The PHL right to sue for bad faith?

Haar v. Nationwide Mut. Fire Ins. Co., 918 F.3d 231, 235 (2d Cir. 2019)

“For the reasons stated, the Court hereby certifies the following question to the New York Court of Appeals:

1. Does New York Public Health Law Section 230(11)(b) create a private right of action for bad faith and malicious reporting to the Office of Professional Medical Conduct?

We invite the Court of Appeals [**9]  to reformulate this question as it sees fit or expand it to address any other issues of New York law that would assist this Court in determining whether Haar may assert a cause of action under Section 230(11)(b) against Nationwide.

It is hereby ORDERED that the Clerk of this Court transmit to the Clerk of the New York Court of Appeals this opinion as our certificate, together with a complete set of briefs, appendices, and the record filed in this case by the parties. The parties shall bear equally any fees and costs that may be imposed by the New York Court of Appeals in connection with this certification. This panel retains jurisdiction for purposes of resolving this appeal once the New York Court of Appeals has responded to our certification.”

This decision from the Second Circuit, on this diversity case in March 2019, is interesting as it relates to the within issue. I honestly was unaware that a medical provider had a right to sue for bad faith reporting under the PHL. Apparently, there is a split in the Departments and now the Court of Appeals has agreed to hear the case.

We shall see what happens.

Bifurcation?

Castro v Malia Realty, LLC, 2019 NY Slip Op 06466 (2d Dept. 2019)

(1) “For decades, trial courts in the Second Judicial Department have, as a general rule, conducted trials in personal injury actions in a bifurcated manner, with the issue of liability tried before the issue of damages. In 1979, this Court adopted a rule, binding on the trial courts in this Department, requiring that a bifurcated trial be directed unless there were “exceptional circumstances” and “good cause” for holding a single, unified trial on the issues of liability and damages (22 NYCRR former 699.14[a]). In 1986, this rule was replaced by a uniform rule applicable to trial courts throughout the state providing that “[j]udges are encouraged to order a bifurcated trial [o]n the issues of liability and damages in any action for personal injury where it appears that bifurcation may assist in a clarification or simplification of issues and a fair and more expeditious resolution of the action” (22 NYCRR 202.42[a]) “

(2)  “Nevertheless, while this Court has repeatedly stated that the determination of whether to conduct a bifurcated trial rests within the discretion of the trial court and should not be overturned absent an improvident exercise of discretion (see Wright v New York City Tr. Auth., 142 AD3d 1163Patino v County of Nassau, 124 AD3d at 739; Abrams v Excellent Bus Serv., Inc., 91 AD3d 681, 682), we have also continued to state that “[u]nified trials should only be held where the nature of the injuries has an important bearing on the issue of liability” (Wright v New York City Tr. Auth., 142 AD3d at 1163-1164 [internal quotation marks omitted]; see Parris v New York City Tr. Auth., 140 AD3d 938, 939; Patino v County of Nassau, 124 AD3d at 739; Abrams v Excellent Bus Serv., Inc., 91 AD3d at 682; Galarza v Crown Container Co., Inc., 90 AD3d 703, 703-704; Winderman v Brooklyn/McDonald Ave. Shoprite Assoc., Inc., 85 AD3d 1018, 1019; Gee v New York City Tr. Auth., 135 AD2d 778, 779) “

(3) ” For example, in Johnson v Hudson Riv. Constr. Co., Inc. (13 AD3d 864), the Third Department found that the denial of a motion to bifurcate was not an abuse of discretion under the circumstances of that case, where “if the trial was bifurcated, [the] decedent’s spouse would have to endure two trials and it is likely that two separate juries would need to be empaneled due to the coordination of expert witnesses” (id. at 865). As another example, in Sommer v Pierre (51 AD3d 464), the First Department found that the Supreme Court providently exercised its discretion in denying a motion to bifurcate because under the circumstances of that case, “fairness and convenience weigh[ed] in favor of a unified trial, which [would] serve to prevent a verdict based on undue sympathy for either party” (id. at 465).”

