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INSURANCE DEPT CIRCULAR LETTER NO. 3 (2009)

Written on February 22, 2009 by Dave Gottlieb

In a letter dated Feb 19, 2009, regarding the Notice of Claim Provisions of the No-fault law, the Insurance Dept reminded insurers of a few things:

TO:
All Motor Vehicle Self-Insurers and Insurers Writing Motor Vehicle Insurance in New York State

RE:
Unfair Claims Settlement Practices - No-Fault Notice of Claim Provisions

STATUTORY REFERENCE: Article 51 and Section 2601 of the New York Insurance Law; 11 NYCRR § 65 (Regulation 68)

Circular Letter No. 9 (2002), issued April 9, 2002, provided guidance to insurers and self-insurers in implementing a revised no-fault insurance regulation, 11 NYCRR Pt 65 (Regulation 68), which took effect on April 5, 2002. The Circular Letter advised of a new time limit for providing notice of a motor vehicle accident to an insurer or self-insurer, and provided guidance to insurers and self-insurers for establishing standards for excusing late notice where there is clear and reasonable justification for the failure to comply with the required timeframe.

The purpose of this Circular Letter is to remind insurers and self-insurers of their obligations with respect to the notice of claim provisions set forth in 11 NYCRR § 65-3.3, and to provide further guidance with regard to those requirements.

NYS Form NF-2 Submission
Regulation 68 does not establish a required time frame in which a claimant must return an NF-2 form to an insurer. 11 NYCRR § 65-3.3(e) permits an insurer to issue a denial for failure to provide timely written notice of claim within 30 days of the accident. However, as noted in the June 2, 2008 opinion of the Department’s Office of General Counsel (“OGC”) (OGC Op. No. 08-06-01), neither the Insurance Law nor the regulations promulgated thereunder authorize an insurer to issue a denial on the ground that the claimant failed to return a completed NF-2 to the insurer when the claimant has otherwise submitted timely written notice within 30 days of the accident in accordance with 11 NYCRR § 65-1.1.

Satisfaction of Written Notice
11 NYCRR § 65-3.3(d) allows for satisfaction of the written notice requirement through the insurer’s receipt of an NF-2 or completed hospital facility form (NYS Form NF-5). But the written notice requirement may be satisfied in other ways as well. Indeed, 11 NYCRR § 65-3.3(c) provides that the receipt by an insurer of a Department of Motor Vehicles Accident Report 104 (MV-104) or other accident report indicating injuries to an eligible injured person shall satisfy the written notice requirement. Further, pursuant to 11 NYCRR § 65-3.5(g), an insurer must accept a completed hospital facility form (NYS Form NF-5) submitted on behalf of a provider of health services in lieu of a prescribed NF-2.

Standards for Excusing Late Notice of Claim
In accordance with 11 NYCRR § 65-1.1, the 30-day written notice requirement must be excused if the claimant submits written proof of clear and reasonable justification for the failure to comply. Moreover, 11 NYCRR § 65-3.5(l) requires insurers to establish standards for review of determinations where an applicant has provided late notice of claim. Such standards must be available for review upon request by Department examiners.

Self-Insurers
All of the aforementioned notice regulatory provisions apply equally to self-insurers, as set forth in 11 NYCRR § 65-2-4.

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EAST ACU

Written on February 20, 2009 by Dave Gottlieb

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East Acupuncture, P.C. v Allstate Ins. Co., 2009 NY Slip Op 01191 (App. Div., 2nd) came out today:

Applying these principles to the matter at bar, we find that the term “applicant” as used in 11 NYCRR 65-3.9(c) refers to both provider/assignees and injured persons. Since the Superintendent’s parallel interpretation is neither irrational nor unreasonable, it is entitled to deference (see Matter of 427 W. 51st St. Owners Corp. v Division of Hous. & Community Renewal, 3 NY3d at 342; Matter of Visiting Nurse Serv. of N.Y. Home Care v New York State Dept. of Health, 5 NY3d at 506). In light of the fact that the no-fault regulations do not provide a general definition of the term “applicant,” the plain meaning of this term in 11 NYCRR 65-3.9(c) would seem to refer to any entity, whether an injured person or a provider/assignee, who submits a claim or applies to an insurance company for no-fault benefits (see Majewski, 91 NY2d at 583). Indeed, in some instances, these regulations use the term “applicant” as a generic reference to both provider/assignees and injured persons (see e.g. 11 NYCRR 65-3.2[b], 65-3.3[a], 65-4.2[b][1][I]); while, in other instances, the term “applicant” is used to refer specifically to injured persons (see e.g. 11 NYCRR 65-3.5[e], 65-3.8[g]). However, construing the no-fault regulations as a whole and considering their various sections in reference to each other, as we must (see People v Mobil Oil Corp., 48 NY2d at 199), the Superintendent’s interpretation of the term “applicant,” as used in 11 NYCRR 65-3.9(c), as a generic reference to both provider/assignees and injured persons is entitled to deference not only because the no-fault regulations do not use this term consistently and exclusively as a reference to injured persons, but because the Superintendent’s definition is consistent with the manner in which it is used in certain other instances.

