On EUOs and NTAs

Dynamic Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 2010 NY Slip Op 20285 (Nassau Dist Ct, First Dist 2010)

The document demand contained in State Farm’s EUO letters to Dynamic and Dr. Brownstein are essentially a demand for pre-action discovery regarding a Malella defense. CPLR 3102(c) permits pre-action discovery only by court order and only to aid in bringing an action. Some of the documentation requested in the EUO letters State Farm might not be able to obtain even if it had been requested in a duly served notice for discovery and inspection.^[FN3]

The oft stated purpose of the No-fault Law is to insure prompt payment for medical services rendered to persons injured in motor vehicle accidents. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., supra; and Hospital for Joint Diseases v. Travelers Property Casualty Ins. Co., 9 NY3d 312 (2007); and Presbyterian Hosp. in City of NY v. Maryland Cas. Co., supra. Permitting an insurer to obtain what would be [*6]tantamount to full discovery regarding a Malella defense as part of an EUO would defeat that purpose and is beyond the scope of the No-fault Law and regulations relating to EUO.

Permitting an insurer to demand what has been demanded by State Farm in this action for an EUO is fraught with the potential for abuse. See, Unitrim Advantage Ins. Co. v. Carothers, 17 Misc 3d 1121(A) (Sup. Ct. NY Co. 2007); and Gegerson v. State Farm Ins. Co., 27 Misc 3d 1207(A) (District Ct. Nassau Co. 2010). An insurer should not be able to defeat no fault claims by making an onerous and improper document demand relating to an EUO.

If an insurer has a reasonable basis for believing a medical provider cannot obtain payment of no-fault benefits because the provider is “fraudulently incorporated”, then it should assert the defense in its answer and litigate the issue on the merits in the action brought by the provider for no-fault benefits. The insurer should move to consolidate all of the actions brought by the provider and have the issue of whether the provider is subject to a Malella defense determined in one action. See, Andrew Carothers, M.D., P.C. v. Insurance Companies Represented by Bruno, Gerbino & Soriano, LLP, supra. Alternatively, an insurer can commence a declaratory judgment action seeking a judgment declaring the provider ineligible to receive no-fault payments. See, State Farm Mutual Ins. Co. v. Malella, supra.

While State Farm may have reason to believe Dynamic is not eligible to receive no-fault benefits for Malella reasons, State Farm cannot use a palpably improper EUO demand not subject to court review as a basis for obtaining summary judgment. See, Westchester Medical Center v. Progressive Casualty Ins. Co., 51 AD3d 1012 (2nd Dept. 2008).

Since the EUO demand was improper, defendant’s motion for summary judgment is denied.

Meridan Health Acupuncture, P.C. v Auto One Ins. Co., 2010 NY Slip Op 51263(U) (Dist Ct Suffolk County, Third Dist 2010).

It is noted that the Appellate Courts are split on the availability of Notices to Admit to establish a medical provider no fault insurance claim. This court has previously decided that the Notice to Admit could be used to establish a NY Ins. Law § 5106(a) prima facie cause of action. Advanced Tempromandibular Disorder & Dental Surgery v. Progressive Northeastern Ins. Co., 27 Misc 3d 436 (Suf. Co. Dist. Ct. 2010) 896 NYS2d 830. Subsequent to that decision, the Appellate term of the Supreme Court, First Department has allowed no fault plaintiffs to establish their prima facie case via Sec. 3123 admissions and expressly found that facts such as receipt of a claim and the failure to respond or pay within 30 days were not legal conclusions which constitute inappropriate requests to admit. Central Nassau Diagnostic Imaging, P.C. v. Geico., 2010 NY Slip Op 20244 (App. Term, 1st Dept., 2010).

The plaintiff in this action seeks to push the envelope one step further by asking for a finding that a written timely inappropriate response similarly constitutes a statutory admission sufficient to establish a prima facie case without the need to call a witness.

The Notice to Admit is a procedural device used to narrow the disputed issues to be addressed at trial. See Hodes v. City of New York I, 165 AD2d 168, 566 NYS2d 611 (App. Div. 1st Dept. 1991). If a party declines to do anything in response to the Notice to Admit, the requested admissions are deemed admitted. The proper response as per CPLR Sec. 3123 is either an admission, a denial, or ” if the matters of which an admission is requested cannot be fairly admitted without some material qualification or explanation such party may, in lieu of a denial or statement, serve a sworn statement setting forth in detail his claim..”^[FN1] Unlike requests for written interrogatories where a party is permitted to object in lieu of responding (CPLR 3133 (a)), such a procedure is not authorized with a Notice to Admit. See Webb v. Tire and Brake Distributor, Inc., 13 AD3d 835, 786 NYS2d 636 (NYAD 3rd Dept. 2004), cited in Prime Psychological Serv. P.C. v. Auto One Insurance Co.,18 Misc 3d 1122(A) (NY Civ. Ct. 2008). If there is a request for an improper admission, the correct procedure is to seek a protective order, pursuant CPLR § 3103. See Saqiv v. Gamache, 26 AD3d 368 (N.Y.A.D. 2nd Dept. 2006).

The plaintiff s Notice to Admit has established its prima facie case that; (1) necessary billing documents were mailed to and received by insurer, and (2) that the payments of no-fault benefits was overdue. New York Insurance Law § 5106; See Countrywide Ins. Co. v. 563 Grand Medical, P.C., 50 AD3d 313 (NY AD 1st Dept. 2008). As the defendant has presented no testimony or alternative evidence to rebut the plaintiff’s case, this Court must enter judgment for [*3]the plaintiff in the sum of $3,485.00. The plaintiff shall settle judgment plus appropriate costs, interest and attorneys fees upon twenty (20) days notice.