Key Takeaway
New York court rejects GEICO's fraud counterclaim in no-fault case, ruling claims precluded due to untimely denial of benefits on fraud grounds.
This article is part of our ongoing fraud coverage, with 29 published articles analyzing fraud issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
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.”
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(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 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.
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Legal Context
Why This Matters for Your Case
New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.
Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,353 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.
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Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
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