Two Out of Three Ain't Bad, or Is It?

For folks like Dave Barshay over at No-Fault Paradise who keep score, of the six decisions decided by the Appellate Term, Second Department, on November 26th and posted to the New York Official Reports website last Wednesday, December 1st,  four were reversals in favor of the defendant insurers' motions for summary judgment, all on lack of medical necessity grounds:

Pomona Med. Diagnostics, P.C. v GEICO Ins. Co.
2010 NY Slip Op 52059(U) (App. Term, 2nd, 11th & 13th Dists., decided 11/26/2010)

Triangle R, Inc. v GEICO Ins. Co.
2010 NY Slip Op 52060(U) (App. Term, 2nd, 11th & 13th Dists., decided 11/26/2010)

Elmont Open MRI & Diagnostic Radiology, P.C. v Clarendon Natl. Ins. Co.
2010 NY Slip Op 52061(U) (App. Term, 9th & 10 Dists., decided 11/26/2010)

Dynamic Med. Imaging, P.C. v New York Cent. Mut. Fire Ins. Co.
2010 NY Slip Op 52062(U) (App. Term, 9th & 10th Dists., decided 11/26/2010)

One was an affirmance of summary judgment to the self-insurer on the assignor's IME no-show:

Trimed Med. Supply, Inc. v ELRAC, Inc.
2010 NY Slip Op 52057(U) (App. Term, 2nd, 11th & 13th Dists., decided 11/26/2010)

And one was an affirmance of partial summary judgment to the hospital provider on a verification issue:

St. Vincent's Hosp. & Med. Ctr. v American Tr. Ins. Co.
2010 NY Slip Op 52063(U) (App. Term, 9th & 10th Dists., decided 11/26/2010)

What does the high proportion of reversals at the Appellate Term mean?  Some might conclude that the lower courts don't know what they're doing.  Some others might conclude (and have already concluded) that the Appellate Term favors insurers on no-fault issues.  Regardless, it seems appealing to the Appellate Term has become a necessary part of the no-fault litigation process in metro New York and Long Island.

Appellate Term, Second Department, No-Fault Decisions

NO-FAULT – MAILING – PROVING IME NO-SHOW
Radiology Today, P.C. a/a/o Charles Rawlins v. GEICO Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th, decided 10/23/2009)

Order of Richmond Civil (Katherine Levine, J.) REVERSED.  Defendant's unopposed motion for summary judgment dismissing the complaint should have been granted.

• Affidavit of a manager employed by the independent medical review service retained by defendant to schedule and conduct IMEs sufficiently set forth the standard office practice and procedure for the generation and mailing of IME notices designed to ensure that said notices were properly addressed and mailed.
• The affirmations and affidavits of the medical professionals who were to perform the IMEs established that plaintiff's assignor failed to appear for said IMEs.

NO-FAULT – SUFFICIENCY OF PEER REVIEW
Richmond Radiology, P.C. a/a/o Arkady Polevoy v. GEICO Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th, decided 10/23/2009)

Order of New York Civil (Diane A. Lebedeff, J.) denying plaintiff's motion for summary judgment AFFIRMED. 

• The doctor performing the peer review did not conclude that he had insufficient information upon which to base a conclusion. Instead, the affirmed report raised a triable issue of fact because "the report clearly indicates that the pertinent [treating] physician's reports and other documentation had been requested and provided for the purpose of conducting a peer review, and the conclusion of lack of medical necessity is based on the peer reviewer's opinion, in effect, that there was no substantiation in the reports and documents reviewed of medical necessity for the [services] provided[.]"

NO-FAULT – PROOF OF MAILING – USE OF WORKERS' COMPENSATION FEE SCHEDULE FOR ACUPUNCTURE SERVICES
New Wave Oriental Acupuncture, P.C. a/a/o Gerard Ikezi v. Government Employees Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th, decided 10/23/2009)

Order of New York Civil (Robin S. Garson, J.) granting summary judgment to plaintiff REVERSED. 

• The affidavit submitted by defendant sufficiently established that the denial of claim forms were timely mailed in accordance with defendant's standard office practices and procedures.
• It was proper for defendant to use the workers' compensation fee schedule for acupuncture services performed by chiropractors to determine the amount which plaintiff was entitled to receive.

