Mallela Depositions: When New York Courts Compel No-Fault Doctors to Testify

No-fault insurance litigation often reveals fascinating patterns when you examine the cases over time. Certain medical professionals, particularly those involved with medical provider corporations, appear repeatedly in appellate decisions concerning deposition requirements and disclosure issues. This case involving RLC Medical P.C. and Dr. Collins exemplifies how the same players continue to surface in disputes over examination before trial (EBT) obligations.

The Appellate Term’s decision here follows established precedent regarding when medical professionals must submit to depositions in connection with Mallela-related challenges to medical necessity. These cases often involve complex questions about the relationships between doctors and medical corporations, particularly when issues of medical necessity are disputed by insurance companies.

The Decision

Jason Tenenbaum’s Analysis:

RLC Med., P.C. v Allstate Ins. Co., 2010 NY Slip Op 51962(U)(App. Term 2d Dept. 2010)

By virtue of reading these opinions, religiously, for about 7 years, it amazes me that I continually see the same names of doctors who the Appellate Term compels to attend depositions on Mallela related issues. Dr. Collins has lately become a regular, and this case follows every other RLC medical I have come across lately.

I know through reading thousands of NF-3’s, EMG reports and other testing data, Dr. Collins seems to have been involved in many of these P.C.’s. I also recall a case a few years back where Dr. Collins was an independent contractor for the one and only A.B. Medical.

The more things change, the more they stay the same.

What a Mallela Deposition Is

The shorthand “Mallela” comes from the Court of Appeals’ decision in State Farm v. Mallela, which held that a medical professional corporation that is fraudulently incorporated — that is, one that is nominally owned by a licensed physician but actually owned or controlled by unlicensed individuals — is not eligible to recover no-fault benefits. The no-fault regulation, 11 NYCRR 65-3.16(a)(12), codifies the same principle: a provider is not entitled to reimbursement if it fails to meet New York’s licensing requirements.

Because corporate ownership and control are facts peculiarly within the provider’s knowledge, insurers raising a Mallela defense routinely seek discovery on those issues. That discovery typically includes demands for corporate, tax, and banking records, and — as in this case — an examination before trial (EBT) of the physician who owns the professional corporation on paper. An EBT is simply New York practice’s term for a deposition: sworn testimony taken before trial under CPLR Article 31, which permits disclosure of all matter material and necessary to the prosecution or defense of an action.

When a provider sues an insurer for unpaid no-fault bills and the insurer has articulated a Mallela-type defense, courts will generally compel the provider’s principal to appear and answer questions about who actually runs the practice, who profits from it, and how it is managed. A provider that refuses to produce its principal for a court-ordered deposition risks preclusion or dismissal of its claims as a discovery sanction.

Why This Matters

For insurance carriers, Mallela discovery is one of the few tools available to test whether a billing entity is what it claims to be. The NF-3 verification of treatment forms, EMG reports, and other testing records that flow through no-fault claims can reveal patterns — the same physicians lending their names and signatures to multiple professional corporations, or working as “independent contractors” across several entities. Those patterns are often what prompts a carrier to demand depositions in the first place.

For legitimate medical providers, the lesson cuts the other way. A provider whose corporate structure is clean has little to fear from a Mallela deposition, but it cannot simply ignore one. Once the Appellate Term has affirmed an order compelling a physician’s appearance, continued non-compliance jeopardizes the entire portfolio of that provider’s pending collection cases. And because the same defense can be raised in case after case, an adverse finding on fraudulent incorporation in one action can have consequences far beyond a single bill.

For injured patients, these disputes are mostly invisible — the fight is between the provider that took an assignment of benefits and the carrier. But the integrity questions underlying Mallela litigation are part of why the no-fault system polices who may bill it.

Practical Takeaways

• A Mallela defense opens the door to discovery into a medical professional corporation’s true ownership and control, including depositions of its nominal owner.
• Appellate courts in the Second Department have repeatedly compelled physicians to appear for EBTs on these issues; resisting a properly grounded demand is rarely a winning strategy.
• Recurring names across multiple professional corporations and NF-3 forms are precisely the kind of pattern that draws carrier scrutiny and motion practice.
• Providers facing Mallela discovery should treat compliance seriously — discovery sanctions can sweep across an entire inventory of collection cases.

Related Resources

• Fraudulent procurement defense precluded — our cluster hub on fraud-based defenses in New York no-fault litigation
• The firm’s Legal Encyclopedia — plain-language explainers on New York no-fault and civil practice
• No-Fault Defense practice — how we defend carriers in no-fault litigation and arbitration
• Hello Mrs. Collins
• Medical Necessity and Peer Review Requirements in New York No-Fault Cases
• How far do we take collateral estoppel?