Opinion
Index No. 154119/2022 Motion Seq. No. 001
03-20-2023
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. ACCESS MEDICAL DIAGNOSTIC SOLUTIONS, P.C., AT BAY CHIROPRACTIC, P.C., BACK TO HEALTH CHIROPRACTIC, P.C., DK ACUPUNCTURE & MASSAGE THERAPY, P.C., JORDAN FERSEL M.D., P.C., NORTHWELL HEALTH - STATEN ISLAND UNIVERSITY HOSPITAL, NEW YORK CITY FIRE DEPARTMENT EMS, ST. HERMINA PHYSICAL THERAPIST, P.C., FREDDIE CASTELLANO Defendant.
Unpublished Opinion
MOTION DATE 11/14/2022
DECISION + ORDER ON MOTION
LORI S. SATTLER, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40 were read on this motion to/for JUDGMENT - DEFAULT.
In this declaratory judgment action, plaintiff State Farm Mutual Automobile Insurance Company ("State Farm") moves for default judgment against all defendants pursuant to CPLR 3215. Defendants At Bay Chiropractic, P.C., Back to Health Chiropractic, P.C., and St. Hermina Physical Therapist, P.C. ("Answering Defendants") cross move for an order vacating default, granting an extension of time to appear and plead pursuant to CPLR 3012(d), and compelling Plaintiff to accept their answer. The remaining defendants ("Non-Answering Defendants") have not appeared.
Defendant Freddie Castellano was struck by a State Farm insured vehicle while walking along Pheasant Lane on Staten Island on June 4, 2021. According to the police report, the driver of the insured vehicle, Valerie Rooker, backed into Castellano because she did not see him. Castellano subsequently reported that he suffered injuries from the accident for which he received treatment from the remaining defendants ("Medical Provider Defendants"). The Medical Provider Defendants allegedly submitted thousands of dollars in bills for treatment allegedly rendered to Castellano.
State Farm investigated Castellano's claim and found it questionable based on conflicting accounts of his accident and the volume and amount of medical bills associated with its treatment. A neighbor reported to a State Farm representative that Castellano had parked his vehicle outside of Rooker's home in the spot she normally used, that an argument ensued between them, and that Rooker entered her vehicle and backed into Castellano while trying to claim her parking spot. Rooker told State Farm that she did not strike Castellano with her vehicle, but rather that he physically assaulted her and drove the vehicle away from where it was parked and parked it elsewhere.
State Farm accordingly believed that there was a strong possibility that the collision did not occur as Castellano alleged, that his injuries did not arise from an insured incident, or that his treatment by the Medical Provider Defendants was not causally related to the collision. It then exercised its rights under the relevant No-Fault regulations and requested that Castellano appear for an examination under oath (EUO) to confirm the legitimacy of the loss and necessity of his medical treatment.
Castellano failed to appear for his scheduled EUOs on two occasions (NYSCEF Doc. No. 23). State Farm consequently denied all No-Fault claims submitted by the Defendants and commenced this action seeking declaratory judgment confirming that it has no obligation to pay No-Fault claims arising out of the June 4, 2021 collision, based on Castellano's breach of a condition precedent to No-Fault coverage.
State Farm moves for default as against all Defendants based on Castellano's breach of a condition precedent to coverage due to his failure to appear for an EUO. A party is entitled to default judgment pursuant to CPLR 3215 where it files proof of service of its Summons and Complaint, proof of the facts constituting its claim, and proof of default (CPRL 3215[f]; Gantt v North Shore-LIJ Health Sys., 140 A.D.3d 418 [1st Dept 2016]). Here, State Farm has filed proof of service of its summons and complaint upon the Defendants (NYSCEF Doc. No. 10). The Answering Defendants were served via the Secretary of State. The remaining Medical Provider Defendants were served either through an authorized agent or via the Secretary of State. Castellano was served via delivery upon a suitable person and by mail. State Farm also submits an adjuster affidavit and other documents containing proof of the facts in support of its claim (NYSCEF Doc. Nos. 18, 21-25) and proof of the Defendants' default (NYSCEF Doc. No. 27).
The Answering Defendants oppose State Farm's motion. The Answering Defendants argue that State Farm fails to present nonhearsay proof of its claim and that it failed to comply with the 30-day window for denying No-Fault claims under 11 NYCRR 65-3.8, therefore making No-Fault benefits overdue. The Answering Defendants further maintain that State Farm erroneously relies on Castellano's nonappearance at the EUOs in denying coverage because State Farm failed to timely request the EUOs under 11 NYCRR § 65-3.5 and to establish a reason based on "objective standards" to request an EUO under 11 NYCRR § 65-3.2(c) and 3.5(e).
11 NYCRR § 65-1.1 requires that a No-Fault claimant fully comply with the terms and coverage in a No-Fault policy as a condition precedent to all claims against an insurer under that policy. A claimant's failure to submit to an EUO constitutes a breach of a condition precedent to coverage under a No-Fault policy and vitiates the policy (Hertz Corp. v Active Care Med. Supply Corp., 124 A.D.3d 411 [1st Dept 2015]; Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 A.D.3d 559, 560 [1st Dept 2011]).
