Recent Appellate Term, Second Department, New York No-Fault Decisions

These eleven Appellate Term, Second Department, New York no-fault decisions were decided on March 10 and posted on March 18, 2010.  Click the case name links to read the full decisions. 

NO-FAULT – CHOICE OF LAW – NEW JERSEY VEHICLE, INSUREDS AND POLICIES
A.B. Med. Servs., PLLC a/a/o Leon Regis v. GEICO Cas. Ins. Co.
(App. Term, 2nd Dept., 9th & 10th Dists., decided 3/10/2010)

Upon the application of a "center of gravity" or "grouping of contacts" analysis, New Jersey law was found to apply to a New York motor vehicle accident that involved a New Jersey registered vehicle, a New Jersey insured, and two New Jersey insurance policies.   Summary judgment to GEICO was properly denied. 

NO-FAULT – JOINT TRIAL
Anthony M. Palumbo, D.C. a/a/o Marc Taly v. Tristate Consumer Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Queens Civil improperly denied defendant's motion for a joint trial of three providers' separate actions for the same services rendered on the same date at the same location.  Tristate intended to defend all three actions on the ground that the services rendered were not medically necessary, and plaintiff failed to establish that a joint trial would prejudice a substantial right.

NO-FAULT – PROOF OF MAILING – UNANSWERED VERIFICATION REQUESTS
St. Vincent Med. Care, P.C. a/a/o Breyton Squires v. Country-Wide Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

• Plaintiff established its prima facie entitlement to summary judgment because defendant's claims representative conceded receipt of claims in question and the affidavit of plaintiff's billing manager established that the documents annexed to plaintiff's motion were admissible pursuant to CPLR 4518.  
• The affidavit of defendant's no-fault litigation supervisor sufficiently established the timely mailing of the NF-10 denial of claim forms and verification requests since it described, in detail, based on the affiant's personal knowledge, defendant's standard office practices or procedures used to ensure that said documents were properly mailed. 
• Although defendant sent follow-up verification requests on the 30th day after its initial verification requests, rather than waiting the full 30 days before sending its follow-up requests, plaintiff did not respond to those requests, so defendant was entitled to summary judgment on those claims, pursuant to Infinity Health Prods., Ltd. v Eveready Ins. Co. (67 AD3d 862 [2d Dept 2009]).

NO-FAULT – PROOF OF MAILING – MEDICAL NECESSITY
Right Aid Diagnostic Medicine, P.C. a/a/o Tarshia Harrison v. Geico Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

• Plaintiff established its prima facie entitlement to summary judgment because defendant's claims representative conceded receipt of claims in question and the affidavit of plaintiff's billing manager established that the documents annexed to plaintiff's motion were admissible pursuant to CPLR 4518.  
• In opposition to plaintiff's summary judgment motion, defendant established that it had timely mailed its denial of claim form, which denied plaintiff's $911.99 claim on the ground of lack of medical necessity, by submitting an affidavit of an employee with knowledge of defendant's standard office practices or procedures designed to ensure that items are properly addressed and mailed.
• Defendant also raised triable issues of fact by submitting a copy of the affirmed peer review report setting forth a factual basis and medical rationale for the conclusion that the MRI was not medically necessary and presenting evidence that it had already paid plaintiff's claim.

NO-FAULT – TIMING OF EUO REQUEST
St. Vincent Med. Care, P.C. a/a/o Omar Morgan v. Travelers Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Although an examination under oath (EUO) need not be scheduled to be held within 30 days of the receipt of the claim form, the EUO request letter must be mailed within 30 days of the insurer's receipt of the bills in question.  The mailing of Travelers' EUO scheduling letters 52 days after its receipt of three bills from plaintiff was untimely and did not toll Travelers' time to pay or deny those bills, regardless of plaintiff's nonappearance at the requested EUO.

