Civil Court of the City of New York, Kings County
November 21, 2013
Natural Therapy Acupuncture, P.C., a/a/o ADA OKIKA, Plaintiff,
State Farm Mutual Automobile Insurance Company, Defendant.
Attorneys for Plaintiff NATURAL THERAPY ACUPUNCTURE, P.C. a/a/o ADA OKIKA The Rybak Firm, PLLC
Attorneys for Defendant STATE FARM MUTUAL INSURANCE COMPANY McDonnell & Adels, PLLC
Carol Ruth Feinman, J.
Recitation, as required by CPLR §2219(a), of the papers considered in the review of this Notice of Motion for Summary Judgment:
Notice of Motion and Affidavits Annexed (Plaintiff)...........1 & 2 [Exh. 1-5]
Opposition and Affidavits Annexed.. (Defendant)......................3 [Exh. 1-6]
Notice of Motion and Affidavits Annexed.. (Defendant)........................ 4 & 5 [Exh. 1-10]
Opposition and Affidavits Annexe (Plaintiff)..........................................6 [Exh. 1-8]
Replying Affidavits (Defendant)..............................................................7 [Exh. E-M]
Other....Plaintiff Post-Motion Memorandum..............................................8 [Exh. 1]
Defendant Post-Motion Memorandum9 [Exh. M, N, O, P, L]
Upon the foregoing cited papers and after oral argument, the Decision/Order on the defendant's motion seeking Summary Judgment and the plaintiff's motion seeking Summary Judgment are decided herein as follows:
Plaintiff health service provider brought the within no-fault insurance action against the defendant insurance company to recover first-party no-fault benefits for medical services rendered, pursuant to §5106 of the New York State Insurance Law (hereforth "Insurance Law") and Regulations of the New York State Insurance Department [11 N.Y.C.R.R. §65-1.1 et. seq. ]. Plaintiff is seeking to recover no-fault benefits in the total amount of $600, including statutory interest and attorney fees, for services rendered to its assignor, Ada Okika, between March 9, 2010 to April 16, 2010, relating to injuries allegedly arising out of a motor vehicle accident which occurred on February 13, 2010. Plaintiff seeks reimbursement for no-fault benefits for the following invoices:
a. $535.00 for services rendered between March 9, 2010 and April 10, 2010; and
b. $65.00 for services rendered on April 16, 2010.
Defendant moves herein for an order granting summary judgment and dismissing plaintiff's complaint as a matter of law, on the grounds that plaintiff failed to establish its prima facie entitlement to no-fault payments, that plaintiff breached a condition precedent to coverage, to wit, its failure to appear for an examination under oath (hereinafter "EUO"), pursuant to 11 N.Y.C.R.R §65-1.1 and §65-3.5, and that plaintiff is fraudulently incorporated, thus arguing that plaintiff is not entitled to receive no-fault payment.
Plaintiff opposes defendant's application, arguing the reasonableness of defendant's EUO request, and that such notices and denials from defendant were neither properly generated nor timely mailed.
Plaintiff subsequently also moves herein for an order granting summary judgment as a matter of law, on the grounds that it has established its prima facie case, in that Ada Okika assigned her "no-fault" benefits to plaintiff health service provider pursuant to the terms of the insurance policies sold by the defendant, and plaintiff timely submitted invoices and/or bills to defendant in accordance with the New York State Insurance Law. The plaintiff asserts herein that the defendant failed to properly pay or deny the various claims within thirty (30) days of receipt, as required by the New York State Insurance Law and Regulations.
Defendant opposes Plaintiff's application, arguing that plaintiff failed to establish its prima facie entitlement to reimbursement, and also that plaintiff fraudulently incorporated its practice.
The court notes that there are two sets of motions filed in the instant action, referencing the same applications to the court, wherein both parties are seeking relief in their favor. Defendant filed a summary judgment motion seeking relief, in which plaintiff filed opposition papers. Plaintiff also subsequently filed a summary judgment motion seeking relief, in which defendant filed opposition papers. This court, in the interest of judicial economy, shall hereby decide both parties' motions in this instant decision. The court has considered all submitted documents of both parties herein, along with the additional post-motion briefs the court directed both parties to submit. The court finds that this will cause no prejudice to either party.
