Opinion
Index 160822/2019
02-28-2022
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. ALLMED MERCHANDISE AND TRADING, INC., AXIAL CHIROPRACTIC, P.C., BIG APPLE MEDICAL EQUIPMENT, INC., BRONX URGENT CARE, P.C., CITIMEDICAL I, PLLC, DYNAMIC MEDICAL IMAGING, P.C., ELMWOOD PARK MEDICAL GROUP, P.C., ENS MEDICAL, P.C., HANDY PHYSICAL THERAPY, P.C., KINGS CHIROPRACTIC WELLNESS, P.C., HAMID LALANI, M.D., LENOX HILL RADIOLOGY, MACCABI PHARMACY RX INC., MASPETH RX INC., MASPETH RX PHARMACY, METRO PAIN SPECIALIST, P.C., MOLNAR MEDICAL SERVICES, P.C., MT PHYSICAL THERAPY, P.C., NORTHERN MEDICAL CARE, P.C., ROXBURY ANESTHESIA, LLC, SJM ACUPUNCTURE, P.C., SP ONE SERVICES, INC., SUAREZ MEDICAL PLLC, SURGICORE OF NEW JERSEY, LLC, SYNERGY MEDICAL LABORATORIES, P.C., CARL HENRY-FRANCOIS, MONSTANG JOSEPH, ODELTON LOUIS-JEAN Defendant.
Unpublished Opinion
MOTION DATE 09/30/2021
PRESENT: HON. PHILLIP HOM Justice
DECISION + ORDER ON MOTION
PHILLIP HOM, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107 were read on this motion to/for JUDGMENT - SUMMARY.
Upon the foregoing documents, it is ordered that Plaintiff State Farm Mutual Automobile Insurance Company's ("State Farm") motion for summary judgment on the second cause of action that Louis-Jean failed to appear for his examination under oath ("EUO") on two or more occasions, which violates a condition precedent to coverage; State Farm's motion for summary judgment on the third cause of action that the injuries of Odelton Louis-Jean ("Louis-Jean"), Monstang Joseph ("Joseph") and Carl Henry-Francois ("Francois") (collectively the "Claimants") did not arise from an insured incident; and State Farm's motion for summary judgment on the fourth cause of action that the incident was intentionally caused, and State Farm has no duty to provide a defense or indemnification and to pay the claims are decided as follows:
Background
Plaintiff State Farm Mutual Automobile Insurance Company's ("State Farm") insured a 2005 Chrysler (the "Insured Vehicle") under a no-fault insurance policy. The Claimants were in the Insured Vehicle when it was allegedly struck by another vehicle on Rogers Avenue in Brooklyn on November 10, 2018 (NYSCEF Doc. No. 74 at page 11). Non-party Jean Maynard owned the Insured Vehicle, but was not in the vehicle at the time of the collision (id). Louis-Jean was driving, and Joseph and Francois were passengers in the Insured Vehicle.
The Claimants later reported serious bodily injuries relating to the November 10, 2018 collision and State Farm assigned claim number 32-6573-G60 to all claims arising from the subject collision (id at page 12). Medical providers submitted over $100,000 in bills for medical treatment allegedly provided to the Claimants (id at page 15). State Farm sought to conduct the Claimants' EUO to explore the legitimacy of the claims, but only Joseph and Francois appeared for their scheduled EUOs (id at page 16).
State Farm commenced this action on November 7, 2019 by filing a Summons and Complaint. In its second cause of action, State Farm alleges that Louis-Jean breached conditions precedent to coverage under the no-fault regulations when he failed to appear for two scheduled EUOs (id at page 19). State Farm claims that it is entitled to a declaratory judgment against the medical provider Defendants, as Louis-Jean's assignees, that it owes no duty to pay no-fault claims arising from the November 10, 2018 collision (id at page 20).
In its third cause of action, State Farm alleges that, based upon its investigation of the incident and the EUO testimony of Francois and Joseph, it has a founded belief that the alleged injuries did not arise from the subject collision and that it owes no duty to pay the claims of the Claimants or the medical provider Defendants (id). In its fourth cause of action, State Farm alleges it is entitled to a judgment declaring that it owes no duty to pay the fraudulent claim because the incident was intentional and staged (id at pages 20-21)
By Order dated October 5, 2020, this Court granted State Farm a default judgment against Defendants Allmed Merchandise and Trading; Bronx Urgent Care, P.C., PLLC; Dynamic Medical Imaging, P.C.; Elmwood Park Medical Group, P.C.; Handy Physical Therapy, P.C.; Kings Chiropractic Wellness, P.C.; Hamid Lalani, M.D.; Maspeth Rx Inc.; Molnar Medical Services, P.C.; MT Physical Therapy, P.C.; Northern Medical Care, P.C.; Roxbury Anesthesia, LLC; SP One Services, Inc.; Suares Medical PLLC; Surgicore Of New Jersey, LLC; Synergy Medical Laboratories, P.C. and Louis-jean ("Non-Answering Defendants") (NYSCEF Doc. No. 70). Notice of Entry of this Order was duly served on October 6, 2020 (NYSCEF Doc. No. 71).
