July 17, 2013
PARKVIEW MEDICAL & SURGICAL, P.C., a/a/o Joseph Howe, Plaintiff,
COMMERCE INS. CO., Defendant. No. 47305/2011.
This decision has been referenced in a table in the New York Supplement.
Bruno, Gerbino & Soriano, LLP, Melville, for defendant.
Law Offices of Emilia Rutigliano, P.C., Brooklyn, for plaintiff.
INGRID JOSEPH, J.
Index No.: 47305/2011
Motion Cal. No.: 103/104
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this Motion
| Notice of Motion and Affidavits Annexed || 1-2 |
| Cross Motion and Affidavits Annexed || 3-4 |
In this action by a provider to recover assigned first-party no fault benefits, the plaintiff seeks summary judgment, and the defendant cross moves for the same relief.
Plaintiff claims that it provided medical services to assignor, Joseph Howe (" Mr.Howe" ), for injuries that he sustained as a result of a motor vehicle accident that occurred on 11/07/09. The plaintiff established by proof in admissible form that it sent bills to the defendant for dates of service 12/09/09 to 1/06/10 ($718.17); 1/07/10 to 2/02/10 ($743.60); 2/05/10 to 3/02/10 ($743.60); and 7/06/10 to 8/14/10 ($1460.00) and that the total amount owed ($3665.98) remains outstanding.
The defendant, a Massachusetts-based insurance company, acknowledges receiving the bills and established that it sent a delay letter to plaintiff on 11/19/09 in response to the first bill for date of service 12-09/09 to 1/06/10 in the amount of $718.17. The delay letter states that the request for payment can not be satisfied due to a pending investigation into a potential policy violation. There is no evidence that the defendant sent a denial of claim form for the first bill after completing its investigation. However, the defendant demonstrated that it sent denials for the remaining bills on 2/16/10, 3/22/10, and 8/30/10, respectively. The defendant noted on each NF-10 form that the claims were denied due to plaintiff's assignor's non-cooperation based on his failure to provide documents to establish that he resides in Massachusetts. The defendant cross moves summary judgment dismissing the action on that ground.
At the outset, the court notes that the applicable Massachusetts laws conflict with New York No-Fault law. The analysis used in resolving choice of law issues in this context is the " grouping of contacts" or " center of gravity" approach ( Babcock v. Jackson, 12 N.Y.2d 473  ). This approach accommodates the competing interests in tort cases with multi-state contacts by giving controlling effect to the law of the jurisdiction based on the relationship or contact with the occurrence, or where the parties have the greatest concern with the specific issue raised in the litigation ( id. ). Upon application of this analysis, the court finds that the dispositive factors weigh in favor of applying Massachusetts law. The motor vehicle accident giving rise to this dispute occurred at the intersection of Pitkin Avenue and Hendrix Street in Brooklyn, New York. However, the insurance contract was entered into and written in Massachusetts. The defendant is a domiciliary of Massachusetts and maintains its principal place of business in that state. Additionally, Mr. Howe had a Massachusetts license, purported to have a Massachusetts address, and the vehicles (Toyota and Lexus) covered under the policy were registered in Massachusetts.
In order to avoid coverage based upon non-cooperation by an insured, the insurer bears the burden of proving (1) a substantial and material breach of the duty to cooperate; (2) actual prejudice to the insurer's interest due to the lack of cooperation, i.e., serious impairment of the insurer's investigation or defense of the action; and (3) the insurer's exercise of diligence and good faith in obtaining the insured's cooperation ( Darcy v. Hartford Ins. Co., 407 Mass. 481, 488-491  ). Even when these elements are met, the insurer will be obligated to provide coverage if the insured (or the party standing in the shoes of the insured) is able to prove that the insurer waived its right to assert the policy breach as a ground for denying liability ( Rose v. Regan, 344 Mass. 223, 229 ; Merrimack Mut. Fire Ins. Co. v. Nonaka, 414 Mass. 189, 190  ). Waiver may be inferred from the circumstances when an insurer has exercised dominion over a case, which made a significant and irrevocable change in the insured's position, without issuing a timely and effective reservation of rights and disclaimer letter ( DiMarzo v. American Mut. Ins. Co., 389 Mass. 85, 99-100  ).