The Superintendent’s interpretation of 11 NYCRR 65-3.9(c) is additionally consistent with the spirit and purpose of the No-Fault Law (see generally Matter of ATM One v Landaverde, 2 NY3d at 477). One of the primary aims of the no-fault system is to ensure prompt payment of claims (see Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d at 860; Cardinell v Allstate Ins. Co., 302 AD2d at 774). The interest which accrues on overdue no-fault benefits at a rate of two percent per month (see Insurance Law § 5106[a]; 11 NYCRR 65-3.9[a]) is a statutory penalty designed to encourage prompt adjustments of claims and inflict a punitive economic sanction on those insurers who do not comply (see Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224; Cardinell v Allstate Ins. Co., 302 AD2d at 774). Interpreting 11 NYCRR 65-3.9(c) as applying the interest toll only to injured persons would allow a provider/assignee, who delays commencing legal action or requesting arbitration on denied claims, to continue to accrue interest pursuant to Insurance Law § 5106(a) throughout this period of delay. Rewarding such delay with what amounts to essentially a windfall of punitive interest payments is at odds with the legislative goal of promptly resolving no-fault claims.

IV.
Finally, the Superintendent’s interpretation conforms with the general principle that an assignee stands in the shoes of an assignor and thus acquires no greater rights than those of its assignor (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126; Long Is. Radiology v Allstate Ins. Co., 36 AD3d 763, 765; TPZ Corp. v Dabbs, 25 AD3d 787, 789). ” It is axiomatic concerning legislative enactments in derogation of common law . . . that they are deemed to abrogate the common law only to the extent required by the clear import of the statutory language’” (Blue Cross & Blue Shield of N.J. v Philip Morris USA Inc., 3 NY3d 200, 206, quoting Morris v Snappy Car Rental, 84 NY2d 21, 28). Under the interpretation of 11 NYCRR 65-3.9(c) urged by East Acupuncture, a provider/assignee would not be subject to the toll on the accrual of [*7]statutory interest provided for by that regulation even though the toll would apply to its assignor, the injured person, if the injured person had submitted the same claim for no-fault benefits to the insurer itself. Because such an abrogation of the common law is not required by the language of 11 NYCRR 65-3.9(c) (see Blue Cross & Blue Shield of N.J. v Philip Morris USA Inc., 3 NY3d at 206), the Superintendent’s contrary interpretation is neither irrational nor unreasonable and is, again, entitled to due deference (see Matter of 427 W. 51st St. Owners Corp. v Division of Hous. & Community Renewal, 3 NY3d at 342).

V.
We further find that East Acupuncture’s reliance upon LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co. (46 AD3d 1290, 1291-1292, lv granted 10 NY3d 717) is misplaced. In LMK, the Appellate Division, Third Department, rejected the no-fault insurer’s contention that the trial court improperly awarded interest to the provider/assignees by not tolling interest for the period between 30 days after they received the claim denial until commencement of their action (see LMK Psychological Servs., P.C., 46 AD3d at 1291). Although noting that this contention was not raised by the insurer in the lower court and thus unpreserved for appellate review, the Appellate Division, Third Department, went on to conclude that the interest toll only applied to no-fault claims timely denied by the insurer (id. at 1291-1292). Likewise, East Acupncture’s reliance on New York & Presbyt. Hosp. v Allstate Ins. Co. (30 AD3d at 494), is also misplaced.

This ruling, enunciated as dicta, is inapposite since it did not confront the precise issue presented by this appeal: whether the term “applicant,” as used in 11 NYCRR 65-3.9(c), refers to both injured persons and provider/assignees (see Sabella and Lustig, Outside Counsel, Accrual Date for Payment of Interest in No-Fault Cases, NYLJ, May 29, 2008, at 4, col 4).

VI.
In conclusion, we hold that the term “applicant,” as used in 11 NYCRR 65-3.9(c), refers to both provider/assignees and injured persons and that the toll on statutory interest provided for therein applies to no-fault claims submitted to insurers by both types of claimants. Accordingly, the Appellate Term properly determined that interest pursuant to Insurance Law § 5106(a) did not begin to accrue on the claims that were untimely denied by Allstate until East Acupuncture filed its complaint. Thus, the Appellate Term properly reversed the order of the Civil Court and remitted the matter for the new interest calculation.

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OTHER NEW CASES FROM THE APP. DIV.

