DJ following a default

The doctrine of judicial notice allows appellate courts to consider matters of public record that may not have been before the trial court but affect the viability of continued litigation. When supervening events render an appeal moot or academic, appellate courts exercise discretion to take notice of those developments rather than issue advisory opinions on controversies no longer requiring resolution. The Second Department Appellate Term’s decision in Actual Chiropractic, P.C. v Global Liberty Insurance Co. demonstrates how permanent stay orders can terminate the justiciability of pending appeals in New York no-fault litigation.

Appellate courts generally decide cases based on the record developed in the trial court. However, New York law recognizes limited exceptions permitting appellate consideration of extra-record materials. Courts may take judicial notice of reliable public documents whose existence and accuracy are undisputed, including orders and judgments entered in other proceedings involving the same parties. This doctrine serves judicial economy by preventing wasteful adjudication of issues that supervening developments have rendered academic.

The permanent stay order at issue in Actual Chiropractic arose from Supreme Court’s inherent authority to prevent fraud on the court and protect the integrity of judicial proceedings. When evidence suggests a pattern of fraudulent billing or systematic abuse of the no-fault system, courts may enter broad injunctive relief prohibiting further litigation by identified providers. Such orders represent extraordinary remedies reserved for egregious circumstances where ordinary case-by-case adjudication cannot adequately protect defendants and the courts from ongoing fraudulent conduct.

Case Background

Actual Chiropractic, P.C. sued Global Liberty Insurance Co. of New York seeking no-fault benefits for services allegedly provided to an injured person. Global Liberty failed to appear and answer the complaint, resulting in entry of a default judgment in favor of Actual Chiropractic. The insurer subsequently moved to vacate the default judgment, but the Civil Court denied that motion. Global Liberty appealed both the default judgment and the order denying its motion to vacate.

While the appeal was pending before the Appellate Term, Supreme Court, Bronx County entered an order on February 9, 2018 addressing litigation involving Actual Chiropractic. That order determined that Actual Chiropractic had engaged in a pattern of submitting fraudulent claims and permanently stayed “all civil lawsuits, judgments and other proceedings that have been brought or may be brought by Actual Chiropractic, P.C.” seeking no-fault benefits under specified claim numbers, including the claim number at issue in the Global Liberty litigation.

Global Liberty appended the Supreme Court’s permanent stay order to its appellate brief, bringing it to the Appellate Term’s attention for the first time on appeal. The Appellate Term had to determine whether it could properly consider this extra-record document and, if so, what effect the permanent stay had on the pending appeal from the default judgment.

Actual Chiropractic, P.C. v Global Liberty Ins. Co. of N.Y., 2020 NY Slip Op 50185(U)(App. Term 2d Dept. 2020)

“On the instant appeal, defendant has annexed to its brief an order of the Supreme Court, Bronx County, entered February 9, 2018, which held, among other things, that all civil lawsuits, judgments and other proceedings “that have been brought or may be brought by … Actual [*2]Chiropractic, P.C.” seeking no-fault benefits under the same claim number and regarding the same assignor and motor vehicle accident as in the case at bar are permanently stayed. As a court may take judicial notice “on appeal, of reliable documents, the existence and accuracy of which are not disputed” and, generally, “of matters of public record” (Brandes Meat Corp. v Cromer, 146 AD2d 666, 667 ; see Headley v New York City Tr. Auth., 100 AD3d 700 ), this court, in the interest of judicial economy, takes judicial notice of the Supreme Court’s order entered February 9, 2018, which permanently “stays” the parties from proceeding further in the action at bar.

In light of the stay issued by the Supreme Court, this appeal has “been rendered academic as any determination on appeal[ ] would not, under the facts of this case, have a direct effect upon the parties” (Matter of Claudia G. , 71 AD3d 894, 895 ).”

Legal Significance

The Appellate Term’s decision reinforces important principles governing appellate jurisdiction and the limits of justiciability. Courts possess authority to adjudicate only actual controversies requiring resolution; they cannot issue advisory opinions on abstract questions or disputes that supervening events have mooted. When a permanent stay order prohibits continued prosecution of an action, any appeal from judgments in that action becomes academic because the appellate court’s determination cannot affect the parties’ rights or obligations.

The judicial notice doctrine applied here serves critical efficiency objectives. Requiring parties to return to the trial court to seek recognition of the stay order, followed by a new appeal if that motion were denied, would waste judicial resources and delay final resolution. By taking judicial notice of the publicly recorded stay order on appeal, the Appellate Term efficiently disposed of an appeal that the stay rendered pointless.

The decision also illustrates the serious consequences providers face when courts determine they have engaged in systematic fraud. The Supreme Court’s permanent stay order effectively shut down Actual Chiropractic’s ability to pursue any no-fault litigation involving specified claims. This remedy goes far beyond denying individual claims on their merits; it represents a judicial determination that the provider’s litigation activity itself constitutes abuse of process warranting extraordinary injunctive relief.

Practical Implications

For insurance carriers, Actual Chiropractic demonstrates the value of investigating patterns of suspicious billing activity and pursuing coordinated litigation strategies when evidence suggests systematic fraud. Rather than defending each fraudulent claim individually, insurers may seek Supreme Court’s intervention through declaratory judgment actions seeking permanent stays against providers engaged in pervasive fraudulent billing. Such relief requires substantial evidence of fraud but, when obtained, provides comprehensive protection against further litigation by bad actors.

Defense counsel should monitor whether providers opposing their clients have been subject to stay orders in other proceedings. When such orders exist, counsel should bring them to the court’s attention through judicial notice, potentially disposing of cases without need for merits adjudication. Appellate counsel should specifically research whether any supervening developments affect the justiciability of pending appeals before expending resources on substantive briefing.

For medical providers, the decision serves as a stark warning about the consequences of fraudulent billing practices. Providers who systematically submit false or inflated claims risk not only denial of those specific claims but complete prohibition from pursuing any litigation involving their services. The permanent stay remedy can effectively terminate a provider’s ability to collect no-fault reimbursement, making fraud detection and prevention essential for preserving legitimate business operations.

Providers should also understand that judgments obtained through default provide little security when underlying fraud allegations remain viable. Even after entry of a default judgment, defendants may seek vacatur and Supreme Court may enter broad stay orders that render the judgment unenforceable regardless of whether it is formally vacated.

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