Severance denied

Majestic Acupuncture, P.C. v Interboro Mut. Ins. Co., 2018 NY Slip Op 51785(U)(App. Term 2d Dept. 2018)

“The decision to grant severance (see CPLR 603) is an exercise of judicial discretion which, in the absence of a party’s showing of prejudice to a substantial right, should not be disturbed on appeal (see King’s Med. Supply, Inc. v GEICO Cas. Ins. Co., 14 Misc 3d 136[A], 2007 NY Slip Op 50232[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2007]). In the instant matter, while the assignors were injured in separate accidents and defendant interposed 50 [*2]defenses in its answer, these two facts, standing alone, do not demonstrate that resolution of the claims for services rendered to plaintiff’s assignors will involve different questions of fact and law. As such, the record does not establish that the Civil Court’s denial of defendant’s motion was an improvident exercise of discretion.”

I swear there must be a different law clerk on the 15th floor who is writing these decisions.  But the real losers here will be the court system and the tax payers because now the cost to prosecute these cases decreases and the cost to defend and to process the matters increases.  Also, this decision goes against prior Appellate Term rulings and decisions from 3 of the 4 Appellate Divisions. 

I wish the Court would be more honest and cite the two Third Department cases that are on point.  Instead, they cite an 11 year old Appellate Term case that requires a quantum of proof the Appellate Divisions  never held was required to sustain a severance motion.

Now, there is one judge on the panel who lived through the old Sanders Grossman multi-suits as a Civil Court Judge.  I recall she was never a fan of the multisuits, but of course we are going back a decade.  I await to see if she signs on to these de facto per curiam opinions.

Incidentally, of the Plaintiff produced evidence in their opposition of commonality, i.e., same fee schedule issue, or same medical necessity defense, then I wold hold that severance would be improper.  But I think in these PIP actions, the Court is reversing the burden of production.

Severance granted – reality is not a rosy

High Definition MRI, P.C. v Mapfre Ins. Co. of N.Y., 2017 NY Slip Op 01800 (1st Dept. 2017)

“The court properly severed the breach of contract cause of action, since the 198 unrelated no-fault claims asserted therein raise no common issues of fact or law (see CPLR 603; Radiology Resource Network, P.C., v Fireman’s Fund Ins. Co., 12 AD3d 185 [1st Dept 2004]). Plaintiff’s contention that the defense of fraudulent incorporation presents common factual and legal issues that predominate is unavailing, since defendant has made clear that it does not intend to pursue that defense”

So two things are going to happen here.  First, Plaintiff walks away because they thought this would be a commercial action as opposed to a no-fault collection action and their shoes are too “white” to get sullied by a collections action.  Second, Mapfre gets slaughtered in interest (let alone legal fees from their counsel) because cases in Civil New York go nowhere very slowly.  By time these cases are final for trial and there is a judge ready to hear the cases, the interest factor will be at 300%.  Add in hourly attorneys fees and who is the winner here?  The expression is so true:  Win the battle, lose the _____?

Verification received? I think not.

EMC Health Prods., Inc. v National Liab. & Fire Ins. Co., 2016 NY Slip Op 50132(U)(App. Term 2d Dept, 2016)

“However, in opposition to the cross motion, plaintiff submitted an affidavit from plaintiff’s employee, which affidavit was sufficient to give rise to a presumption that the requested verification had been mailed to, and received by, defendant (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]). In light of the foregoing, there is a triable issue of fact as to whether the first, second, third and fifth causes of action are premature (see Healing Health Prods., Inc. v New York Cent. Mut. Fire Ins. Co., 44 Misc 3d 59 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]).”

Really?

Severance appropriate

Austin Diagnostic Med., P.C. v Mercury Cas. Co., 2015 NY Slip Op 51680(U)(App. Term 2d Dept. 2015)

(1)”Plaintiff commenced this action to recover first-party no-fault benefits as assignee of nine individuals. The complaint alleged separate causes of action for each assignor. Defendant moved, pursuant to CPLR 603, to sever the second through ninth causes of action into separate actions, arguing that the nine causes of action arose out of six separate motor vehicle accidents and that each of the nine causes of action involves different questions of fact and law. By order entered May 29, 2013, the Civil Court denied defendant’s motion.”

(2) “Plaintiff commenced this action to recover first-party no-fault benefits as assignee of nine individuals. The complaint alleged separate causes of action for each assignor. Defendant moved, pursuant to CPLR 603, to sever the second through ninth causes of action into separate actions, arguing that the nine causes of action arose out of six separate motor vehicle accidents and that each of the nine causes of action involves different questions of fact and law. By order entered May 29, 2013, the Civil Court denied defendant’s motion.”

(3) “defendant’s motion to sever the second through ninth causes of action into separate actions is granted”

All that is necessary is to assert through the answer that there is a different defenses and that is it.  There is no need to attach denials or to present proof that the matters involves different defenses.  But let us assume a defense moves to serve.  A Plaintiff can probably defeat the motion by attaching proof that the claim involves the same fee schedule issue or same medical necessity defense. However, standing moot will not defeat the motion.

It is John J. McGee again.

New York Cent. Mut. Ins. Co. v McGee,  2011 NY Slip Op 06253 (2d Dept. 2011)

Point one: A Malella defense (or cause of action) against different providers, despite different contracts of insurance, should be consolidated.