Here, the defendant's underwriter, Ania Cryan, stated in her affidavit that Mr. Howe represented at the time the policy was issued that he resided at L3 Franklin Square, Randolph, Massachusetts (" Massachusetts address" ). Ms. Cryan indicated that the defendant would not have issued the insurance policy had it known that Mr. Howe resided in New York and not in Massachusetts. The defendant's claims adjuster, Melissa Thompson, also stated in her affidavit that the defendant was under the impression that Mr. Howe resided at the Massachusetts address. Ms. Thompson asserted that the defendant became suspicious, because the NF-2 application indicates that Mr. Howe's address is 126-39 146th Street, Jamaica, New York (" Jamaica, Queens address" ). Ms. Thompson did not set forth the defendant's procedures when receiving NF-2 forms, but the dates on Mr. Howe's NF-2 form appears to contradict Ms. Thompson's assertions. The NF-2 is dated 11/13/09 and bears a received stamp of 11/18/09, and the reservation of rights letter was sent on 11/13/09 to the Jamaica, Queens address. Based on these dates, it appears that the defendant sent the reservation of rights letter to Mr. Howe's Jamaica, Queens address before receiving the NF-2 application. The defendant has also failed to proffer any evidence that it sent the letter to the Massachusetts address, which is the address of record on the insurance policy according to Ms. Thompson. The court is unable to ascertain when the defendant first became aware of a potential discrepancy with Mr. Howe's residency so as to disclaim coverage on that ground. This is relevant because under Massachusetts law, the defendant could be potentially barred from disclaiming coverage on estoppel grounds, or if waiver applies ( Sweeney v. Frew, 318 Mass. 595  ). Waiver of a policy defense can be inferred from an insurer's actions, and, in the court's view, accepting premium payments from an insured when the insurer is aware of a potential policy violation or discrepancy with an insured's purported residence may estop the defendant from availing itself of the lack of coverage defense.
There is also a question as to the effectiveness of the letter that was sent to Mr. Howe. The letter indicates that the defendant is reserving its right to disclaim and to assert a defense of no coverage based upon its contention that it may have been provided with false, deceptive, misleading or incomplete information regarding the garaging of Mr. Howe's vehicles. The letter outlines provision 18 under the policy, which states, in pertinent part,
" After an accident or loss, you or anyone else covered under this policy must cooperate with us in the investigation, settlement and defense of any claim or lawsuit. We must be sent copies of all legal documents in connection with the accident or loss. Failure to cooperate with us may result in the denial of the claim."
The letter states that the defendant will need to obtain a recorded statement from Mr. Howe in reference to the garaging of his vehicles, and it states that Mr. Howe will need to provide documents showing that he resides in Massachusetts. After receiving reports from two investigators and a recorded statement from Mr. Howe, the defendant did not disclaim its obligation under the subject insurance policy based upon false, deceptive, misleading or incomplete information regarding the garaging of Mr. Howe's vehicles. Instead, the defendant disclaimed its obligations under the policy based upon its contention that Mr. Howe's did not submit the requested documentation and therefore, failed to cooperate with its investigation.
The defendant's contention that Mr. Howe failed to cooperate when applied to Massachusetts law regarding the waiver of defenses, raises several issues. First, there is no showing that Mr. Howe received the reservation of rights letter. The defendant failed to annex actual proof of mailing or provide an affidavit of an individual with personal knowledge to establish the practices and procedures that were in place at the time to ensure that such letters are sent. Ms. Thompson's conclusory statement that she mailed the letter to Mr. Howe is insufficient. Second, before receiving the NF-2 application or completed reports from its investigators, the defendant sent the letter to the Jamaica, Queens address only and not to the address of record on the insurance policy. Third, there is a notation in the letter that the defendant enclosed a self-addressed, stamped envelope for Mr. Howe to return acknowledgment of receipt of the letter. The defendant's claims adjuster, Ms. Thompson, failed to address whether a signed acknowledgment of receipt was received from Mr. Howe. Lastly, there is no showing that a reservation of rights or disclaimer letter was sent to the plaintiff, who stands in the shoes of Mr. Howe.
