In a decision issued on February 17, 2006, the Appellate Term, Second Department reversed the Civil Court's granting of summary judgment to plaintiff where discovery was not complete as to defenses available to the insurance carrier. See
A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 2006 NYSlipOp 26068.
Plaintiffs A.B. Med., et al. moved for partial summary judgment on the standard basis that a claim had been submitted but not paid or denied in a timely manner. (Said motion was partial in that it appears that plaintiffs' only sought summary judgment as to a certain portion of the claims that are the subject of the Complaint.) Defendant cross-moved for an order compelling plaintiffs to provide responses to previously-served discovery demands.
Defendant further opposed plaintiffs' motion, pursuant to CPLR R. 3212(f), in that the outstanding discovery demands caused facts to be unavailable to them, and that said facts might provide a potential basis for opposing plaintiffs' motion on the merits. As to the merits, defendant also provided purported proof that the subject claims had been timely denied.
Civil Court, Kings County, by order of
Judge Loren Baily-Schiffman, granted plaintiffs' motion for partial summary judgment, and denied defendant's cross-motion as to those claims for which summary judgment had been granted. As to those claims in the Complaint that were not the subject of the summary judgment motion, the Civil Court further granted defendant's cross-motion to the extent that plaintiffs were compelled to provide discovery responses concerning same.
In its decision, the Appellate Term discussed the propriety of discovery demands by an insurance carrier in a no-fault matter, which has historically been a matter of recurring dispute among parties at the trial court level. The Appellate Term reaffirmed the proposition put forth by many Civil Court judges in that any demands requesting information related to defenses that the carrier is precluded from raising are palpably improper. However, the Appellate Term broke from the general Civil Court trend by holding that demands related to defenses that are, by their nature, not subject to preclusion are proper and thus require compliance therewith.
Compare, e.g.,
Metropolitan Radiological Imaging v State Farm Mut. Auto. Ins. Co., 7 Misc.3d 675 (Civ. Ct., Queens County, Feb. 17, 2005) in which Judge Charles J. Markey held that "failure by an insurer to include a copy of its denial or demand for verification in a discovery motion, whether seeking to strike pleadings, preclude evidence, or compel discovery, or to furnish a justifiable, compelling reason for not including it, will be per se grounds for denial of the motion." Judge Markey does not even acknowledge the existence of non-precludable defenses, noting at various points that "an insurer will not be permitted to assert a defense not specifically made in the NF-10" and further that "[s]ince any reason for the denial of the claim must be specifically stated in the NF-10, that form must be included so that a reviewing court can pass on the propriety of the requested disclosure...."
In the post-
Metropolitan v. State Farm era, the Civil Courts adopted the rationale of Judge Markey as a matter of routine. It is perhaps not pure coincidence, then, that the Appellate Term's decision in
A.B. Med. v. Utica was issued on the one-year anniversary of
Metropolitan.
In
A.B. Med., the Appellate Term found that the carrier failed to prove that it timely dealt with plaintiffs' claims. However, they further found that some of the carrier's discovery demands concerned a non-precludable defense. In particular, they held that the decision in
State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313 (2005), has the effect of allowing the allegation by the carrier of plaintiff's fraudulent corporate licensure to be interposed at any time, regardless of the existence of a timely denial setting forth same. It is
well worth noting that this is the first time that a New York State appellate court has dealt with
Mallela on the merits, and the Appellate Term now makes explicit a proposition that had previously appeared inherent and obvious to carriers, but preposterous to plaintiffs.
In light of the non-preclusion of
Mallela-related defenses, the Appellate Term denied summary judgment to plaintiffs and granted defendant's cross-motion to the extent that plaintiffs must comply with certain specified demands. Thus, when plaintiff has not responded to discovery demands concerning defenses that either a carrier raised in a timely manner or may be raised at any time, it is reversible error for the Court to grant summary judgment to said plaintiff.
This discovery issue must now be taken into consideration by plaintiff prior to each summary judgment motion they seek to bring, and also by defendant each time they are served with such a motion. Defendants should be analyzing their demands for the presence of non-precludable defense concerns, as well as comparing their demands to any timely denials that may have been issued.
With regard to non-precludable defenses, the undersigned humbly suggests that
Mallela is not the only game in town. To state the obvious, the classic matter of
Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 (1997), provides that issues of causality and coverage are not subject to preclusion. However, it may be difficult to target discovery demands on those issues given that the medical providers are typically (allegedly) removed from the circumstances of any given loss. Still, other defenses should provide much more fertile ground for demands. As a starting point, I suggest a review (by litigants on both sides of these matters, as well as the judiciary) of the holdings in
Rockaway Blvd. Med. P.C. v Progressive Ins., 9 Misc. 3d 52 (App. Term, 2d Dep’t, 2005) and
Ozone Park Medical Diagnostic Associates v. Allstate Insurance Company, 180 Misc. 2d 105 (App. Term, 2d Dep’t, 1999).
Taking them in order, the specific dispute on proof of mailing in Ava Acu. was whether a presumption of mailing could be created by the affidavit of one who, although having knowledge of the standard practice and procedure of mailing by an office, was not in a supervisory position with regard to same. The problematic App. Term case law, relied upon by the plaintiff in Ava Acu., was Contemp. Med. Diag. & Treatment, P.C. v Government Employees Ins. Co., 2005 NY Slip Op 50254(U) (App. Term, 2d Dep't, 2005 and Gribenko v Allstate Ins. Co., 2005 NYSlipOp 52201(U) (App. Term, 2d Dep't, 2005).
