Tag Archive: Fraud

Catching Up

Written on October 24, 2009 by Dave Gottlieb
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I’ve been under the weather for the past week.  According to my wife, I wasn’t sick enough.  According to some people at the office, I had a bad case of the whine flu.  According to me, I felt like I was going to vomit and pass out.

So I didn’t post.  I barely looked at the cases that were coming out.  It’s time to catch up.

No-Fault Defender posted on two important issues.  First, the Appellate Division granted leave to appeal the Appellate Term’s decision in Andrew Carothers, M.D., P.C. v GEICO Indem. Co., 24 Misc 3d 19 (App. Term, 2nd 2009).  The decision dates are different, but it’s the same case.  I took a trip over to the Appellate Division to confirm.  The Pine Hollow decision was stapled to the order granting leave1.  Some might find that interesting.  You can read No-Fault Defender’s post HERE.  He believes, and I agree, that this may be the end of Dan Med–a decision that never made sense.  The other post asked the question, Must a carrier demonstrate that a deponent willfully failed to attend EUO’s in order to substantiate this defense?  It begins with the recent Progressive Northeastern Ins. Co. v Arguelles Med. P.C., decision where the Supreme Court found that defendant failed to prove that the EUO was reasonably required, among other things.  He concludes that “In order to oppose an EUO no-show defense, the burden is on the Plaintiff to demonstrate a lack of reasonableness.”  While he poo poos the willful and avowed standard, I believe that it remains appropriate, even for condition precedent issues.  And there is always the Insurance Department opinion letter.

My favorite part of his post is where he directs his readers to my post–the one that only has the case cite and link–for my insight.  Thanks.  This is not the place to go for insight; however, if what you are looking for is stick figure drawings of people sticking their ass in other people’s faces on the subway, this is your place.

In other news2:

Med-Tech Prods., Inc. v Geico Ins. Co., 2009 NY Slip Op 52111(U) (App. Term, 2nd 2009)

Contrary to defendant’s contention, the affidavits of plaintiff’s president, who was also plaintiff’s custodian of records, were sufficient to establish that the documents annexed to plaintiff’s motion papers constituted evidence in admissible form pursuant to CPLR 4518 (see Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2008]; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). As defendant concedes, any deficiency in plaintiff’s moving papers regarding proof of mailing of the claim forms was cured by defendant’s claim denial forms acknowledging receipt of the claim forms (see 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 by proof that it submitted the statutory claim forms, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]).

In opposition to plaintiff’s motion, defendant established that it had timely denied the claims in question based upon affirmed peer review reports setting forth a factual basis and medical rationale for the doctor’s opinion that the supplies provided to plaintiff’s assignors were [*2]not medically necessary (see New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co., 39 AD3d 832 [2007]; Quality Health Prods., P.C. v Progressive Ins. Co., 20 Misc 3d 143[A], 2008 NY Slip Op 51757[U] [App Term, 2d & 11th Jud Dists 2008]). As a result, defendant proffered sufficient evidence in admissible form to demonstrate the existence of a triable issue of fact as to medical necessity (see Velen Med. Supply, Inc. v GEICO Ins. Co., 23 Misc 3d 132[A], 2009 NY Slip Op 50735[U] [App Term, 2d, 11th & 13th Jud Dists 2009]).

Plaintiff’s contention that the peer review reports did not constitute evidence in admissible form was waived since said argument is raised for the first time on appeal (see Dowling v Mosey, 32 AD3d 1190 [2006]; Velen Med. Supply, Inc., 23 Misc 3d 132[A], 2009 NY Slip Op 50735[U]; Alur Med. Supply, Inc. v Geico Ins. Co., 20 Misc 3d 145[A], 2008 NY Slip Op 51867[U] [App Term, 2d & 11th Jud Dists 2008]).

Right Aid Diagnostic Medicine, P.C. v Geico Ins. Co., 2009 NY Slip Op 52122(U) (App. Term, 2nd 2009)

On appeal, defendant’s sole contention with respect to plaintiff’s prima facie case is that the affidavit of plaintiff’s billing manager failed to establish that the documents annexed to plaintiff’s motion for summary judgment were admissible as business records. We disagree because the affidavit was sufficient to comply with CPLR 4518 (see Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2008]; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). As a result, the burden shifted to defendant to demonstrate the existence of a triable issue of fact (Zuckerman v City of New York, 49 NY2d 557 [1980]).

