No Fault Defender – A Defense Attorney's Perspective on New York No-Fault Law

Use and Operation.  This is one area of law that is all over the place.  Practitioners that are called upon to give opinions on whether coverage is implicated through a vehicle’s use and operation, and whether coverage should be shared between numerous carrier, should usually walk on egg shells.  This is a difficult area of law, and it changes every day, and this case is a doozy.

I am going to pretty much cut and paste this decision and the dissent – something I try to avoid.  In my years of practice, I have never seen a court explicitly hold that use and operation should have a different interpretation under the SUM endorsement as opposed to the PIP endorsement.  If someone could give me a bright line rule on this coverage issue, please share.  Please do not cite Matter of Manhattan & Bronx Surface Tr. Operating Auth. (Gholson), 71 AD 1004 (2d Dept. 1979).

Also, this may end up at the court of appeals.  It really should actually.  And now………..

Matter of Liberty Mut. Fire Ins. Co. v Malatino, 2010 NY Slip Op 06204 (3d Dept. 2010)

“While respondent Marcia Malatino (hereinafter respondent) was returning to work after taking a break in the employer’s parking lot, she walked into a piece of sheet metal extending approximately five feet beyond the tailgate of a coworker’s parked pickup truck,^[FN1] sustaining facial lacerations and a broken nose. According to the record, the coworker had torn the sheet metal off a building on his property and planned to deliver it to a junkyard after work.”

“Initially, we note that the issue herein involves the right to arbitration under the specific terms of the parties’ supplemental underinsured motorists policy and not the application of any statutory no-fault provisions ^[FN2]. A court may grant an application to stay arbitration “where ‘the particular claim sought to be arbitrated is outside [the] scope of the agreement to arbitrate’” (Matter of Farm Family Cas. Ins. Co. [Trapani], 301 AD2d 740, 741 [2003]

Clearly, the pickup truck was not being operated at the time of the accident — having been parked in the employer’s lot when the coworker arrived at work. The focus herein, however, is whether the vehicle was in use so as to fall within the scope of the terms of the supplemental underinsured motorists policy. Here, at the time of respondent’s injury, the pickup truck was being used by the coworker to transport the sheet metal to the junkyard after work. Construing the language of the supplemental underinsured motorists policy liberally “in favor of the insured and strictly against the insurer” (Penna v Federal Ins. Co., 28 AD3d at 731), and given the causal connection between the use of the pickup truck to transport the sheet metal and respondent’s injuries, we find that respondent’s request for arbitration falls within the scope of the parties’ agreement….

NOW THE DISSENT

“While “use” of a motor vehicle encompasses more than just driving and extends to other incidental activities (see Rowell v Utica Mut. Ins. Co., 77 NY2d 636, 639 [1991]), there are limits to that term and the corresponding insurance coverage ^[FN4]. The majority holds that the truck here was being used to contain sheet metal until the coworker could transport it, rendering the vehicle in “use.” This broad finding places no parameters on the use of a vehicle. It is unclear if the majority considered that the truck was in use while containing the sheet metal only because the coworker intended to transport the sheet metal to the junkyard that same day, or if the truck would be considered in use as a vehicle if the sheet metal was placed there a year earlier and the coworker regularly parked his truck with metal protruding from his tailgate. Conversely, if the truck was never moved from the parking lot but was regularly utilized to store different materials in the same location, would the parked truck constantly be in use as a vehicle? Rather than [*4]expanding the application of the statute and regulation requiring coverage for injuries arising out of a “motor vehicle’s ownership, maintenance or use” (11 NYCRR 60-2.3 [f] [II]; see Insurance Law § 3420 [f] [1]), we should adhere to the current rule that looks to whether the “circumstances constituted an ‘on-going activity relating to the vehicle’ which would necessitate a conclusion that the vehicle was in use” (Trentini v Metropolitan Prop. & Cas. Ins. Co., 2 AD3d 957, 958 [2003], lv dismissed 2 NY3d 823 [2004], quoting Matter of Celona v Royal Globe Ins. Co., 85 AD2d 635, 636 [1981]; see Zaccari v Progressive Northwestern Ins. Co., 35 AD3d 597, 599-600 [2006]); Wooster v Soriano, 167 AD2d at 234).