Summary Judgment
State Farm moves for summary judgment against Defendants Axial Chiropractic, P.C. ("Axial"), Big Apple Med Equipment Inc. ("Big Apple"), Citimedical I, PLLC ("Citimedical"), ENS Medical, P.C. ("ENS"), Maccabi Pharmacy Rx, Inc. ("Maccabi"), Maspeth Rx Pharmacy ("Mespeth"), Metro Pain Specialist, P.C. ("Metro Pain"), and SJM Acupuncture, P.C. ("SJM") (collectively "Medical Providers"). Citimedical and Metro Pain (collectively the "Remaining Providers") are the only remaining Defendants to oppose this motion.
On a motion for summary judgment, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case (Fuller v KFG L & I, LLC, 189 A.D.3d 666 [1st Dept 2020], citing Zuckerman v New York, 49 N.Y.2d 557 [1980]). Once the proponent has made this showing, the burden of proof shifts to the party opposing the motion to produce evidentiary proof in admissible form to establish that material issues of fact exist which require a trial of the action (Fuller v KFG L&I, LLC, supra; citing, Zuckerman v New York, 49 N.Y.2d 557 [ 1980]; Alvarez v Prospect Hosp., 68 N.Y.2d320 [1986]; Delgado v Martinez Family Auto, 113 A.D.3d 426 [1st Dept 2014]).
a. Second Cause of Action - Failure to Appear for EUO
A no-fault benefits claimant must appear for an EUO on the reasonable request of the insurer (11 NYCRR 65-1.1). A claimant's failure, without reasonable cause, to appear for a timely and properly scheduled EUO is grounds to deny coverage (Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 A.D.3d 559, 560 [1st Dept 2011]). An EUO request must be based upon the application of objective standards so that there is specific objective justification supporting the choice to seek an EUO (11 NYCRR 65-3.5 [e]).
The First Department has held that if a denial of a no-fault claim leads to coverage litigation, the plaintiff no-fault insurer must upon request provide the injured claimant's assignees with the "specific objective justification" for its EUO request (Kemper Independence Ins. Co. v AB Med. Supply, Inc., 187 A.D.3d 671, 671 [1st Dept 2020], quoting 11 NYCRR 65-3.5[e]; see also American Tr. Ins. Co. v Jaga Med. Servs., P.C, 128 A.D.3d 441, 6 N.Y.S.3d 480 [1st Dept 2015]). An insurer should not be excused during the claims-verification process from providing an EUO-justification (Kemper Independence Ins. Co. v Accurate Monitoring, LLC, 73 Misc.3d 585, 588 [Sup Ct, NY County 2021]).
State Farm claims that Louis-Jean failed to appear for scheduled EUO on two occasions, breaching his obligations under the no-fault policy. State Farm's EUO letters mailed to Louis-Jean were timely and proper under 11 NYCRR 65-3.5 (b). On February 15, 2019, State Farm sent Louis-Jean a letter requesting, among other things, that Louis-Jean be produced as a witness for an EUO on or before March 5, 2019 (NYSCEF No. 78 at page 2). State Farm put on the record that Louis-Jean did not appear on March 5, 2019. On March 11, 2019, State Farm sent a second letter, requesting that Louis-Jean be produced as a witness on or before March 26, 2019, and warning that a second failure to appear would constitute a breach of the policy leading to a denial of Louis-Jean's claims (Id. at page 14). On March 26, 2019, State Farm placed on the record that Louis-Jean failed to appear. The Court finds that State Farm has provided proof that Louis-Jean was notified of these appointments and did not appear.
State Farm also claims that the EUO request of Louis-Jean was timely and proper and complied with 11 NYCRR 65-3.5(b) because State Farm received a claim form on behalf of Louis-Jean from Defendant Big Apple Med Equipment, Inc., on February 8, 2019, for treatment allegedly provided on January 31, 2019 (NYSCEF Doc. No. 81). The Court finds that the EUO request was timely because it was requested on February 15, 2019, approximately six business days after the bill was received (Hertz Vehs., LLC v Alluri, 171 A.D.3d 432, 432 [1st Dept 2019]). State Farm has met its burden on summary judgment and the burden shifts to the Remaining Providers to present admissible evidence that triable issues of fact exist to warrant a jury trial.