Fatiha Ibrahim, D.C. v MVAIC, 2009 NY Slip Op 52125(U) (App. Term, 2nd, 2009)

The Civil Court denied MVAIC’s motion, holding that “MVAIC did not conform to the verification request protocol mandated by the Insurance Regulations of New York.”

Where, as here, plaintiff and his assignor are aware of the identity of the owner of the vehicle which plaintiff’s assignor was driving at the time of the accident, plaintiff, as assignee, is required to exhaust its remedies against the vehicle’s owner before seeking relief from MVAIC (Hauswirth v American Home Assur. Co., 244 AD2d 528 [1997]; Complete Med. Servs. of NY, P.C. v MVAIC, 20 Misc 3d 137[A], 2008 NY Slip Op 51541[U] [App Term, 2d & 11th Jud Dists 2008]). However, under the facts of this case, MVAIC’s motion for summary judgment was properly denied since the motion papers contained what appeared to be only the last page of an affidavit executed by MVAIC’s claims examiner, which did not establish, by one with personal knowledge of the facts, plaintiff’s failure to exhaust his remedies against the vehicle’s owner (see Zuckerman v City of New York, 49 NY2d 557 [1980]). Accordingly, defendant did not demonstrate a prima facie entitlement to summary judgment and, thus, the order is affirmed.

Nationwide Mut. Fire Ins. Co. v Aquiles, 2009 NY Slip Op 32432(U) (Sup Ct, Nassau County, 2009)

In news unrelated to no-fault, everyone should take a moment to check out John M. Hochfelder’s blog, New York Injury Cases Blog.  His posts have pictures.  PICTURES!  And the man can write.  If there are a thousand personal injury blogs, only a handful are worth reading.  His is one of them.

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1.  I also read the briefs.  One of them was full of ad hominemA arguments and hyperbole.

2. Some believe that the Appellate Term invented the Dan Med rule to cut down on no-fault litigation, or at the very least, make the cases speed along in the Courts.  If so, the decision has had a contrary effect.  Not only has it clogged the Courts, it caused countless appeals.  Good Stuff.

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A.  That’s right, a footnote to the footnote.  I just did that.  If you are interested, Logic for Lawyers, comes highly recommended.  It isn’t cheap, which is why I haven’t read it yet, but based on the recommendation (and the author), I think it’s worth picking up.

Tags: , , , , Coverage, Dan Med, Declaratory Judgment, EUO, Fraud, Geico, Legal writing, no fault law, progressive
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Sept 30 Wrap Up

Written on October 3, 2009 by Dave Gottlieb
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In the September 30th edition of the No-Fault Insurance Wrap-Up, in the New York Law Journal, David M. Barshay, a partner at Baker, Sanders, Barshay, Grossman, Fass, Muhlstock and Neuwirth and I (not a partner) discuss the recent developments in no-fault law. This edition covers a few topics, including a SCOTUS case.  Yes, a friggin SCOTUS case.

The Excerpts:

The U.S. Supreme Court recently granted certiorari in Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co.1 from the U.S. Court of Appeals for the Second Circuit.2

Shady Grove Orthopedic Associates (a Maryland corporation) and Sonia E. Galvez3 brought a class action against Allstate (an Illinois corporation) in the Eastern District of New York4 for unpaid interest on no-fault claims pursuant to a New York insurance policy.5 Those claims were paid, but for the interest. Shady Grove argued that it could get into federal court through 28 U.S.C. §1332(d)(2)(A), which gives the federal courts original jurisdiction in a class action where the amount in controversy is more than $5 million and diversity exists, and FRCP 23 allows class certification for the relief requested.

****

First, the court addressed the Erie9 issue. Under Erie, when a federal court sits in diversity jurisdiction, it must apply a state’s substantive law and the federal procedural law. It found that FRCP 23 does not conflict with CPLR §901(b); that there is no “direct collision” with §901. It reasoned that, because FRCP 23 does not determine which actions can or cannot be brought, “it leaves room for the operation of §901(b),” finding it to be a substantive rule.