NO-FAULT – LEAVE TO AMEND ANSWER – FRAUDULENT INCORPORATION DEFENSE  – COMPELLING DEPOSITION OF PROVIDER'S OWNER
New York First Acupuncture, P.C. a/a/o Anitta Allen v. State Farm Mut. Auto. Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th, decided 10/23/2009)

Order of Richmond Civil (Diane A. Lebedeff, J.) granting defendant's motion to amend its answer to assert a fraudulent incorporation defense and compel plaintiff to produce its owner for a deposition AFFIRMED.

• The Civil Court did not improvidently exercise its discretion in granting defendant's application for leave to amend its answer in order to interpose the affirmative defense of fraudulent incorporation, in the absence of any showing that prejudice or surprise would result therefrom and since the proposed affirmative defense was neither devoid of merit nor palpably insufficient as a matter of law.
• Plaintiff's contention, that the defense of fraudulent incorporation must be asserted in a timely denial of claim form, is without merit. 
• Defendant sufficiently demonstrated that the deposition testimony of plaintiff's owner, Valentina Anikeyeva, regarding plaintiff's corporate structure was material and necessary so as to warrant the granting of the branch of its motion seeking to compel Ms. Anikeyeva's deposition.

Justice Golia's concurring memorandum is worth a look:

While I agree with the ultimate disposition in the decision reached by the majority, I strenuously disagree with the majority gratuitously raising a nonexistent issue, namely that a Mallela defense (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) may be disallowed if "prejudice or surprise would result therefrom." This impression was created by the majority in choosing here to excise an important requirement with regard to the law of amending an answer. The actual statement by the Court of Appeals in McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp. (59 NY2d 755, 757 [1983] [emphasis added, citations and internal quotations marks omitted]) is that, "Leave to amend the pleadings shall be freely given absent prejudice or surprise resulting directly from the delay."

Inasmuch as it is inconceivable that a Mallela defense of fraudulent incorporation could ever create prejudice or surprise that resulted directly from the delay in raising such defense, it is clear that such analysis is unwarranted.

To me, it is extremely unlikely that an individual who creates a fraudulent entity for the purpose of defrauding an insurance company would forget that he/she did so and be prejudiced or surprised when it was discovered. Such would be akin to a person running a "Ponzi" scheme deciding to invest in his own firm because it was obtaining such good results.

So is Dave Gottlieb's observation on Justice Golia's point.  What do you think?  I get Justice Golia's point on the no surprise part, but I guess whether the "absent prejudice or surprise" aspect attaches to an insurer's leave to amend its answer to add a Mallela defense depends on one's definition of "prejudice". 


NO-FAULT – UNTIMELY PROOF OF CLAIM – WAIVER
Delta Diagnostic Radiology, P.C. a/a/o Frank Louigarde v. Interboro Ins. Co.
(App. Term, 2nd Dept., 2nd, 11th & 13th, decided 10/23/2009)

Judgment of Queens Civil (William A. Viscovich J.) in favor of plaintiff AFFIRMED.

• Although plaintiff's claim was submitted more than 45 days after the services at issue were rendered, defendant waived its reliance on the 45-day rule as a basis to deny the claim because defendant had failed to communicate to plaintiff, as required by the No-Fault Regulations, that late submission of the proof of claim will be excused where the applicant can provide a reasonable justification for the late submission. 
• Defendant also failed to demonstrate that discovery was needed in order to show the existence of a triable issue of fact.

Willful and Avowed Obstruction -- SUM Arbitration Not Stayed for Claimant's Mistaken Refusal to Submit to Second IME

AUTO – SUM – MULTIPLE IMEs – COOPERATION
Matter of New York Cent. Mut. Fire Ins. Co. v. Bradfield
(3rd Dept., decided 4/9/2009)

Claimant was injured while a passenger in a one-car accident in January 2006.  She was covered under her parents' policy with New York Central Mutual, which included a UM/SUM endorsement.  She settled her personal injury claim against the tortfeasor with NYCM's consent, and submitted to an IME requested by NYCM in January 2007. She refused, through counsel, however, to appear for a second IME in both November 2007 and April 2008, claiming that NYCM was not entitled to multiple examinations.  She subsequently demanded arbitration of her SUM claim, and NYCM commenced this special proceeding to stay that arbitration based on its contention that claimant had violated a condition precedent to coverage by refusing to submit to a second IME.  Ulster Supreme denied the application and NYCM appealed.