NO-FAULT – MEDICAL NECESSITY OF MEDICAL SUPPLIES  – AFFIRMED PEER REVIEW REPORT
High Quality Med., P.C. a/a/o Robel Thomay v. Mercury Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Queens Civil (Lebedeff) improperly denied Mercury's cross motion for summary judgment.  The affirmation of plaintiff's doctor did not meaningfully refer to, let alone rebut, the conclusions set forth in the affirmed peer review report Mercury submitted in support of its cross motion, which set forth a factual basis and medical rationale for the conclusion that there was a lack of medical necessity for the medical supplies at issue.  

NO-FAULT – UNTIMELY PROOF OF CLAIM – 11 NYCRR § 65-3.3(e) NOTICE  – BILL INITIALLY SUBMITTED TO WRONG INSURER
Prestige Med. & Surgical Supply, Inc. a/a/o Michael Martin v. Chubb Indem. Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Kings Civil (Sherman) properly granted defendant's motion for summary judgment.  Defendant's denial of claim form adequately advised plaintiff pursuant to 11 NYCRR § 65-3.3 (e) that its late submission of the claim would be excused if plaintiff provided a reasonable justification for its failure to timely submit the claim within 45 days after the date the supplies at issue had been provided to its assignor.  Plaintiff failed to proffer any explanation as to why it first submitted the claim to another insurance carrier.

NO-FAULT – VACATING DEFAULT JUDGMENT – CPLR 317
Nursing Personnel Homecare a/a/o Evelyn White v. New York Cent. Mut. Fire Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Kings Civil (Garson) improvidently exercised its discretion in denying defendant's motion to vacate the default judgment.  Pursuant to CPLR 317, NYCM met its burden of showing that it did not receive actual notice of the summons in time to defend the action.  NYCM submitted an affidavit from one of its no-fault litigation examiners, who had personal knowledge regarding defendant's practices and procedures in retrieving, opening and filing its mail and in maintaining its files on existing claims. In that affidavit, the no-fault litigation examiner stated that defendant had never received the summons, the complaint or the motion for a default judgment.  NYCM also submitted an affidavit from its litigation examiner in which he stated that the assignor had cancelled her insurance policy with defendant prior to the date of the accident and had not subsequently taken out another insurance policy with NYCM.  

NO-FAULT – MEDICAL NECESSITY OF CHIROPRACTIC TREATMENT – QUESTION OF FACT
Co-Op City Chiropractic, P.C. a/a/o Gloria Fagan v. Mercury Ins. Group
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Queens Civil properly denied defendant's motion for summary judgment.  Although the affidavit and peer review report of defendant's chiropractor set forth a factual basis and medical rationale for the chiropractor's conclusion that there was a lack of medical necessity for the services rendered, the affidavit of plaintiff's treating chiropractor, submitted in opposition to defendant's motion for summary judgment, was sufficient to demonstrate the existence of a triable issue of fact as to the medical necessity of the services rendered.

NO-FAULT – MEDICAL NECESSITY OF MEDICAL SUPPLIES – UNREBUTTED SWORN PEER REVIEW REPORTS
Favorite Health Prods., Inc. a/a/o Jeoniel Michel v. Geico Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Queens Civil (Lebedeff) improperly denied defendant's cross motion for summary judgment.  Defendant submitted, among other things, two sworn peer review reports, which set forth a factual basis and medical rationale for the conclusion that there was a lack of medical necessity for the medical supplies at issue.  Defendant's showing that the supplies were not medically necessary was unrebutted by plaintiff.

NO-FAULT – MEDICAL NECESSITY – UNREBUTTED IME REPORT
Advanced Med., P.C. a/a/o Joyce Asiedu v. GEICO Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th Dists., decided 3/10/2010)

Queens Civil (Lebedeff) improperly denied defendant's cross motion for summary judgment.  Defendant sufficiently established that the denial of claim forms were timely mailed in accordance with defendant's standard office practice or procedure, and submitted an affirmation by the doctor who performed the independent medical examination as well as a copy of the independent medical examination report, establishing, prima facie, that with respect to the services at issue in plaintiff's third and fifth causes of action, there was no medical necessity.  Plaintiff did not rebut that evidence.