The rule governing summary judgment requires the proponent of a summary judgment motion to make a prima facie showing of entitlement to summary judgment as a matter of law, offering sufficient evidence to eliminate any material issues of fact from the case. See, Winegrad v. New York University Medical Center, 64 N.Y.2d 851 ; Tortello v. Carlin, 260 A.D.2d 201 [1st Dept. 1999]; Cox v. Kingsboro Medical Group, 214 A.D.2d 150 [2nd Dept. 1995]. The burden of proof, as well as persuasion, rests with the proponent of the summary judgment motion. Once the burden is satisfied, the opponent of the motion must produce sufficient evidence, in admissible form, establishing the existence of at triable issue of fact. See, Alvarez v. Prospect Hospital, 68 N.Y.2d 320 , citing Zuckerman v. City of New York, 49 N.Y.2d 557 .
Pursuant to both the Insurance Law and the Regulations promulgated by the Superintendent of Insurance, an insurer is required to pay or deny a claim for no-fault automobile insurance benefits within thirty (30) days from the date a claimant supplies proof of claim forms. See, Insurance Law §5106(a); 11 N.Y.C.R.R. §65.15(h). Failure to pay benefits within the 30-day requirement renders the benefits "overdue, " and all overdue payments bear interest at a rate of 2% per month. See 11 N.Y.C.R.R. §65-3.9(a). In addition, the claimant is entitled to recover attorney's fees where a "valid claim or portion" was denied or overdue. See, Presbyterian Hospital in the City of New York v. Maryland Casualty Company, 90 N.Y.2d 274 .
After oral argument previously conducted, this court found that plaintiff had established its prima facie entitlement to no-fault reimbursement. However, the court determined that the remaining issues to be determined were the reasonableness of defendant's EUO verification request, the timeliness and proper mailing of the EUO verification request, and personal knowledge of the assignor's appearance or failure of same. The court reserved decision and directed both parties to submit additional briefs regarding these remaining issues, which the court notes it only received additional briefs from defendant. Thus, the court shall render its decision based upon the record herein.
REASONABLENESS OF EUO REQUEST
As a condition to coverage under the revised Personal Injury Endorsement ("PIP"), "the eligible person... shall... as may reasonably be required, submit to examinations under oath by any person named by the [insurer] and subscribe to same. Another condition to coverage under this section sets forth that an eligible person shall submit to medical examination by physicians selected by or acceptable to the insurer as often as the insurer may reasonably require." See, 11 N.Y.C.R.R. § 65—1.1(d) [Sec. I. Conditions, Proof of Claim (b) ].
It is well settled that a defendant insurance company is within its rights to request an examination under oath ("EUO") of a plaintiff provider based upon the fact that all no-fault endorsements issued in the state since April 2002 allow for the taking of same, for the purposes of verifying a claim. Moreover, an EUO of a medical provider has been held to be appropriate where the insurer can demonstrate a valid and necessary reason for doing so. See 11 N.Y.C.R.R. §65-1.1. See also, W & Z Acupuncture, P.C. v Amex Assurance Co., 24 Misc.3d 142(A) [App. Term 2nd, 11th & 13th Jud. Dists. 2009]. Appearance at a properly demanded EUO is a condition precedent to an insurance carrier's liability to pay no-fault benefits. See, Five Boro Psychological Services, P.C. v. Progressive Northeastern Ins. Co., 27 Misc.3d 141(A) [App. Term 2nd, 11th and 13th Jud. Dists. 2010].
The regulations provide for an examination under oath. The term "examination under oath" is not defined by the no-fault regulations. Word used in regulations that are not specifically defined in the regulations are to be given their ordinary meaning. See, Oefelein v. Town of Thompson Planning Board, 9 A.D.3d 556 [3rd Dept.2004]; Parker v. Kelly, 140 A.D.2d 993, [4th Dept.1988]; McCarter v. Beckwith, 247 A.D. 289 [2nd Dept.1936]. Examination is defined as the questioning of a witness by an attorney. See, Law.Com Law Dictionary. Examination can also be defined as a formal interrogation. See, Webster's Unabridged Dictionary 2nd Ed., [1998; p. 673]. Therefore, the term "examination under oath" as used in the no-fault regulations means the insurer can request the injured party or the assignee of the injured party appear and give oral testimony after having been sworn or under affirmation.