The Court in Contemp. Med., in holding that the defendant carrier failed to prove the mailing of its denial, noted that the affidavit of the claims examiner "was conclusory and failed to specify either that it was the duty of the claims examiner to ensure compliance with said office procedures or that the claims examiner had actual knowledge that said procedures were complied with." Out of sympathy to the Court, I'll decline to criticize the use of a preposition to end a sentence. However, there is a bigger problem. Shortly after the sentence I've just quoted, the App. Term cited generally to Residential Holding Corp. v. Scottsdale Ins. Co., 286 A.D.2d 679 (2d Dep't, 2001). The problem is, though, Residential Holding says nothing about proof of mail coming from a deponent whose position it is to ensure compliance with the relevant practices and procedures. The App. Div. formulated the rule as being that "[t]he presumption [of mailing] may be created by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed." Id. at 680, citing to Tracy v. William Penn Life Ins. Co., 234 A.D.2d 745 (3d Dep't, 1996) and Pardo v. Central Coop. Ins. Co., 223 A.D.2d 832 (3d Dep't, 1996).
The App. Term seemingly compounded the error in Gribenko by noting, when holding that the plaintiff had failed to create a presumption of the mailing of its claim forms, "the affidavits [did not] state that it was the duty of the affiants to ensure compliance with said office procedures or that the affiants had actual knowledge that said office procedures were complied with." 2005 NYSlipOp 52201(U), citing to Contemp. Med.
Subsequent to Gribenko, the Appellate Division issued its decision in New York & Presbyt. Hosp. v. Allstate Ins. Co., which quoted Residential Holding directly and held that "[t]he presumption [of mailing] may be created by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed." 29 A.D.3d 547 (2d Dep't, 2006). Since that time, the App. Term has, curiously and without explicitly mentioning it, dropped the "ensure compliance with" rule from Contemp. Med. and Gribenko. Interestingly, the last time that the App. Term cited to Contemp. Med. or Gribenko, they found simply that "[t]he affidavit submitted by defendant's no-fault specialist was sufficient to establish that defendant followed a standard office practice or procedure designed to ensure that denial of claim forms were properly addressed and mailed," and failed to address the "ensured compliance with" rule at all. A.M. Med. Servs., P.C. v New York Cent. Mut. Ins., 2006 NYSlipOp 51662(U) (App. Term, 2d Dep't, 2006).
In Ava Acu., Judge Battaglia eloquently described the "ensured compliance with" issue and proof of mailing in general, and ultimately (and understandably) concluded that such a requirement did, indeed, exist. Judge Battaglia also found the affidavit submitted by the defendant carrier to be conclusory, anyway, so presumably the same result would have been reached whether or not the requirement existed. So, too, on appeal, the App. Term could have avoided even tackling the issue by finding it to be insufficient under any standard. Nevertheless, it would have been nice to have the App. Term explicitly disavow Gribenko, as plaintiffs' attorneys still argue for it throughout the Civil Courts with some success. See, e.g., Judge George Silver's opinion in Y&J Intertrade v. Utica Mut. Ins. Co., 236 N.Y.L.J. 41 (Civ. Ct., Kings Cty., 2006).
As for the second interesting portion of the Ava Acu. decision, the issue of the lack of a fee schedule for acupuncture performed by an acupuncturist has been a troubling one for some time. This is especially true in Civil Court, Kings County in acupuncture cases where plaintiff's counsel is the Law Offices of Gary Tsirelman, attorneys for Ava Acu. In short, Mr. Tsirelman's clients, along with many other acupuncturists, would have it that licensed acupuncturists are allowed to charge a rather substantial amount per modality, usually somewhere in the neighborhood of $120. However, there is a fee schedule for acupuncture rendered by chiropractors and physicians, and the resultant fees, at the high end, are about $43. Unfortunately for the acupuncturists, the Insurance Department issued an opinion letter on October 6, 2004 in which they opined that "licensed acupuncturists do not have a right to reimbursement at the prevailing regional fee rate in effect" prior to the physician and chiro fee schedules being put into effect, and that "it would be consistent with the regulation for an insurer to limit the reimbursable fee for necessary services provided by a licensed acupuncturist to the rates established for doctors and chiropractors performing a similar service."
Although he avoided doing so in Ava Acu., Judge Battaglia later tackled this issue on the merits in Power Acupuncture P.C. v State Farm Mut. Auto. Ins. Co., 2006 NY Slip Op 50393(U) (Civ. Ct., Kings Cty., 2006). I'm not quite sure how he pulled it off, but he both acknowledged the October 6, 2004 opinion letter and concluded that it "was wrong" for State Farm to reduce the bills submitted to a lower "fee [that] was calculated according to the...Schedule for Medical Fees." Id. I'm still mystified by the Power Acu. decision, and especially in light of the fact that Ava Acu. had its appeal dismissed, I hope that State Farm chose to prosecute an appeal in that matter.
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1 The title of the post explained: it's a cheap pun, as Ava Acu. is owned by Valentina Anikeyeva. Actually, given that she is married to Andrey Anikeyev, I might have more approrpiately titled the post 'Dissed Mrs.,' but that misses (mrs.?) the point. Then again, I could have gone neutral - and also avoided embarrassing myself in case the pair has split - and called it 'Dissed Ms.' I chose not to use this version, as it removed the subtle reference to 'Swiss Miss,' but I digress. For more fun adventures with the Anikeyevas, I direct the reader to Circle Intl. Group, Inc. v Anikeyeva, 2005 NY Slip Op 50979(U) (Sup. Ct., Kings Cty., 2005).