To Infinity and Beyond, or Actually Before -- Kings Civil Rules that No-Fault Insurer Not Required to Wait 30 Days After Initial IME Letter to Send Second IME Letter

NO-FAULT – TIMING OF FOLLOW-UP VERIFICATION – INSURANCE LAW § 5106(A) – 11 NYCRR § 65-3.6(B)
Perfect Point Acupuncture, P.C. a/a/o Jocelyn Louis v. Auto One Ins. Co.
(NYC Civil Ct., Kings Co., decided 1/6/2010)

Just under two months ago, the Appellate Division, Second Department, held in Infinity Health Products, Ltd. v Eveready Ins. Co., 67 AD3d 862, that a health care provider which ignores the no-fault insurer's verification requests altogether is estopped from claiming that the insurer's early or premature follow-up verification request -- sent on Day 27 in that case -- precludes any defenses from being asserted, including the defense that the provider's action is premature because it did not respond to the insurer's verification requests.

In this case, the plaintiff provider argued that by not waiting 30 days from the mailing of its initial IME request letter to send the second IME letter -- that second letter having been mailed only 17 days after the first -- Auto One violated  11 NYCRR § 65-3.6(b), rendering its subsequent IME no-show-based denial defective.  In rejecting that argument, Kings County New York City Civil Court Judge Peter Sweeney cited Infinity Health Products and held:

The [Infinity Health Products] Court held that "inasmuch as the plaintiff did not respond to either of the verification requests, the 30-day period within which the defendant was required to pay or deny the claim did not commence to run . . . and that . . . plaintiff's action [was therefore] premature" (Id.). The Court further held that "plaintiff was not entitled to summary judgment on the complaint, and the defendant's cross motion for summary judgment dismissing the complaint should have been granted . . .without prejudice to commencement of a new action" (Id. [citations omitted]).

In this Court's view, the holding in Infinity Health Products, Ltd. requires dismissal of the within action, without prejudice to its recommencement. Here, as in Infinity Health Products, Ltd., it would be inequitable to award summary judgment to the plaintiff, whose assignor ignored two verification requests, merely because the defendant did not strictly adhere to the time frames set forth in 11 NYCRR 65-3.6[b] for mailing out second requests for additional verification of a claim . It would be incongruous to conclude that 11 NYCRR 65-3.6[b] mandates a result that would penalize the defendant for its diligent attempts to obtain additional verification of the claims and reward plaintiff whose assignor ignored the requests.

This court recognizes that this case is not on all fours with Infinity Health Products, Ltd.. In Infinity Health Products, Ltd., the defendant sent its second written verification request a mere 3 days before the expiration of a full 30 days after the first verification request had been sent. Here, the second written verification request was sent out 13 days before the expiration of the 30 day period referred to in 11 NYCRR 65-3.6[b]. Under the facts and circumstances of this case, however, this distinction does not warrant a contrary result.

When plaintiff's assignor failed to appear for the IME on September 6, 2009, the re-scheduling letter was mailed to her on the following day. Unlike in Infinity Health Products, Ltd., once plaintiff's assignor failed to appear for the IME, there is no legitimate reason why defendant should have waited a full 30 days from the mailing of the first letter to mail out the re-scheduling letter. Indeed, had defendant waited a full 30 days, it would have had acted in contravention of one of the primary policies underlying the "no-fault law"; which is "to promote the expeditious handling of verification requests and prompt claim resolution" (Infinity Health Products, Ltd., supra, 67 AD3d 862, 2009 NY Slip Op 08585 at 2). Further, the Court notes that when plaintiff's assignor failed to appear for the re-scheduled IME, 30 days had elapsed from the time that the first scheduling letter had been sent to her.