The SUM endorsement at issue required claimant to "submit to physical examinations by physicians we select when and as often as we may reasonably require."  When NYCM scheduled claimant's first IME in January 2007, her attorney advised NYCM that claimant's treatment was ongoing and suggested that the IME await the completion of treatment. Claimant's attorney further indicated that if NYCM insisted upon an IME at that time, claimant would not participate in a second IME.  According to the claimant's attorney, this refusal was based on his incorrect belief that NYCM was not entitled to more than one IME.

In AFFIRMING the motion court's denial of NYCM's petition for a stay of the SUM arbitration, the Third Department agreed with the lower court that NYCM had not met its

heavy burden of showing "that it acted diligently in seeking to bring about [respondent's] co-operation; that the efforts employed by [petitioner] were reasonably calculated to obtain [respondent's] co-operation; and that the attitude of [respondent], after [her] co-operation was sought, was one of 'willful and avowed obstruction'" (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169 [1967], quoting Coleman v New Amsterdam Cas. Co., 247 NY 271, 276 [1928] [citations omitted]; see Matter of St. Paul Travelers Ins. Co. [Kreibich D'Angelo], 48 AD3d 1009, 1010 [2008]). 

According to the decision, when claimant's attorney received NYCM's show cause application on April 15, 2008 and became aware that the included SUM endorsement permitted multiple physical examinations, he contacted NYCM's attorney and advised him that the claimant was willing to submit to the second IME, which had been rescheduled to April 21, 2008.  NYCM's attorney, however, declined the offer and proceeded with the application to stay the SUM arbitration based on the claimant's asserted breach of the policy's IME condition.

Characterizing the claimant's attorney's mistaken assumption that NYCM was not entitled to multiple IMEs and his failure to request a copy of the policy "no more unreasonable than [NYCM]'s failure to offer a copy of the policy in the face of [his] obvious misunderstanding", the Third Department held:

In our view, even assuming that petitioner acted diligently and employed reasonable efforts to secure respondent's cooperation, Supreme Court properly determined that petitioner failed to demonstrate that respondent's lack of cooperation rose to the level of willful and avowed obstruction (see Baust v Travelers Indem. Co., 13 AD3d 788, 790 [2004]; Ingarra v General Acc./PG Ins. Co. of N.Y., 273 AD2d 766, 767 [2000]). Although respondent's earlier refusals to submit to a second examination were unequivocal, there is no evidence that either she or her attorney was in possession of the policy and, therefore, aware of the provision permitting multiple examinations ^[FN2]. Furthermore, respondent did submit to one physical examination, answered questions under oath for three hours and provided petitioner with copies of medical records, as well as numerous authorizations for healthcare providers, employers and insurance companies. Once she was aware of her obligation to submit to a second physical examination, she immediately indicated her willingness to do so. Overall, there is ample evidence that respondent's attitude was one of cooperation and that her conduct was not an unreasonable attempt to obstruct discovery (see Baust v Travelers Indem. Co., 13 AD3d at 790). Therefore, Supreme Court properly denied petitioner's application to stay arbitration. 

The "willful and avowed obstruction" or "Thrasher" standard has always been a high one to prove for insurers in New York.  Conceptually speaking, bona fide ignorance of a policy condition or requirement could, in the right circumstances, be mutually exclusive of willfulness.  In this case, there certainly was "avowed" obstruction -- in that claimant's counsel made his client's refusal to attend a second IME clear and unequivocal -- and yet seemingly missing, at least in the opinion of the motion and appellate courts, was the claimant's willfulness, given her attorney's mistaken assumption or belief that the insurance policy did not permit more than one IME.  If faced with the appearance of such mistake, misunderstanding or ignorance, insurers might consider quoting the policy conditions or providing a copy of the applicable endorsement, to avoid any dispute over what the policy obliges the claimant to do.  Especially in the Third Department.

Another Court Rejects Argument that IME Must Be Performed by Physician

NO-FAULT – PSYCHOLOGICAL IME – IME BY NON-PHYSICIAN
Five Boro Psychological Servs., P.C. v. Autoone Ins. Co.
(NYC Civil Ct., Kings Co., decided 12/8/2008)

I mentioned this decision in my December 16th post regarding the Allstate Social Work a/a/o Jocelyn v. Utica Mut. Ins. Co. case.   Same provider attorney.  Same argument.  Same result.

