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

Archive for the ‘Discovery’ Category

Total Family Chiropractic v Mercury Cas. Co., 2010 NY Slip Op 51470(U)(App. Term 2d Dept. 2010)

This was another one that did not necessarily go my way.  By way of explanation, this was a complicated case, where the defense was whether plaintiff assignors made or conspired to make material misrepresentations in the procurement of the insurance policy.

The bills were delayed pending EUO’s of the assignors.  The assignors were coy about admitting that Karoy Brown resided with his soon to be bride, Crystal Franklin Brown.  There were four vehicles that were registered and owned by Crystal Franklin.  Evidence was adduced that a trailer was parked in front of the Franklin residence, which contained lawn mowers and other equipment.  Karoy alleged that he commuted from New Jersey to Patchogue to perform landscaping for a man whose name and number he could not remember.  He worked between 3-5 days per week, for 12 hours per day.  He would always go back home to New Jersey at the end of the day.  Both assignors denied using the vehicles for any commercial purposes.  Karoy had a suspended driver’s license during the relevant time period.  Also, Karoy made a pass at the court reporter after the EUO.  Thank goodness Crystal did not see that.

Evidence was also adduced that Crystal kept logs of  the jobs that were performed.  Both Assignors had cellphones.  Crystal had a lease for her place, and had a landlord.  Other material information was in existence.

The bills were delayed following the EUO in order to obtain this information.  Once obtained, a further investigation would be done, which would shed more light on this case.

Nobody ever complied with the verification requests.

Had the supplied information demonstrated that the vehicles were used for commercial purposes or that Karoy was a resident and used the vehicle, then the claims would have most likely been denied due to the making of material misrepresentations in the procurment of the insurance policy.

Dueling motions for summary judgment were made following commencement of this action.  A spreadsheet was used to log all of the pertinent dates for each bill.  This case was pre-LMK so there were tons of bills for $33.70 and $67.40 flying around out there.

The Court said the following: “In an attempt to establish that the time period in which it had to pay or deny the claims was tolled due to outstanding verification requests, defendant relied upon spreadsheets annexed to the affidavit of its claim representative. However, because the claim representative did not establish that the spreadsheets constituted evidence in admissible form (see CPLR 4518 [a]; People v Kennedy, 68 NY2d 569, 579-580 [1986]; Palisades Collection, LLC v Kedik, 67 AD3d 1329, 1330-1331 [2009]; Speirs v Not Fade Away Tie Dye Co., 236 AD2d 531 [1997]), defendant has not shown that it made timely verification requests.”

The information annexed to the spreadsheets were the dates the bills were received, verifications sent, etc.  All of this information was annexed to the motion itself.  In fact, the motion was about 1000 pages.  The spreadsheet was more or less illustrative.  I mean, I usually put a chart in my motion and put the information in the said chart.  Since there was so much information for each bill, I used a spreadsheet instead of one of my charts in this case.

The affidavit of the claims representative had the standard language that this court previously found to be sufficient to allow the entry of all of the documents into evidence.  The information in the spreadsheet was incorporated by reference.  The case the court cites, Pallisades Collection, involved an assigned credit card debt that Pallisades purchased from Discover.  Pallisades had to establish a business record foundation involving Discover’s business practices, in order to allow the entry of Discover’s data into evidence.

Here, the information was always stored and processed by Mercury.  The affidavit, after laying a foundation for the dates and form of the documents,  said that the spreadhseets annexed to the affidavit memorialized the information pertinent to the claim.  I have to disagree with the court on this one.

Anyway, the moral of the story is this.  If you have information that requires a spreadsheet, make sure you somehow incorporate the actual spreadsheet as part of the affidavit.

E.g.

“3. The following represents the claims handling in this matter:

[INSERT SPREADSHEET]

4. blah blah.

5. Facsimiles shall be deemed originals.”

On the bright side, the notice of trial was stricken so that Mercury can now search this state to find the Brown family and invite them to come in for an EBT.

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]).”

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.”

