Matter of Countrywide Ins. Co. v DHD Med., P.C., 2011 NY Slip Op 05864 (1st Dept. 2011)
“Petitioner argues that respondent is a fraudulently incorporated medical services provider and therefore is not only ineligible for reimbursement of no-fault payments (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) but is also precluded from demanding arbitration pursuant to Insurance Law § 5106(b) (and the no-fault policy issued by petitioner). Contrary to this argument, the defense of fraudulent incorporation is “for the arbitrator and not for the courts” (see Matter of Nassau Ins. Co. v McMorris, 41 NY2d 701 [1977]; Matter of MVAIC v Interboro Med. Care & Diagnostic PC, 73 AD3d 667, 667 [2010]).”
I take it this was a Special proceeding commenced through an Article 75, seeking injunctive relief. I think this decision would have been different had an affirmative lawsuit been commenced seeking Mallela based relief prior to the filing of an arbitration.
I would also note that this decision should not impact IME non-coop and EUO non-coop based DJ’s since those are “coverage” cases. Mallela is a standing based issue.
