A.B. Med. Servs. PLLC v Travelers Indem. Co., 2008 NY Slip Op 28185 (Nassau Dist Ct)
Therefore, the question presented is whether the suspension of the license of the sole member/manager of a professional limited liability company renders the existence of the entity to be fraudulent under the holding of Mallela, supra , and to violate Insurance Law § 5102(a)(1) and 11 NYCRR 65-3.16(a)(12) thereby precluding reimbursement for services rendered.
The facts established in this case do not support the defendant that the entity is fraudulently formed as outlined in Mallela;, supra . However, neither the plaintiff nor Dr. Braver offer any rationale for failing to adhere to the requirements of the Limited Liability Company Law. Dr. Braver raises through an affidavit in opposition that he is being persecuted by the insurance companies, but fails to offer any other defense to the defendant’s allegation of fraudulent formation. Dr. Braver had the opportunity to avail himself voluntarily of options to continue the entity through a valid transfer but failed to do so. Therefore, the plaintiff while properly formed in light of the suspension of its sole member is now required to dissolve and wind up its affairs. As such, it does not have standing to the continued maintenance of this action.
Clearly, Dr. Braver is not permitted to continue as a member of the entity. This however does not mean that Dr. Braver must forfeit his rights to payment or that the potential debt of the defendant is erased. The entity is allowed as part of its winding up affairs to pursue claims Limited Liability Company Law § 703(b). Dr. Braver, as a creditor of the entity, would be entitled to payments earned.
American Transit Insurance Company v 21st Avenue Medical Plaza, P.C., 2008 NY Slip Op 31371(U) (Sup Ct, NY County)
ill add more in a little bit.