In the instant record, defendant proffers the Affidavit of Dawn Madalone, an investigator employed in defendant's Special Investigative Unit. Ms. Madalone attests to her personal knowledge of the instant matter, due to her involvement in the investigation of plaintiff provider. Ms. Madalone sets forth the factors and circumstances which led to defendant insurance company to initially investigate plaintiff. Ms. Madalone also sufficiently substantiates the defendant's request for an EUO, as a part of defendant's further investigation and verification of plaintiff no-fault reimbursement claims. Moreover upon further review, defendant insurance company did in fact advise plaintiff provider in the EUO scheduling letters that it requested an EUO based on, inter alia, the "rendition and necessity of [plaintiff's] billing practices, as well as the patten in the nature and frequency of the medical services." These letters clearly delineate defendant's further reasons as to why it sought verification of the claims.
However, despite defendant's arguments herein for seeking such verification, the regulations do not provide an insurer with the right to obtain written documentation other than such documentation as may be demanded as verification. In addition to appearing for an examination under oath, the assignee can be compelled to execute a written proof of claim under oath and provide other pertinent information as may assist the insurer in determining the amount due and payable. See, 11 NYCRR 65—1.1. The regulations also do not give the insurer to right to ask an assignee to produce documents relating to the corporate structure or finances of a medical provider. See, 11 NYCRR 65—3.5(a). Upon receipt of the completed verification form, the insurer can request additional verification. See, 11 NYCRR 65—3.5(b). The regulations only permit the insurer to obtain written information to verify the claim. See, 11 NYCRR 65—3.5(c); See also, generally, V.M.V. Management Co., Inc. v. Peerless Ins., 15 A.D.3d 647 [2nd Dept., 2005]. Nothing in the No—Fault regulations permits an insurer to request an assignee to produce corporate organizational and financial documents a week in advance of an EUO.
However, before this court can refuse to accept defendant's arguments in favor of its verifications requests seeking EUOs, plaintiff must first establish that it had objected to or responded to such requests indicating and specifying the claims of unreasonableness. In the present case, the plaintiff provider has in no way established that it ever objected to any part of the defendant's EUO notices. The Appellate Term has clearly decided that due to such a failure by a plaintiff provider to submit any objections prior to an application to the court, it will decline to consider the plaintiff's argument. See for example, Viviane Etienne Medical Care, P.C. v State Farm Mutual Ins. Co., 35 Misc.3d 127(A) [App. Term 2nd Dept. 2012]; Crescent Radiology v. American Transit, 31 Misc.3d 134');"> 31 Misc.3d 134(A) [App. Term 2nd Dept. 2011]; See also, Westchester Medical Center v New York Central Fire, 262 A.D.2d 553 [2nd Dept. 1999]. Thus, this court, in following precedent, will also decline to consider the instant plaintiff's argument.
In light of the findings above, plaintiff's application seeking summary judgment is hereby denied.
TIMELY AND PROPER MAILING OF EUO and PERSONAL KNOWLEDGE OF FAILURE TO APPEAR
In order to establish that the claimant failed to appear for the scheduled EUOs, the defendant is required to establish that the EUO scheduled letters were mailed. See for example, Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 A.D.3d 720 [2nd Dept. 2006]. There are three distinct methods to demonstrate proof of mailing: (1) provide an affidavit from an individual with personal knowledge of the actual mailing (see for example, Carle Place Chiropractic v. New York Cent. Mut. Fire Ins. Co., 19 Misc.3d 1139(A) [N.Y.Dist.Ct. 2008]); (2) acknowledgment by the adverse party that it received the subject document (see for example, A.B. Medical Services v. New York Central Mutual Fire Ins. Co., 3 Misc.3d 136(A) [App. Term 2nd & 11th Jud. Dists. 2004]); and (3) where the party provides proof of a standard office procedure, which ensures that documents are properly addressed and mailed (see for example, Lenox Hill Radiology, P.C. v. Tri State Consumer Ins. Co., 31 Misc.3d 13 [App. Term 1st Dept. 2010]).
Additionally, the defendant must also meet the burden of establishing with an affidavit by a person with personal knowledge that the plaintiff's assignor failed to appear for the scheduled EUOs (see, Infinity Health Products, LTD., v. Progressive Insurance Company, 28 Misc.3d 133(A) [App. Term 2nd, 11th, & 13th Jud. Dists. 2010]; Fair Price Medical Supply Corp., v. New York Cent. Mut. Fire Ins. Co., 14 Misc.3d 141(A) [App. Term 2nd & 11th Jud. Dists. 2007].
