Much thanks for Nicole L. Black, Esq., she of the Sui Generis blawg, not only for pointing out to us that we are linked in a post today on PointofLaw.com, but also apparently for providing the method by which we got noticed in the first place.
Also a hearty welcome to the 3 people in the world that will read the PointofLaw.com post and be unable to resist checking out "a blog on New York no-fault auto law." ;)
Wednesday, October 11, 2006
Keeping It Real, Part I
The Appellate Term, 2d Department has been in engaging in some rather groundbreaking decision-making as of late: the application of "real" law (as opposed to solipsistic citation to prior no-fault decisions that had no particular basis in law on their own). For your consideration, we present the decision in West Tremont Med. Diagnostic, P.C. v Geico Ins. Co., 2006 NYSlipOp 51871(U) (App. Term, 2d Dep't, 2006). The "real" rule of law in question: "[I]t is well settled that the assignee stands in no better position than its assignor, and has no more right or claim than the assignor." Id., citing to Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121 (1975).
In the trial court opinion, Judge Judith R. McMahon held that "in a matter, such as the instant case, wherein the usual and customary medical procedure was utilized by the examining physician in referring a patient involved in a motor vehicle accident for radiological tests after a physical examination, and the patient assigned her rights to the diagnostic radiological establishment for reimbursement of No-Fault benefits, the affirmative defense of lack of medical necessity should not be available as the diagnostic center does not make an independent medical evaluation of the patient and the denial of benefits to the diagnostic establishment is in derogation of the intent of the Insurance Law 5106." West Tremont Med. Diagnostic, P.C. v Geico Ins. Co., 8 Misc. 3d 423, 427 (Civ. Ct., Richmond Cty., 2005). In sum, a carrier cannot deny MRI bills based upon a lack of medical necessity. This conclusion was based on that most vague and useless of arguments: that "the purpose and intent of the Insurance Law No-Fault Benefits statute which is expedient payment of benefits to automobile victims." Id.
The meat of the App. Term's rationale for overruling the Civil Court's order is as follows:
Under the Comprehensive Motor Vehicle Insurance Reparations Act (Insurance Law art 51), more commonly known as the No-Fault Law, "first party benefits" are available to reimburse persons for "basic economic loss" resulting from injuries "arising out of the use or operation of a motor vehicle" (Insurance Law § 5102 [b]). Insurance Law § 5102 (a) (1) defines "basic economic loss" as including, inter alia, "[a]ll necessary expenses incurred for: (i) medical, hospital . . ., surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services" and "(iv) any other professional health services." The Mandatory Personal Injury Protection Endorsement (11 NYCRR 65-1.1 [d]) defines "medical expenses" as consisting of "necessary expenses" for the services which are enumerated in the statute. Nowhere in the statutory or regulatory scheme is there any suggestion that services rendered by diagnostic centers or, for that matter, medical equipment suppliers, laboratories, or radiological facilities, all of which rely upon prescriptions or referrals from treating or examining medical providers, be exempt from the requirement that said services be "medically necessary." While it may be argued that a diagnostic center is in no position to establish the medical necessity of a prescribed MRI, it is well settled that the assignee stands in no better position than its assignor, and has no more right or claim than the assignor (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121 [1975]). If a claim is not assigned, and is submitted to the insurer directly by the eligible injured person, the insurer may assert a defense of lack of medical necessity which, if established, will shift the burden to the eligible injured person to provide his or her own evidence of medical necessity. If the defense may be asserted against the eligible injured person, it follows that it may be asserted against the provider as well. Moreover, "[t]o permit medical providers to receive reimbursement even when the insurer has proven that the service provided was not medically necessary would encourage fraud, rather than combat it . . . . In fact, the construction urged by plaintiff would require insurers to pay for MRIs of the entire spine when the insured suffered a broken toe, or for full body scans for broken arms" (Precision Diagnostic Imaging, P.C. v Travelers Ins. Co., 8 Misc 3d 435, 439 [2005]). 2006 NYSlipOp 51871(U).
This makes sense for a number of reasons, not the least of which is that the limitation of basic economic loss in § 5102 to "necessary [medical] expenses" doesn't have a subsection containing an exemption for instances where it would stink for the provider. To be sure, no one ever wants to write in a general exception to the laws and regulations when application of same would stink for the carrier.
Also, I think the end result of such a rule would be even worse than what the Civil Court posed in Precision Diagnostic: a no-fault applicant could have a single examination by a physician at which everything under the sun was prescribed, and then the resulting tens of thousands of dollars of no-fault claims would not be defensible on the basis of lack of necessity.