The absurdity of an argument can sometimes cause a court to favor the opposing position.  This "early" or "premature" follow-up verification argument has always seemed counterintuitive and contrary to the spirit of Regulation 68 to me.  Apparently it does to Judge Sweeney, also.

Provider that Ignored Verification Requests Estopped from Arguing that Insurer's Premature Follow-Up Verification Request Precludes Any Defenses

NO-FAULT – TIMING OF FOLLOW-UP VERIFICATION – INSURANCE LAW § 5106(A) – 11 NYCRR § 65-3.6(B)
Infinity Health Prods., Ltd. v. Eveready Ins. Co.
(2nd Dept., decided 11/17/2009)

This is for you half-a-loaf folks.

The first sentence of 11 NYCRR § 65-3.6(b) provides:

At a minimum, if any requested verifications has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested, either by telephone call, properly documented in the file, or by mail. (Bold added.)

If a no-fault insurer does not wait the entire 30-day period to issue a follow-up verification request pursuant to § 65-3.6(b), does it "lose" the tolling effect of such verification requests and is it precluded from relying on defenses related to those requests?  Prior to the Second Department's decision in this case, this was the box score on this question:

Psych. & Massage Therapy Assoc., PLLC a/a/o Kendra Harrell v. Progressive Cas. Ins. Co.	5 Misc3d 723 (NYC Civil, Queens Co., decided 11/4/2004)	No preclusion.
Seaside Medical P.C. a/a/o Sandra Bond v. State Farm Mut. Auto Ins. Co.	12 Misc3d 1127 (NYC Civil, Richmond Co., 2006)	Yes, preclusion.
Park Slope Med. & Surgical Supply, Inc. a/a/o Alicia Marsh v. Country-Wide Ins. Co.	19 Misc 3d 1138(A)(NYC Civil, Richmond Co., decided 5/27/2008)	No preclusion.
Infinity Health Prods., Ltd. a/a/o Jermaine Thomson v. Eveready Ins. Co.	21 Misc3d 1 (App. Term, 2nd Dept., decided 7/10/2008)	Yes, preclusion.
Unitrin Advantage Ins. Co. v. Painless Medical, P.C.	2008 NY Slip Op 32365(U) (Sup.Ct., New York Co., decided 8/22/2008)	No preclusion.
Alur Med. Supply, Inc. a/a/o Teresa Radriguez v. Progressive Ins. Co.	23 Misc 3d 130(A) (App. Term, 2nd Dept., decided 4/7//2009)	Yes, preclusion.

In REVERSING the Appellate Term's finding of defense preclusion in this case, the Appellate Division, Second Department, has narrowly ruled that a provider which ignores the no-fault insurer's verification requests altogether is estopped from claiming that the insurer's early or premature follow-up verification request -- sent on Day 27 in this case -- precludes any defenses from being asserted, including the defense that the provider's action is premature because it did not respond to the insurer's verification requests.

It is important to note, as Jason Tenenbaum does over at No Fault Defender, that the Second Department has not ruled that all early or premature follow-up verification requests are okay and inconsequential to the insurer's claim defenses.  That broader question may be answered when the Second Department decides Progressive's appeal in Alur Medical, which does not appear to involve a situation in which the provider completely ignore the insurer's allegedly premature follow-up verification request (sent on Day 30 in that case).