In opposition, the Remaining Providers submit an attorney affirmation in which it asserts that the motion must be denied because, the alleged misrepresentation was immaterial as a matter of law; plaintiff fails to establish intent to defraud; plaintiff failed to preserve the subject defense since it did not issue timely and proper denials as required by the Insurance Law, the Regulations and binding Court of Appeals precedent. They also argue the motion for summary judgment is premature because discovery has not yet been conducted in this matter (NYSCEF Doc. No. 86).
The Remaining Providers also argue that State Farm did not proffer objective justification for its request that Louis-Jean appear for EUO citing to, among others, Kemper Independence Ins. Co. v Accurate Monitoring, LLC (73 Misc.3d 585 [Sup Ct, NY County 2021]). In Kemper, the injured claimant declined the insured's EUO request and demanded a specific justification for the EUO. The insured declined to provide a justification. The issue presented for the Kemper Court was, whether the 2006 interpretive opinion letter issued by the State Department of Financial Services is intended also to address the extent of an insurer's discretion to refuse to provide an EUO-justification should the benefits claimant request it after receiving an initial EUO scheduling notice. Unlike Kemper, the Remaining Providers have failed to provide any admissible evidence that they requested State Farm provide an objective justification for the EUO. The Court has considered the remaining arguments and finds them to be unavailing.
In reply, State Farm rejects the Remaining Providers' argument that the motion is premature due to a lack of discovery, arguing that they have made no efforts to provide any discovery in this case and that all necessary documentation has already been provided in this motion (NYSCEF Doc. No. 106).
The failure of a party, eligible for no-fault benefits, to appear for a properly noticed EUO constitutes a breach of a condition precedent, vitiating coverage (Hertz Corp. v Active Care Med. Supply Corp., 124 A.D.3d 411, 411, 1 N.Y.S.3d 43 [1st Dept 2015]). Remaining Providers have failed to establish that there are triable issues of fact to warrant a jury trial. Accordingly, the Court finds that State Farm is under no obligation to honor any claims submitted on behalf of Louis-Jean retroactive to the date of loss (Mapfre Ins. Co. of N.Y. v Manoo, 140 A.D.3d 468, 33 N.Y.S.3d 54 [1st Dept 2016]; Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 A.D.3d 559, 560 [1st Dept 2011]).
b. Third Cause of Action - Injuries did not arise from the insured incident
An insurer may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident (Cent. Gen. Hosp. v Chubb Group of Ins. Cos., 90 N.Y.2d 195, 199 [1997]). A collision caused in furtherance of an insurance fraud is not a covered accident under a policy of insurance (Matter of Eagle Ins. Co. v Davis, 22 A.D.3d 846, 847 [2d Dept 2005]). The no-fault insurer must demonstrate the facts elicited during an investigation that make up the founded belief (Unitrin Advantage Ins. Co. v Advanced Orthopedics & Joint Preser v. P.C, 2018 NY Slip Op 33296[U], *5 [Sup Ct, NY County 2018], citing Benzaken v. Verizon Communications, Inc., 21 A.D.3d 864, 865 [2d Dept 2005]). Circumstantial evidence is sufficient to prove such facts if a party's conduct may be reasonably inferred based upon logical inferences to be drawn from the evidence (Id).
State Farm claims, based on founded belief, that the alleged injuries of the Claimants and any subsequent no-fault treatment did not arise from the incident. State Farm also claims that Francois and Joseph's testimonies contain inaccuracies and inconsistencies. Francois testified that Louis-Jean was driving the vehicle with Joseph and Francois as passengers in the Insured Vehicle when it was involved in a collision. He testified the Insured Vehicle was initially stopped at the red light. When the light turned green, the Insured Vehicle collided with a car attempting to leave a parking spot that was in a rush to leave and moved first (NYSCEF Doc. No. 79 at pages 24-26). Francois further testified that the impact was made to the left of the insured vehicle and that Rogers Avenue is a one-way street.
Joseph initially testified that the impact was made to the right of the vehicle and that Rogers Avenue is a two-way street (NYSCEF Doc. No. 80 page 32-34 of the transcript). Joseph then altered her testimony and stated that the impact was made to the left of the insured vehicle and that Rogers Avenue is a one-way street (id).
State Farm further claims that according to the uncertified and inadmissible police report, none of the Claimants alleged any injuries at the scene of the collision, no medical personnel was required for anybody, the airbags did not deploy in the Insured Vehicle, there was minor loss reported, the Insured Vehicle was drivable from the scene, and the Claimants nevertheless underwent significant medical treatment due to serious bodily injuries sustained as a result of the subject collision (NYSCEF Doc. No. 76 and 77). The Claimants received treatment from the Non-Answering Defendants. State Farm further alleges that the Non-Answering Defendants submitted over $50,000 in No-Fault claims as the alleged assignees of the Claimants. State Farm claims that it has no obligation to provide coverage as the Claimants' injuries do not arise from the insured incident.
