Mercury Cas. Co. v Encare, Inc.
2011 NY Slip Op 32166(U)
July 13, 2011
Sup Ct, NY County
Docket Number: 102610/2011
Judge: Saliann Scarpulla
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SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY
Index Number : 102610/2011
MERCURY CASUALTY CO.
MOTION SEQ NO.
Sequence Number : 001
IN O W
Upon the foregoing papem, It is ordered that thls motlon Is
C u dd
~ J & M ~
COUNTY CLERK'S OFFICE
1. CHECK ONE: .....................................................................
.......................... .MOTION IS: GRANTED
CHECK IF APPROPRIATE: ................................................
2. CHECK AS APPROPRIATE:
0DO NOT POST
0GRANTED IN PART 0OTHER
0FlDUCl ARY APPOINTMENT 0REFERENCE
Index No.: 102610/2011
Submission Date: 6/8/20 1
ENCARE, INC. A/A/O/ ROBERT MANLEY,
DECISION AND ORDER
Werner, Zaroff, Slotrick, Stem &
Ashkenazy 3 60 Merrick Road
360 Merrick Road
Lynbrook, NY 11563
The Law Offices of Jason Tenenbaum, P.C.
595 Stewart Avenue Suite 550
Garden City, NY 11 590
Papers considered in review of motion to dismiss and cross motion for summary judgment:
Notice of Motion.. ........................... 1
Aff in Supp of Motion to Dismiss ........ .2
Notice of Cross Motion., ...................3
Aff in Reply ................................. .4
Aff in Opposition to Cross Motion.. .......5
JUL 1 8 2011
HON. SALIANN SCARPULLA, J.:
COUNN CLERKS OFFICE
In this declaratory judgment action, defendant Encare, Inc, (“Encare”) moves to
dismiss plaintiff Mercury Casualty Company’s (“Mercury”) complaint and Mercury cross
moves for partial summary judgment.
This action arose out of a December 27, 2007 motor vehicle accident, in which
Encare’s assignor Robert Manley (“Manley”) was injured. Mercury, an automobile
insurance liability carrier, issued non-party Nelson Rodriquez an insurance policy, which
included a no-fault endorsement providing coverage to all eligible injured persons in the
amount of $50,000. As a no-fault injured person, Manley was entitled to receive no-fault
benefits for “all necessary expenses.” Encare subsequently provided Manley with
medical-treatment for his injuries and submitted a bill to Mercury for its skilled nursing
services and home health care services in an amount totaling $23,760.00. To date,
Mercury has paid $10,504.00.
After Mercury’s failure to pay all charged amounts, Encare submitted the matter to
the American Arbitration Association (“AAA”) adjudication. At a hearing, Mercury
asserted that the amount paid to Encare was “the usual and customary fee for a home
health aide.” On November 3,2010, Arbitrator Lucille S. DiGirolomo ruled in favor of
Encare and ordered Mercury to pay an additional $9,306.00 for services rendered by
Encare to Manley, noting that Mercury’s denials of the amounts billed were not on
prescribed forms, missing the dates the billing was received by the insurance carrier, and
untimely, Further, the arbitrator noted that even if the denials were proper and timely,
Mercury did not substantiate its claim that the reimbursement was made in accordance
witkthe usual and customary fee for the specific services rendered. On November 19,
2010, via letter, Mercury filed a demand for Master Arbitral review. On February 1,
20 10, the Master Arbitrator upheld the lower arbitrator’s ruling.
Thereafter, Mercury commenced this action seeking a judgment declaring that it
did not owe Encare any additional monies for services rendered by Encare to its assignor
Robert Manley, except for interst due on late payments and attorneys fees. In its
complaint, Mercury asserted that it paid the “reasonable geographic and customary value
of the services . . .” in accordance with the Workers’ Compensation fee schedule.
Encare now moves to dismiss the complaint, arguing that Mercury failed to state a
cause of action under CPLR $32 1 l(a)(7) because Mercury’s fee schedule defense is
precluded as a matter of law. Mercury cross-moves for partial summary judgment,
arguing that it paid the usual and customary amount for services rendered in full
satisfaction of its obligations and that it was not precluded from asserting a fee schedule
Mercury alleges that Encare’s charges were excessive and inconsistent with the
“usual and customary” fees provided in the Workers’ Compensation fee schedule. A nofault claim must not exceed “the legally permissible fee.” Insurance Law $5 108(c); see
Goldberg v. Corcoran, 153 A.D.2d 113 (2ndDept. 1989); see ulso Jamil M Abraham
M D . P.C. v. Country Wide Ins. Co., 3 Misc.3d 130A (N.Y.App. Term, Sup. Ct. 2004).
To successfblly invoke a fee schedule defense for non-payment of charges,
however, an insurer’s denial of a claim must be timely. See P.L.P Acupuncture, P.C. v.
Dept. 2008). An insurer
Travelers Indem. Co., 19 Misc.3d 126A (N.Y. App. Term, lSt
must either pay or deny a claim for no-fault vehicle insurance benefits within thlrty days
from the date an applicant provides proof of a claim. See Fair Price Medical Supply
Corp. v. Travelers Indem. Co., 10 N.Y.3d 556 (2008); Mount Sinai Hosp. v. Chubb
Group o Ins. Companies, 43 A.D.3d 889 (2nd
Dept. 2007). An insurer that fails timely to
deny is precluded from offering a defense against payment of that claim. Hosp. for Joint
Diseases v. Travelers Prop. Cas. Inc. Co., 9 N.Y.3d 3 12 (2007).
A fee schedule defense does not fit into the narrow lack of coverage defense
exception to the preclusion rule. See A.B. Med. Sews. PLLC v. Prudential Prop. & Cas.
Ins. Co., 11 Misc.3d 137A (N.Y. App. Term, 2”dDept. 2006); Struhl v. Progressive Cas.
Ins. Co., 7 Misc.3d 138A-(N.Y. App. Term, Znd Dept. 2005). A fee schedule defense,
therefore, is only preserved if an insurer has complied with the thirty-day rule and issued
a timely denial. Here, the record shows that Mercury failed to issue a timely denial.
Mercury does not deny that it failed timely to deny Encare’s claims. Instead,
Mercury argues that its fee schedule defense should not be precluded because there is no
First Department ruling on this specific defense. Mercury, however, has failed to
demonstrate any reason for this Court to deviate from the current Appellate Term case
law in New York, which provides that a fee schedule defense is precluded if an insurer’s
denial is untimely, As Mercury’s fee schedule defense is precluded, Encare’s motion to
dismiss the complaint is granted.
As Mercury’s fee schedule defense is precluded due to a failure to comply with the
thirty-day denial rule, Mercury has not asserted a valid cause of action and therefore
Encare’s motion to dismiss is granted.
In accordance with the foregoing, it is
ORDERED that the defendant Encare, Inc. ddo Robert Manley’s motion to
dismiss the complaint is granted and the complaint is dismissed; and it is further
ORDERED that plaintiff Mercury Casualty Company’s cross motion for partial summary
judgment is denied; and it is further ORDERED the Clerk of the Court is directed to enter
This constitutes the decision and order of the Court.
Dated: New York, New York
July 13, 2011
COUNTY CLERK’S OFFICE