Written on February 19, 2009 by Dave Gottlieb

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Gulf Ins. Co. v Stradford, 2009 NY Slip Op 01198 (App. Div., 2nd)

The timeliness of a carrier’s disclaimer based on its insured’s alleged violation of the policy’s cooperation clause “almost always presents a factual question, requiring an assessment of all relevant circumstances surrounding [the] particular disclaimer” and “cases in which the reasonableness of an insurer’s delay may be decided as a matter of law are exceptional and present extreme circumstances” (see Continental Ins. Co. v Stradford, 11 NY3d 443, 449). This case is neither exceptional nor does it present extreme circumstances. Accordingly, we modify the order of the Supreme Court to deny the plaintiff’s motion for summary judgment.

Estee Lauder Inc. v OneBeacon Ins. Group, LLC, 2009 NY Slip Op 01313 (App. Div., 1st)

As the duties to disclaim promptly and specifically are imposed by law (see Hotel Des Artistes, Inc. v General Acc. Ins. Co. of Am., 9 AD3d 181, 193 [2004], lv dismissed 4 NY3d 739 [2004]), an insurer cannot unilaterally absolve itself of these duties. Thus, an insurer cannot avoid a waiver of a defense of which it has actual or constructive knowledge (i.e., avoid its duties to disclaim promptly and with specificity on the basis of that defense), by a unilateral assertion in a disclaimer notice that it is reserving or not waiving a right to disclaim on other, unstated grounds (id. at 185, 193 [despite statement by insurer in its disclaimer letter that it was not waiving any rights or defenses under the policy not mentioned in the letter, insurer waived defense of late notice both because it failed to disclaim on this ground in the letter and because it [*3]failed to raise a defense of late notice in its answer]; see also Allstate Ins. Co. v Moon, 89 AD2d 804, 806 [1982]).

…

OneBeacon is not persuasive in contending that it did not disclaim coverage in its July 2002 and November 2002 letters. As noted, in the July 2002 letter OneBeacon informed Lauder that it was “terminating its investigation of this matter and closing its file” with respect to Lauder’s tender under the disputed pre-1971 policy (Policy No. E-16-40036-27) with regard to the Huntington and Blydenburg landfills. With respect to the Hickey’s Carting claim, OneBeacon expressly referenced in its November 2002 letter the earlier decision to close its file and went on to state, “[p]lease be advised that OneBeacon had determined, at this time, it will [*4]not revisit its prior determination.” Even assuming that OneBeacon did not state in either letter that it was “disclaiming” coverage, both letters made clear that OneBeacon was denying coverage.^[FN4]

No case cited by OneBeacon supports the proposition that an insurer disclaims coverage only if it uses a form of the word “disclaim” in the course of denying coverage. The cases that are on point are to the contrary (see e.g. Commercial Union Ins. Co. v International Flavors & Fragrances, Inc., 822 F2d 267, 270, 274 [2d Cir 1987] [construing New York law]). Moreover, to accept OneBeacon’s position would exalt form over substance and invite gamesmanship. Because we conclude that OneBeacon did disclaim coverage in the July 2002 and November 2002 letters, we need not address Lauder’s independent contentions that OneBeacon constructively waived its untimely notice defenses by failing to assert them within a reasonable time (see e.g. 151 E. 26th St. Assoc. v QBE Ins. Co., 33 AD3d 452 [2006]), and by failing to assert them with specificity in its answer to Lauder’s complaint (see e.g. Hotel des Artistes, 9 AD3d at 193).

With respect to constructive waiver, one final contention by OneBeacon should be addressed. It argues that “where, as here, the existence of coverage has not been established because the insurance policy is missing, . . . an insurer cannot waive its right to disclaim coverage.” To be sure, as noted above, “where the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable” (Albert J. Schiff, 51 NY2d at 698). Thus, where the putative insured fails to establish coverage, it is not created by the insurer’s failure timely to disclaim coverage (id.). It does not follow, [*5]however, that when an insurer asserts that no policy was in effect during the relevant period, an untimely-notice defense to coverage need not be timely asserted.

OneBeacon’s argument would be more compelling if the duties of an insurer to disclaim coverage in a timely, specific and nonselective manner were imposed solely by the terms of the contract of insurance. As noted above, however, those duties are imposed by law. So, too, at least where the policy is silent on the subject, the conditions of reasonable-notice-of-occurrence and reasonable-notice-of-claim are implied into every insurance contract (see Olin Corp. v Insurance Co. of N. Am., 743 F Supp 1044, 1051 [SD NY 1990] [construing New York law], affd 927 F2d 62 [2d Cir 1991]).