Indeed, I think the Court of Appeals has actually already decided the matter, anyway. The factual basis of Central General v. Chubb, 90 N.Y.2d 195 (1997) was as follows:
Central General Hospital provided medical treatment to Pamela Mandresh on four separate occasions for injuries allegedly sustained in an automobile accident. Chubb insured the automobile Mandresh was driving at the time she was allegedly injured. The hospital submitted standard requests for payment of no-fault billings totaling $ 2,403.50. Chubb rejected them on the grounds that the injuries were not related to the accident and the treatments were excessive. Chubb insists that Mandresh's injuries were sustained in a separate work-related accident about a year prior to the automobile accident. Id. at 198.
Although there was an allegation by Chubb that Ms. Mandresh had treated with the same physician for both injuries, this appears to be unrelated to the services rendered by the hospital. Either way, when a patient presents injuries and a given explanation to a physician, unless the injuries are somehow so blatantly unrelated that they cannot possibly have arisen as explained, the physician is in no position to determine the causality of the injuries. Nevertheless, the Court of Appeals concluded that "an insurer...may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident." If Judge McMahon's conclusion in the West Tremont trial decision was the correct rule, Central General should have held that carriers are precluded from raising the defense of lack of causality (unless the medical provider was actually a personal witness to the event that caused the injuries, I suppose).
Possibly more later on the potential effects of the App. Term's decision in West Tremont on the pending litigation in Long Is. Radiology v. Allstate Ins. Co., 12 Misc. 3d 1167A (Sup. Ct., Nassau Cty., 2006).
In the trial court opinion, Judge Judith R. McMahon held that "in a matter, such as the instant case, wherein the usual and customary medical procedure was utilized by the examining physician in referring a patient involved in a motor vehicle accident for radiological tests after a physical examination, and the patient assigned her rights to the diagnostic radiological establishment for reimbursement of No-Fault benefits, the affirmative defense of lack of medical necessity should not be available as the diagnostic center does not make an independent medical evaluation of the patient and the denial of benefits to the diagnostic establishment is in derogation of the intent of the Insurance Law 5106." West Tremont Med. Diagnostic, P.C. v Geico Ins. Co., 8 Misc. 3d 423, 427 (Civ. Ct., Richmond Cty., 2005). In sum, a carrier cannot deny MRI bills based upon a lack of medical necessity. This conclusion was based on that most vague and useless of arguments: that "the purpose and intent of the Insurance Law No-Fault Benefits statute which is expedient payment of benefits to automobile victims." Id.
The meat of the App. Term's rationale for overruling the Civil Court's order is as follows:
Under the Comprehensive Motor Vehicle Insurance Reparations Act (Insurance Law art 51), more commonly known as the No-Fault Law, "first party benefits" are available to reimburse persons for "basic economic loss" resulting from injuries "arising out of the use or operation of a motor vehicle" (Insurance Law § 5102 [b]). Insurance Law § 5102 (a) (1) defines "basic economic loss" as including, inter alia, "[a]ll necessary expenses incurred for: (i) medical, hospital . . ., surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services" and "(iv) any other professional health services." The Mandatory Personal Injury Protection Endorsement (11 NYCRR 65-1.1 [d]) defines "medical expenses" as consisting of "necessary expenses" for the services which are enumerated in the statute. Nowhere in the statutory or regulatory scheme is there any suggestion that services rendered by diagnostic centers or, for that matter, medical equipment suppliers, laboratories, or radiological facilities, all of which rely upon prescriptions or referrals from treating or examining medical providers, be exempt from the requirement that said services be "medically necessary." While it may be argued that a diagnostic center is in no position to establish the medical necessity of a prescribed MRI, it is well settled that the assignee stands in no better position than its assignor, and has no more right or claim than the assignor (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121 [1975]). If a claim is not assigned, and is submitted to the insurer directly by the eligible injured person, the insurer may assert a defense of lack of medical necessity which, if established, will shift the burden to the eligible injured person to provide his or her own evidence of medical necessity. If the defense may be asserted against the eligible injured person, it follows that it may be asserted against the provider as well. Moreover, "[t]o permit medical providers to receive reimbursement even when the insurer has proven that the service provided was not medically necessary would encourage fraud, rather than combat it . . . . In fact, the construction urged by plaintiff would require insurers to pay for MRIs of the entire spine when the insured suffered a broken toe, or for full body scans for broken arms" (Precision Diagnostic Imaging, P.C. v Travelers Ins. Co., 8 Misc 3d 435, 439 [2005]). 2006 NYSlipOp 51871(U).
This makes sense for a number of reasons, not the least of which is that the limitation of basic economic loss in § 5102 to "necessary [medical] expenses" doesn't have a subsection containing an exemption for instances where it would stink for the provider. To be sure, no one ever wants to write in a general exception to the laws and regulations when application of same would stink for the carrier.
Also, I think the end result of such a rule would be even worse than what the Civil Court posed in Precision Diagnostic: a no-fault applicant could have a single examination by a physician at which everything under the sun was prescribed, and then the resulting tens of thousands of dollars of no-fault claims would not be defensible on the basis of lack of necessity.
