Opinion
Index No. 651676/15
08-11-2016
AMERICAN TRANSIT INSURANCE COMPANY, Plaintiff, v. JIMENEZ ENDRY GARCIA, ARS MEDICAL P.C., JOURNEY ACUPUNCTURE P.C., NEW MILLENNIUM MEDICAL IMAGING, P.C., PRO-ALIGN CHIROPRACTIC P.C., PRO EDGE CHIROPRACTIC P.C., UNION PHYSICAL THERAPY P.C., Defendant.
Motion Sequence 001
DECISION AND ORDER
SHERRY KLEIN HEITLER, J.S.C.
Plaintiff American Transit Insurance Company ("Plaintiff" or "American Transit") moves pursuant to CPLR 3215 for default judgments against all of the defendants for failing to answer or otherwise appear in this action. Plaintiff further seeks a declaratory judgment that defendant Jimenez Endry Garcia ("Garcia") is not entitled to motor vehicle no-fault benefits under American Transit insurance policy CAP 612713 ("the Policy") regarding Claim No. 777684-02 ("Claim") and that American Transit is not obligated to pay any claims for reimbursement submitted by Mr. Garcia's health care providers, defendants ARS Medical P.C., Journey Acupuncture P.C., New Millennium Medical Imaging, P.C., Pro-Align Chiropractic, P.C., Pro Edge Chiropractic, P.C., and Union Physical Therapy, P.C. ("the Providers") arising under the Policy and the Claim.
CPLR 3215(a) provides in relevant part that "[w]hen a defendant has failed to appear, plead or proceed to trial of an action reached and called for trial, or when the court orders a dismissal for any other neglect to proceed, the plaintiff may seek a default judgment against him."
The Policy that is the subject of this action was issued by American Transit to A VA Service Corp. It includes a no fault endorsement which provides coverage to an eligible insured in the amount of $50,000 for expenses resulting from a motor vehicle accident. The Policy was in effect on June 22, 2014 when a vehicle owned by A VA Service Corp. was involved in a motor vehicle accident. Defendant Garcia was allegedly driving the vehicle at the time. On July 23, 2014, American Transit received a New York Motor Vehicle No-Fault Insurance Law Application for Motor Vehicle Benefits form (NF-2) from Mr. Garcia who claimed benefits under the Policy. According to Plaintiff, Mr. Garcia assigned the right to collect such benefits to the Providers.
It is unclear when the Policy was first issued.
The New York State Department of Financial Services has promulgated regulations concerning New York's no-fault laws which require insurers to include certain endorsements as part of any motor vehicle policy. As is relevant to this case, the Policy contains the following conditional provisions in conformity with 11 NYCRR 65-1.1 (see also Insurance Law § 5103):
No action shall lie against the Company unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage.
* * * *
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. [Exhibit B, at 15-16].
American Transit sent notices to Mr. Garcia on October 3, 2014, October 16, 2014, October 29, 2014, and November 13, 2014, each requesting that he appear for an Independent Medical Examination ("IME"). Despite such notices, Mr. Garcia did not appear for his examination. Thereafter American Transit denied defendants' request for coverage. The denial of claim form (NF-10), which was signed by American Transit representative Joann Shepard on December 10, 2014, recites Mr. Garcia's failure to appear for his IME as the reason for the denial.
Exhibit D.
The moving papers do not include proof of service of the denial of claim form upon the defendants. However the moving papers include an April 19, 2016 affidavit by an American Transit mail room supervisor, Mr. Luis Campbell, who sets forth American Transit's standard office practice mailing procedures. Based thereon, he avers that the denial of claim form was mailed to the defendants via USPS first class mail on December 10, 2014.
American Transit filed its summons and verified complaint in this action on May 15, 2015. The complaint seeks a declaratory judgment that American Transit properly denied no fault coverage in this case due to Mr. Garcia's violation of a condition precedent to coverage by failing to appear for his IME. American Transit further seeks a declaration that the Providers are not entitled to payment of the assigned no fault benefits for treatment rendered to Mr. Garcia as a result of his accident. American Transit's proofs of service show that all of the defendants were served within the 120 day period prescribed by CPLR 306-b. There is no record that any defendant has answered or appeared in this action. On April 29, 2016 American Transit filed this motion for a default judgment against the defendants and a declaratory judgment that the defendants are not entitled to benefits under the Policy and the Claim. Its motion is unopposed.
An application for a default judgment must include proof of service of the summons, proof of the claim, and proof of the default. The moving papers establish that Plaintiff duly served defendant Garcia pursuant to CPLR 308(4) and the various Providers were served pursuant to CPLR 311 and BCL 306. The defendants were served with additional copies of the summons and complaint on March 25, 2016 as required by CPLR 3215(g)(3)(i) and CPLR 3215(g)(4)(i) . Annexed to the moving papers is an affidavit by Ms. Shepard, sworn to April 19, 2016, which sets forth the facts constituting Plaintiff's claims herein. See CPLR 3215(f). Based on the foregoing, the court finds that the defendants indeed are in default.