…

In its opposition, OneBeacon failed to meet its burden of coming forward with evidentiary facts sufficient to raise any material issues of fact that would require denial of Lauder’s motion (see Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [1978]; S.J. Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338, 343 [1974]). As the affidavit of Lauder’s expert submitted in its reply convincingly demonstrates, OneBeacon’s expert offered only unsupported assumptions and speculation (see Aero-Motive, 254 F Supp 2d at 692-693; Batista v Rivera, 5 AD3d 308, 309 [2004]; Warden v Orlandi, 4 AD3d 239, 242 [2004]; Leggio v Gearhart, 294 AD2d 543, 545 [2002]). For this same reason, OneBeacon failed to raise a material issue of fact supporting its position — on which it bears the burden of proof (see Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 444 [2002]) — that the disputed policy would have contained a pollution exclusion during the entire policy period.

Adames v Nationwide Mut. Fire Ins. Co., 55 AD3d 513 (App. Div., 2nd)

A notice of disclaimer “must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated” (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]; see Insurance Law § 3420 [d]), and “[a]n insurer’s justification for denying coverage is strictly limited to the ground stated in the notice of disclaimer” (Shell v Fireman’s Fund Ins. Co., 17 AD3d 444, 446 [2005]; see Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d 595 [2004]; Prus v Glencott Realty Corp., 10 AD3d 390 [2004]). Thus, an insurer waives any ground for denying coverage that is not specifically asserted in its notice of disclaimer, even if that ground would otherwise have merit (see General Acc. Ins. Group v Cirucci, 46 NY2d at 864; Vacca v State Farm Ins. Co., 15 AD3d 473 [2005]; Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d at 596).

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NEW DECISIONS FROM APPELLATE TERM, 2nd

Written on February 18, 2009 by Dave Gottlieb

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Came out this morning. I’ll post them a little later. Until then, here is the link for them.

Edit: here they are. And one from Buffalo.

Great Wall Acupuncture, P.C. v New York Central Mutual Insurance Company, 2009 NY Slip Op 50224(U) (App. Term, 2nd, 2009)

In the instant case, the affidavit submitted by plaintiff’s billing manager was sufficient to establish that she possessed personal knowledge of plaintiff’s practices and procedures so as to lay a foundation for the admission, as business records, of the documents annexed to plaintiff’s moving papers. Further, any deficiency in plaintiff’s moving papers regarding proof of mailing of the claim forms was cured by defendant’s claim denial forms and the affidavit of defendant’s no-fault litigation examiner, in which receipt of the claims in question was conceded (see East Acupuncture, P.C. v Electric Ins. Co., 16 Misc 3d 128[A], 2007 NY Slip Op 51281[U] [App Term, 2d & 11th Jud Dists 2007]; Oleg Barshay, D.C., P.C. v State Farm Ins. Co., 14 Misc 3d 74 [App Term, 2d & 11th Jud Dists 2006]). Accordingly, plaintiff made a prima facie showing of its entitlement to summary judgment.
In support of its motion for summary judgment and in opposition to plaintiff’s cross motion for summary judgment, defendant asserted that it timely denied plaintiff’s claims based on plaintiff’s owner’s failure to appear for scheduled examinations under oath (EUOs). However, a review of the record indicates that defendant failed to timely request the EUO after receiving plaintiff’s bills (see Insurance Department Regulations [11 NYCRR] §§ 65-3.5 [b]; 65-3.6 [b]). As a result, defendant’s time to pay or deny plaintiff’s claim was not tolled (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [c]). Consequently, defendant is precluded from, inter alia, relying upon plaintiff’s failure to appear at an EUO as a defense to this action (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]; Rigid Med. of Flatbush, P.C. v New York Cent. Mut. Fire Ins. Co., 11 Misc 3d 139[A], 2006 NY Slip Op 50582[U] [App Term, 2d & 11th Jud Dists 2006]). Accordingly, the judgment is affirmed, albeit on other grounds.

Top Choice Med., P.C. v New York Cent. Mut. Fire Ins. Co., 2009 NY SlipOp 50230(U) (App. Term, 2nd, 2009)

The affidavit submitted by defendant’s litigation examiner failed to establish that defendant timely mailed its denial of claim form based upon its standard office practice or procedure designed to ensure that items are properly addressed and mailed, since it merely stated that the denial of claim form was mailed and did not sufficiently set forth the steps which comprise defendant’s mailing practices and procedures (see New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Align for Health Chiropractic, P.C. v New York Cent. Mut. Fire Ins. Co., 20 Misc 3d 144[A], 2008 NY Slip Op 51862[U] [App Term, 2d & 11th Jud Dists 2008]; Horton Med., P.C. v New York Cent. Mut. Fire Ins. Co., 20 Misc 3d 142[A], 2008 NY Slip Op 51682[U] [App Term, 2d & 11th Jud Dists 2008]). As a result, defendant failed to establish that its defense of lack of medical necessity was not precluded (see e.g. Delta Diagnostic Radiology, P.C. v Republic W. Ins. Co., 15 Misc 3d 33 [App Term, 2d & 11th Jud Dists 2007]). [*2]Accordingly, the order granting defendant’s motion for summary judgment is reversed and defendant’s motion is denied.