In support of its motion, defendant submitted herein both the Affidavit of Dawn Madalone and the Affidavit of Neil Gahl, Claims Representatives employed by defendant insurance company. Contrary to plaintiff's contentions, the court finds that such affidavits of Ms. Madalone and Mr. Gahl sufficiently establishe the standard office procedures and practices for the preparation and generation of verification letters and NF-10 denial of claim forms in which defendant institutes. Specifically, both Affidavits sufficiently establish the process defendant institutes regarding all incoming mail of proof of claims, as well as the process defendant institutes regarding all out-going mail, including but not limited to the verification request letters and NF-10 denials (of which are previously prepared by a designated claims representative). In addition, both Affidavits sufficiently establish the process of mailing of same by way of daily pick up by a U.S. Postal Service. Both Affidavits assert that defendant received plaintiff's first proof of claim invoice on April 19, 2010, and that an EUO verification request/delay letter was thereafter issued and mailed on May 4, 2010, directing the plaintiff to appear for the EUO on June 1, 2010. Additionally, upon defendant's receipt of an additional proof of claim on April 30, 2010, an additional verification request/delay letter was issued and mailed on May 14, 2010. Both Affidavits indicated that upon plaintiff's failure to appear for the initial EUO scheduled date of June 1, 2010, a follow-up EUO request was issued and mailed to plaintiff on June 7, 2010, directing plaintiff to appear for the EUO on June 29, 2010. Both Affidavits also indicated that upon plaintiff's failure to appear for the re-scheduled EUO of June 29, 2010, a denial of no-fault reimbursement was thus issued, based upon plaintiff's failure to satisfy a condition precedent of attending the EUO.
In addition, the defendant's presentation herein of a copy of its mail receipt by United States Postal Service is not only additional prima facie proof of mailing, but is key to creating the presumption of receipt. See, Hernandez v. Merchants Mutual Ins. Co., 14 Misc.3d 1215(A) [Civ. Ct. Bronx Co. 2006].
The defendant further submitted herein the Affirmation of Joseph A. Schwarzenberg, Esq., who attested he was employed as an attorney at the law offices of McDonnell & Afels, PLLC, which represents the defendant herein. Mr. Schwarzenberg asserted that he was assigned to handle the EUO, and was present in the office where the EUOs were scheduled to be conducted, on both dates of June 1, 2010 and June 29, 2010, wherein plaintiff failed to appear on either date. The Court finds that such Affirmation of Mr. Schwarzenberg sufficiently attests to having personal knowledge of the plaintiff's failure to appear for three duly scheduled EUOs. See, Infinity Health Products, Ltd., v. Progressive Insurance Company, 28 Misc.3d 133(A) [App. Term 2nd, 11th, & 13th Jud. Dists. 2010]; Fair Price Medical Supply Corp., v. New York Cent. Mut. Fire Ins. Co., 14 Misc.3d 141(A) [App. Term 2nd & 11th Jud. Dists. 2007]; Chi Acupuncture, P.C. v. Kemper Auto & Home Ins. Co., 14 Misc.3d 141(A) [App. Term 9th & 10th Jud. Dists. 2007].
In reviewing the contentions made by the plaintiff within its opposition to defendant's application for summary judgment, the court finds that it has failed to rebut the presumption of defendant's prima facie timely mailing of the EUO verification requests and denials, and plaintiff's failure to appear for either of the properly scheduled EUOs. In light of such, the Court finds that the plaintiff's submissions in opposition are insufficient to raise a triable issue of fact as to whether the defendant timely issued a denial of its outstanding claims. See for example, Zuckerman v. City of New York, 49 N.Y.2d 557 .
In light of the this condition precedent, it is clear that plaintiff's failure to comply (or even properly object to preserve its objection for court review) with a condition precedent to coverage voids the policy contract ab initio, and defendant is not obligated to pay the claim, regardless of whether defendant issued denials beyond the thirty (30) day period. See for example, Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, PLLC, 82 A.D.3d 559 [1st Dept. 2011]; see also, Neomy Medical, P.C., v American Transit Ins. Co., 31 Misc.3d 1208(A) [Kings County Civ. Ct.]. This court finds, based upon the foregoing analysis, that the plaintiff has failed to establish its entitlement to summary judgment, and the defendant has sufficiently established its entitlement to summary judgment herein regarding the plaintiff's claims. See, Winegrad v. NYU Medical Center, 64 N.Y.2d 851 ; Zuckerman v. City of New York, 49 N.Y.2d 557 .
Based upon the foregoing, the plaintiff's application seeking summary judgment is hereby denied. In addition, the defendant's application seeking summary judgment against the plaintiff is hereby granted, and the matter is dismissed.
This constitutes the Decision and Order of this Court.