I’m pretty sure I’m recycling even my non-obvious titles.
Lincoln Gen. Ins. Co. v Alev Med. Supply Inc, 2009 NY Slip Op 29389 (Dist Ct Nassau County, First Dist)
Lincoln commenced this action seeking to recover the money it paid to Alev on the claim.
Alev has defaulted in the action. Lincoln now moves for leave to enter a default judgment.
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Lincoln could have denied the claim on the grounds it was fraudulent. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., supra . Lincoln did not. It paid the claim in part and denied the claim in part
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Permitting Lincoln to recover in this action would allow an insurer to avoid or evade the time restrictions of the no fault law and regulations by paying and then investigating a claim and suing to recover the previously paid benefits if the investigation reveals the claim was fraudulent. To permit this would subvert the entire no-fault system which establishes strict time limits by which an insurer must process, dispute and pay a claim.
The no-fault law and regulations require insurers to promptly investigate and pay claims. The regulations provide insurers with the verification process in order to obtain additional information designed to ferret out illegitimate or fraudulent claims.
While the 30 day period plus any applicable tolls for paying or denying a claim may be “…too short of a time frame in which to detect billing fraud, any change is up to the Legislature.” Fair Price Medical Supply Corp. v. Travelers Indemnity Co., supra at 565.
All bases that an in insurer has for denying a no fault claim, except for specific and limited exceptions, must be raised in a timely denial.[FN2] The only way an insurer can avoid paying a fraudulent no fault claim is to deny the claim as fraudulent in a timely denial and to assert and prove the defense at trial. Id.; and Lenox Hill Radiology and MIA, P.C. v. Global Liberty Ins. Co. of New York, 24 Misc 3d 1225(A) (NY Civil Ct. 2009).
One of the elements of an application for leave to enter a default judgment is proof a cause of action against the defendant.. Francisco v. Soto, 286 AD2d 573 (1st Dept. 2001); and Joosten v. Gale, 129 AD2d 531 (1st Dept. 1987); and Siegel, New York Practice 4th §295. Lincoln complaint fails to state a claim upon which relief can be granted.
Nothing in this decision precludes Lincoln from reporting this apparent insurance fraud (Penal Law Article 176) to the appropriate law enforcement authorities or from obtaining restitution should Alev be prosecuted and found guilty of insurance fraud in connection with this claim. Penal Law §60.27.
For the foregoing reasons, plaintiff’s motion for leave to enter a default judgment is denied. The action is dismissed.
This decision follows the reasoning in Cornell Med., P.C. v Mercury Cas. Co., 2009 NY Slip Op 29228 (App. Term, 2nd), though the Court does not cite the decision.
Roy Mura, over at CoverageCounsel, believes that the outcome should have been different.