Opinion
CV-704318-19/NY
03-12-2021
RESTORATIVE CHIROPRACTIC SOLUTIONS, PC as Assignee of Lourdes Clyne, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INS. CO., Defendant.
John E. Fagan, Esq., Restorative Chiropractic Solutions. Dianne M. Galluzzo, Esq. and Michael A. Soriano, State Farm Mutual Automobile Ins. Co.
John E. Fagan, Esq., Restorative Chiropractic Solutions.
Dianne M. Galluzzo, Esq. and Michael A. Soriano, State Farm Mutual Automobile Ins. Co.
Ilana J. Marcus, J.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this motion:
Papers/Numbered
Notices of Motion and Affidavits Annexed 1
Answering Affidavits and Notice of Cross-Motion 2
Replying Affirmation and Opposition to Cross-Motion 3
Exhibits
Email Correspondence 4
Other
BACKGROUND
Plaintiff medical provider, Restorative Chiropractic Solutions, PC, brings this action against insurer defendant State Farm Mutual Automobile Ins. Co., to recover first-party no-fault benefits for medical services provided to its assignor, Lourdes Clyne ("plaintiff assignor"). Defendant makes the instant motion for summary judgment based on its denials of the claims. The bulk of the denials — three out of five of them — allege material misrepresentation in the procurement of the policy. Defendant asks that if this court does not grant summary judgment on a proper denial of material misrepresentation, that it determine its denials were at a minimum timely. Plaintiff opposes the motion and cross-moves for summary judgment.
Plaintiff assignor was involved in a motor vehicle accident on June 14, 2017, and sought medical treatment. This action seeks reimbursement for five claims corresponding to dates of service between August 1, 2017 to September 7, 2017, totaling $505.98. Defendant supplied the following chart that provides information relevant to its request for verification and denials:
| Bill | Dates of Service | Amount of Bill | Amount Paid | Date Received | Delay letter | Date of Denial | Reason for Denial |
|---|---|---|---|---|---|---|---|
| 1 | 8/01/17 | $54.74 | $43.79 | 9/05/17 | N/A | 9/12/17 | Bill was partially paid and remainder was denied |
| 2 | 8/02/17-8/10/17 | $69.36 | $55.49 | 9/05/17 | N/A | 9/12/17 | Bill was partially paid and remainder was denied |
| 3 | 8/11/17-8/22/17 | $173.40 | $0 | 9/18/17 | 9/26/17-10/27/17 | 11/27/17 | Material Misrepresentation in Procurement of the Policy |
| 4 | 8/23/17-8/24/17 | $69.36 | $0 | 9/18/17 | 9/26/17-10/27/17 | 11/27/17 | Material Misrepresentation in Procurement of the Policy |
| 5 | 8/31/17-9/07/17 | $138.72 | $0 | 9/29/17 | 10/05/17 | 11/27/17 | Material Misrepresentation in Procurement of the Policy |
Plaintiff assignor acquired the policy with a residential address in Florida. The subject motor vehicle accident occurred in New York. Defendant's investigation of the claims prompted questions about plaintiff assignor's residency and principal garaging location of the insured vehicle (Galluzo Aff., ¶¶ 18-19). Defendant mailed verification request letters to plaintiff seeking an examination under oath ("EUO") of plaintiff assignor to ascertain if there was a material misrepresentation in procurement of the policy (Galluzo Aff., Exh. E).
The EUO was held on November 3, 2017 (Galluzo Aff., Exh. G). Plaintiff assignor testified that at the time of the subject accident she resided in Brooklyn, New York, and principally garaged the insured vehicle there as well ( id. ; Galluzo Aff., ¶¶ 20 — 22). In fact, plaintiff assignor stated that the subject vehicle never entered the state of Florida (Galluzo Aff., Exh. G, p 44). Defendant claims that had it known plaintiff assignor resided in New York and would principally garage the subject vehicle there, it would not have issued the policy (Galluzo Aff., ¶ 22). Defendant issued Denial of Claim Forms ("NF-10s") on September 12, 2017, and November 27, 2017 (Galluzo Aff., Exh. D).