Assuming arguendo that Mr. Howe received the reservation of rights letter, there is no showing that the defendant exercised diligence and good faith in obtaining Mr. Howe's cooperation. The letter is vague and ambiguous as to the type of documentation required, and there is no evidence that a more detailed, follow up letter was sent to Mr. Howe before disclaiming coverage. Furthermore, the defendant has failed to demonstrate that Mr. Howe's alleged failure to submit documentation as to his proof of residency constituted a substantial and material breach of the duty to cooperate. The defendant received detailed reports from both investigators and Mr. Howe submitted to an in person, recorded interview with one of the investigators, Timothy Cunningham, on 11/20/09. When asked by Mr. Cunningham for his current address, Mr. Howe responded that he resides at L3 Franklin Square Condo, Randolph, Mass., 02368. Mr. Howe presented the investigator with a Massachusetts driver license but provided a New York area code phone number. Mr. Howe claimed that he worked full time at American Airlines (JFK Airport location) over a seventeen year period before retiring in April 2009. Mr. Howe indicated that he stayed at the Jamaica, Queens address, his mother's home, when he was working. He claimed that he did not pay rent at that address but stated that the Direct TV bill was in his name. Mr. Howe also stated that he did not pay rent or utilities at the Massachusetts address, and he acknowledged that he did not own that property. Mr. Howe told the investigator that he sometimes stays at the Massachusetts address and at his daughter's house, located at Herman Street in Roxbury, Massachusetts.
Additionally, the defendant has not established that it has or will suffer prejudice or serious impairment due to Mr. Howe's alleged failure to produce documentation. Mr. Cunningham investigated Mr. Howe's New York address, and the other investigator, Robert DiMare, investigated the Massachusetts address. In addition to the results of the in person interview with Mr. Howe, Mr. Cunningham reported that a search using Mr. Howe's social security number connected him to the Jamaica, Queens address from 1993 through November 2009. Mr. Cunningham also located Mr. Howe's bankruptcy filing from May 2005, which revealed that Mr. Howe used the Jamaica, Queens address at that time. Mr. Cunningham also indicated that a search with the New York Department of Motor Vehicles showed that Mr. Howe had a New York driver's license that expired in 1981. He also reported that Mr. Howe has received tickets for disobeying traffic devices in Brooklyn, New York on 4/13/09 and 2/02/07 as well as a parking ticket in New York City on 5/20/09. Mr. Cunningham reported further that he found a telephone listing for " Joseph N. Howe" at the Jamaica, Queens address on the Whitepages.com website. According to Mr. Cunningham, one of the neighbors near the Jamaica, Queens address indicated that Mr. Howe has resided there for several years. Mr. Cunningham reported that he observed both of the vehicles covered under the subject policy (a Toyota and Lexus) parked on a street by the Jamaica, Queens address, and he noted that the Lexus had extensive front end damage.
Mr. DiMare reported that he found no records relating to Mr. Howe at the Randolph Town Hall, Registrar of Voters Office, or Assessor's Office. He also indicated that he found nothing identifiable with Mr. Howe at the Massachusetts address after reviewing available telephone company records for that area. Mr. DiMare questioned the residents of attached townhouses to the L3 Franklin address and none were familiar with or had knowledge of Mr. Howe. Mr. DiMare interviewed Wendy Jillian of Brooks Management Company, which oversees the operation of the townhouse complex. Ms. Jillian confirmed that the property is owned by another individual and that Mr. Howe is not listed as the current or former owner. Mr. DiMare reported that he conducted a series of spot checks during the evening hours of 11/16/09 and that he did not observe either of the insured's vehicles parked in close proximity to the Massachusetts address.
Essentially, both investigators concluded in reports that were provided to the defendant (on 11/23/09 and 12/04/09) that Mr. Howe resides primarily in New York. Despite receiving the reports and a transcript of Mr. Howe's interview, the defendant disclaimed its obligation under the subject policy on the ground that Mr. Howe failed to cooperate by not submitting documentation. However, there is no showing that Mr. Howe's alleged failure to provide documentation was material and substantial, or that it impaired the defendant's investigation concerning this matter.
The defendant has submitted sufficient information to rebut plaintiff's prima facie showing regarding the outstanding bills but has failed to establish its defense of lack of cooperation based upon Mr. Howe's failure to remit documentation. The court is cognizant that Massachusetts courts have held that furnishing information known to be false and of a material nature before or at trial is a ground for disclaiming coverage based on an insured's non-cooperation ( Williams v. Travelers Ins. Co., 330 Mass. 476, 479 ; Jertson v. Hartley, 342 Mass. 597, 602  and
see Mello v. Hingham Mut. Fire Ins. Co., 421 Mass. 333 [duty to cooperate a condition precedent to affixing liability] ). However, the defendant has not raised that defense, and, even if it had, there are questions of fact as to whether the defendant waived its right to disclaim on that ground. Waiver may apply if the defendant is estopped from disclaiming coverage on equitable grounds, and there is an issue as to the effectiveness, or lack thereof, of the reservation of rights and disclaimer letters that were sent in this case.
Accordingly, plaintiff's motion and the defendant's cross motion are denied.
This constitutes the decision and order of the court.