The IME condition found in the prescribed PIP endorsement provides that "[t]he insured shall submit to physical examinations by physicians we select when and as often as we may reasonably require."  Plaintiff provider argued that since New York Education Law defines a physician as only "a person licensed or otherwise authorized...[to] practice medicine", plaintiff's assignor did not violate the policy's IME condition because AutoOne scheduled the IME before a psychologist, rather than a physician.

In rejecting this argument, New York City Civil Court Judge Alice Fisher Rubin held:

The argument raised by plaintiff appears to be one of first impression. This court has researched the issue, having read and written many no fault decisions, and did not find a case addressing the issue of whether a policy which states "physician" means that any other healthcare provider is excluded, and only a physician can conduct the independent medical examination of an EIP. 

This court answers in the negative.

In the case before this court, the insurance company sent verification requesting that the injured party appear before an independent psychologist. The court finds that although the policy states physician, the term itself is not ambiguous where it would or should allow the EIP to circumvent the requirement of an independent examination, to determine whether the services rendered were medically necessary. The assignor was seen by a psychologist and therefore, there is no reason why a verification which requests that he appear before an independent psychologist, should not be held as a valid request when the policy states "physician."

In so ruling, the court relied on the General Provisions of the Workers' Compensation Law, Section 300.2, which addresses independent medical examination, examiners, and entities, and provides:

Independent medical examiner means a physician, surgeon, podiatrist, chiropractor or psychologist who is authorized to conduct independent medical examinations as defined in paragraph (4) of this subdivision[.]

Ultimately, however, Judge Rubin granted summary judgment to plaintiff because AutoOne had not timely requested or scheduled the assignor's IME.

Court Rejects Argument that IME Must Be Performed by Physician

NO-FAULT – PSYCHOLOGICAL IME – IME BY NON-PHYSICIAN
Allstate Social Work a/a/o Daniel & Sonya Jocelyn v. Utica Mut. Ins. Co.
(NYC Civil Ct., Kings Co., decided 11/5/2008)

The mandatory personal injury protection endorsement provides, in pertinent part, that an "eligible injured person shall submit to medical examination by physicians selected by, or acceptable to, the Company, when, and as often as, the Company may reasonably require." Does this mean that only physicians or medical doctors may perform IMEs? No, says this court.

Using an IME intermediary company, Utica Mutual twice scheduled the plaintiff's assignors for psychological IMEs with Moses Weksler, Ph.D. Plaintiff's assignors no-showed for those IMEs, and Utica denied no-fault benefits on that basis.

Plaintiff provider brought this suit for payment of its denied bills. Among other grounds, plaintiff argued that Utica Mutual had failed to establish that the assignors violated the policy conditions by failing to appear for the psychological IMEs because, under the express unambiguous terms of the insurance contract, the assignors were only obligated to submit to a medical examination by a physician. Plaintiff contended that licensed psychologists like Dr. Weksler are not physicians as the term is defined by the Educational Law, therefore the assignors' failure to appear for the scheduled IMEs was not a violation of the insurance policy and Utica Mutual's denial of plaintiff's claims was improper.

In rejecting that argument and dismissing the complaint, Kings County New York City Civil Court Judge George Silver relied on a 2004 New York State Insurance Department Office of General Counsel opinion letter and ruled:

"Pursuant to Insurance Law § 5103(d) the Legislature empowered the Superintendent of Insurance to promulgate regulations establishing minimum benefit standards for policies of insurance providing coverage for the payment of first-party benefits and to set standards for the payment of first-party benefits by self-insurers. Pursuant to this authority, the Superintendent promulgated Insurance Department Regulation § 65-1.1, which sets forth the basic form of the Mandatory Personal Injury Protection Endorsement' which must be included in every owner's policy of liability insurance issued on a motor vehicle in this state" (Alleviation Supplies, Inc. v. Enter. Rent a Car, 2006 NY Slip Op 26177 [Civ Ct, Kings County]). The mandatory personal injury protection endorsement (hereinafter endorsement) provides, in pertinent part, that the "eligible injured person shall submit to medical examination by physicians selected by, or acceptable to, the Company, when, and as often as, the Company may reasonably require" (11 NYCRR 65-1.1). The appearance of the insured for IMEs at any time is a condition precedent to the insurer's liability on the policy (Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720 [2d Dept 2006]). The term physician is not defined in the endorsement but the Education Law provides that "only a person licensed or otherwise authorized under this article shall practice medicine or use the title physician'" (Education Law § 6522). Defendant concedes in its reply that a licensed psychologist such as Dr. Weksler is not a physician. The question then is may any health provider perform an IME of an eligible injured person or, as the endorsement appears to require, only a physician?

