Opinion
No. HUC10836–11.
2012-06-15
BACK TO BACK CHIROPRACTOR, P.C., Assignee of Francisco Perez, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
C. STEPHEN HACKELING, J.
Upon the following papers numbered 1 to 21 read on this motion by defendant to dismiss action by Notice of Motion/Order to Show Cause and supporting papers 1,2,14; Notice of Cross Motion and supporting papers 10,11,14; Answering Affidavits and supporting papers 15,17; Replying Affidavits and supporting papers 18,21; Filed papers; Other exhibits: 3–13; 16; 19–20; and after hearing counsel in support of and opposed to the motion) it is,
ORDERED that the motion by defendant for dismissal of plaintiff's complaint pursuant to CPLR 3211(a)(1) and (7) is granted. The Clerk of the Court is hereby directed to enter judgment accordingly.
This is an action by plaintiff for payment of health services allegedly rendered to plaintiff's assignor from an automobile accident on January 8, 2007 in the sum of $492.84, in addition to interest of 2% compounded per month pursuant to 11 NYCRR § 65.15(g) and attorney fees of 20% of the overdue claim with a maximum of $850 .00 and a minimum of $80.00 pursuant to 11 NYCRR § 65.4.6(e), under New York's No–Fault Law.
Defendant, in a pre-answer motion, now moves for dismissal of the action, contending that plaintiff violated a policy condition for verification of the claim, as plaintiff never appeared at a Examination Under Oath (“EUO”) on March 26, 2007 and the adjourned date of April 16, 2007, dates requested by defendant, and plaintiff failed to provide additional verification of the claim, as requested by defendant.
Defendant asserts it received a proof of claim from plaintiff within the statutory 45 days required from the date that medical services were rendered. Thereafter, defendant asserts it requested verification of the claim. Since a response from plaintiff was not received within the 30 day statutory period, defendant sent a follow-up second statutory request for verification. To date, plaintiff has not provided the requested verification.
In support of its motion to dismiss, defendant contends it was justified in seeking EUOs and further verification of plaintiff's claims, based upon an investigation it commenced of plaintiff for improper organization, management and billing operations. Defendant submits, inter alia, a copy of the pleadings, the affidavits of Sibrena Johnson, an employee in the Special Investigative Unit, Christopher Howard, an investigator in the Special Investigative Unit, Denise Rafalski, a Claim Support Services Supervisor, and an affidavit from Michael Bellamy, the Administrative Services Mailroom Services Assistant for defendant, and an attorney's affirmation from Joshua E. Mackey, Esq.
In opposition to defendant's motion, plaintiff contends that defendant was required to forward statutory timely verification requests. Plaintiff contends the defendant's submitted proof is insufficient to establish a timely request.Furthermore, defendant contends the request to attend the EUO's contained a document demand requiring plaintiff's production, seven days prior to the scheduled EUO's. Defendant contends the document demand included, inter alia, a demand for tax returns and general ledgers, and proof of ownership of the professional corporation, all of which were improper demands outside the scope of a verification request to substantiate a $492.84 claim. Plaintiff further asserts the request indicated the claim would not be paid if the requested documents were not provided. Therefore, plaintiff claims there was no point in going to the EUO's, as defendant had no intention of paying the claim without receipt of the documents which were improperly requested.
Defendant replies it properly denied the claim as plaintiff never complied with the outstanding verification requests.
No-fault regulations mandate that a claim for health service expenses must be submitted by written proof of claim to the insurer, no later than 45 days after the date that health services were rendered ( see11 NYCRR § 65–2.4[c] ). An insurer can then issue payment or deny the claim ( see 11 NYCRR § 65.15). After receipt of the written proof of claim, a no-fault claim is overdue if not paid or denied by the insurer within 30 calendar days ( seeInsurance Law § 5106[a]; 11 NYCRR § 65–3.8[a][1] ). An insurer may toll the 30 day period by requesting additional verification of the claim within 15 days from its receipt of the claim ( see 11 NYCRR 65.15[d][1][e]; NY & Presbyt. Hosp. v. Allstate Ins. Co., 30 AD3d 492, 493 [2nd Dept 2006] ). If the insurer has not received a verification from the plaintiff within 30 days of the initial request, the insurer may send a follow-up verification request within 10 calendar days ( see 11 NYCRR 65.15[e][2] ).