(4) ” There is little doubt but that the Bench and the Bar in the Second Department perceive that our precedent is, in contrast to the approach of the other departments, inflexibly, or nearly inflexibly, in favor of bifurcation. We stress today that the trial courts in the Second Department have the discretion to determine whether a personal injury trial should be unified or bifurcated in accordance with the standard set forth in the statewide rule.”

Where does this leave us? Car accident cases will probably still be bi-furcated. Trip and fall cases where an ambulance comes and statements sprinkle the records regarding how the accident occurred provide a better chance at unification. I would say the catastrophic mature of most 240 cases and the direct nexis between mode of injury and hospitalization will gravitate towards unification.

But I look forward to the trial and appellate orders as they fly through the Courts post this case.

Verification receipt

Right Aid Med. Supply Corp. v Travelers Ins. Co.. 2019 NY Slip Op 51184(U)(App. Term 2d Dept. 2019)


“The witness, a 27-year employee of defendant, testified regarding defendant’s policies and procedures for the receipt of mail, both at the Buffalo office, where certain items were sent, and the Melville office, where the claims at issue were processed.”

Implicit here, similar to the recent State Farm cases, is the ability of a claims representative, through resort to the computer system, to testify regarding the intake and mailing from any office to prove the defense.

Workers Comp

Metro Psychological Servs., P.C. v Travelers Prop. & Cas. Ins. Co., 2019 NY Slip Op 51150(U)(App. Term 2d Dept. 2019)

“Defendant proffered sufficient evidence to support its contention that there was an issue as to whether plaintiff’s assignor had been acting in the course of his employment at the time of the accident and that, therefore, workers’ compensation benefits might be available (see e.g. Arce Med. & Diagnostic Svce v American Tr. Ins. Co., 39 Misc 3d 134[A], 2013 NY Slip Op 50531[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]; Jamaica Med. Supply, Inc. v American Tr. Ins. Co., 34 Misc 3d 133[A], 2011 NY Slip Op 52371[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]; D.A.V. Chiropractic, P.C. v American Tr. Ins. Co., 29 Misc 3d 128[A], 2010 NY Slip Op 51738[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]; cf. Westchester Med. Ctr. v American Tr. Ins. Co., 60 AD3d 848 [2009]). ” ‘Since primary jurisdiction with respect to determinations as to the applicability of the Workers’ Compensation Law has been vested in the Workers’ Compensation Board,’ it is ‘inappropriate for the courts to express views with respect thereto pending determination by the board'”

Jurisdiction defenses need to specific

Masigla v Windhaven Ins. Co., 2019 NY Slip Op 51169(U)(App. Term 2d Dept. 2019)

He wrote the book, but who wrote the answer? I am not quitting my day job anytime soon…

It appears that an innocent error in an answer could produce grave results for the insurance carrier.

“As to defendant’s second argument, there is no need to consider whether defendant’s claimed lack of contacts with New York might raise an issue of personal, rather than subject matter, jurisdiction, since, pursuant to CPLR 3211 (e), an objection to personal jurisdiction is waived unless it is raised in the answer or in a pre-answer motion to dismiss the complaint, whichever comes first (see Hatch v Tu Thi Tran, 170 AD2d 649 [1991]; see also Parasconda v Club Mateem, Inc., 33 Misc 3d 141[A], 2011 NY Slip Op 52201[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]). “Absent the pursuit of either course, a defendant’s voluntary participation in litigation in which the point can be raised, in and of itself, constitutes a submission to the jurisdiction of the courts” (Gager v White, 53 NY2d 475, 488 [1981]). Here, defendant first appeared by interposing its answer, in which it raised the affirmative defense that [*2]the summons was not properly served, but was silent on the issue of personal jurisdiction due to a lack of a jurisdictional basis for the service. Thus, it waived all personal jurisdiction defenses other than the actual service of process (see Hatch, 170 AD2d at 649; Osserman v Osserman, 92 AD2d 932 [1983]).”

