Nationwide Affinity Insurance Company of America, et al., respondents,
Acuhealth Acupuncture, P.C., et al., appellants. Index No. 4874/15
Submitted - October 3, 2017
Tsirelman, P.C., Brooklyn, NY (Stefan Belinfanti and David M.
Gottlieb of counsel), for appellants.
McCormack & Mattei, P.C., Garden City, NY (John E.
McCormack, Kevin A. Mattei, and Nicole Holler of counsel),
C. DILLON, J.P. SANDRA L. SGROI SYLVIA O. HINDS-RADIX ANGELA
G. IANNACCI, JJ.
DECISION & ORDER
action, inter alia, for a judgment declaring that the
plaintiffs are not obligated to pay any past, pending, or
future claims for no-fault benefits submitted to them by the
defendants, the defendants appeal from an order of the
Supreme Court, Nassau County (Bruno, J.), entered January 28,
2016, which granted the plaintiffs' motion for summary
judgment on the complaint.
that the order is reversed, on the law, with costs, and the
plaintiffs' motion for summary judgment on the complaint
plaintiffs, which issue automobile insurance policies that
include coverage under the No-Fault Automobile Insurance Law
(see Insurance Law § 5101 et seq.), commenced
this action against the defendants, five professional medical
service corporations. The complaint sought, inter alia, a
judgment declaring that the plaintiffs are not obligated to
pay any past, pending, or future claims for no-fault benefits
submitted to them by the defendants on the basi s that the
defendants were fraudulently incorporated in the names of
licensed medical professionals, while in fact they were
owned, operated, and controlled by Andrey Anikeyev, a
nonphysician. The plaintiffs moved for summary judgment on
the complaint. The Supreme Court granted the motion, and the
Law § 5102 et seq. requires no-fault carriers
to reimburse patients (or, as in this case, their medical
provider assignees) for 'basic economic loss'"
(State FarmMut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d
313, 320). However, "[a] provider of health care
services is not eligible for reimbursement under section
5102(a)(1) of the Insurance Law if the provider fails to meet
any applicable New York State or local licensing requirement
necessary to perform such service in New York" (11
NYCRR65-3.16[a]). "State law mandates that
professional service corporations be owned and controlled
only by licensed professionals" (One Beacon Ins.
Group, LLC v. Midland Med. Care, P.C., 54 A.D.3d 738,
740; see Business Corporation Law §§
1503[a]; 1507, 1508). Thus, an insurance carrier may withhold
payment for medical services provided by a professional
corporation which has been "fraudulently
incorporated" to allow nonphysicians to share in its
ownership and control (State Farm Mut. Auto. Ins. Co. v.
Mallella, 4 N.Y.3d at 319, 321; see Andrew
Carothers, M.D., P.C. v. Progressive Ins. Co., 150
A.D.3d 192, 194; Liberty Mut. Ins. Co. v. RaiaMed.
Health, P.C, 140 A.D.3d 1029, 1030-1032; One Beacon
Ins. Group, LLC v. Midland Med. Care, P.C, 54 A.D.3d at
the plaintiffs failed to meet their prima facie burden of
demonstrating that the defendants were fraudulently
incorporated in this manner. In support of their motion, the
plaintiffs submitted nothing more than Anikeyev's plea of
guilty to a federal court Information that charged him
generally with mail and health care fraud, and charged that
substantial funds held in the defendants' accounts were
subject to forfeiture. The Information does not describe the
manner in which the fraud was committed or how the funds came
to be held in the defendants' accounts. Thus, this
evidence did not demonstrate, prima facie, that Anikeyev
exercised dominion and control over the defendants and their
assets and shared the risks, expenses, and interest in their
profits and losses, or that he had a significant role in the
guidance, management, and direction of their business (see
Andrew Carothers, M.D., P.C. v. Progressive Ins.
Co., 150 A.D.3d at 201). Moreover, even assuming, as the
plaintiffs do, that the presence of the forfeited funds in
the defendants' bank accounts demonstrated some level of
control by Anikeyev over the bank accounts, such control
could not, on its own, support a finding that he owned and
controlled the defendants (id. at 202).
the plaintiffs failed to demonstrate their prima facie
entitlement to judgment as a matter of law, the Supreme Court
should have denied their motion for summary judgment without
regard to the sufficiency of the defendants' opposition
papers (see Winegrad v. New York Univ. Med. Ctr, 64
N.Y.2d 851, 853).
light of our determination, we need not reach the