Indeed, I think the Court of Appeals has actually already decided the matter, anyway. The factual basis of Central General v. Chubb, 90 N.Y.2d 195 (1997) was as follows:
Central General Hospital provided medical treatment to Pamela Mandresh on four separate occasions for injuries allegedly sustained in an automobile accident. Chubb insured the automobile Mandresh was driving at the time she was allegedly injured. The hospital submitted standard requests for payment of no-fault billings totaling $ 2,403.50. Chubb rejected them on the grounds that the injuries were not related to the accident and the treatments were excessive. Chubb insists that Mandresh's injuries were sustained in a separate work-related accident about a year prior to the automobile accident. Id. at 198.
Although there was an allegation by Chubb that Ms. Mandresh had treated with the same physician for both injuries, this appears to be unrelated to the services rendered by the hospital. Either way, when a patient presents injuries and a given explanation to a physician, unless the injuries are somehow so blatantly unrelated that they cannot possibly have arisen as explained, the physician is in no position to determine the causality of the injuries. Nevertheless, the Court of Appeals concluded that "an insurer...may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident." If Judge McMahon's conclusion in the West Tremont trial decision was the correct rule, Central General should have held that carriers are precluded from raising the defense of lack of causality (unless the medical provider was actually a personal witness to the event that caused the injuries, I suppose).
Possibly more later on the potential effects of the App. Term's decision in West Tremont on the pending litigation in Long Is. Radiology v. Allstate Ins. Co., 12 Misc. 3d 1167A (Sup. Ct., Nassau Cty., 2006).
Saturday, October 07, 2006
Fee, Fi, Ho, Hum
As Matthew S. Lerner, Esq. of the New York Civil Law blawg recently posted1, Judge Peter Paul Sweeney of Civil Court, Richmond County has issued an opinion on the proper calculation of attorney's fees. See Marigliano v NY Cent. Mut. Fire Ins. Co., 2006 NY Slip Op 26395 (Civ Ct., Richmond Cty., 2006).
Judge Sweeney (now sitting once again in Civil Court, Kings County, and in fine spirits concerning the move as per conversations between His Honor and the undersigned yesterday) adopted the interpretation of the attorney's fees portions of the Regulations opined upon by the NYS Insurance Department on October 8, 2003. As the Ins. Dep't concluded therein:
The minimum amount of attorney's fees awarded to an assignee health provider who has prevailed in a court action brought against a No-Fault insurer is based upon the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which had been submitted and denied. The minimum attorney fee amount of $60 is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action.
In Marigliano, plaintiff favored a calculation whereby each individual bill would be entitled to a separate fee calculation, each with its own $60/$850 boundaries (actually, plaintiff probably argued for a minimum of $80, but that's a recurring issue for a future post on No-Fault Urban Legends). Given that there were three (3) assignors in the suit, the Court's ruling will result in three (3) separate fee calculations, with the same $60/$850 bounds. Without having seen the underlying briefs, I am guessing that plaintiff's preferred calculation would have led to attorney's fees in excess of $1,200. Using the calculation set forth by the Ins. Dep't, attorney's fees probably didn't even exceed $850 (although the theoretical maximum for fees in a suit with three separate assignors would actually be $2,550, it is unlikely that the bills for each assignor reach that level).
This has been a pressing issue for some time, and I almost hope that the plaintiff appeals so that we can get a an on-point determination from the Appellate Term. Plaintiffs often break up very small bills into multiple causes of action in a Complaint in order to multiply their attorney's fees (and plaintiff's counsel in Marigliano is certainly no exception). Any bill lower than $300 will bring in attorney's fees at the $60 minimum, so sometimes plaintiffs will have 20+ causes of action per assignor, each with bills of around $150, in order to greatly boost the fees. Whereas using the calculation on which the Ins. Dep't has opined might not even result in fees that hit the $850 ceiling, using the plaintiffs' preferred calculation can far exceed $850, as seen in my rough guesses re: Marigliano above. It's obviously very frustrating when negotiating on behalf of a carrier that is otherwise dead in the water on their defense in a given action - a carrier either must face paying the full amount of the bills plus interest, fees (with a calculation likely done by the plaintiff and accepted by the clerk, anyway), and costs or give in to a demand that flouts regulatory limits. This often hardly constitutes a "settlement."
I am inclined to believe that if the Appellate Term of the 2d Dep't hears this matter, faced with a very clear opinion letter from the Insurance Department and no contrary and on-point Appellate Division holdings, they will be likely to uphold the Civil Court determination and memorialize the opinion letter as binding common law. In the absence of contrary Appellate Division holdings, the Appellate Term appears to favor adopting the opinions of the Ins. Dep't, as seen on the matter of whether providers can be reimbursed for services performed by independent contractors. See A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc. 3d 36 (App. Term, 2d Dep't, 2005).2 The Appellate Term also seems concerned of late with systemic abuses by no-fault medical providers and their attorneys, another factor weighing in the carriers' favor. See, e.g., the fairly recent scheduling of sanctions hearings by the Appellate Term for Marylou A. Paolucci, Esq. and Alden Banniettis, Esq.3 Of course, the Appellate Term is highly unpredictable, and I have surely been wrong before.