The Court finds State Farm fails to establish its entitlement to summary judgment on its claim based on a founded belief that the Claimants' injuries did not arise from an insured accident. There is insufficient proof establishing that the Claimants' injuries could not have resulted from the subject collision. While the Court agrees that Joseph and Francois' EUO testimonies reveal inconsistencies that may raise credibility issues regarding the alleged collision and the injuries sustained, viewing the evidence in the light most favorable to the nonmoving party, State Farm's branch of motion for summary judgment on the third cause of action that it maintains a founded belief that the injuries of the Claimants did not arise from an insured incident is denied. It is unnecessary to determine whether Remaining Providers' opposition were sufficient to raise a triable issue of fact (Santiago v NY City Health & Hosps. Corp., 66 A.D.3d 435 [1st Dept 2009]).
c. Fourth Cause of Action - Intentional or Staged Collision
The subject policy provides no-fault coverage for bodily injuries resulting from a motor vehicle accident. State Farm claims that the purported collision was intentionally caused by some of the Claimants for purposes of generating fraudulent insurance claims.
An intentional and staged collision caused in furtherance of an insurance fraud scheme is not a covered accident under an insurance policy (Nationwide Gen. Ins. Co. v Linwood Bates III, 130 A.D.3d 795, 796 [2d Dept 2015], citing Matter of Liberty Mut. Ins. Co. v Goddard, 29 A.D.3d 698, 699, 815 N.Y.S.2d 650 [2006]; see Matter of Liberty Mut. Ins. Co. v Young, 124 A.D.3d 663, 664, 1 N.Y.S.3d 330 [2015]). If the incident was deliberate, then none of the defendants are entitled to coverage, regardless of the innocence of any particular defendant, and regardless of whether or not the incident was motivated by fraud or malice (Allstate Ins. Co. v Massre, 14 A.D.3d 610 [2d Dept 2005], Govt. Emples. Ins. Co. v Robbins, 15 A.D.3d 484 [2d Dept 2005]). Evidence of fraud should be considered in determining the question of whether or not the collision was deliberate (Matter of Eagle Ins. Co. v Davis, 22 A.D.3d 846 [2d Dept 2005]).
State Farm submits an affidavit by Micki Fraley, one of its Claim Specialists, in support (NYSCEF Doc. No. 73 at page 8). His affidavit summarizes State Farm's investigation, concluding there is a strong possibility the accident and treatment were fraudulent. However, this affidavit is conclusory and self-serving and not enough to rebut the testimony of the eyewitnesses with first-hand knowledge (Aur v Manhattan Greenpoint Ltd., 132 A.D.3d 595 [1st Dept 2015], citing Winegrad v NY Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985] [bare conclusory assertions by defendants do not establish that the cause of action has no merit as to entitle a party to summary judgment]).
This Court looks at the totality of the circumstances to determine whether an inference can reasonably be made that the collision was staged. There is no evidence that the present collision was deliberate. State Farm points to no inconsistent testimony regarding the collision itself or the identities of the individuals involved. To the contrary, based on Francois and Joseph's EUO testimonies, the Court finds no material inconsistencies regarding the occurrence of the collision. The Court finds that the testimony does not prove that the collision was staged. State Farm provides no evidence regarding the circumstances of the collision, nor any eyewitness statement suggesting that the collision was deliberate.
The Court finds that State Farm fails to meet its burden to set forth a prima facie case entitling it to a judgment declaring that the collision was not an accident as a matter of law, and it is unnecessary to determine whether the Remaining Providers' opposition were sufficient to raise a triable issue of fact (Santiago v NY City Health & Hosps. Corp., supra). Accordingly, State Farm's branch of motion for summary judgment on the fourth cause of action that loss was intentionally caused is denied.
Conclusion
Accordingly, it is
ORDERED that State Farm's branch of motion for summary judgment on the second cause of action that Louis-Jean failed to appear for his EUO on two occasions, which violates a condition precedent to coverage, is granted; and it is further
ORDERED that State Farm's branch of motion for summary judgment on the third cause of action that it maintains a founded belief that the injuries of the Claimants did not arise from an insured incident is denied; and it is further
ORDERED that State Farm's branch of motion for summary judgment on the fourth cause of action that it has no duty to provide a defense or indemnification or pay the claims because the collision was deliberate is denied; and it is further
ORDERED that State Farm shall serve a copy of this order with Notice of Entry upon all parties within 20 days of this Order.
This constitutes the Decision and Order of the Court.