Though there appears to be no case law addressing the point, in an opinion letter dated March 12, 2004, the State Insurance Department (hereinafter Insurance Department) answered the following question: "When a No-Fault eligible person is being treated by a chiropractor and the person's insurer has requested a medical examination ("IME") of that person in order to evaluate the medical necessity of the chiropractic services performed, must the medical examination be performed by a chiropractor, or may it be performed by a medical doctor?" (2004 Ops Ins Dept No. 04-03-10). In holding that an "insurer's medical examination of an eligible injured person to evaluate the medical necessity of health services provided by a chiropractor may be performed by a medical doctor, and need not be performed by a licensed chiropractor" (id.) the Insurance Department stated "there is no requirement in the regulation that a claim denial must be based upon a medical examination conducted by a health provider of the same specialty area as the treating health provider" (id.). Implicit in the Insurance Department's interpretation, which is entitled to great deference unless it is "irrational or unreasonable" (Matter of John Paterno, Inc. v Curiale, 88 NY2d 328, 333, 668 NE2d 395, 645 NYS2d 424 [1996], quoting Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448, 488 NE2d 466, 497 NYS2d 645 [1985]; cf. Matter of Gaines v New York State Div. of Hous. & Community Renewal, 90 NY2d 545, 548 549, 686 NE2d 1343, 664 NYS2d 249 [1997]), is that an independent medical examination of an eligible injured person may be performed either by a physician, as the term is defined in the Education Law and used in the endorsement, or by any other licensed health provider selected by or acceptable to the insurer. It is for the court or an arbitrator to "consider the qualifications of the health provider performing the IME in determining the validity of a claim denial" (2004 Ops Ins Dept No. 04-03-10). A contrary conclusion would frustrate the core objective of the no-fault scheme by limiting the universe of health providers who could perform IMEs, thereby delaying the processing of no-fault claims (see Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720 [2d Dept 2006]).

Given his decision on the assignors' IME no-shows, Judge Silver did not reach plaintiff's arguments regarding Utica Mutual's allegedly defective and ineffective EUO requests.

Over at/in No-Fault Paradise, Dave Gottlieb reported another decision in which New York City Civil Court Judge Alice Fisher Rubin, relying on section 300.2(5) of the General Provisions of the New York Workers' Compensation Law, also found that a non-physician (psychologist) could perform a no-fault IME. Five Boro Psychological Services PC v. Autoone Ins. Co., 29347/07 (NYC Civil Ct., Kings Co., decided 10/31/2008).

The Consequence of Not Proving a Negative

NO-FAULT – IME NO-SHOW – PROOF OF ASSIGNORS' NONAPPEARANCE
Post Traumatic Med. Care, P.C. a/a/o Ahissa Smith & Tameeka Nunn v. Progressive Cas. Ins. Co.
(App. Term, 2nd Dept., decided 9/29/2008)

Progressive denied payment of plaintiff medical provider's bills based on the assignors' failure to attend scheduled IMEs. Plaintiff sued in Kings Civil and unsuccessfully moved for summary judgment.

In REVERSING the lower court's denial of summary judgment to plaintiff, the Appellate Term held:

On appeal, plaintiff contends, inter alia, that defendant failed to create a triable issue of fact by competent proof that the assignors failed to attend the IMEs, and we agree. While defendant denied the claims based upon the assignors' failures to appear for scheduled IMEs, defendant did not submit evidence in admissible form from anyone with personal knowledge of the assignors' nonappearances (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721 [2006]; Vista Surgical Supplies, Inc. v Autoone Ins. Co., 20 Misc 3d 133[A], 2008 NY Slip Op 51460[U] [App Term, 2d & 11th Jud Dists 2008]; Vista Surgical Supplies, Inc. v New York Cent. Ins. Co., 14 Misc 3d 135[A], 2007 NY Slip Op 50165[U] [App Term, 2d & 11th Jud Dists 2007]).