--
1. The post at bar is a modified version of a comment I posted to the subject New York Civil Law post.
2. However, the Appellate Term has never paid any attention to Ins. Dep't opinions that conflict with established appellate case law. For example, the Appellate Term has never given any weight to the January 11, 2000 opinion letter that medical necessity may be part of a plaintiff's prima facie burden (even where a carrier is precluded from raising the lack of medical necessity as a defense), as this is surely contradicted by the seminal Court of Appeals holding in Presbyterian Hospital v. Maryland Casualty Co., 90 N.Y.2d 274 (1997) and numerous appellate decisions holding that a plaintiff need only prove that it submitted claim forms to the carrier on which it stated the fact and amount of the loss sustained and that such claims have not been paid or properly denied.
3. Although the Appellate Term has published a motion decision whereby they declined to sanction Ms. Paolucci, I have not yet seen a decision either way concerning Mr. Banniettis.
Judge Sweeney (now sitting once again in Civil Court, Kings County, and in fine spirits concerning the move as per conversations between His Honor and the undersigned yesterday) adopted the interpretation of the attorney's fees portions of the Regulations opined upon by the NYS Insurance Department on October 8, 2003. As the Ins. Dep't concluded therein:
The minimum amount of attorney's fees awarded to an assignee health provider who has prevailed in a court action brought against a No-Fault insurer is based upon the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which had been submitted and denied. The minimum attorney fee amount of $60 is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action.
In Marigliano, plaintiff favored a calculation whereby each individual bill would be entitled to a separate fee calculation, each with its own $60/$850 boundaries (actually, plaintiff probably argued for a minimum of $80, but that's a recurring issue for a future post on No-Fault Urban Legends). Given that there were three (3) assignors in the suit, the Court's ruling will result in three (3) separate fee calculations, with the same $60/$850 bounds. Without having seen the underlying briefs, I am guessing that plaintiff's preferred calculation would have led to attorney's fees in excess of $1,200. Using the calculation set forth by the Ins. Dep't, attorney's fees probably didn't even exceed $850 (although the theoretical maximum for fees in a suit with three separate assignors would actually be $2,550, it is unlikely that the bills for each assignor reach that level).
This has been a pressing issue for some time, and I almost hope that the plaintiff appeals so that we can get a an on-point determination from the Appellate Term. Plaintiffs often break up very small bills into multiple causes of action in a Complaint in order to multiply their attorney's fees (and plaintiff's counsel in Marigliano is certainly no exception). Any bill lower than $300 will bring in attorney's fees at the $60 minimum, so sometimes plaintiffs will have 20+ causes of action per assignor, each with bills of around $150, in order to greatly boost the fees. Whereas using the calculation on which the Ins. Dep't has opined might not even result in fees that hit the $850 ceiling, using the plaintiffs' preferred calculation can far exceed $850, as seen in my rough guesses re: Marigliano above. It's obviously very frustrating when negotiating on behalf of a carrier that is otherwise dead in the water on their defense in a given action - a carrier either must face paying the full amount of the bills plus interest, fees (with a calculation likely done by the plaintiff and accepted by the clerk, anyway), and costs or give in to a demand that flouts regulatory limits. This often hardly constitutes a "settlement."
I am inclined to believe that if the Appellate Term of the 2d Dep't hears this matter, faced with a very clear opinion letter from the Insurance Department and no contrary and on-point Appellate Division holdings, they will be likely to uphold the Civil Court determination and memorialize the opinion letter as binding common law. In the absence of contrary Appellate Division holdings, the Appellate Term appears to favor adopting the opinions of the Ins. Dep't, as seen on the matter of whether providers can be reimbursed for services performed by independent contractors. See A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc. 3d 36 (App. Term, 2d Dep't, 2005).2 The Appellate Term also seems concerned of late with systemic abuses by no-fault medical providers and their attorneys, another factor weighing in the carriers' favor. See, e.g., the fairly recent scheduling of sanctions hearings by the Appellate Term for Marylou A. Paolucci, Esq. and Alden Banniettis, Esq.3 Of course, the Appellate Term is highly unpredictable, and I have surely been wrong before.
--
1. The post at bar is a modified version of a comment I posted to the subject New York Civil Law post.
2. However, the Appellate Term has never paid any attention to Ins. Dep't opinions that conflict with established appellate case law. For example, the Appellate Term has never given any weight to the January 11, 2000 opinion letter that medical necessity may be part of a plaintiff's prima facie burden (even where a carrier is precluded from raising the lack of medical necessity as a defense), as this is surely contradicted by the seminal Court of Appeals holding in Presbyterian Hospital v. Maryland Casualty Co., 90 N.Y.2d 274 (1997) and numerous appellate decisions holding that a plaintiff need only prove that it submitted claim forms to the carrier on which it stated the fact and amount of the loss sustained and that such claims have not been paid or properly denied.