An appearance at a properly demanded EUO is a condition precedent to an insurance carrier's liability to pay a no-fault claim ( see11 NYCRR § 65–1.1; Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720, 722 [2nd Dept 2006]; Richmond Radiology, P.C. v. American Transit Ins. Co., 33 Misc.3d 135[A][App. Term 2nd, 11th and 13th Jud. Dists.2011]; Five Boro Psychological Services, P.C. v. Progressive Northeastern Ins. Co., 27 Misc.3d 141[A][App. Term 2nd, 11th and 13th Jud. Dists.2010; Dynamic Med. Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., 29 Misc.3d 278 [D. Ct. Nassau Co.2010] ).
A verification demand by an insurer will extend the 30 day period until such time as the requested verification is received ( see 11 NYCRR § 65.15[g][1] [I]; Hosp. For Joint Diseases v. Elrac, Inc., 11 AD3d 432 [2nd Dept 2004]; Westchester County. Med. Ctr. v. New York Cent. Mut. Fire Ins., 262 A.D.2d 553 [2nd Dept 1999] ). Where a requested verification is not provided an insurer is not required to pay or deny the claim ( see11 NYCRR § 65–3.8; NY & Presbyt. Hosp. v. Progressive Cas. Ins. Co., 5 AD3d 568 [2nd Dept 2004] ).
Here, the Court determines that defendant's papers in support of dismissal demonstrate that the EUO notices and verification requests were sent twice to plaintiff's address pursuant to its standard office practice and procedure and were sufficient to establish timely notification of defendant's EUO and verification requests ( see St. Vincent's Hosp. of Richmond v. GEICO, 50 AD3d 1123, 1124 [2nd Dept 2008]; Urban Radiology, P.C. v. Tri–State Consumer Ins. Co., 27 Mis3d 140[A][App. Term, 2nd, 11th & 13th Jud Dists 2010]; Chi Acupuncture, P.C. v. Kemper Auto & Home Ins. Co., 14 Misc.3d 141[A][App. Term, 9th & 10th Jud. Dists.2007] ). It is undisputed that plaintiff failed to respond in any manner to defendant's EUO and verification requests. The affirmation of defendant's EUO counsel demonstrates that EUOs were noticed and scheduled to be conducted at the office of defendant's counsel on March 26, 2007 and the adjourned date of April 16, 2007, none of which were attended by a representative of plaintiff ( see Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., supra; Five Boro Psychological Services, P.C. v. Progressive Northeastern Ins. Co., supra ). In addition, defendant demonstrated the timely mailing of the NF–10 denial of claims forms in accordance with defendant's standard office practice and procedure ( see St. Vincent's Hosp. of Richmond v. GEICO, supra at 1124). Plaintiff's inaction to defendant's timely notifications is fatal to its causes of action for alleged services rendered ( see Crescent Radiology, PLLC., as Assignee of Spiros Arbiros v. American Transit Ins Co., 31 Misc.3d 134[A][App Term, 9th & 10th Jud Dists 2011]; Urban Radiology, P.C. v. Tri–State Consumer Ins. Co., supra ).
Plaintiffs Must Make Written Objection To Improper Verification Request To Avoid Denial Toll.