Continental Med., P.C. v Mercury Cas. Co., 2009 NY Slip Op 50234(U) (App. Term, 2nd, 2009)

Although chiropractors may not affirm pursuant to CPLR 2106 (see Slavenburg Corporation v Opus Apparel, Inc., 53 NY2d 799, 801 [1981]; Kunz v Gleeson, 9 AD3d 480, 481 [2004]; Shinn v Catanzaro, 1 AD3d 195, 197 [2003]), this defect was waived since plaintiff failed to object in the court below (see Akamnonu v Rodriguez, 12 AD3d 187 [2004]; see also Shinn, 1 AD3d 195; Scudera v Mahbubur, 299 AD2d 535 [2002]; cf. O’Connor v Singh, 16 Misc 3d 30, 31 [App Term, 1st Dept 2007]). As a result, the IME report proffered by defendant established defendant’s prima facie entitlement to summary judgment on the ground that the services rendered to plaintiff’s assignor were not medically necessary (see Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App [*2]Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]). In opposition, plaintiff proffered an unsworn medical report which was “dictated but not read.” Thus, it was of no probative value (see Dowling v Mosey, 32 AD3d 1190 [2006]; Macri v St. Agnes Cemetery, 44 Misc 2d 702 [1965]). Inasmuch as plaintiff failed to rebut defendant’s prima facie case, defendant’s motion for summary judgment dismissing the complaint should have been granted (see Delta Diagnostic Radiology, P.C., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U]; A. Khodadadi Radiology, P.C., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U]).

There is a long dissent. Short version, the majority is wrong. I’ll put up the rest later.

Delta Diagnostic Radiology, P.C. v Country-Wide Ins. Co., 2009 NY Slip Op 50236(U) (App. Term, 2nd, 2009)

In this action to recover assigned first-party no-fault benefits, plaintiff moved to, inter alia, compel the deposition of defendant. Defendant failed to oppose plaintiff’s motion or to seek a protective order. Accordingly, the motion should have been granted to the extent of compelling defendant to appear for a deposition (see Crossbay Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 15 Misc 3d 110, 112 [App Term, 2d & 11th Jud Dists 2007]).

Richard Morgan Do, P.C. v State Farm Mut. Auto. Ins. Co., 2009 NY Slip Op 50242(U) (App. Term, 2nd, 2009)

In support of its cross motion, defendant submitted, inter alia, an affidavit of an employee of Independent Physical Exam Referrals, Inc. (IPER), the company which scheduled the IMEs. The District Court granted defendant’s cross motion for summary judgment dismissing the complaint. On appeal, plaintiff argues only that defendant’s cross motion for summary judgment should have been denied because the affidavit executed by IPER’s employee was insufficient to establish that defendant’s request and follow-up request for an IME were mailed to plaintiff’s assignor.
Contrary to plaintiff’s contentions, the affidavit submitted by defendant was sufficient to establish that defendant’s requests and follow-up requests for IMEs were mailed to plaintiff’s assignor (see Chi Acupuncture, P.C. v Kemper Auto & Home Insurance Co., 14 Misc 3d 141[A], 2007 NY Slip Op 50352[U] [App Term, 9th & 10th Jud Dists 2007]). Accordingly, the order, insofar as appealed from, is affirmed.

Daniel C. Cox, DC, P.C. v State Farm Gen. Ins., 2009 NY Slip Op 29066 (City Ct Buffalo)

The court finds that it has subject matter jurisdiction over this matter pursuant to Uniform City Court Act §§ 201, 202 & 212. The defendants are well know automobile insurance carriers who have been transacting business in New York State and the City of Buffalo for decades. They have both been plaintiffs in this court for dozens if not hundreds of actions. Additionally, all of the plaintiffs maintain and regularly transact business in their offices within the City of Buffalo or in townships adjacent to the City of Buffalo which allows this court to obtain subject matter jurisdiction over these actions pursuant to Uniform City Court Act § 213.

…

This court finds that service on the defendants pursuant to Insurance Law § 1212 is valid service and gives this court personal jurisdiction over the defendants pursuant to the authority of Uniform City Court Act §§ 403 & 404 and the Court of Appeals holding in [*3]Pohlers v. Exeter Mfg, 293 NY 274 (1944).

It should be noted that the court has found no case law which suggests that the Pohlers decision is no longer good law, and has in fact been cited by appellate courts well after the 1962 change to the New York State Constitution cited by the defendants. Falck v. Sublett, 78 AD2d 834 (1st Dept 1980).

In fact our own Fourth Department has stated in a decision specifically citing to the Pohlers decision that a party may by agreement consent to the jurisdiction of a court which would not otherwise have authority over him. Further, public policy does not forbid the appointment of an agent to accept service, or an agreement, in advance of litigation, to submit oneself to jurisdiction by subjecting oneself to process. While ordinarily a court can acquire jurisdiction of the person of a defendant only by service of process within the jurisdiction of the court; that rule does not apply where the defendant has agreed in advance to accept some other form of service as sufficient. Bauer v. MVAIC, 31 AD2d 239, 241 (4th Dept 1969).