3. Although the Appellate Term has published a motion decision whereby they declined to sanction Ms. Paolucci, I have not yet seen a decision either way concerning Mr. Banniettis.
Friday, September 29, 2006
Ready or Not
Today's entry at U.S. District Judge Jerry Buchmeyer's legal humor blog (taken from the archives of his column for the the Texas Bar Journal) presents the classic scenario of the strategizing one attempts at a court's calendar call. Choosing the perfect moment to let the court and your adversary know you're not ready to proceed is, indeed, an art.
The Court: Okay. Do y'all want a hearing today after 11 then?
Mr. George: No. I'm not ready today your honor.
The Court: Okay. Y'all want to put it off till next Monday.
Mr. Shumate: I can't be ready today either.
The Court: Okay.
Mr. George: Well, then I may be ready.
Have a good weekend.
The Court: Okay. Do y'all want a hearing today after 11 then?
Mr. George: No. I'm not ready today your honor.
The Court: Okay. Y'all want to put it off till next Monday.
Mr. Shumate: I can't be ready today either.
The Court: Okay.
Mr. George: Well, then I may be ready.
Have a good weekend.
Tuesday, September 26, 2006
Law & Order: SIU
One of the initial goals for this blog was to intersperse posts on recent news with a background primer on no-fault. Of course, this concept presumes that there exists a class of persons who are both a) reading this blog with sufficient interest to revisit periodically, and b) not very well-versed in no-fault. It is perhaps my own inherent self-deprecating nature that makes me inclined to believe that, to the extent that this blog is read at all (assuming that, say, Matthew Lerner, Esq. and Nicole L. Black, Esq. are real persons and not robots with high marks on their Turing tests), only those so masochistic as to already know no-fault rather well would be interested in visiting. This probably leads to postings here that assume too much with regard to the reader's knowledge. We are open to any commentary as to whether the blog is indeed too insular, what types of postings would be most useful (e.g., basic educational, statutory and case law reportage, issue-specific practice notes, etc.).
All of that being said, it has occurred to me that the previous posting assumed too much on the part of the reader's knowledge of the existence, structure, and entrenchment of no-fault fraud. To that end, an NYS OAG press release from July 31, 2006 concerning seventeen (17) grand jury indictments relative to a particular investigation may be of some value. The factual basis of the some of the charges is enlightening:
In the first indictment, three defendants, including a doctor and a medical clinic owner, are charged with Enterprise Corruption, a class "B" felony. The defendants allegedly earned millions of dollars through their operation and control of AR Medical Art, P.C. (AR Medical), a medical clinic in the Midwood section of Brooklyn that "treated" persons purportedly injured in car accidents. Other charges in the indictment include scheme to defraud, money laundering, grand larceny, insurance fraud, falsifying business records, and offering a false instrument for filing.
* * *
In the two other indictments unsealed today, 14 people were charged with staging car accidents throughout New York City and attending clinics, including AR Medical, for treatment of their feigned injuries. These two staged accident ring indictments charged the defendants with scheme to defraud, insurance fraud, larceny, falsifying business records, and offering a false instrument for filing.
* * *
The enterprise corruption indictment alleges that although the owner of record of AR Medical was Dr. Alexander Rozenberg, a physician specializing in physical rehabilitation, he did not control the operations or the financial affairs of the clinic. Instead, Inna Polack, who lacks a health provider license, secretly owned the clinic and decided what medical and health services were to be provided to patients. The defendants acquired patients through a network of "steerers," who were paid to refer patients to AR Medical. Steerers solicited patients by staging motor vehicle accidents and by offering the clinic’s "services" to real car accident victims.
* * *
The indictment further alleges that, following referrals of patients to AR Medical, Rozenberg conducted cursory medical evaluations, fabricated patients’ symptoms, falsely diagnosed extensive soft tissue injuries, and referred patients for prolonged, unnecessary treatment and testing. This treatment included months of physical therapy, chiropractic care, acupuncture, and psychological counseling, as well as MRIs, x-rays, and nerve testing.
The AR Medical situation brings together many of the various defenses often described collectively as "fraud" or as relating to an "SIU" issue (SIU being an acronym for Special Investigations Unit, which carriers in New York are required by regulation to operate). For example, both of the following are complete defenses to a no-fault personal injury protection ("PIP") claim: a) the monies earned by a professional medical corporation are being directed to the true lay operators of the facility rather than the licensed person who is involved on paper only (see State Farm Mut. Auto Ins. Co. v Mallela, 4 N.Y.3d 313 (2005)), and b) the alleged motor vehicle loss was not accidental (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 N.Y.2d 195 (1997); Metro Medical Diagnostics, P.C. v. Eagle Insurance Company, 293 A.D.2d 751 (2d Dep't, 2002); State Farm v. Laguerre, 305 A.D.2d 490 (2d Dep't, 2002)). In practical litigation terms, these defenses lead to the submissions of the lengthiest motion and opposition papers, as well as the lengthiest jury trials.
