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Advanced Neurological Care, P.C. v. State Farm Mutual Automobile Ins. Co.

District Court of Nassau County, First District

December 12, 2012

Advanced Neurological Care, P.C. Assignee of Maria Silva, Plaintiff(s),
State Farm Mutual Automobile Ins. Co., Defendant(s).

Israel, Israel & Purdy, LLP, attorneys for Plaintiff

Richard T. Lau & Associates, Attorneys for Defendant


Plaintiff moves for summary judgment upon its claim for no-fault benefits, and defendant cross-moves for summary judgment dismissing the claim.For the reasons stated below, plaintiff's motion is DENIED, the cross-motion is GRANTED, and the action is DISMISSED as premature.

The principal issue presented by the motion and cross-motion concerns defendant's failure to give notice to plaintiff's attorneys that it was requesting verification of the claim from the plaintiff medical provider. Defendant's proof establishes that it mailed timely verification requests directly to plaintiff, but received neither the requested material nor any response. In opposing defendant's argument that plaintiff's lawsuit should be dismissed as premature, plaintiff's papers contend that defendant's verification letters should have been sent to plaintiff's attorneys pursuant to the no-fault regulations and that firm's explicit written request. Although plaintiff's contention has merit, defendant's failure to send its verification requests to plaintiff's attorneys, by itself, is legally inconsequential. Most importantly, plaintiff does not dispute that it received defendant's verification letters. In the absence of a prompt objection by plaintiff to the misdirected verification letters, plaintiff is in no position to complain about defendant's mistake. Its action, therefore, was brought prematurely, and must be dismissed.

The facts relevant to the motion and cross-motion are undisputed. By letter dated October 19, 2011, plaintiff submitted a timely claim for no-fault benefits to defendant through a letter from its attorneys, Israel, Israel & Purdy, LLP ("IIP"). The cover letter from IIP stated, in pertinent part: "in the event you require additional verification of the claim or proof of loss, then your request for the same, including medical records, should be forwarded to us, as Attorneys, and we will in turn arrange for the transmittal to you."

Plaintiff's claim was received at defendant's Ballston Spa office no later than October 21, 2011. Following receipt of the claim, defendant timely mailed a verification request to plaintiff on November 3, 2011, seeking submission of a "[l]etter of medical necessity." For reasons not explained, defendant failed to mail a copy of the letter to IIP. Instead, copies were sent only to plaintiff's assignor (Maria Silva) and her attorneys.

When no response was received within the following 30 days, defendant sent a second verification request to plaintiff on December 16, 2011. Again, defendant failed to send a copy of the letter to IIP. Again, copies were sent only to plaintiff's assignor and her attorneys.

The Court begins its analysis by assuming that no-fault insurers must ordinarily respect a provider's decision to pursue a claim through communications from and to its lawyers. Once an insurer is advised that it should communicate directly with a provider's attorneys, any such communications should be directed to those attorneys. Lawyers for parties are ethically bound to observe such a rule. See DR 7-104(A)(1) ("a lawyer shall not... communicate... with a party the lawyer knows to be represented by a lawyer in that matter unless the lawyer has the prior consent of the lawyer representing such other party..."). So, too, a debt collector who knows that a consumer is represented by an attorney is "generally obligated to communicate with the consumer only through the attorney." See Rosario v American Collective Counselling Services, Inc., 2001 WL 1045585 (MD Fla. 2001), citing 15 USC §1692c(a)(2). "In such situations, a notice to counsel satisfies the requirement that notice be sent to the consumer." Id.

Similarly, in matters involving insurance claims, where the insurer has been apprised that a claimant has counsel, appellate court decisions hold that statutory notices to the claimant may properly be sent to "the claimant's attorney, rather than to the claimant personally." See Excelsior Insurance Company v Antretter Contracting Corp., 262 A.D.2d 124, 127 (1st Dept 1999); see also St. Vincent's Hosp. v Am. Tr. Ins. Co., 299 A.D.2d 338, 339-340 (2d Dept 2002); New York Hosp. v State Farm Mut. Auto Ins. Co., 293 A.D.2d 588, 590-1 (2d Dept 2002); New York Mut. Underwriters v O'Connor, 105 A.D.2d 994, 995 (3d Dept 1984). Indeed, as the Court recognized in Lenox Hill Radiology v Global Liberty Insurance, 20 Misc.3d 434, 438 (Civ Ct NY Co 2008), "sending [a] verification request to the attorneys [of the medical provider]... [is] notice to the principal-provider as a matter of law."

In view of the foregoing, in cases where a no-fault claimant chooses to have its claim presented thru counsel, and designates counsel as its agent for receipt of requests for verification, a no-fault insurer should scrupulously respect a claimant or provider's wish that all such communications be sent to its attorneys for their response. Although the processing of a no-fault claim is not supposed to be adversarial (see 11 NYCRR 65-3.2[b]), practical realities require acknowledgment that attorneys oversee or are involved in each and every step of the process. When such attorneys are designated as a provider's agent at the claims stage, an insurer ought to honor that designation in the course of processing the provider's claim for no-fault benefits. Absent circumstances where a statute or regulation requires otherwise, the Court sees no reason why an insurer should not communicate directly with counsel for the provider.

Nothing in the no-fault regulations requires a different conclusion. Under the provisions which specifically govern verification requests, an insurer seeking verification "must follow up with the party from whom the verification was requested, either by a telephone call, properly documented in the file, or by mail." However, the regulations further provide: "[a]t the same time the insurer shall inform the applicant and such person's attorney of the reasons why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested." 11 NYCRR 65-3.6(b) (emphasis added).

Plaintiff's counsel correctly maintains that her office should be deemed "the applicant's attorney" for the purpose of receiving notice of any missing verification as required by this regulation. Pursuant to the currently prevailing case law interpretations of §65-3.6(b), a provider seeking payment through an assignment is deemed the "applicant." See Cambridge Medical, P.C. v. Progressive Ins. Co., 29 Misc.3d 186, 188-9 (Civ Ct Richmond Co. 2010), discussing East Acupuncture, P.C. v Allstate Ins. Co., 61 A.D.3d 202 (2d Dept 2009), and Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc.3d 42 (App Term, 2d Dept 2007). Moreover, defendant cannot dispute that it was aware, from IIP's initial claim letter, that IIP was representing plaintiff in connection with the instant claim. Indeed, IIP clearly placed the insurer on notice that the provider's law firm was acting as its agent for the receipt of all correspondence concerning the bills at issue. See Cambridge Medical, P.C. v. Progressive Ins. Co., supra, 29 Misc.3d at 189. Therefore, at a very minimum, defendant should have sent written notice of defendant's follow-up verification request to both plaintiff and IIP, in accordance with §65-3.6(b).

Instead of doing so, defendant merely sent copies of its letters to plaintiff's assignor and her attorney. Under the circumstances at bar, the insurer's failure to notify IIP of the request for verification is inexcusable. At least with respect to the follow-up notice, that ...

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