Matter of Travelers Indem. Co. v United Diagnostic Imaging, P.C., 2010 NY Slip Op 03944 (2d Dept. 2010)

“The test for ordering disclosure to aid in arbitration is “necessity,” as opposed to “convenience” (Hendler & Murray v Lambert, 147 AD2d 442, 443 [internal quotation marks omitted]). Thus, court-ordered disclosure to aid in arbitration is justified only where that relief is “absolutely necessary for the protection of the rights of a party” to the arbitration (Hendler & Murray v Lambert, 147 AD2d at 443 [internal quotation marks omitted]). [*2]

Here, the petitioner already has evidence sufficient to establish a potential defense in the arbitration proceedings (cf. 11 NYCRR 65-1.1[d], 65-3.2[c], 65-3.5[b], [c], [e]). Furthermore, the petitioner can potentially obtain the requested disclosure in the context of those proceedings (see 11 NYCRR 65-4.5[o][2]; cf. Matter of Katz [Burkin], 3 AD2d 238, 238-239). Finally, the record provides no indication that if a disclosure directive is made during those proceedings, the requested disclosure will, at that point, be unavailable (cf. Bergen Shipping Co., Ltd. v Japan Marine Servs., Ltd., 386 F Supp 430, 435 n 8). Under the circumstances, the petitioner failed to demonstrate the existence of extraordinary circumstances justifying court-ordered disclosure to aid in those proceedings. Accordingly, the Supreme Court improvidently exercised its discretion in granting the petition.”

The Appellate Division seems to be continuing its cruisade to insulate the arbitration forum from any collateral attack.  Travelers Indem. Co. v. United Diagnostic Imaging, P.C., 70 A.D.3d 1043 (2d Dept. 2010); Mercury Cas. Co. v. Healthmakers Medical Group, P.C., 67 A.D.3d 1017 (2d Dept. 2010).

Also, look at the the regulagtory provisions that were delimited by a “c.f.” cite: 65-3.2(c) “Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.”; 65-1.1(d) “[Claimant shall] provide any other pertinent information that may assist the Company in determining the amount due and payable.”; 65-3.5 (allowing verification via EUO under the tight claims determinative time frames).

It appears that this might have been a Mallela case, and the Court was not willing to allow the same type of discovery in arbitral proceedings that it would allow in plenary actions.  Compare, One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 54 A.D.3d 738 (2d Dept. 2008).

Also, note the purported ability to obtain discovery through the arbitration proceeding itself.  We saw this doctrine enunciated in another context a few years  ago.  In re Progressive Northeastern Ins. Co. (New York State Ins. Fund),  56 A.D.3d 1111 (3d Dept. 2008).  Yet, should the arbitrator refuse to grant you the sought after discovery, you are probably out of luck.  See, Mercury Cas. Co. v. Healthmakers Medical Group, P.C..

Finally, without knowing what the proofs were in this matter, I cannot say that I necessarily agree or disagree with the outcome of the ultimate disposition of the case.  I take issue, however, with the court denying discovery on the basis that the information could have been obtained during the claims determination phase, inasmuch as broad discovery is usually allowed where true coverage issues or non-precludable standing issues arise.

A.B. Med. Servs., PLLC v New York Cent. Mut. Fire Ins. Co., 2010 NY Slip Op 50702(U)(App. Term 2d Dept. 2010)

“Plaintiffs’ prior action was dismissed pursuant to CPLR 3126 (3), but the dismissal order did not state that the dismissal was with prejudice, nor does a review of the record reveal the existence of a preclusion order. Consequently, plaintiffs were not barred from [*2]commencing a second action. Accordingly, the District Court properly denied defendant’s pre-answer motion to dismiss the complaint based on the doctrine of res judicata.”

If the striking of a complaint is such an extreme remedy, only available upon the willful and contumacious behavior of the plaintiff, then why does it carry  less of a sanction than preclusion?  Secondly, would we have had the same outcome had an answer been stricken?  Do we have a 14th Amendment issue?  Interesting.