However, insurers must have "good reasons" to demand verification of a claim's underlying facts (11 NYCRR § 65-3.2[c]). When an insurer requires an EUO, "such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination" (11 NYCRR § 65-3.5[e]). An insurer fails to comply with the No-Fault claims procedure where it does not provide the required "specific objective justification" for its EUO request (see Country-Wide Ins. Co. v Delacruz, 205 A.D.3d 473 [1st Dept 2022]).
Here, State Farm proffers the affidavit of its claims adjuster expressing its reasons why it found Castellano's claim questionable. According to the claims adjuster, State Farm was given conflicting accounts of the accident from Rooker, Rooker's attorney, and a neighbor who witnessed the accident. The Court therefore finds that State Farm has provided a specific objective justification for seeking Castellano's EUO.
To deny a No-Fault claim where a claimant has failed to appear for an EUO, an insurer must establish that it timely requested EUOs in accordance with the claim procedure in 11 NYCRR § 65-3.5 (Unitrin, 82 A.D.3d at 560; American Tr. Ins. Co. v Longevity Med. Supply, Inc., 131 A.D.3d 841, 841-42 [1st Dept 2019]). This procedure first requires that the insurer forward to claimants "the verification forms it will require prior to payment of the initial claim" within 10 business days after receiving a completed application for no-fault benefits ("NF-2 form") (11 NYCRR § 65-3.5[a]). After receiving one or more of these verification forms ("NF-3 forms"), the insurer must request "any additional verification" needed to establish proof of claim within 15 business days (11 NYCRR § 65-3.5[b]). A request for an EUO is timely when it is made within 15 days of the receipt of an NF-3 form such as a medical provider claim (Unitrin Direct Ins. Co. v Beckles, 188 A.D.3d 620 [1st Dept 2020]) and may also be sought before an insurer receives an NF-3 (Mapfre Ins. Co. of N.Y. v Manoo, 140 A.D.3d 468, 469 [1st Dept 2016]).
The Court finds that State Farm timely requested an EUO of Castellano. Here, Castellano submitted an NF-2 dated June 30, 2021, although the record does not indicate that any verification forms were requested of him (NYSCEF Doc. No. 22). State Farm submits the NF-3 form it received from one of the Medical Provider Defendants: a bill from At Bay Chiropractic dated October 7, 2021 (NYSCEF Doc. No. 25). Castellano's first EUO was also noticed on October 7, 2021 via a letter sent by regular and certified mail, within the 15 day time frame provided by 11 NYCRR § 65-3.5[b] (NYSCEF Doc. No. 23 at 2-6).
State Farm's motion for default on its claims is granted as against the Non-Answering Defendants. It followed the applicable No-Fault regulations by providing a specific objective justification for seeking EUOs and notifying Castellano of the EUO requirement within the required timeframe. It is undisputed that Castellano twice failed to appear at an EUO. In so doing, he breached a condition precedent to coverage, thereby vitiating the policy with respect to claims arising out of the June 4, 2021 collision (Hertz Corp., 124 A.D.3d at 411).
The Answering Defendants cross-move for an order vacating their default, granting them an extension for time to appear pursuant to CPLR 3012(d), and compelling State Farm to accept their Answer. They contend that their default was not willful or intended to prejudice State Farm. The Answering Defendants were served via the Secretary of State on June 10, 2022 (NYSCEF Doc. No. 35). However, they did not interpose their answer until August 5, 2022; State Farm then rejected the Answer as untimely (NYSCEF Doc. No. 34). The Answering Defendants assert that this default was caused by delayed processing of Summons and Complaints at the Secretary of State's Office, resulting in delays of service upon defendants
The cross-motion is granted to the extent of granting the Answering Defendants an extension of time to appear and compelling State Farm to accept their Answer. CPLR 3012(d) allows the court to "extend the time to appear or plead, or compel the acceptance of a pleading untimely served . . . upon a showing of reasonable excuse for delay or default." Here, the Answering Defendants have offered a reasonable excuse for their untimely Answer, namely the delays in service from the Secretary of State. Accordingly, it is hereby:
ORDERED that Plaintiffs motion is granted to the extent of entering default judgment against defendants Access Medical Diagnostic Solutions, PC; DK Acupuncture & Massage Therapy, P.C.; Jordan Fersel M.D., PC; Northwell Health - Staten Island University Hospital; New York City Fire Department EMS; and Freddie Castellano; and it is further
ORDERED that Plaintiffs motion for a default judgment against defendants At Bay Chiropractic, P.C., Back to Health Chiropractic, P.C., and St. Hermina Physical Therapist, P.C. is denied; and it is further
ORDERED that the cross motion of defendants At Bay Chiropractic, P.C, Back to Health Chiropractic, P.C, and St. Hermina Physical Therapist, P.C is granted to the extent that said defendants' Answer filed August 5, 2022 is deemed timely filed nunc pro tunc.