CPLR 308(4) provides that personal service upon a natural person can be made "by affixing the summons to the door of either the actual place of business, dwelling place or usual place of abode within the state of the person to be served and by either mailing the summons to such person at his or her last known residence . . . ." CPLR 311(a)(1) provides in part that corporation may be served by the delivering the summons "to an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service. . . ." Business Corporation Law 306 authorizes service of process upon a domestic corporation by service on the New York State Secretary of State as agent of the corporation.
CPLR 3215(g)(3)(i) provides in relevant part that "when a default judgment based upon nonappearance is sought against a natural person in an action based upon nonpayment of a contractual obligation an affidavit shall be submitted that additional notice has been given by or on behalf of the plaintiff at least twenty days before the entry of such judgment, by mailing a copy of the summons by first-class mail to the defendant at his place of residence . . . ." CPLR 3215(g)(4)(i) provides that "[w]hen a default judgment based upon non-appearance is sought against a domestic or authorized foreign corporation which has been served pursuant to paragraph (b) of section three hundred six of the business corporation law, an affidavit shall be submitted that an additional service of the summons by first class mail has been made upon the defendant corporation at its last known address at least twenty days before the entry of judgment."
CPLR 3215(f) provides in relevant part that "[o]n any application for judgment by default, the applicant shall file . . . proof of the facts constituting the claim . . . .Where a verified complaint has been served, it may be used as the affidavit of the facts constituting the claim and the amount due."
Notwithstanding, Plaintiff has not shown its entitlement to declaratory relief. New York's no-fault system is designed "to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists". Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312, 317 (2007) (quoting Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 860 [2003]). 11 NYCRR 65-3.5(a) provides that "within 10 business days after receipt" of an NF-2 form, an insurer shall forward, to the parties required to complete them, the verification forms it will require prior to payment of the initial claim. Under 11 NYCRR 65-3.5(b), "[s]ubsequent to the receipt of one or more of the completed verification forms, any additional verification required by the insurer to establish proof of claim shall be requested within 15 business days of receipt of the prescribed verification forms" and under 11 NYCRR 65-3.5(d), "[i]f the additional verification required by the insurer is a medical examination, the insurer shall schedule the examination to be held within 30 calendar days from the date of receipt of the prescribed verification forms."
The consequences of an insurer's failure to pay or deny a claim within the statutory period are substantial. Indeed, the insurer that fails to respond to a claim within the statutory period is "generally precluded from asserting a defense against payment of the claim." Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d at 317.
The First Department's recent decision in American Transit Ins. Co. v Vance, 131 AD3d 849 (1st Dept 2015) showcases the consequences of failing to comply with these regulations. In that case, although the insurer established that the notices of the scheduled IMEs were properly mailed and that the claimant did not appear, the insurer's motion for summary judgment was denied because it did not follow the time frames set forth in 11 NYCRR § 65-3.5(d). See also American Tr. Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841 (1st Dept 2015); National Liab. & Fire Ins. Co. v Tam Med. Supply Corp., 131 AD3d 851 (1st Dept 2015). In light of these decisions, it is clear that an insurer must affirmatively establish that it complied with claim procedures in order to obtain a judgment declaring that no coverage exists based on the failure of a claimant to appear for a medical examination. See Unitrin Advantage Ins. Co. v Better Health Care Chiropractic, P.C., 2016 N.Y. Misc. LEXIS 1698, *5 (Sup. Ct. NY Co. May 4, 2016, Madden, J.); Mapfre Ins. Co. of N.Y. v Aubry, 2016 N.Y. Misc. LEXIS 2030, *4-5 (Sup. Ct. NY Co. Mar. 30, 2016, Singh, J.).
Here, as in Vance, the court has been presented with no evidence to show that American Transit complied with the applicable claim procedures, 11 NYCRR § 65-3.5(a), (b), and (d). Specifically, American Transit has not shown that it timely mailed verification forms to the Providers and/or received the completed verifications forms back from the Providers, and has not shown that it timely scheduled Mr. Garcia's IME upon receiving such completed verification forms. Therefore, American Transit cannot demonstrate its entitlement to a declaratory judgment.
Accordingly, it is hereby
ORDERED that American Transit's motion is denied with leave to renew within 30 days from the date of entry of this decision and order, failing which this action shall be dismissed in its entirety.
This constitutes the decision and order of the court.
DATED: 8-11-16
ENTER:
/s/ _________
SHERRY KLEIN HEITLER, J.S.C.