In Sullivan v Barry Scott Agency, Inc. (23 AD3d 889 [2005]), this Court held that a plaintiff’s back injury caused by lifting a heavy box was not related to the use of a motor vehicle, even though he was standing in a delivery van when unloading the box. We found the proximity to the vehicle “wholly incidental,” “[a]s plaintiff’s injuries would have occurred even if he had been standing on the ground and lifting the box” (id. at 890; see Sochinski v Bankers & Shippers Ins. Co., 221 AD2d 889, 889 [1995]; United Servs. Auto. Assn. v Aetna Cas. & Sur. Co., 75 AD2d 1022, 1022 [1980]; cf. Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 215 [1996]). Similarly, respondent here would have received the same injuries had the sheet metal she walked into been protruding from any object other than a vehicle. Under the circumstances, there was no ongoing activity related to the parked truck — in its capacity as a motor vehicle, rather than as a storage bin for sheet metal — so as to necessitate a conclusion that the vehicle was in use when respondent was injured (see Sullivan v Barry Scott Agency, Inc., 23 AD3d at 890; Matter of New York Cent. Mut. Fire Ins. Co. [Hayden — Allstate Ins. Co.], 209 AD2d 927, 928 [1994] [staying arbitration where "accident did not arise out of the inherent nature of the automobile as such"]; Reisinger v Allstate Ins. Co., 58 AD2d 1028, 1028 [1977], affd 44 NY2d 881 [1978]; McConnell v Fireman’s Fund American Ins. Co., 49 AD2d at 677). Accordingly, petitioner was entitled to a stay of arbitration because its insurance policy does not provide coverage for respondent’s injuries.”

h/t to Damin Toell (who really needs to update his blog already) and many thanks to DG for publishing this at NFP.  Acupuncture is now going to be deemed to be payable at the MD or DO rate.

Where was the DOI when “Power Acupuncture” represented the law, and the carriers were getting socked for $100 acupuncture visits, notwithstanding the DOI’s proclamation that acupuncture was only payable at the chiro rate?  As an aside, it looks Judge Gonzalez in Great Wall Acupuncture v. GMAC, 6/15/2007 NYLJ 22, (col. 3)(Civ. Ct. Bronx Co. 2007) called this one three years ago.

While it is unfortunate that the carriers will be paying more for these acupuncture visits, the good news is that my summary judgment motions will  consume about 40 less pieces of paper, since a definitive fee schedule will have been established.

Meridan Health Acupuncture, P.C. v Auto One Ins. Co., 2010 NY Slip Op 51263(U)(Dis. Ct. Suffolk 2010)

In this case, the District Court allowed a Notice to Admit to satisfy a plaintiff’s prima facie burden.  It also found that a Defendant’s really cute, but completely inappropriate response, to the notice to admit to be deemed a nullity.  The net effect, in the eyes of the District Court, was to deem the allegations set forth in the notice to admit to be deemed admitted.

I would have no problem with the court’s findings of facts and conclusions of law, provided the District Court transplanted itself to the Grand Concourse from 1850 New York Avenue.  Thus, if the District Court, Third District, Huntington Part, sat in the hypothetical District Court, Third District, Bronx Part, then one should probably applaud this opinion.  Furthermore, if the Appellate Division, Second Department overturns, in effect, Art of Healing, which many of us think is probably going to happen, then this decision would probably be correct.  But, District Suffolk sits on Long Island, and cannot disregard the law as the Appellate Term in this Department has said it to be, viz, a prima facie case requires, among other things, a business record foundation for the entry of the bills into evidence.

But if you read this decision, note how the Court avoids citing Second Department precedent (when convenient), and even cites the one and only Appellate Division, First Department case that commented on what constitutes a prima facie case.