Bernal v Singh, 2010 NY Slip Op 03053 (2d Dept. 2010)

“It is settled that the nature and degree of the penalty to be imposed pursuant to CPLR 3126 lies within the sound discretion of the Supreme Court (see CPLR 3126[3]; Joseph v Iannace, 6 AD3d 502, 503; Ordonez v Guerra, 295 AD2d 325, 326; Yona v Beth Israel Med. Ctr., 285 AD2d 460, 461). The record herein supports the Supreme Court’s determination that the defendants’ failure to appear for depositions on June 5, 2009, was willful and contumacious (see Beneficial Mortg. Corp. v Lawrence, 5 AD3d 339, 340; Rowell v Joyce, 10 AD3d 601). The attorneys for both sides had agreed upon that date at a compliance conference on June 1, 2009, just four days earlier, and the resulting compliance conference order had directed the depositions to proceed on that date starting at 10:00 A.M. in the courthouse.”

I am not sure how many previous orders were violated, but the extreme penalty of putting a defendant in default under the circumstances as presented in this opinion seems quite drastic.

Seda v Epstein, 2010 NY Slip Op 02850 (1st Dept. 2010)

“There is no evidence that defendants’ removal of the debris was willful; indeed, the preliminary conference order merely stated that defendants were to make the premises available for inspection, and plaintiff did not [*2]schedule an inspection for more than two years (see e.g. Jimenez v Weiner, 8 AD3d 133 [2004]). However, in view of defendants’ failure to notify plaintiff’s counsel of the intended removal, the court properly ordered the lesser sanction of an adverse inference charge (see e.g. Balaskonis v HRH Constr. Corp., 1 AD3d 120, 121 [2003]).”

I am not sure when in no-fault practice this particular issue would arise.  It is something to keep in mind if you are fighting a contested  issue where substantive discovery has been ordered and the items you seek to discover suddenly “vanish”.

Once a month, the Fourth Department usually barrages us with about 100 or so decisions.  The hard part is sifting through them quickly enough and finding the ones that are worth posting.  The next few posts will be from the Appellate Department that specializes in short opinions, the use of the “memorandum” and which always fails to award a bill of costs to the prevailing party on appeal.

L.T. v Teva Pharms. Usa, Inc., 2010 NY Slip Op 02201 (4th Dept. 2010)

This case is interesting because it explicitly allows certain discovery if medical texts or journals support the medical proposition that the defendant is espousing.  Here are the pertinent parts of the opinion:

“Plaintiff suffers from tardive dyskinesia (TD) and alleges that it was caused by her use of defendant’s medication to treat her gastroesophageal disease. All of the articles submitted by defendant link alcohol abuse or dependency to TD only for psychiatric patients who are concomitantly using antipsychotic or neuroleptic medications. The record contains no evidence that plaintiff ever used such medication or, indeed, that she ever suffered from a psychiatric condition, and thus defendant failed to establish a link between plaintiff’s alleged alcohol abuse or dependency in the 1990s and plaintiff’s having developed TD in 2007 (cf. Napoleoni v Union Hosp. of Bronx, 207 AD2d 660; see generally Manley v New York City Housing Auth., 190 AD2d 600, 600-601).

Defendant contends that antipsychotic medications are sometimes used to treat alcoholics suffering from withdrawal and thus that discovery is warranted because it is possible that plaintiff was prescribed such antipsychotic medications while being treated for her alcohol use. That contention is not properly before us, however, because it is raised for the first time on appeal (see generally CPLR 5501 [a]; Ciesinski v Town of Aurora, 202 AD2d 984, 985). In any event, the record contains no evidence that plaintiff was ever prescribed such medication and thus does not support defendant’s contention.

While the record does not justify the disclosure of the confidential alcohol treatment records, we agree with defendant that it should be allowed to provide expert witness affidavits and/or “medical texts and journals” establishing a link between alcohol abuse and the development of TD where the person suffering from TD was not a psychiatric patient being treated with antipsychotic or neuroleptic medication (Green v City of New York, 281 AD2d 193, 193). We thus conclude at this juncture that the court properly denied plaintiff’s cross motion for a protective order, and we modify the order by denying defendant’s motion without prejudice and vacating the directive that plaintiff provide defendant with HIPAA compliant authorizations permitting release of her alcohol treatment records.”

Bath Med. Supply, Inc. v Allstate Indem. Co., 2010 NY Slip Op 20059 (App. Term 2d Dept. 2010)

First, the Appellate Term, Second Department, appears to have, for the first time that  I can recall, denied a 3212(f) application when the defense is based upon a corporate structure issue.  The court found it relevant that many of the corporate documents, which the 3212(f) defense was based upon, are readily available.