DISCUSSION
The movant on a motion for summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence to eliminate any material issues of fact from the case ( Winegrad v New York Univ. Med. Ctr. , 64 NY2d 851, 853 [1985] ; Zuckerman v City of New York , 49 NY2d 557, 562 [1980] ). CPLR 3212(b) provides that a summary judgment motion must be supported by an affidavit of a person with knowledge of the facts, as well as other admissible evidence ( see JMD Holding Corp. v Congress Fin. Corp. , 4 NY3d 373, 384-85 [2005] ). Once such a showing is made, "the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" ( Alvarez v Prospect Hosp. , 68 NY2d 320, 324 [1986], citing Zuckerman v City of New York, 49 NY2d at 562 ).
The no-fault insurance scheme is designed to provide a quick resolution of the reimbursement of claims, avoid litigation, and incentivize an insurer to seek verification of a claim, deny it, or pay it in short order ( see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co. , 25 NY3d 498, 506-07 [2015] ; Matter of Med. Socy. of State v Serio , 100 NY2d 854, 860 [2003] ). The procedure to verify, deny, or pay claims is codified and governed by Insurance Law § 5106(a).
A claimant has 45 days after medical services are rendered to submit claims ( see 11 NYCRR 65-1.1 ). An insurer may request verification of the claim(s) which shall be requested within 15 business days of receipt of the prescribed verification forms ( see 11 NYCRR 65-3.5 [b]). If the requested verification has not been received within 30 days of the request, the insurer shall make a second request within 10 calendar days and, at the same time, "inform the applicant and such person's attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested" ( 11 NYCRR 65-3.6 [b]). An insurer shall either pay or deny the claim in whole or in part within 30 calendar days after proof of the claim(s), including the requested verification, is received ( see 11 NYCRR 65-3.8 [c]).
Timeliness of Defendant's Denials
Even though plaintiff did not submit any evidence, this court searches the record presented and determines that plaintiff's initial burden is met. There is no dispute that plaintiff timely submitted its claims to defendant. Defendant asks this court to find that it timely denied plaintiff's claims as a matter of law. The claims for dates of service August 1st through August 10th, were timely denied after partial payment was made. As to claims for dates of service from August 11th through September 11th, defendant mailed verification requests and conducted an EUO before denying the claims for a material misrepresentation in the procurement of the policy. Plaintiff in its cross motion asks that this court determine that all the claims are overdue and unpaid, and thus, it is deserving of summary judgment.
Defendant submits the affidavits of Cathy Shandera, Lisa Edwards, Matthew Allen, and Paul Kosowski to demonstrate that it timely mailed delay letters, explanations of review, and NF-10s to plaintiff on the dates reflected in the chart above. Defendant claims that the affidavits are sufficient to establish the standard office practices and procedures of mailing these forms. Defendant argued that the contents of its delay letters clearly advised that it was investigating the loss and would request an EUO of plaintiff assignor, which consequently tolled the insurer's obligation to deny or pay the claims (Soriano Aff. in Reply and Opp, ¶17).
In its opposition to defendant's motion for summary judgment, plaintiff argues that defendant's delay letters failed to toll the time to pay or deny plaintiff's claims (Fagan Aff in Opp, ¶¶ 4, 18). Plaintiff claims the contents of the delay letters do not specifically inform it about what verification is needed other than stating an EUO is required (Fagan Aff in Opp, ¶ 18). Plaintiff also claims that defendant failed to provide copies of the EUO requests to plaintiff (Fagan Aff. in Opp, ¶19). As a result, it argues defendant's NF-10s were untimely and defendant is precluded from the defense of material misrepresentation in the procurement of an insurance policy (Fagan Aff. in Opp, ¶¶ 17, 22).
