Only Justice Golia’s concurring opinion is worth discussing.
New York First Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 2009 NY Slip Op 52217(U) (App. Term, 2nd, 2009)
Golia, J., concurs in the result only, in the following memorandum:
While I agree with the ultimate disposition in the decision reached by the majority, I strenuously disagree with the majority gratuitously raising a nonexistent issue, namely that a Mallela defense (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) may be disallowed if “prejudice or surprise would result therefrom.” This impression was created by the majority in choosing here to excise an important requirement with regard to the law of amending an answer. The actual statement by the Court of Appeals in McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp. (59 NY2d 755, 757 [1983] [emphasis added, citations and internal quotations marks omitted]) is that, “Leave to amend the pleadings shall be freely given absent prejudice or surprise resulting directly from the delay.”
Inasmuch as it is inconceivable that a Mallela defense of fraudulent incorporation could ever create prejudice or surprise that resulted directly from the delay in raising such defense, it is clear that such analysis is unwarranted.
To me, it is extremely unlikely that an individual who creates a fraudulent entity for the purpose of defrauding an insurance company would forget that he/she did so and be prejudiced or surprised when it was discovered. Such would be akin to a person running a “Ponzi” scheme deciding to invest in his own firm because it was obtaining such good results.
Really? It looks like Justice Golia skipped a step, namely, a finding that there is in fact a Mallela violation. And it’s no small step. By that logic, a plaintiff could add a bad faith cause of action, at the last minute, and defendant could not complain of any surprise because, well, they knew they were illegally and improperly handling their claims. For the sake of argument, assume that the bad faith cause of action is viable–none of that consequential damages nonsense.
Without ever having had a trial on the matter, Justice Golia has concluded that plaintiff is a fraudulently created entity, hell bent on defrauding insurance companies. I don’t see how his opinion can be read another way. In fact, Golia appears to support a rule that, any plaintiff accused of a Mallela violation can never legitimately oppose a defendant’s motion to amend. What if defendant is wrong and there is no Malella violation? Wouldn’t it be fair to say that plaintiff was in fact surprised and prejudiced by the late amendment? Nope, not according to Justice Golia. Can’t happen. It wouldn’t be alleged if it wasn’t true, right? Insurance companies haven’t been sued and lost because they made allegations they knew were wrong, right?
I’m just wondering how much longer the Appellate Term can go on ignoring things like; the rules of evidence, governing case law from higher courts, and oh, I don’t know, the regs themselves in making decisions on no-fault appeals. Things have gotten way beyond absurd.
Surprised, can’t be. Prejudiced? Guess it depends. Golia’s strongest point is that a deliberately bad actor can’t legitimately be surprised by even a late allegation of bad acting. “Prejudice”, however, is another thing. Would just litigation delay, need for additional discovery and increased expense be enough to constitute “prejudice” from the delayed assertion of a Mallela defense? What sayeth the CPLRblogger?
He starts out with the assumption that providers are fraudulently incorporated. I understand his point. He starts with and uses the conclusion, and only the conclusion, to prove the conclusion.
“Inasmuch as it is inconceivable that a Mallela defense of fraudulent incorporation could ever create prejudice or surprise that resulted directly from the delay in raising such defense, it is clear that such analysis is unwarranted.”
Golia’s attempts to create divergent rules of evidence and rules of procedure, one set applicable to medical providers, one set applicable to insurance carriers, continue. Here, for example, he invites the Term to create a new rule of law that would grant the no-fault carrier the unconditional right to amend its answer at any point in litigation. Golia gives lip service to Court of Appeals authority before aruging that a special rule should be crafted in no-fault law that contradicts said athority.
Of course, Golia is also the one who has spearheaded, among other things, the invaid case law in this Term that the no-fault carrier may lodge evidentiary objections for the first time on appeal, yet the medical provider may not.
Golia tells us that everything we learned in law school is wrong, and that procedural due process does not exist.
Even if you disregard the nonsensical nature of his decisions themselves, how does one explain the consistency of those decisions in favoring the insurance industry over all other litigants? The pattern is stark and undeniable.
Edward R. Murrow addresses this very issue in two entries on Zuppa’s Pit. You may want to check them out.