All of that being said, it has occurred to me that the previous posting assumed too much on the part of the reader's knowledge of the existence, structure, and entrenchment of no-fault fraud. To that end, an NYS OAG press release from July 31, 2006 concerning seventeen (17) grand jury indictments relative to a particular investigation may be of some value. The factual basis of the some of the charges is enlightening:
In the first indictment, three defendants, including a doctor and a medical clinic owner, are charged with Enterprise Corruption, a class "B" felony. The defendants allegedly earned millions of dollars through their operation and control of AR Medical Art, P.C. (AR Medical), a medical clinic in the Midwood section of Brooklyn that "treated" persons purportedly injured in car accidents. Other charges in the indictment include scheme to defraud, money laundering, grand larceny, insurance fraud, falsifying business records, and offering a false instrument for filing.
* * *
In the two other indictments unsealed today, 14 people were charged with staging car accidents throughout New York City and attending clinics, including AR Medical, for treatment of their feigned injuries. These two staged accident ring indictments charged the defendants with scheme to defraud, insurance fraud, larceny, falsifying business records, and offering a false instrument for filing.
* * *
The enterprise corruption indictment alleges that although the owner of record of AR Medical was Dr. Alexander Rozenberg, a physician specializing in physical rehabilitation, he did not control the operations or the financial affairs of the clinic. Instead, Inna Polack, who lacks a health provider license, secretly owned the clinic and decided what medical and health services were to be provided to patients. The defendants acquired patients through a network of "steerers," who were paid to refer patients to AR Medical. Steerers solicited patients by staging motor vehicle accidents and by offering the clinic’s "services" to real car accident victims.
* * *
The indictment further alleges that, following referrals of patients to AR Medical, Rozenberg conducted cursory medical evaluations, fabricated patients’ symptoms, falsely diagnosed extensive soft tissue injuries, and referred patients for prolonged, unnecessary treatment and testing. This treatment included months of physical therapy, chiropractic care, acupuncture, and psychological counseling, as well as MRIs, x-rays, and nerve testing.
The AR Medical situation brings together many of the various defenses often described collectively as "fraud" or as relating to an "SIU" issue (SIU being an acronym for Special Investigations Unit, which carriers in New York are required by regulation to operate). For example, both of the following are complete defenses to a no-fault personal injury protection ("PIP") claim: a) the monies earned by a professional medical corporation are being directed to the true lay operators of the facility rather than the licensed person who is involved on paper only (see State Farm Mut. Auto Ins. Co. v Mallela, 4 N.Y.3d 313 (2005)), and b) the alleged motor vehicle loss was not accidental (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 N.Y.2d 195 (1997); Metro Medical Diagnostics, P.C. v. Eagle Insurance Company, 293 A.D.2d 751 (2d Dep't, 2002); State Farm v. Laguerre, 305 A.D.2d 490 (2d Dep't, 2002)). In practical litigation terms, these defenses lead to the submissions of the lengthiest motion and opposition papers, as well as the lengthiest jury trials.
Monday, September 25, 2006
Carothers, Part CLXXXVI
The latest (and surely most wide-reaching) event in the saga of the no-fault claims of Andrew Carothers, M.D., P.C. has come courtesy of Judge Peter Paul Sweeney (formerly of Civil Court, Richmond County, up until this past Friday - he has now returned to his former home of Civil/Kings). See Matter of Carothers v Insurance Cos. Represented by Bruno Gerbino & Soriano LLP & Freiberg & Peck LLP, 2006 NY Slip Op 26372 (Civ. Ct., Richmond Cty., 2006). At least Judge Sweeney has gone out with something of a bang (relative to no-fault, at least).
All of this may seem very trite (even moreso to those who aren't practicing in the no-fault world and hence aren't shocked that a court would order that a party would actually have to appear for an EBT), but it has consumed much of this past summer for the no-fault defense bar, including your humble correspondent, and most New York City Civil Court motion clerks. For example, BG&S submitted a brief in the matter (as if same was not contextually obvious from the caption), which is more or less all that I can recall about the month of June this year.1
See also, Andrew Carothers, M.D., P.C. v. GEICO Indem. Co., 2006 NY Slip Op 26326 (Civ. Ct., Kings Cty., 2006; Battaglia, J.)
