Key Takeaway
Court rules Mallela defense doesn't require timely denial preservation in no-fault insurance cases, contrary to plaintiff's argument in K.O. Med v USAA.
K.O. Med., P.C. v USAA Cas. Ins. Co., 2017 NY Slip Op 51089(U)(App. Term 2d Dept. 2017)
Contrary to plaintiff’s argument, a “Mallela defense” need not be preserved in a timely denial (see Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 ; All Boro Psychological Servs., P.C., 39 Misc 3d 9; First Help Acupuncture P.C. v State Farm Ins. Co., 12 Misc 3d 130, 2006 NY Slip Op 51043 ).
This should be compared with relevant First-Department precedent: Country-Wide Ins. Co. v Valdan Acupuncture, P.C., 150 AD3d 560, 560-561 (1st Dept. 2017):
“Assuming without deciding that an insurer’s defense of fraudulent incorporation cannot be precluded (see AVA Acupuncture, P.C. v AutoOne Ins. Co., 28 Misc 3d 134, 958 N.Y.S.2d 59, 2010 NY Slip Op 51350 ; Bath Med. Supply, Inc. v Allstate Indem. Co., 27 Misc 3d 92, 95, 902 N.Y.S.2d 875 ), we conclude that the master arbitrator properly confirmed the award of the arbitrator, who reviewed petitioner’s submissions relating to the plea of guilty to no-fault insurance fraud by a man married to the owner of respondent, found that respondent was not mentioned once in the “hundreds of pages” submitted, and rejected petitioner’s attempt to hold the owner “responsible by association.”
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