Dynamic Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 2010 NY Slip Op 20285 (Dis. Nassau 2010)

I am somewhat flabbergasted at this decision.  I am pretty down the middle (I think) and I really try to be as fair as I can on this blog.  With that introduction, I will say the following.  I would probably volunteer to do the appeal on this one, just because it is off on the law, the facts and is against the trend of every modern case that has come out of both branches of the Appellate Term, Second Department, as well as some “hidden” Appellate Division precedent, which I will not disclose.  You can read the facts of this case at your leisure.

Finocchiaro v Wall St. Mail Pk-Up Serv., Inc., 2010 NY Slip Op 51255(U)(App. Term 2d Dept. 2010)

I am including this case today, because the Appellate Term (see the bold below) has shared with us something that might have come from a spy novel: “While leave to amend a bill of particulars is ordinarily freely granted in the absence of prejudice and surprise, when leave to amend is sought on the eve of trial, judicial discretion should be exercised in a discreet, circumspect, prudent and cautious manner (see Kyong Hi Wohn v County of Suffolk, 237 AD2d 412 [1997]).”

New York Merchants Protective Co., Inc. v Costanza, 2010 NY Slip Op 51253(U)(App. Term 2d Dept. 2010)

“Plaintiff commenced this action to recover damages for breach of contract. Defendants appeared and answered, and the matter was adjourned to June 2007. The case was then adjourned and marked final for trial on October 24, 2007. Thereafter, the complaint was dismissed with prejudice….”

“Under the facts presented herein, the Civil Court did not improvidently exercise its discretion in denying plaintiff’s request for an adjournment and, therefore, properly dismissed the complaint with prejudice.”

Very interesting.  I am not sure I have seen this one before.

SEE COMMENTS FROM DAMIN TOELL, ESQ. – for further explanation of this case.

Kipor Medicine, P.C. v GEICO, 2010 NY Slip Op 51247(U)(App. Term 2d Dept. 2010)

The branch of defendant’s motion seeking consolidation should have been denied since defendant failed to demonstrate that the actions it sought to consolidate had common questions of law or fact (see CPLR 602 [a]; S & B Neurocare, P.C. v GEICO Ins. Co., 20 Misc 3d 132[A], 2008 NY Slip Op 51450[U] [App Term, 2d & 11th Jud Dists 2008]). In addition, the branch of [*2]defendant’s motion seeking leave to amend the answer should have been denied since defendant’s papers presented no evidence that the proposed amendment might have merit (see CPLR 3025 [b]; Ingrami v Rovner, 45 AD3d 806, 808 [2007]). Defendant sought to amend its answer to assert that plaintiff’s certificate of incorporation had been revoked following the surrender, in April 2006, of the medical license of plaintiff’s sole shareholder. Plaintiff, however, is entitled to wind up its affairs and seek to recover no-fault benefits for the services it rendered to its assignors prior to April 2006 (see e.g. A.B. Med. Servs., PLLC v Travelers Indem. Co., 26 Misc 3d 69 [App Term, 9th & 10th Jud Dists 2009]). Defendant has not demonstrated that the facts herein are akin to a fraudulent incorporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).

Moreover, since defendant failed to submit an affidavit specifying that any unusual or unanticipated conditions had developed after the notice of trial had been filed which made it necessary for defendant to engage in further pretrial proceedings (see Uniform Rules for New York City Civ Ct [22 NYCRR] § 208.17 [d]; S & B Neurocare, P.C. v GEICO Ins. Co., 20 Misc 3d 132[A], 2008 NY Slip Op 51450[U]), the branch of defendant’s motion seeking to compel plaintiff to respond to discovery demands and produce its sole shareholder for an examination before trial should also have been denied.

Two points.  One, consolidation motions seem to have the same rules as severance motions.  While it is easy to sever, it is equally as difficult to consolidate.  Two, belated discovery following the filing of a notice of trial is shunned upon.

