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Maimonides Medical Center v. First United American Life Ins. Co.

Supreme Court, Kings County

February 22, 2012

Maimonides Medical Center, Plaintiff,
v.
First United American Life Insurance Company, Defendant.

Attorneys for Plaintiff: Edward S. Kornreich, Roger A. Cohen, Proskauer Rose LLP

Attorneys for Defendant: Ellen M. Dunn, Suman Chakraborty Dewey & LeBoeuf LLP

HON. CAROLYN E. DEMAREST, J.S.C.

The following papers numbered 1 to 5 read on this motion:

Papers................................................................. Numbered:

Notice of Motion.......................................................1

Memorandum of Law in Support................................2

Affirmation in Support................................................3

Memorandum of Law in Opposition...........................4

Reply Memorandum of Law in Support......................5

Defendant First United American Life Insurance Company ("First United") moves, pursuant to CPLR 3211 (a) (1) and (7), to dismiss the second, fourth, sixth, eighth, tenth, twelfth, and thirteenth causes of action in plaintiff Maimonides Medical Center's ("Maimonides") complaint. Plaintiff alleges breach of contract and violation of Insurance Law § 3224-a (the "Prompt Pay Law") in connection with six patients that plaintiff treated who were each covered under one of defendant's supplemental Medicare insurance ("Medigap") plans. Alternatively, plaintiff pleads a single cause of action for unjust enrichment. Defendant contends that the Prompt Pay Law, which authorizes the recovery of delinquent health insurance claim payments plus interest at a rate the greater of twelve percent or the rate set by the Commissioner of Taxation and Finance for corporate taxes, contains no express or implied private right of action and that plaintiff's demands for such relief should therefore be dismissed. Defendant also argues that plaintiff's cause of action for unjust enrichment is duplicative of its breach of contract claims and is thus improper. Should the contracts be deemed invalid or inapplicable, defendant maintains, the relationship between First United and Maimonides would be too tenuous to sustain a cause of action for unjust enrichment.

BACKGROUND

At various times from 2007 until 2011, Maimonides, a not-for-profit hospital located in Brooklyn, New York, provided inpatient health care services to six patients who, during each of their hospital stays, held Medigap policies issued by insurance company First United. Each patient's policy, pursuant to state regulations establishing standardized Medigap plans, provided 100% coverage of hospitalization expenses after the patient exhausted his or her Medicare coverage, subject to a lifetime maximum of 365 additional days. [1] For the six patients, collectively, Maimonides billed First United $19, 075, 525.90 and received only $4, 078, 663.29. Plaintiff alleges that each of the six patients "entered into a binding, valid, and enforceable contract" with defendant and that each assigned his or her benefits to Maimonides. Plaintiff claims that it has provided services for which it has not received full payment and asserts six causes of action for breach of contract against defendant, one for each of the six patients. Defendant does not challenge these causes of action in the instant motion.

Plaintiff also alleges six separate causes of action for violation of the Prompt Pay Law, which provides that where an insurer is clearly liable to pay a health care claim, the health care provider or patient must be paid within 30 days of receipt of an electronically transmitted claim, or within 45 days of receipt of a claim transmitted by any other means (Insurance Law § 3224-a [a]). Where liability for the claim is not reasonably clear, the insurer must pay any undisputed portion and, within 30 days of receipt of the claim, provide either written notification specifying the reasons why it is not liable or a written request for any additional information necessary to determine its liability (Insurance Law § 3224-a [b]). An insurer that fails to abide by these standards "shall be obligated to pay to the health care provider or person submitting the claim" the full amount of the claim plus interest at the statutorily authorized rate (Insurance Law § 3224-a [c] [1]). The Prompt Pay Law authorizes the Superintendent of Insurance (now called the Superintendent of Financial Services) to investigate violations and assess civil penalties, both on his own accord and upon ...


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