Fo'get About It -- No Summary Judgment for Staged Incident

NO-FAULT – STAGED INCIDENT – DISCOVERY – MALLELA DEFENSES
AA Acupuncture Service, P.C., a/a/o Marie Boucicaut v. State Farm Mut. Auto. Ins. Co.
(NYC Civil, New York Co., decided 5/30/2008)

What??? What??? I've been practicing law for about as long as that muskie from last Friday's post has been alive, and this is the first time that I've seen a "per se" rule against granting summary judgment to a party. Ever. In law school and during the early, formative years of practice, we learned that summary judgment was available when there were no triable issues of material fact and the court could conclude, as a matter of law, that the movant had established either its right of recovery or defense against same.

The world as I knew it -- at least insofar as summary judgment in staged collisions is concerned -- changed yesterday, with the posting of New York County City Civil Court Judge Arlene P. Bluth's decision in this case. I'll explain.

One would think that if the insurer were to present "compelling", "uncontradicted, overwhelming circumstantial evidence" that the incident at issue was staged, the insurer should merit summary judgment, right? Wrong, according to Judge Bluth.

State Farm denied no-fault benefits based on its conclusion that the underlying incident was an intentionally caused loss which was not covered by the subject insurance policy. The assignor's medical provider sued and, in support of its motion for summary judgment, State Farm submitted an affidavit of one of its special investigators who was personally involved in the investigation and set forth detailed results of his investigation, all of which tended to show that the underlying incident was staged, and thus not covered by the policy. In opposition, the plaintiff "failed to contradict any of [the special investigator]'s sworn statements or any of the voluminous documents annexed thereto."

In spite of State Farm's persuasive and uncontroverted submission, the court denied summary judgment to State Farm, holding that "there is a per se rule against summary judgment dismissing a claim based on staged accident. " Judge Bluth based this ruling on two things: (1) the lack of any reported cases affirmatively awarding summary judgment to an insurer based on a staged incident; and (2) the Appellate Term's 2006 decision in A.M. Medical Services, P.C. v. Nationwide Mut. Ins. Co., 12 Misc 3d 143(A), 824 NYS2d 760 (App. Term, 2nd Dept., 2006) in which the appellate court ruled that Nationwide's cross motion for summary judgment should have been denied even though the assignors, when confronted with suspicious facts about their multiple "accidents," withdrew their claims with prejudice. Nonetheless, Judge Bluth concluded:

If the Appellate Term thought the evidence of a staged accident was strong enough to consider sanctions against the plaintiff's attorney for pursuing the claim but still refused to grant summary judgment to the defendant, then the only explanation is that there is a per se rule against summary judgment dismissing a claim based on staged accident. Absent a contrary decision in this Department, this Court, following A.M. Medical Services, denies defendant's motion for summary judgment[.]

Judge Bluth also partially granted NYCM'S motion to compel discovery, holding:

Here, Dr. Sachdev, as the owner of the facility and the practitioner who actually rendered the services, must appear for his deposition. Furthermore, he must bring with him to the deposition the documents he may need to refer to in answering the questions relating to plaintiff's corporate structure; if he does not bring the documents and he cannot answer the questions, then defendant may bring on a motion for further relief. In addition to the plethora of uncontradicted reasons submitted by the defendant tending to show that plaintiffs may be fraudulently incorporated and thus not entitled to insurance payment, the Court notes that Dr. Sachdev may be unaware of his corporation's billing practices inasmuch as the bills annexed to the defendant's motion show the each NF3 for services allegedly provided by Dr. Sachdev state that Dr. Sachdev is a "nerologist;" he is no more a "nerologist" than his counsel is an "attor-knee." A person who worked so hard to become a neurologist would know how to spell it.

See? Spelling counts. Expect an appeal, though. A company that has worked so hard to become a large, successful auto insurer should know when it deserves summary judgment.