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NEW (OLD) DECISIONS

Written on February 16, 2009 by Dave Gottlieb

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These decisions came out while I was up at the Court of Appeals, except for one that I found while strolling around the interweb.

Park Slope Med. & Surgical Supply, Inc. v Country-Wide Ins. Co., 2009 NYSlipOp 50203(U) (App. Term, 2nd, 2009)

Judgment reversed without costs, so much of the order as granted plaintiff’s motion for summary judgment vacated, plaintiff’s motion for summary judgment denied, and matter remanded to the Civil Court for all further proceedings.

For the reasons stated in Velen Med. Supply, Inc. v Country-Wide Ins. Co. (___ Misc 3d ___, 2009 NY Slip Op _____ [No. 2007-1406 Q C], decided herewith), the judgment is reversed, so much of the order as granted plaintiff’s motion for summary judgment is vacated, and plaintiff’s motion for summary judgment is denied.

A.B. Med. Servs., PLLC v Merchants Mut. Ins. Co., 2009 NYSlipOp 50204(U)(App. Term, 2nd, 2009)

Since defendant raised no issue in the District Court with regard to plaintiffs’ prima facie case, we do not pass upon the propriety of the District Court’s determination with respect thereto. As the affidavit of defendant’s claims representative does not describe defendant’s standard office practice and procedure to ensure that items were properly addressed and mailed, defendant did not establish that its denial of claim forms were timely mailed (see New York & Presby. Hosp. [*2]v Allstate Ins. Co., 29 AD3d 547 [2007]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2007]; Delta Diagnostic Radiology, P.C. v GEICO Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50137[U] [App Term, 9th & 10th Jud Dists 2006]). Defendant is, therefore, precluded from asserting most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), including its defense that plaintiff Lvov Acupuncture, P.C. sought to recover an amount in excess of the amount permitted by the worker’s compensation fee schedule (see Ultra Diagnostics Imaging v Liberty Mut. Ins. Co., 9 Misc 3d 97 [App Term, 2d & 11th Jud Dists 2005]), but is not precluded from asserting the defense that the alleged injuries do not arise out of a covered accident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 201 [1997]). However, the documents submitted in opposition to plaintiffs’ motion, including the affirmation of defendant’s attorney, the copies of transcripts of recorded witness statements, and the affidavit of defendant’s claims representative, were insufficient to demonstrate that defendant’s defense of lack of coverage was “premised on the fact or founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. at 199).

AJS Chiropractic, P.C. v Mercury Ins. Co., 2009 NYSlipOp 50208(U)(App. Term, 2nd, 2009)

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that the services allegedly rendered to plaintiff’s assignor lacked medical necessity. Although the Civil Court found that defendant had timely denied the claims, the court denied defendant’s motion, apparently on the ground that the independent chiropractic examination report, upon which defendant had based its denials, was not in admissible form, notwithstanding the accompanying affidavit executed by the chiropractor. This appeal by defendant ensued.

Defendant demonstrated that it had timely mailed the denial of claim forms at issue based upon its standard office practice or procedure designed to ensure that items are properly addressed and mailed (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Defendant’s independent chiropractic examination report, together with the affidavit of the chiropractor, provided a factual basis and medical rationale for the chiropractor’s [*2]opinion that the services rendered were not medically necessary (see Delta Diagnostic Radiology, P.C. v Progressive Cas. Ins. Co., 21 Misc 3d 142[A], 2008 NY Slip Op 52450[U] [App Term, 2d & 11th Jud Dists 2008]; Crossbridge Diagnostic Radiology, P.C. v Progressive Ins. Co., 20 Misc 3d 143[A], 2008 NY Slip Op 51761[U] [App Term, 2d & 11th Jud Dists 2008]). As plaintiff failed to present any evidence to refute that showing, defendant’s motion for summary judgment dismissing the complaint should have been granted (see Delta Diagnostic Radiology, P.C., 21 Misc 3d 142[A], 2008 NY Slip Op 52450[U]; A. KhodadadiRadiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

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NOTHING TO SEE HERE

Written on February 16, 2009 by Dave Gottlieb

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ANOTHER BLOGGER’S TAKE ON LMK

Written on February 14, 2009 by Dave Gottlieb

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Damin J. Toell, Esq., over at It’s No-Fault of New York, posted his take on the LMK arguments. I’m posting part of his post here.

