facie case, since the genuineness of the bills is not part of a provider’s prima facie case.

Now, in light of the Second Department’s  holding in Urban, viz, that a denial does not have to be “in evidence” in order to preserve the defense set forth on the denial, the only factual issue a denial presents is its timeliness.  We all know that denials, generally, are mailed on the date set forth on the denial or the next business day.  There are some variations out there, but that is the general industry standard.  In light of Central Nassau, it would seem that a provider could be charged with having sufficient knowledge to either admit or deny: 1) whether; and/or 2) when the provider received a denial.  Like anything else, this tactic will only work if the statements set forth on the Notice to Admit are properly drafted.

Since the only issue relating to an NF-10 at the Appellate Term, Second Department, involves the timeliness of the denial, it would seem to follow that a Notice to Admit can satisfy the underlying procedural issues, and allow the insurance carrier to go forward on its substantive defense.  Moreover, since an insurance carrier’s entire prima facie defense does not rest on the timeliness of a denial, it cannot be said that the Notice to Admit would go to the ultimate or heart of the disputed issue.  So, an insurance carrier can successfully use this device to demonstrate timely handling, in my opinion.

As for the Appellate Term, First Department, this is an open question.  Notwithstanding that Court’s holding that a Notice to Admit may itself satisfy a provider’s prima facie case, that court has never opined as to whether a denial must be in evidence, in order to preserve the defenses that are set forth on it.  I would imagine that the Appellate Term, First Department, would probably follow the Presbyterian v. Elrac rule and require that the denial be placed into evidence, before allowing a carrier to go forward on its substantive defenses.

In any event, the Appellate Term, First Department, at worst would only leave unresolved for trial the business record foundation issue involving the denial, besides the substantive defenses.  Admittedly, laying a business record foundation is a far easier burden than showing a document was timely mailed.

Thus, a properly drafted notice to admit should resolve the timeliness issue.  In the Second Department, this would resolve all issues involving the denial of claim form and allow the carrier to go forward on its substantive defense.  In the First Department, this would at a bare minimum eliminate the mailing issue, and possibly leave the business record issue open, as well as the underlying defense to the no-fault claim.

Why don’t Defendant’s start to use the Notice to Admit to establish their Prima Facie? Am I missing something?

This was a comment from Jerry Maline, of Richard Lau’s office, State Farm’s in-house counsel.  This is a really astute comment, and got me thinking for a second.  Now, just follow me on this to see if my logic makes sense.

According to the Appellate Term, Second Department, Notices to Admit and Interrogatories cannot be used to establish a prima facie case.  This is because a party cannot admit the genuineness of another party’s documents, as well as use these devices to establish a complete prima facie case.  In practice, this translates to disallowing an insurance carrier to lay a business record foundation for a provider’s bills or an injured person’s bills.

The corollary to this rule is that a medical provider cannot lay a business record foundation for an insurance carrier’s denials.

In contrast to the above, we now have learned that at the Appellate Term, First Department, interrogatories and notices to admit may be used to satisfy a prima facie case, since the genuineness of the bills is not part of a provider’s prima facie case.

Now, in light of the Second Department’s  holding in Urban, viz, that a denial does not have to be “in evidence” in order to preserve the defense set forth on the denial, the only factual issue a denial presents is its timeliness.  We all know that denials, generally, are mailed on the date set forth on the denial or the next business day.  There are some variations out there, but that is the general industry standard.  In light of Central Nassau, it would seem that a provider could be charged with having sufficient knowledge to either admit or deny: 1) whether; and/or 2) when the provider received a denial.  Like anything else, this tactic will only work if the statements set forth on the Notice to Admit are properly drafted.

Since the only issue relating to an NF-10 at the Appellate Term, Second Department, involves the timeliness of the denial, it would seem to follow that a Notice to Admit can satisfy the underlying procedural issues, and allow the insurance carrier to go forward on its substantive defense.  Moreover, since an insurance carrier’s entire prima facie defense does not rest on the timeliness of a denial, it cannot be said that the Notice to Admit would go to the ultimate or heart of the disputed issue.  So, an insurance carrier can successfully use this device to demonstrate timely handling, in my opinion.

As for the Appellate Term, First Department, this is an open question.  Notwithstanding that Court’s holding that a Notice to Admit may itself satisfy a provider’s prima facie case, that court has never opined as to whether a denial must be in evidence, in order to preserve the defenses that are set forth on it.  I would imagine that the Appellate Term, First Department, would probably follow the Presbyterian v. Elrac rule and require that the denial be placed into evidence, before allowing a carrier to go forward on its substantive defenses.

In any event, the Appellate Term, First Department, at worst would only leave unresolved for trial the business record foundation issue involving the denial, besides the substantive defenses.  Admittedly, laying a business record foundation is a far easier burden than showing a document was timely mailed.

Thus, a properly drafted notice to admit should resolve the timeliness issue.  In the Second Department, this would resolve all issues involving the denial of claim form and allow the carrier to go forward on its substantive defense.  In the First Department, this would at a bare minimum eliminate the mailing issue, and possibly leave the business record issue open, as well as the underlying defense to the no-fault claim.

Interesting post from the Respondent's attorney in Central Nassau

I think the blog post of Respondent’s counsel in Central Nassau, Kurt Lundgren, shows the practical side of Central Nassau and the business side of our industry.  You should definitely read it.

Interesting post from the Respondent’s attorney in Central Nassau

I think the blog post of Respondent’s counsel in Central Nassau, Kurt Lundgren, shows the practical side of Central Nassau and the business side of our industry.  You should definitely read it.