Follow-Up Verification Requests Sent Less Than 30 Days After Original Requests Held to be Timely

NO-FAULT – STAGED ACCIDENT – TIMING OF FOLLOW-UP VERIFICATION REQUESTS – FAILURE TO ATTEND IMEs – FAILURE TO ATTEND EUOs
Unitrin Advantage Ins. Co. v. Painless Medical, P.C.
(Sup. Ct., New York Co., decided 8/22/2008)

If a no-fault insurer does not wait the entire 30-day period to issue a follow-up verification request pursuant to 11 NYCRR § 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? This court says "no." See, also, Park Slope Med. & Surgical Supply, Inc. v Country-Wide Ins. Co., 19 Misc 3d 1138(A) (NYC Civil Ct., Richmond Co., 2008).

Unitrin issued a personal auto policy to non-party Hector Sanchez, Jr. on November 28, 2006. Sanchez was involved in a sideswipe collision on December 16, 2006. On January 5, 2007, the three claimants, Ruben Oliver, Ricardo Santos and Marie Mora, were involved in another sideswipe collision with the insured vehicle, which Unitrin contended was staged. According to Unitrin's research, Oliver and Santos had been involved in another collision just 8 months earlier, in May 2006. All three claimants refused medical treatment at the scene.

After Unitrin's special investigator was unable to obtain statements from the claimants, Unitrin requested EUOs and IMEs of each claimant in order to confirm the legitimacy of their claims. Unitrin sent its initial EUO scheduling letter on February 22, 2007, and forwarded a second letter on March 8, 2007 , less than 30 days later. The the initial IME letters were mailed to the claimants on February 12, 2007, and the second letters were mailed two weeks later, on February 28, 2007. Neither Santos nor Mora appeared for their EUOs. In addition, none of the claimants appeared for their IMEs. Unitrin then denied all claims based on the claimants' failure to appear for their IMEs, and because Oliver made material misrepresentations at his EUO.

Unitrin commenced this action against the three claimants and their medical providers seeking a declaration that it was not obligated to pay no-fault benefits to the claimants or their assignees because: (1) Santos and Mora failed to appear for EUOs and all three claimants failed to appear for IMEs; and (2) the January 5, 2007 accident was staged and, therefore, that the claimants' treatment was not related to a motor vehicle "accident".

Defendants Painless Medical PC, Eastern Star Acupuncture, PC (Anatoly Yuryev, Chairman/CEO), and Improved Care Chiropractic PC (Gregory Pinsky DC, Chairman/CEO) moved for summary judgment, contending that Unitrin did not properly deny their allegedly assigned no-fault claims because Unitrin: (1) failed to wait 30 days before rescheduling the EUOs, thereby failing to properly toll the 30-day period within which it had to deny moving defendants’ claims; (2) failed to submit proof that requests for IMEs were made, and regardless, failed to toll its time to deny moving defendants’ claims since Unitrin failed to wait 30 days before making a second request for IMEs of the claimants; (3) submitted vague denials with respect to moving defendants’ claims concerning Oliver in that: (a) the denial was not specific; and (b) Unitrin neglected to mark certain boxes reflecting the reason for the denial on the claim form. Unitrin cross-moved for summary judgment and to compel discovery.

New York County Supreme Court Justice Martin Shulman denied both defendants' motion and Unitrin's cross motion for summary judgment. In rejecting the moving defendants' argument that Unitrin improperly issued follow-up verification requests before waiting 30 days, Justice Shulman ruled:

“There is no case law or statutory authority for the proposition that an insurer must wait 30 days before sending its follow-up request, or it will be precluded from offering defenses at trial” (Psych. & Massage Therapy Assoc., PLLC v Progressive Cas. Ins. Co., 5 Misc.3d 723, 725 [Civ Ct, Queens County 2004]).*** There is significant case law which addresses the timeliness of follow-up requests (see New York & Presbyterian Hosp. v. American Tr. Ins. Co., supra [court held that the defendant insurer’s request for additional verification on October 5, 1999 and its follow-up letter, 27 days later on November 1, 1999 were timely]; New York Hosp. Med Ctr. of Queens v State Farm Auto Ins. Co., 293 A.D.2d 588 [2d Dept 2002] [holding insurer timely sent follow-up verification requests exactly 30 days after initial requests]; Pysch. & Massaqe Therapy Assoc., PLLC v. Progressive Cas. Ins. Co., 5 Misc.3d at 725 [holding that “penalizing [insurer] for sending a follow-up request twenty-five days after its initial request is inconsistent with the goals of the No Fault Law”]).