“The Supreme Court improvidently exercised its discretion in, sua sponte, severing the action as to the 12 PCs, and, in effect, permitting the action to continue only against Dr. McGee and 3 of the 12 PCs. “Although it is within a trial court’s discretion to grant a severance, this discretion should be exercised sparingly” (Shanley v Callanan Indus., 54 NY2d 52, 57; see Curreri v Heritage Prop. Inv. Trust, Inc., 48 AD3d 505, 507; Lelekakis v Kamamis, 41 AD3d 662, 666). Severance is inappropriate where the claims against the defendants involve common factual and legal issues, and the interests of judicial economy and consistency of verdicts will be served by having a single trial (see Bentoria Holdings, Inc. v Travelers Indem. Co., 84 AD3d 1135; Curreri v Heritage Prop. Inv. Trust, Inc., 48 AD3d at 507-508; Lelekakis v Kamamis, 41 AD3d at 666; Naylor v Knoll Farms of Suffolk County, Inc., 31 AD3d 726, 727). Here, the complaint alleged the existence of a common scheme to fraudulently incorporate the PCs through the use of Dr. McGee’s professional license, which, if established, would render all of the PCs ineligible to recover no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319-322). The common factual and legal issues presented as to whether the 12 PCs were fraudulently incorporated predominate the action and, thus, the interests of judicial economy and consistency of verdicts would be not be served by requiring the plaintiff to commence multiple actions. To the contrary, such fragmentation would increase litigation and place “an unnecessary burden on court facilities” (Shanley v Callanan Indus., 54 NY2d at 57), by requiring four separate trials instead of one.”

Point two:

Med-pay only comes into play when Basic PIP is exhausted.  I admittedly always thought that Med-pay was also triggered when Basic-PIP was denied based upon a violation of a condition precedent to coverage.

“The counterclaims are predicated on the defendants’ allegation that they are entitled to reimbursement for medical services provided under the medical payments coverage provisions of the subject insurance policies rather than the no-fault coverage provisions. However, medical payments coverage is excess coverage over mandatory no-fault coverage (see 11 NYCRR 65-1.1), and the defendants have failed to allege or otherwise demonstrate that the payments they seek exceed the no-fault threshold of $50,000 for basic economic loss of an eligible injured person for a single accident.”

Sever it.

Today, the last nail was placed in the coffin for the joining of claims from different assignors, which arise from different accidents and do not implicate a common coverage defense.

In an appeal I took up – mainly because I did not think it was fair that certain firms were not playing by the “rules” involving the joinder of claims that arise from different accidents – the Appellate Term reversed the order of Civil Court and severed the claims of the 2 assignors involved in different accidents.

In Georgetown Mind-Body Med., P.C. v State Farm Mut. Auto. Ins. Co., 2009 NY Slip Op52464(U)(2d Dept. 2009), the Appellate Term observed the following:

“The claims allegedly arose out of two separate accidents. The Civil Court denied defendant’s motion pursuant to CPLR 603 to sever the causes of action into two separate actions. Defendant’s answer clearly places at issue with respect to each assignor, among other things, the necessity and reasonableness of the particular medical services rendered. The facts relating to each claim are therefore likely to raise few, if any, common issues of fact (see Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co., 12 AD3d 185 [2004]). A severance can be properly based solely upon allegations set forth in the answer, and there is no need to demonstrate prejudice (see Ladim DME, Inc. v GEICO Gen. Ins. Co., 15 Misc 3d 139[A], 2007 NY Slip Op 50997[U] [App Term, 2d & 11th Jud Dists 2007]).”

The Fourth Department for the first time in a decade has discussed the issue of what constitues a prima facie case

In the matter of Sunshine Imaging Association/wny Mri v Government Employees Ins. Co., 2009 NY Slip Op 06984 (4th Dept. 2009), the Appellate Division, Fourth Department finally chimed in as to what constitutes a prima facie case in a no-fault action.  The last time the Fourth Department discussed this issue, they held that a plaintiff, as part of its prima facie case, needed to prove that a service was medically necessary.  It looks like the Fourth Department has now joined the other Appellate Divisions, as to the elements of a prima facie case.

The Court held as follows: “Although plaintiff made a prima facie showing of entitlement to judgment as a matter of law by submitting evidence that the prescribed statutory billing forms were received by defendant and that defendant’s payment of no-fault benefits to plaintiff was overdue (see A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779, 780; LMK Psychological Servs., P.C. v Liberty Mut. Ins. Co., 30 AD3d 727, 728), defendant raised a triable issue of fact by submitting its denial of claim forms setting forth that the services for which plaintiff sought to recover no-fault benefits were not medically necessary (see Countrywide Ins. Co. v 563 Grand Med., P.C., 50 AD3d 313, 314; A.B. Med. Servs., PLLC, 39 AD3d at 780-781).”

Finally, the Appellate Division, Fourth Department, in discussing whether severance of a joined claim was acceptable, stated the following: “Although this action was commenced “by a single assignee against a single insurer and all [causes of action] allege the erroneous nonpayment of no-fault benefits . . ., they arise from [14] different automobile accidents on various dates in which the [14] unrelated assignors suffered diverse injuries and required different medical treatment” (Poole v Allstate Ins. Co., 20 AD3d 518, 519).”

The Appellate Division, Fourth Department, at least as to severance, has followed the lead of the First and Second Departments, when it found that severance was appropriate in the above circumstance.  Notably, the Appellate Division, Fourth Department, has declined, in the severance arena, to follow Third Department precedent, which unconditionally permits the joinder of all claims against a common insurance carrier.

To those who practice in Buffalo on the Plaintiff’s side, you must be breathing a sigh of relief after reading this case.  Nobody can now ethically hold you to the Hobby v. CNA standard requiring a plaintiff to make a prima facie showing, in the first instance, that a service is medically necessary.