And, really, let’s be honest: the concept of “exhaustion” of attorney’s fees is just made up. They invented it out of nowhere for this litigation. Just look at the provisions concerning attorney’s fees in the Regs:

11 NYCRR § 65-4.6(b)(1) provides that, in a specific scenario, “[i]f the resolved claim was initially denied, the attorney’s fee shall be $80.” § 65-4.6(b)(2) provides “[i]f the resolved claim was overdue but not denied, the attorney’s fee shall not exceed…” The word “claim” in these provisions only makes sense if a claim is an individual bill. Otherwise, each “claim” could have a mixture of bills that were denied and not denied, and these provisions would write themselves out of existence.

To read the rest of the post, click here, or on the link at the beginning of this post.

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LMK ARGUMENTS AT THE COURT OF APPEALS

Written on February 12, 2009 by Dave Gottlieb

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LMK was a popular roadtrip. Progressive reps, Freiberg, Spina, Short & Billy, Lau, Picciano, Dodson, and Israel were all there. Not the actual people generally, just people from the firms.

Only six Judges sitting, no Lippman, who was sworn in that day.

Evan Krinick, of Rivkin Radler was there for the Appellant, State Farm.
Craig Mayerson was there for the Respondent, LMK.
And there was someone from the Insurance Department (Amicus).

Mr. Krinick started off swinging for the fences. His argument: there is one 850.00 cap per patient, per provider, regardless of the dates of treatment, or lawsuits. That was how he defined claim. So, if in one lawsuit, an $850.00 attorney fee is recovered, attorney fees are no longer recoverable for that patient, ever.

Judge Pigott asked him whether several bills over a three year period should be considered one claim, receiving only one attorney fee. Mr. Krinick said yes, and that the insurance department agrees with him. Mr. Krinick didn’t stop there, because that would have made sense. No, he pushed it further. He said that if a hypothetical patient treated every day over a year, there would be only $850.00 in attorney fees available, period.

The hypotheticals continued. Judge Pigott asked, and I’m paraphrasing here, assuming a patient gets in one accident and Mr. Krinick’s $850.00 cap was reached in one lawsuit, couldn’t an insurance company decide not to pay anymore, knowing that the attorney fees were exhausted.

Judge Smith asked whether the insurance company ever really said that there is one attorney fee for multiple lawsuits, and what happens when a plaintiff can’t find a lawyer to take on the case without attorney fees available.

Mr. Krinick’s response was that no carrier will deny claims just because attorney fees aren’t available. Judge Pigott added that to do that would be bad faith on the insurer’s part. Mr. Krinick commented that one attorney fee would encourage prompt submission of the bills, as would the preclusion remedy and the interest provisions.

*Not addressed: there is no pure bad faith cause of action in New York, so even it an insurance company did act in bad faith, the provider would have no remedy*

Mr. Krinick pressed his point that if the statute is unclear, the Insurance Dept is the entity that interprets it, not the Court.

For some reason, Mr. Krinick avoided the facts in LMK, namely, one lawsuit, several bills. Instead of addressing that, he wanted to give the Court only one option, and a nuclear one at that. He argued that plaintiff’s should have to pay their attorneys out of their pockets, despite the clear wording of the applicable regulations. I thought he was trying the “here is a terrible idea, but what about this,” approach. You know, the one teenagers use. For example:

“Mom, Dad, can I got out tonight and smoke some crack then rob a bank”?
“No?”
“Ok, then, can I stay out one hour past curfew“

Nope, he wasn’t trying to do that. He was going for the gold. No silver or bronze for him.

Next up was the Insurance Dept. as Amicus.

Almost immediately Judge Pigott questioned the attorney, saying 5106 says “valid claim” but doesn’t define claim as an amalgam of bills. The attorney said that it wasn’t a clear case of statutory interpretation, and that the Insurance Dept can interpret the statute. Because it can interpret the statute, it did, and it has decided that a claim is indeed an amalgam of bills. Judge Pigott followed by asking why, if the Insurance Dept defines claim that way, it isn’t defined in the Regs. The response: we feel it’s the best interpretation. Further pressed, the attorney agreed that once the attorney fee is exhausted in an earlier suit, the fees are exhausted.

Both Judge Pigott and Smith asked, where, once the second claim comes around, the plaintiff will find a lawyer who will work for free. The Insurance Dept’s response was that the provider can make its own personal arrangement with the lawyer. And when further questioned, said that the money for attorney fees can come out of the interest recovered.

The Insurance Dept., like Mr. Krinick, argued that this was not a case for the Court, that it should be left to the Insurance Dept.

Once Mr. Meyerson’s turn came, the issue of interest and how it should be tolled was addressed in detail. He argued that if a denial is late, and based upon a precluded defense, the insurance company should pay interest from when the claim is overdue, because that would encourage insurance companies to pay the bill rather than stall and hope that the provider never sues.

Judge Smith questioned him on this point, asking whether it should be OK for a provider to sit back and not sue, while collecting interest up to the SOL. Mr. Meyerson responded in the affirmative, arguing that insurance company that knows it issued a bad denial should pay promptly, instead of waiting to be sued to pay.