Personally, I think the Court court have construed that the summons was not properly served as a general personal jurisdiction defense. Not sure I agree with this Court’s holding, but my name is not on the order nor is my name Paul Kenny and my opinion does not really count.

The second basis for the decision is absolutely correct and is a lesson to everyone who tries to play the deemer does not apply to us game.

” Finally, even if, as defendant claims, it is exempt from Insurance Law § 5107, which requires certain insurers to provide no-fault coverage, defendant did not demonstrate that its policy did not provide such coverage, and, therefore, defendant did not demonstrate its entitlement to judgment as a matter of law.”

The reason as many of you coverage geeks know is that many insurance policy contains an out of state deemer provision in the insurance contract. This is separate and apart from Ins. Law 5107. Thus, absent presenting the contract of insurance, the Court properly found denied the motion as all triable issues of fact have not been eliminated.

IME no show

Acupuncture Approach, P.C. v NY Cent. Mut. Fire Ins. Co., 2018 NY Slip Op 51601(U) (App. Term 2d Dept. 2018)

I missed this one originally. And this was a big one.

” While plaintiff argues that defendant did not mail its IME scheduling letters to the correct address, defendant demonstrated that copies of the IME scheduling letters had been mailed to the attorney who represented plaintiff’s assignor with respect to the accident in question (see Great Wall Acupuncture, P.C. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 136[A], 2009 NY Slip Op 50294[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). “

Another hiccup to the briefing schedule rule

Golden Star Acupuncture, P.C. v Erie Ins. Co. of NY, 2019 NY Slip Op 50920(U)(App. Term 2d Dept. 2019)

“We note that the Civil Court did not improvidently exercise its discretion in considering the papers submitted by plaintiff in opposition to defendant’s motion, even though the opposition papers had been untimely served pursuant to the parties’ stipulation, as defendant was able to submit reply papers (see Hsu v Shields, 111 AD3d 674 [2013]; Kavakis v Total Care Sys., 209 AD2d 480 [1994]). “

So what happened in Carothers?

Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 2019 NY Slip Op 04643 (2019)

The facts are as egregious as they come. Carothers made nothing and lay people Sher and Vayman pocketed the money. Medtrex appeared to be the factor. If this were Florida, we would not have this conversation since they allow lay person ownership with a medical director. New York and New Jersey require physician ownership.

We all know how the story played out and the facts are not what should interest anyone. It is the law, or its shift that should interest you.

First, Court of appeals punted on the issue Judge Soloman raised in the initial dissent: negative inference due to Sher and Vayman pleading the fifth amendment. They appeared to want to resolve it in favor of the insurance carriers, but backed away.

Second, “A [*4]corporate practice that shows “willful and material failure to abide by” licensing and incorporation statutes (Mallela, 4 NY3d at 321) may support a finding that the provider is not an eligible recipient of reimbursement under 11 NYCRR 65-3.16 (a) (12) without meeting the traditional elements of common-law fraud.”

Comment: I never thought the carrier had to prove common-law fraud.

Third, “Insurance carriers do not have good cause to delay or deny payments of reimbursement claims on the basis of a provider’s slight divergence from licensing requirements. Here, the jury’s finding that plaintiff was in material breach of the foundational rule for professional corporation licensure — namely that it be controlled by licensed professionals — was enough to render plaintiff ineligible for reimbursement under 11 NYCRR 65-3.16 (a)(2). The trial court committed no error in refusing to issue a charge requiring a “tantamount to fraud” finding by the jury”

Comment: “material breach of the foundational rule for professional corporation licensure”. Interesting.

