Plaintiff Must Complete Discovery as a Prerequisite to Moving for Summary Judgment

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).