Instead, the Second Department reversed and granted Eveready's cross motion for summary judgment, "on the facts and in the exercise of discretion", dismissing plaintiff's action as premature, "without prejudice to commencement of a new action."  The Second Department held:

There is no dispute here that the defendant timely requested initial verification by sending out its verification request within seven days (on March 21, 2001) after receipt of the plaintiff's claim (on March 14, 2001). There also is no dispute that the plaintiff did not respond to the defendant's timely initial verification request. An insurer does not have to pay or deny a claim until it has received verification of all of the relevant information requested (see 11 NYCRR former 65.15[g][1][i], [2][iii]). The issue in this case is whether an insurer loses the toll of the 30-day rule to pay or deny the claim, which is afforded by an initial timely request for verification, simply because its follow-up verification request is sent 3 days before the expiration of a full 30 days after a plaintiff fails to respond to the initial request. The Insurance regulations stated, in pertinent part, that "if any requested verification has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was originally requested" (11 NYCRR former 65.15[e][2]).

Although the defendant in this case did not strictly comply with the time limitation set forth in the rule regarding the submission of a second verification request, under the circumstances of this case, the plaintiff is estopped from claiming that the defendant is precluded from asserting any defense to the claim. It would be inequitable to award summary judgment to the plaintiff, which ignored two verification requests, merely because the defendant, slightly prematurely, sent its second verification request a mere 3 days before the expiration of a full 30 days after the first verification request had been sent (see New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699; see generally Chemical Bank v City of Jamestown, 122 AD2d 530; Guberman v William Penn Life Ins. Co. of N.Y., 146 AD2d 8). Indeed, in light of the particular factual circumstances herein, it would be incongruous to conclude that the Insurance regulation regarding follow-up verification, or any other statute or rule, warrants a result which would, in effect, penalize an insurer who diligently attempts to obtain the information necessary to make a determination of a claim, and concomitantly, rewards a plaintiff who makes no attempt to even comply with the insurer's requests. Such a result is not contemplated by the "no-fault law" or its regulations, which should be interpreted to promote the expeditious handling of verification requests and prompt claim resolution.

Furthermore, inasmuch as the plaintiff did not respond to either of the verification requests, the 30-day period within which the defendant was required to pay or deny the claim did not commence to run (see 11 NYCRR former 65.15[g][1][i], [2][iii]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553). Thus, the plaintiff's action is premature (see Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432).

The court could have disposed of this appeal simply by ruling that an early or premature follow-up verification request is of no legal consequence.  It did not do so, however, perhaps suggesting to some that had plaintiff responded to Eveready's verification requests, the result in this case would have been  an affirmance.

I'm not going to speculate on that possibility, but instead await the outcome of Progressive's Alur Medical appeal.   I will say, however, that I believe the Second Department is already incorrect in viewing the 30-day period of 65-3.6(b) as a "time limitation".  If that period truly were a time limitation, such as a statute of limitations period, the early issuance of a follow-up verification request could not be deemed to violate it, since time limitations necessarily connote an outside limit for doing something, rather than proscribe certain conduct during the limitations period. The 30-day period of 65-3.6(b) should properly be viewed as a minimum prescription, rather than an absolute proscription.  

New York statutes contain numerous examples of actual proscriptive waiting periods.  For instance, Insurance Law § 3420(a)(2) effectively requires a judgment creditor to wait at least 30 days after serving an insured and its insurer with notice of entry of a money judgment before suing that insurer to enforce the judgment.  Similarly, General Municipal Law § 50-i requires a party claiming personal injury, wrongful death or property damage due to the negligence of a municipality to wait at least 30 days after serving a notice of claim before commencing suit against the municipality. Legislators and regulators know how to draft proscriptive waiting periods.  The 30-day period of 65-3.6(b) is not such a period. 

When the Second Department revisits the 30-day period of 65-3.6(b), I hope it doesn't overlook the first three words of that section.  "At a minimum" must mean something.  To me, those words must mean that "at a minimum", no-fault insurers must send follow-up verification requests within 30+10 days after their initial additional verification requests.  The "minimum" is the insurer's minimum handling requirement.  Substitute "at the very least" into the first sentence of 65-3.6(b) and the incongruity and inequity of penalizing a no-fault insurer for sending a follow-up verification request sooner than 31 days after the initial additional verification request becomes obvious.  At least to me.  At a minimum.