Nationwide Affinity Insurance Company of America, et al., respondents,
Acuhealth Acupuncture, P.C., et al., appellants.
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 basis 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 Farm Mut. 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 NYCRR
65-3.16[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 Raia Med. 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 739-740).
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