Defendant's affidavits and supporting exhibits establish the dates that the subject claims were received. Also, the delay letters to plaintiff were sufficient to toll the 30-day period (Galluzo Aff., Exh. E). Defendant's additional verification letters were mailed within 15 days after it received plaintiff's claims ( see 11 NYCRR 65-3.5 [a], [b]; Hertz Vehicles, LLC v Best Touch PT, P.C. , 162 AD3d 617, 618 [1st Dept 2018] ). The delay letter was specific enough to communicate to plaintiff that an EUO was required. No further specificity is necessary. If plaintiff required any additional explanation of the delay letter, it is plaintiff's responsibility to communicate about it ( see Canarsie Chiropractic, P.C. v State Farm Mut. Auto. Ins. Co. , 27 Misc 3d 1228(A) [Civ Ct, Kings Cty 2010] ; Dilon Med. Supply Corp. v Travelers Ins. Co., 7 Misc 3d 927, 929 [Civ Ct, Kings Cty 2005] ).
As to the claim that defendant failed to provide copies of the EUO request to plaintiff, this claim is controverted by the affidavit of Richard C. Aitken who submitted that his law office mailed plaintiff and the assignor an EUO scheduling letter (Galluzo Aff., p 14 [Aitken affidavit], and Exh. F). After the EUO took place on November 3, 2017, defendant denied those claims for material misrepresentation in procurement of the policy.
Defendant's summary judgment motion established that plaintiff timely mailed the claims and that the claims were denied in a timely manner. As a result, plaintiff cannot establish that the claims are overdue.
Material Misrepresentation
As to the later three claims that were denied on the basis of material misrepresentation in the procurement of the policy, defendant refers the court to the affidavit of its underwriter, Dawn Thompson (Galluzo Aff., ¶¶4, 22; Soriano Aff. in Reply and Opp, ¶¶17, 38). Plaintiff correctly points out that no such affidavit was annexed to defendant's submissions.
The insurer may raise the defense of fraudulent procurement of an insurance policy against health service providers seeking to recover assigned no-fault benefits, but this defense must be supported with sufficient proof that the misrepresentation was material ( see Quality Medical Care, PC v Progressive Casualty Ins. Co., 56 Misc 3d 1214[A] [Civ Ct, Bronx Cty 2017] ). A misrepresentation is material only if the insurer can demonstrate that it would not have issued the insurance policy if the correct information was known ( see Interboro Ins. Co. v Fatmir , 89 AD3d 993 [2d Dept 2011] ; Novick v Middlesex Mut. Assur. Co. , 84 AD3d 1330 [2d Dept 2011] ; Varshavskaya v Metropolitan Life Ins. Co. , 68 AD3d 855 [2d Dept 2009] ). Materiality of a misrepresentation is ordinarily a question for trial ( see Kiss Const. NY, Inc. v Rutgers Cas. Ins. Co. , 61 AD3d 412, 413-14 [1st Dept 2009] ). A court may determine the issue of materiality when evidence is presented that is clear and substantially uncontradicted ( see id. citing Process Plants Corp. v Beneficial Natl. Life Ins. Co. , 53 AD2d 214 [1st Dept 1976], affd 42 NY2d 928 [1977] ).
After reviewing defendant's 286-page motion, and 14-page reply and opposition to the cross motion, this court emailed the parties on February 22, 2021, for help locating the underwriter's affidavit. Defendant's counsel responded by email that the underwriter's affidavit was not annexed to its papers and any references to the affidavit were "a typographical error." Without this evidence, defendant cannot establish materiality as a matter of law and therefore, its motion for summary judgment fails.
Accordingly, it is hereby
ORDERED, defendant's motion for summary judgment and plaintiff's cross motion for same are granted to the extent that the issues preserved for trial are the bases for the timely denials. Plaintiff's bills were timely submitted, as were defendant's denials. An issue of fact exists as to whether plaintiff assignor's misrepresentation about her residence and garaging of the vehicle was material in the procurement of the insurance policy.
This constitutes the decision and order of the court.