Fourth, “plaintiff is incorrect to characterize the improper control of plaintiff by unlicensed persons as simply an instance of improper fee splitting of the professional corporation’s profits with a nonphysician in violation of 8 NYCRR 29.1 (b) (4). Although the Appellate Division held in Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C. (134 AD3d 495, 495 [1st Dept 2015], lv denied 28 NY3d 909 [2016]) that a “fee-sharing arrangement . . . does not constitute a defense to a no-fault action,” the jury in this case determined that plaintiff was controlled by unlicensed persons, rather than merely splitting fees with them. Control of a professional corporation by nonprofessionals violates foundational New York licensing requirements and rendered plaintiff ineligible for insurer reimbursement, for exactly the same reason the medical service corporation in Mallela was ineligible for reimbursement.”

Comment: Mere violations of the Public Health Law and regulations promulgated thereto will not sufficie as a basis to withhold no-fault benefits.

Of course, this makes me wonder about the viability of the Raia case – where the owner of the clinic is a physician in good standing, cannot read films and the Second Department (Liberty Mut. Ins. Co. v Raia Med. Health, P.C., 140 A.D.3d 1029, 1031 [2d Dept. 2016]) held that sufficient violations of the the education law to withhold compensation. Where does that fit on the radar ? Or, is 65-3.16(a) clearly pure Mallela? I need more guidance.

You know DFS does NOT approve of this disclaimer

Hereford Ins. Co. v Forest Hills Med., P.C., 2019 NY Slip Op 03926 (1st Dept. 2019)

” Moreover, movant defendants failed to demonstrate a meritorious defense. The failure by the occupants of the vehicle to subscribe and return the transcripts of their examinations under oath violated a condition precedent to coverage and warranted denial of the claims (see Hertz Vehs., LLC v Gejo, LLC, 161 AD3d 549[1st Dept 2018]). “

I really find this basis to disclaim coverage disingenuous. The EIP came to the EUO, told his or her story, lied or did not lie. We go from there. I cannot fathom how the failure to return an EUO transcript – which is a sworn to document and which may be used against the deponent or the assignee as a matter of course – warrants the loss of no-fault benefits.

I am quite sure that DFS did not put the “and subscribe the same” (11 NYCRR 65-1.1[b]) language in the regulations to authorize the voiding of coverage due to the failure to sign the transcript. I also suspect this case will spur either an emergency amendment from DFS or an opinion letter. Thankfully, this appeared in the context of a motion to vacate a default, which means the Court of Appeals will not touch this matter, i.e., the failure to establish a reasonable excuse is reviewed under an abuse of discretion standard that will not be upset on appeal.

I think this basis for a disclaimer is the colloquial playing with fire.

App Term EUO cases (ad nauseam)

LMS Acupuncture, P.C. v State Farm Mut. Automotive Ins. Co., 2019 NY Slip Op 50696(U)(App. Term 2d Dept. 2019)

” Furthermore, defendant was not required to set forth objective reasons for requesting the EUOs in order to establish its prima facie entitlement to summary judgment….”

Bronx Chiropractic Care, P.C. v State Farm Ins., 2019 NY Slip Op 50700(U)(App. Term 2d Dept. 2019)

“Contrary to plaintiff’s contention, defendant was not required to set forth objective reasons for requesting EUOs in order to establish its prima facie entitlement to summary judgment”

K.O. Med., P.C. v IDS Prop. Cas. Ins. Co., 2019 NY Slip Op 50687(U)(App. Term 2d Dept. 2019)

“Plaintiff correctly argues that the initial EUO scheduling letter sent to plaintiff had been sent more than 30 days after defendant had received the claims seeking $348.80, $204.41, $148.69, and $91.42. As a result, the request was a nullity as to those claims”

BC Chiropractic, P.C. v Farmers New Century Ins. Co.,2019 NY Slip Op 50680(U)(App. Term 2d Dept. 2019)

” While the Civil Court correctly noted that defendant’s January 13, 2012 letter was a delay letter, which did not toll defendant’s time to pay or deny the claim, defendant established that initial and follow-up letters scheduling an EUO had been timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]); that plaintiff’s assignor had failed to appear on either date (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. [*2]Co., 35 AD3d 720 [2006]); and that the claim had been timely denied on that ground”

The common refrain here is that the objective basis for the EUO is not part of the an insurance carrier’s prima facie case.