Moreover, Unitrin has proffered sufficient proof that the follow-up requests were properly mailed to claimants (see lnwood Hill Med., P.C. v General Assurance Co., 10 Misc.3d 18 [App Term, 1st Dept 20051). Following the rational in Presbyterian, Unitrin “did not sit on its rights but rather promptly requested additional verification of the claim” (New York & Presbyterian Hosp., supra). Moving defendants seek to penalize Unitrin for being too prompt, which is in direct contravention of the goals of the No Fault law (see Pysch. & Massaqe Therapv Assoc., 5 Misc.3d at 725-726). As such, the court finds moving defendants’ tolling argument without merit.

Justice Shulman also rejected the moving defendants' argument that Unitrin's denial was vague and legally insufficient:

Unitrin specifically noted in the denial of claim form the reasons that the claim was being denied (Denial of Claim Form dated June 8, 2007, Affirmation in Support, Exh. E). Specifically, the denial of claim form states:

This entire no-fault claim was previously denied based on failure to show for scheduled independent medical exams on 03/06/07 and 04/03/07. Treatment rendered is considered overlapping, excessive and/or concurrent care. Therefore, this treatment is denied. This matter has been referred to the Insurance Fraud Bureau. Our review of the medical records submitted, our investigation, and accepted medical practices reveals that the services alleged to have been rendered were not medically necessary. Therefore, your claim is denied for lack of medical necessity. Material misrepresentations were made at the Examination Under Oath which was performed on March 29, 2007.

Where, as here, “the claims were denied based on the claimants’ failure to appear at the scheduled independent medical examinations”, the denial of claim is sufficiently specific to deny the claims assigned by Oliver as a matter of law[.]

Finally, with respect to Unitrin's motion to compel discovery, the court held that Unitrin was entitled to any discovery that either supported or rebutted its claim that the underlying accident was staged, and discovery pertaining to its fraudulent incorporation claims, including depositions of the moving defendants' alleged owners.

*** Although Justice Shulman may not have been aware of it, in a July 2008, 2-1 decision, the Appellate Term, 2nd Department, ruled that a follow-up verification request sent 27 days after the initial request was "premature and without effect", precluding the insurer "from raising most defenses, including its proffered defense of excessive fees". Infinity Health Prods., Ltd. a/a/o Jermaine Thomson v Eveready Ins. Co., 2008 NYSlipOp 28271 (App. Term, 2nd Dept., decided 7/10/2008). The 2-justice majority (Pesce and Steinhardt) read the 2nd Department's decision in New York & Presbyterian Hosp. v. American Tr. Ins. Co. differently than Justice Shulman did in this case, and Justice Golia in his dissent noted:

The majority makes this finding even though the cited Appellate Division case deals with a verification request that was dated October 5, 1999 and a follow-up request that was sent and dated November 1, 1999. Certainly, the first day of November is less than 30 days from the fifth day of October.

Plaintiff argues, in substance, that because the Appellate Division did not specifically state that the letter that was dated 27 days later was actually mailed on the date that was noted, the case cannot be read to say that the follow-up was actually mailed 27 days later.

A review of the file that was submitted to the Appellate Division in New York & Presbyt. Hosp. v American Tr. Ins. Co. indicates that there is contained in that file, among other references, the reply affirmation of the plaintiff. It states, "The defendant's letters of October 5, 1999 and November 1, 1999 were not prescribed verification forms." There is no indication from this or any other document in that file that the letter dated November 1, 1999 was mailed on any date other than November 1, 1999. Nor, according to my review, was this issue raised.

I do not support the theory that the Appellate Division found that the November 1, 1999 letter was, in fact, dated November 1, 1999 but not mailed before November 5, 1999, nor was it mailed after November 14, 1999.

I, however, do believe that the Appellate Division understood exactly what was presented to it when it found that the follow-up request for verification that was sent within 30 days of the first request, specifically 27 days, was, in fact, timely and in all respects proper.

Just like its decision on fees in excess of the workers' compensation fee schedule, the Appellate Term, Second Department's ruling on this issue is incorrect and should eventually be reversed.

SUM Arbitration Stayed for IME No-Shows & False EUO Testimony

SUM – SPECIAL PROCEEDING TO STAY ARBITRATION – BREACH OF IME CONDITION – FALSE TESTIMONY BY CLAIMANT DURING EUO
Matter of New York Central Mut. Fire Ins. Co. v. Quadrino
(Sup. Ct., Nassau Co., decided 4/29/2008)

In response to its insured's demand for arbitration of his SUM claim, New York Central Mutual timely commenced this special proceeding to stay arbitration and compel discovery. By earlier order, the court temporarily stayed the arbitration and directed Quadrino "to provide pre-arbitration discovery as provided for in the parties ' automobile insurance policy", noting that the policy at issue provided that a person seeking SUM coverage must submit to physical exams as reasonably required, an examination under oath, and provide authorizations for medical and other pertinent records.