Sadly, there is not much information available online addressing the background of the Carothers situation, or of the prior facilities, Deajess Medical Imaging, P.C., Preferred Medical Imaging, P.C., and Boston Post Road Medical Imaging, P.C. Judge Sweeney describes the situation a little bit, and I have a PDF of the decision in AIU Ins. Co. v. Deajess Medical Imaging, P.C., 235 NYLJ 28, p. 22, col. 1 (Sup. Ct. Nassau Co. 2/10/06). Additional information is summarized in Preferred Med. Imaging, P.C. v Liberty Mut. Ins. Co., 2006 NY Slip Op 50437(U) (Dist. Ct., Suffolk Cty., 2006).
To really get a feel for the entire affair, the truly dedicated might be inclined to visit the Supreme Court, Kings County and copy the pleadings in Medical Capital Corporation, et al., v. MRI Global Imaging, Inc. (Index No. 41099/04). That lawsuit concerned Deajess, Preferred, etc. suing their management company after their relationship went sour.
Anyway, stay tuned to this space in 2007 or so for a report on the results of the Appellate Term decision on the inevitable appeal.
--
1. The Joint Brief submitted on behalf of the defendants represented by Bruno, Gerbino & Soriano, LLP & Freiberg & Peck, LLP was authored by Craig J. Bruno, Esq., with noted contributions by Vincent F. Gerbino, Esq., Damin J. Toell, Esq., Brian M. Martin, Esq., and Craig J. Freiberg, Esq.
All of this may seem very trite (even moreso to those who aren't practicing in the no-fault world and hence aren't shocked that a court would order that a party would actually have to appear for an EBT), but it has consumed much of this past summer for the no-fault defense bar, including your humble correspondent, and most New York City Civil Court motion clerks. For example, BG&S submitted a brief in the matter (as if same was not contextually obvious from the caption), which is more or less all that I can recall about the month of June this year.1
See also, Andrew Carothers, M.D., P.C. v. GEICO Indem. Co., 2006 NY Slip Op 26326 (Civ. Ct., Kings Cty., 2006; Battaglia, J.)
Sadly, there is not much information available online addressing the background of the Carothers situation, or of the prior facilities, Deajess Medical Imaging, P.C., Preferred Medical Imaging, P.C., and Boston Post Road Medical Imaging, P.C. Judge Sweeney describes the situation a little bit, and I have a PDF of the decision in AIU Ins. Co. v. Deajess Medical Imaging, P.C., 235 NYLJ 28, p. 22, col. 1 (Sup. Ct. Nassau Co. 2/10/06). Additional information is summarized in Preferred Med. Imaging, P.C. v Liberty Mut. Ins. Co., 2006 NY Slip Op 50437(U) (Dist. Ct., Suffolk Cty., 2006).
To really get a feel for the entire affair, the truly dedicated might be inclined to visit the Supreme Court, Kings County and copy the pleadings in Medical Capital Corporation, et al., v. MRI Global Imaging, Inc. (Index No. 41099/04). That lawsuit concerned Deajess, Preferred, etc. suing their management company after their relationship went sour.
Anyway, stay tuned to this space in 2007 or so for a report on the results of the Appellate Term decision on the inevitable appeal.
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1. The Joint Brief submitted on behalf of the defendants represented by Bruno, Gerbino & Soriano, LLP & Freiberg & Peck, LLP was authored by Craig J. Bruno, Esq., with noted contributions by Vincent F. Gerbino, Esq., Damin J. Toell, Esq., Brian M. Martin, Esq., and Craig J. Freiberg, Esq.
Sunday, September 24, 2006
Just to Show We're Alive
Summer is finally technically over, so presumably we have no further excuses left for our failure to maintain this blog. In a show of good faith, please to enjoy a new link in our blogroll to Small Town Lawyer. Joel H. Seachrist, Esq., of Beckman & Seachrist, has been kind enough to link to us in his wonderfully useful (and, not to mention, disturbingly more frequently-updated than the blog at bar) blog.
While we rev up further postings, we should all be chewing over the decision in New York & Presbyt. Hosp. v New York Cent. Mut. Fire Ins. Co., 2006 NYSlipOp 05336 (App. Div., 2d Dep't, July 5, 2006). In a very short decision, the following two (2) sentences are (potentially) the most important: "The defendant correctly contends that the plaintiff hospitals lacked standing. The proof adduced at trial included unsigned assignment of benefit forms." Id., citing to Leon v Martinez, 84 NY2d 83 (1994).
To be sure, the lack of a signature is a very deep defect in an assignment. However, with standing now being brought into the game as a necessary result of the operation of a no-fault assignment, one can only wonder what other defects might also preclude standing. Indeed, given that the Appellate Division cites to a non-no-fault case (what Hon. Philip S. Straniere formerly referred to as "real cases"), does this mean that general contract law applies to the determination of the validity of a no-fault assignment? How far can this all go? Have we perhaps entered a Twilight Zone-esque world in which even such outlandish laws and rules as those embodied within the CPLR (gasp!) apply to no-fault?! The mind boggles and the heart quivers.