Nonetheless, defendant's request for the production of documents and information seven days prior to the EUO is troubling to the Court. The request, as plaintiff contends, is clearly outside the scope of permissible information. Lower Courts have found this type of EUO request for documents and information to be “palpably improper” ( see Concourse Chiropractic, PLLC., v. State Farm Mutual Ins. Co., 35 Misc.3d 1213[A][D. Ct. of Nassau Co.2012]; Dynamic Med. Imaging, P.C. v. State Farm Mutual Automobile Ins. Co ., supra at 285). “The regulations do not give the insurer the right to ask an assignee to produce documents relating to the corporate structure or finances of a medical provider” ( see11 NYCRR 65–3.5[a]; Dynamic Med. Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., supra at 283. “The regulations only permit the insurer to obtain written information to verify the claim” ( Id. at 283; see also11 NYCRR 65–3.5[b] ). “Nothing in the no-fault regulations permits an insurer to request an assignee to produce corporate organizational and financial documents a week in advance of an EUO” ( Id. at 283). Disclosure of tax returns “is disfavored since income tax returns contain confidential and private information” ( Id. at 283; see also Walter Carl, Inc. v. Wood, 161 A.D.2d 704, 705 [2nd Dept 1990] ). A party seeking the production of tax returns must make a strong showing of necessity and an inability to obtain tax returns from any other source ( see Abbene v. Griffin, 208 A.D.2d 483 [2nd Dept 1994] ).
However it is the plaintiff's reaction to the “palpably improper” document demand of defendant's EUO request that vitiates its causes of action. Here, the plaintiff did nothing and did not contact the defendant's counsel to protest the document request.There is no provision in the no-fault regulations which permit a claimant or an insurance company to ignore communications from each other “without risking its chance to prevail in the matter” ( see Canarsie Chiropractic, P.C. v. State Farm Mutual Auto. Ins. Co., supra at *2; Media Neurology, P.C. v. Countrywide Ins. Co., 21 Misc.3d 1101[A][NY City Civ.Ct.2008]; All Health Medical Care, P.C. v. Gov. Employees Ins. Co., 2 Misc.3d 907 [NY City Civ.Ct.2004] ); see Westchester Cty. Med. Center v. N.Y. Central Mutual Fire Ins. Co., 262 A.D.2d 553, 555 [2nd Dept 1999].
It is well established that the No–Fault statute is designed to ensure prompt resolution of claims by accident victims. “Any questions concerning a communication should be addressed by further communication, not inaction” ( see Canarsie Chiropractic, P.C. v. State Farm Mutual Auto. Ins. Co., citing Dilon Medical Supply Corp. v. Travelers Ins. Co., 7 Misc.3d 927 [NY City Civ.Ct.2005] ). By failing to respond in some manner to defendant's verification request, “plaintiff undermined the purpose of the No–Fault statute, which is to ensure the prompt resolution of claims” ( see Canarsie Chiropractic, P.C. v. State Farm Mutual Auto. Ins. Co., supra at *2).It is incumbent upon the plaintiff to mail a “Malella Discovery Objection” letter in response to such an improper verification request so as to prevent a “denial toll” and run the thirty (30) days to pay time period. Island Chirop. Testing, P.C. v. nationwide Ins. Co., 2012 N.Y. Slip Op 51001(u). As an objection was not interposed, the defendant's 30 day period to pay continuing to be tolled, requiring dismissal of this complaint as premature.
Plaintiffs Must Appear Or Raise Written Objection to EUO Demand
The plaintiff's assignee also did not show up at either date for the EUO's. Again, there was no protest of the fact that the EUO's were scheduled at the inconvenient location of Poughkeepsie, New York, a few hours upstate from plaintiff's office in Nassau County. Nor did the plaintiff request reimbursement for time and travel expenses “thereby preserving its defenses concerning the EUO notices” ( see Canarsie Chiropractic, P.C. v. State Farm Mutual Auto. Ins. Co., 27 Misc.3d 1228[A][NY City Civ.Ct.2010] ).
The Court further determines, that by not appearing at the properly noticed EUO, plaintiff did not fulfill a condition precedent which would have required defendant to pay its no-fault claim ( see Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., supra at 722).Even if the plaintiff timely mailed a “Malella Discovery Objection”, it is still incumbent for the assignor to appear at the EUO as a precondition to commencing a lawsuit to recover upon the claim.
Accordingly, the motion by defendant to dismiss plaintiff's complaint pursuant to CPLR 3211(a)(1) and (7) is granted. Plaintiff's complaint is hereby dismissed.