A better question is assuming the facts as presented by Justice Golia are accurate (see below), why would anybody prosecute this type of action.  Does this make the law firm prosecuting this action a co-conspirator or accessory after the fact to a fraud?  I am not sure -

“Unlike the majority, I do not find that defendant failed to demonstrate that the actions it sought to consolidate had common questions of law or fact,” or that defendant’s papers presented no evidence that the proposed amendment might have merit,” or that additional discovery should also have been denied.” Notwithstanding the foregoing, I agree with the majority in the ultimate result in that defendant waited nearly two years from the time it knew that Dr. Meisher had committed insurance fraud and was losing his medical license. Indeed, it was this very defendant, GEICO, that was the named victim” in the case to which Dr. Meisher entered his guilty plea. I can find no valid reason for this particular defendant to have ignored these concerns for such an extended period of time. Certainly, if defendant had submitted the same motion within a reasonable time, I would have voted to affirm the order of the Civil Court.”

Abdalla v Mazl Taxi, Inc., 2010 NY Slip Op 06071 (2d Dept. 2010)

There is nothing wrong with relying on a party’s opponents to help establish your prima facie defense that threshold was not breached or a service lacked medical utility.  But, as this case shows, watch what you annex to your motions, lest you wish to lose right out of the gate.

“The defendants, in support of their motion, relied on some of the plaintiff’s own medical reports. One such report was that of the plaintiff’s treating physician, Dr. Joyce Goldenberg, which revealed the existence of a significant limitation in the plaintiff’s right knee flexion (see Guerrero v Bernstein, 57 AD3d 845; Mendola v Demetres, 212 AD2d 515). The other was an operative report of the plaintiff’s treating orthopedic surgeon, Dr. Richard Seldes, which revealed, inter alia, the existence of a tear in the posterior horn of the medial meniscus in the right knee. Since the defendants did not meet their prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact”

Can you say sianara?

Furtow v Jenstro Enters., Inc., 2010 NY Slip Op 05987 (2d Dept. 2010)

“Here, Ching submitted an affidavit which recited that he was “duly sworn” and contained a jurat stating that the affidavit was “sworn to before” a notary public, who signed and stamped the document. On the record presented here, the form of the affidavit was adequate (see Sirico v F.G.G. Prods., Inc., 71 AD3d 429; Sparaco v Sparaco, 309 AD2d 1029, 1030; Feinman v Mennan Oil Co., 248 AD2d at 504; Collins v AA Truck Renting Corp., 209 AD2d at 363).”

The affidavit at a minimum must say this: John Doe, DULY SWORN….

Sworn to before

notary public

[notary stamp]

Raz Acupuncture, P.C. v AIG Indem. Ins. Co., 2010 NY Slip Op 51177(U)(App. Term 2d Dept. 2010)

It gets to the point where enough is enough.  The Appellate Term, Second Department, has repeatedly held that acupuncture services are reimbursable, as a matter of law, at the chiropractor rate.  The Court in the case stated the following:

“This court has held, “as a matter of law, that an insurer may use the workers’ compensation fee schedule for acupuncture services performed by chiropractors to determine the amount which a licensed acupuncturist is entitled to receive for such acupuncture services” (Great Wall Acupuncture, P.C. v Geico Ins. Co, 26 Misc 3d 23, 24 [App Term, 2d, 11th & 13th Jud Dists 2009]). As it is undisputed that defendant paid plaintiff based upon the workers’ compensation fee schedule for acupuncture services performed by a medical doctor, a rate higher than that established for acupuncture services performed by a chiropractor, we decline to disturb so much of the order as granted defendant summary judgment dismissing plaintiff’s complaint with respect to those claims.”

What is somewhat new is that the Appellate Term has held that the “it is not compensable” defense for failing to pay an initial acupuncture visit shares the same level of validity as the “it is included in the comprehensive visit” defense for failing to pay for computerized range of motion.  For those of you who do not get this sardonic humor, it is sufficient to say that there is no validity to this statement.