Second, the portion of the 3212(f) application, which was based upon the purported need for an EBT of the assignor based upon an allegation that the assignor received the supplies, was denied since the defense may have been precluded.

Third, even if the defense was not precluded, a deposition of the assignor without a subpoena, as we know, is palpably improper.

“The court denied plaintiff’s motion for summary judgment pursuant to CPLR 3212 (f) on the ground that defendant was entitled to discovery pertaining to its contention that plaintiff had billed insurance companies for medical supplies which were never provided. However, defendant failed to make any showing that its denial of claim forms were timely mailed and that it is not precluded from raising fraudulent billing as a defense (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Consequently, the court’s determination that discovery was necessary to obtain facts relevant to this precluded defense was improper, and, thus, plaintiff’s motion for summary judgment should not have been denied on that basis.

A defense that plaintiff may be ineligible to recover no-fault benefits because it failed to adhere to applicable statutes (cf. State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) is not precluded, notwithstanding defendant’s failure to demonstrate that its denial of claim forms were timely sent. However, defendant has offered no factual basis for its contention that plaintiff was not properly incorporated as a provider of durable medical equipment or failed to obtain any license that may have been required at the time it delivered medical equipment to its assignor. Further, in light of the availability of public records documenting plaintiff’s licensing status, defendant “failed to demonstrate that discovery was needed in order to show the existence of a triable issue of fact (see CPLR 3212 [f])” (Delta Diagnostic Radiology, P.C. v Interboro Ins. Co., 25 Misc 3d 134[A], 2009 NY Slip Op 52222[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; see also Corwin v Heart Share Human Servs. of NY, 66 AD3d 814, 815 [2009] [summary judgment should be deferred pending discovery only when the opponent "offer[s] an evidentiary basis to suggest that discovery might lead to relevant evidence and that facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff”]).”

We note that, insofar as the order conditioned the grant of defendant’s cross motion on the nonappearance of plaintiff’s assignor for an examination before trial, the order was improper. As plaintiff’s assignor is neither a party to this action nor under plaintiff’s control (Leon v Martinez, 84 NY2d 83, 88 [1994]; Cardtronics, LP v St. Nicholas Beverage Discount Ctr., Inc., 8 AD3d 419, 420 [2004]; 6A NY Jur 2d, Assignments §§ 59, 85), the sanctions provided by CPLR 3126 (3) for nondisclosure cannot be imposed on plaintiff for failing to produce its assignor for an examination before trial (MIA Acupuncture, P.C. v Mercury Ins. Co., ___ Misc 3d ___, 2009 NY Slip Op 29509 [App Term, 2d, 11th & 13th Jud Dists 2009]).

Rodriguez v United Bronx Parents, Inc., 2010 NY Slip Op 01366 (1st Dept. 2010):

“Order, Supreme Court, Bronx County (Howard R. Silver, J.), entered August 26, 2009, which, to the extent appealed from, granted plaintiff’s cross motion pursuant to CPLR 3126 to strike defendant’s answer solely to the extent of granting plaintiff a missing witness charge as to Nadia James and Victor Martinez, unanimously modified, on the law and the facts, the cross motion to strike granted….”

“Here, plaintiff established that defendant’s failure to comply was willful and contumacious, given its repeated and persistent failure to comply with five successive disclosure orders (see Goldstein v CIBC World Mkts. Corp. 30 AD3d 217 [2006]; Min Yoon v Costello, 29 AD3d 407 [2006]; compare Pascarelli v City of New York, 16 AD3d 472 [2005]). Defendant’s failure to adequately explain what efforts were made to locate the documents it failed to disclose, or to explain its inability to provide the last known addresses of its former residents or employees, also supports a finding that its failure to comply was willful. Furthermore, defense counsel’s “Affirmation of Search” did not indicate whether he was the custodian of defendant’s records, what records were searched, who conducted the search, what the search consisted of, and the statement was made upon “information and belief.” Accordingly, this statement is devoid of detail and insufficient.”

After the fifth time that defendant stonewalled the plaintiff, the Supreme Court granted plaintiff a missing witness charge.  The Appellate Division was unimpressed and, upon Defendant’s appeal, struck the Defendant’s complaint.