On a more realistic note, what is the remaining force of the decision in Presbyterian Hosp. v. Aetna Cas. & Sur. Co., 233 A.D.2d 433 (2d Dep't, 1996)? In particular, compare the sentences quoted from New York & Presbyt. Hosp. v New York Cent. Mut. Fire Ins. Co., supra, with the following: "[The carrier] failed to allege any deficiency in the plaintiff hospital's assignment in its denial of claim. As a result, it waived any such defense." 233 A.D.2d at 433 (citations omitted). Does the newer decision overrule the older one? Or should we perhaps create a meta-rule of "a carrier waives any defense premised upon any deficiency in an assignment of benefits if it fails to allege such deficiency in a timely denial of claim form, unless such deficiency works to preclude standing"? Most pressingly, should we resolve all of this prior to the 10th anniversary of Presbyterian Hosp. v. Aetna Cas. & Sur. Co. on November 18 of this year?
Anyhow, I'm open to suggestions as to where we'll all have drinks to celebrate Presbyterian Hosp. v. Aetna Cas. & Sur. Co.'s birthday (and/or to use the occasion to celebrate/mourn its demise). November 18, 2006 is a Saturday, after all.
While we rev up further postings, we should all be chewing over the decision in New York & Presbyt. Hosp. v New York Cent. Mut. Fire Ins. Co., 2006 NYSlipOp 05336 (App. Div., 2d Dep't, July 5, 2006). In a very short decision, the following two (2) sentences are (potentially) the most important: "The defendant correctly contends that the plaintiff hospitals lacked standing. The proof adduced at trial included unsigned assignment of benefit forms." Id., citing to Leon v Martinez, 84 NY2d 83 (1994).
To be sure, the lack of a signature is a very deep defect in an assignment. However, with standing now being brought into the game as a necessary result of the operation of a no-fault assignment, one can only wonder what other defects might also preclude standing. Indeed, given that the Appellate Division cites to a non-no-fault case (what Hon. Philip S. Straniere formerly referred to as "real cases"), does this mean that general contract law applies to the determination of the validity of a no-fault assignment? How far can this all go? Have we perhaps entered a Twilight Zone-esque world in which even such outlandish laws and rules as those embodied within the CPLR (gasp!) apply to no-fault?! The mind boggles and the heart quivers.
On a more realistic note, what is the remaining force of the decision in Presbyterian Hosp. v. Aetna Cas. & Sur. Co., 233 A.D.2d 433 (2d Dep't, 1996)? In particular, compare the sentences quoted from New York & Presbyt. Hosp. v New York Cent. Mut. Fire Ins. Co., supra, with the following: "[The carrier] failed to allege any deficiency in the plaintiff hospital's assignment in its denial of claim. As a result, it waived any such defense." 233 A.D.2d at 433 (citations omitted). Does the newer decision overrule the older one? Or should we perhaps create a meta-rule of "a carrier waives any defense premised upon any deficiency in an assignment of benefits if it fails to allege such deficiency in a timely denial of claim form, unless such deficiency works to preclude standing"? Most pressingly, should we resolve all of this prior to the 10th anniversary of Presbyterian Hosp. v. Aetna Cas. & Sur. Co. on November 18 of this year?
Anyhow, I'm open to suggestions as to where we'll all have drinks to celebrate Presbyterian Hosp. v. Aetna Cas. & Sur. Co.'s birthday (and/or to use the occasion to celebrate/mourn its demise). November 18, 2006 is a Saturday, after all.
Monday, July 10, 2006
Through No Fault of Mine - On Hiatus
In case you have not noticed, we're on hiatus for a while for the summer slow down. There have been some developments that we hope to cover in the coming weeks.
A pressing project must take precedence for the next week or so, but after that look back here for fresh posts.
Thanks for stopping by.
A pressing project must take precedence for the next week or so, but after that look back here for fresh posts.
Thanks for stopping by.
Sunday, May 28, 2006
To Prove Staged Accident in Judge Velasquez' Courtroom, the Standard is Preponderance of Evidence
In Universal Open MRI of the Bronx, P.C. v State Farm Mut. Auto Ins., decided on May 11, 2006, Judge Velasquez at Civil Court, Kings County ruled evidence defendant presented insufficient to prove a staged accident. While unremarkable by itself, he goes into a detailed analysis as to the standard of proof required. He ultimately adopts the standard of preponderance of evidence. The decision is worth reading.
An Example of An Effective Peer Review Defense - Where Plaintiff Does Not Produce a Witness
In Expo Med. Supplies, Inc. v Clarendon Ins. Co., 2006 NY Slip Op 50892(U), decided May 15, 2006 in Civil Court, Kings County, Judge Delores J. Thomas held that defendant's Peer Review Doctor Ronald A. Csillag's testimony was sufficient to carry their burden to prove that the supplies were not medically necessary. Plaintiff did not produce a witness, but instead relied upon the report of Dr. Barshay. The court found that no evidence was presented to refute defendant's testimony.
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