But would the application of CPLR §901(b) “serve the twin aims10 of Erie?” The court answered in the affirmative. Not applying the rule would, according to the court, encourage plaintiffs to file in the federal courts, rather than in New York, and it would allow them to recover in federal court, when they could not in New York.

Second, the court then discussed (and ultimately dismissed) Shady Grove’s argument that under N.Y. Ins. Law §5106(a) the lawsuit can be maintained via class action because 11 NYCRR §65-3.9(c)11contemplates class actions in this context, and therefore satisfies the exception clause of CPLR §901(b). In rejecting this argument, the court found that N.Y. Ins. Law §5106(a) contains no authorization for class actions to recover a penalty and that 11 NYCRR §65-3.9(c) did not specificallyauthorize12 class actions to recover a penalty. The Second Circuit interpreted the language of CPLR §901(b) “provides that where a statute creates a penalty, the ‘statute‘ itself must ‘specifically authorize‘” the class action. “At most, [the] regulation contemplates the recovery of a penalty in a class action,” and contemplation is not enough. The Eastern District’s decision was affirmed.

Oral argument before the Supreme Court is scheduled for Nov. 2, 2009.

***

Staged Accidents

In proving that an accident was intentional, defendant does not have to prove fraud. Such is the rule according to the Appellate Term, 2nd, 11th, and 13th Judicial Districts. In V.S. Med. Servs., P.C. v. Allstate Ins. Co.23 defendant must only show that “at least one driver intended to make contact,” because, “[a] deliberate collision caused in furtherance of an insurance fraud scheme is not a covered accident.”24 And defendant must show that the accident was intentional by a preponderance of the evidence, not by clear and convincing evidence.

The court did not cite or address State Farm Mut. Auto. Ins. Co. v. Langan,25 an Appellate Division case decided well after State Farm Mut. Auto. Ins. Co. v. Laguerre.26 Langan, readers might recall,27 held that in no-fault, even if an accident is intentional, if the injured person was not complicit in “misconduct, provocation, or assault” and if the accident “was unexpected, unusual, and unforeseen” by the injured person, no-fault coverage exists. V.S. Med does not tell us whether plaintiff’s assignor was somehow complicit in the manufactured accident.

I left out all of the footnotes to save space.

Tags: , , , , , , Class Action, Coverage, Interest, Law Journal, Wrap up
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Material Misrepresentation

Written on September 17, 2009 by Dave Gottlieb
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Barkan v New York Schools Ins. Reciprocal, 2009 NY Slip Op 06494 (App. Div., 2nd, 2009)

Contrary to NYSIR’s contentions, NYSIR failed to demonstrate its entitlement to summary judgment based on a material misrepresentation in the renewal applications for the insurance policies (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d at 853; see Carpinone v Mutual of Omaha Ins. Co., 265 AD2d 752). “[T]o establish its right to rescind an insurance policy, an insurer must demonstrate that the insured made a material misrepresentation. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented’ (Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d 713, 714; see Insurance Law § 3105[b]). Material misrepresentations, if proven, would void the insurance policy ab initio (see Taradena v Nationwide Mut. Ins. Co., 239 AD2d 876). However, whether a misrepresentation is material is generally a question of fact for the jury (see Parmar v Hermitage Ins. Co., 21 AD3d 538, 540; see also Process Plants Corp. v Beneficial Natl. Life Ins. Co., 53 AD2d 214, 216, affd 42 NY2d 928). To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show that it would not have issued the same policy if the correct information had been disclosed in the application (see Insurance Law § 3105[c]; Parmar v Hermitage Ins. Co., 21 AD3d at 540-541; Curanovic v New York Cent. Mut. Fire Ins. Co., 307 AD2d 435, 437; Tuminelli v First Unum Life Ins. Co., 232 AD2d 547). Conclusory statements by insurance company employees, unsupported by documentary evidence, are insufficient to establish materiality as a matter of law (see Parmar v Hermitage Ins. Co., 21 AD3d 538). Having failed to offer any of the aforementioned documents, NYSIR has failed to meet its evidentiary burden.

Compare with AA Acupuncture Serv., P.C. v Safeco Ins. Co. of Am., 2009 NY Slip Op 29311 (App. Term, 1st, 2009) and another case from the Appellate Term, Second Department that I can’t seem to find.

Tags: , , Fraud, Material Misrepresentation, Policy Issues
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