Judge Pigott also questioned him. He asked whether the tolling interest until the lawsuit would encourage providers to promptly sue. That is assuming the provider continues to treat no-fault patients, after not getting paid over and over again, was Mr. Meyerson’s response.

The Court then addressed what kind of deference it should give the Insurance Dept’s opinion. Judge Graffeo brought up Serio and reminded Mr. Meyerson of the standard in cases such as this is: whether the Superintendent’s opinion is irrational.

He responded that it was in fact irrational as it is plainly contrary to the legislative intent; that the Insurance Dept’s interpretation of the interest tolling provision is contrary to the quick payment portion of the statute. He added that a toll would only encourage lawsuits and further delay.

Shifting back to attorney fees, Judge Smith asked, shouldn’t the Court be especially deferential to the Insurance Dept on that issue; why doesn’t the Insurance Dept. know, more so than him? As well as whether the $850.00 per patient per provider, aggregate definition of claim is too little. Judge Graffeo asked a similar question. Meyerson responded that the Superintendent can define claim, however its interpretation must be consistent with the legislative intent, which it isn’t.

Judge Pigott also asked whether a provider could put more bills in one lawsuit. The response was that it isn’t practical.

*Addressed by neither the Court or any of the attorneys, was the fact that bills must be submitted in accordance with the statutory timeline. If they are submitted late, they can be denied due to the late submission. So it would be impossible and contrary to the regulations to put everything together, especially if there is one attorney fee per patient. Also not addressed was what happens if there is no assignment and the injured party sues. Should that person be crap out of luck because a provider sued on one of the bills?*

Finally, Mr. Krinick came back for his rebuttal. He again pressed his argument that this is a decision for the Insurance Dept to make. If the result of their interpretation is that providers cannot find attorneys who will represent them because they can’t get paid, then the Insurance Dept. should be the one to fix that, not the Court. He also said that no insurance company ever violates the 30 day rule purposefully; that the insurance companies only find out that their denial is late during litigation when a court finds that a verification request was improper and did not toll the time to pay or deny.
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I’m going to review another attorney’s notes on the case later today to see if I missed anything.

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HEADING UP TO ALBANY FOR LMK

Written on February 11, 2009 by Dave Gottlieb

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Look for an update on the oral arguments later tonight.

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NEW FROM RICHMOND

Written on February 6, 2009 by Dave Gottlieb

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Lenox Neuropsychiatry Med., P.C. v State Farm Ins. Co., 2009 NY Slip Op 50178(U) (Civ Ct City NY, Richmond County)

Insurers have the burden to come forward with proof in admissible form to establish the factual basis of their allegations. Mt. Sinai Hospital v Triboro Coach Inc., 263 AD2d 11, 20 (2d Dept 1999). In fact, in Mallela, the Court of Appeals specifically permitted insurers to “look beyond the face of licensing documents to identify willful and material failure to abide by state and local law,” State Farm Mutual Automobile Insurance Co., Appellant, v. Mallela et al., 4 NY3d 313, 321 [3d Dept 2005], in assessing whether to withhold reimbursement of no-fault claims to medical corporations they believe to be fraudulently incorporated. Id., see, One Beacon Ins. Co. v. Midland Medical Care, 54 AD3d 738, (2d Dept 2008).

In contrast, here, the defendant has submitted unsubstantiated hypotheses and suppositions and has not articulated a founded belief that Lenox is fraudulently incorporated so as to warrant the extensive discovery it is seeking. Defendant attempts to question whether Dr. Etemadi is the true owner of Lenox by weaving an intricate pattern of alleged fraud premised upon the fact that defendant received bills from Dr. Etemadi for services he allegedly rendered while working at different medical providers. Since Lenox, as well as the other medical [*3]providers from whom Dr. Etemadi submitted. bills use the same billing companies, and since two of these billing companies have the same address and phone numbers,” a hallmark of improperly owned PCs” is present (affirmation of Joseph A. Schwarzenberg , Esq, “attorney’s affirmation, ¶¶ 7-9 ).

The court finds this alleged web of fraud to be beyond the six degrees of separation that could conceivably connect these various medical providers to one another ^[FN1].^[FN2] The court first takes issue with defendant’s claim that Dr. Etemadi is synonymous with the Dr. Atamedi mentioned in Halima’s affidavit. Furthermore, the court can give little credence to Dr. Halima’s affidavit since it apparently was borrowed from some unknown and unrelated case and does not even mention Lenox Neuropsychiatry! Second, while defendant has made a valiant attempt to implicate Lenox and Neuropsychiatry with numerous billing companies and one other medical provider which somehow may be implicated in a fraudulent scheme by virtue of the acts of an attorney, there simply is no direct or indirect connection between Lenox or Etemadi and actual or attempted fraud.

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