Quadrino provided some discovery and moved to dismiss the petition and compel arbitration. New York Central Mutual cross-moved to stay arbitration permanently on two grounds: (1) that Quadrino failed to appear for two, scheduled IMEs; and (2) that he made fraudulent statements at his EUO in having denied injuring his neck and/or back in a subsequent accident.

In granting a permanent stay of the SUM arbitration based on Quadrino's "chronic failure to provide discovery", Nassau County Supreme Court Justice Karen Murphy found that Quadrino failed to appear for or cancel two IMEs, and offered no explanation for his non-appearance. Justice Murphy also found that in breach of the policy's EUO and fraud conditions, Quadrino repeatedly denied injuring his neck and back in a subsequent motor vehicle accident despite stating in his applications for no-fault benefits that he had in fact sustained such injuries. New York Central Mutual procured and submitted a treating chiropractor's report indicating that Quadrino had received treatment for injuries to his neck and back as a result of that subsequent accident.

NF-10 Wars -- Arbitrator Held to Have Erroneously Invalidated PT Denial Based on Lack of Medical Rationale Set Forth in Denial

NO-FAULT – NCV-EMG COSTS – SPECIAL PROCEEDING TO VACATE MASTER ARBITRATION AWARD – NF-10 SUFFICIENCY – MEDICAL RATIONALE – PROVIDING COPY OF IME-PEER REVIEW REPORT WITH DENIAL
American Transit Ins. Co. v. 21st Ave. Medical Plaza, P.C. a/a/o Dennene Baker
(Sup. Ct., New York Co., decided 5/8/2008)

In April 2007, the Second Department issued its decision in A.B. Med. Servs., PLLC v. GEICO Cas. Ins. Co., 39 AD3d 778, holding that a no-fault insurer is not required to set forth with sufficient particularity the factual basis and medical rationale upon which NF-10 denial of claim forms are based:

The applicable regulations provide that if a no-fault claim is denied in whole or in part based on a medical examination or peer review report requested by the insurer, then the insurer shall release a copy of that report to, among others, the applicant or its attorney, upon written request (see 11 NYCRR 65-3.8 [b] [4]). Had it been the intent of the Department of Insurance to require the carrier to set forth a medical rationale in the prescribed denial of claim form (see NYS Form N-F 10; 11 NYCRR 65-3.4 [c] [11]), it would have so provided.

In this case, defendant conducted NCV/EMG (nerve conduction velocities/electromyography) studies of and provided PT (physical therapy) to the defendant's assignor in conjunction with defendant's treatment of her. American Transit denied payment of both the NCV/EMG and PT billings, based on negative peer review and IME reports, respectively. Plaintiff provider sought payment of those services in compulsory no-fault arbitration.

One day before the Second Department decided A.B. Med. Services, PLLC v. GEICO, the arbitrator ruled against American Transit, finding: (1) that the peer review report relied upon to deny payment of the NCV/EMG studies was "not very persuasive"; and (2) that American Transit's denial of reimbursement for PT treatments based on the negative IME performed by a consulting physiatrist was defective because a copy of the IME report had not been sent to the assignor within thirty days of the date American Transit issued the denial. The lower arbitrator stated that because the IME report was not timely sent to the claimant, she was "constrained to
preclude the IME report."

American Transit appealed the lower arbitrator's decision to a master arbitrator, who, based on the Appellate Term's (not Division's) decision in A.B. Med. Services, PLLC v. GEICO, upheld the arbitrator's decision in both respects. American Transit then brought this CPLR article 75 special proceeding to vacate the master arbitrator's decision.

In partly denying and partly granting American Transit's petition, New York County Supreme Court Justice Kibbie F. Payne found: (1) that the lower arbitrator acted within her authority in considering but rejecting as legally and factually deficient and unpersuasive the peer review report concerning the NCV/EMG studies; and (2) that the master arbitrator's decision upholding the lower arbitrator's refusal to consider the IME report and invalidation of America Transit's NF-10 for PT services violated existing law and was not rationally based.