21st Century Advantage Ins. Co. v Kissena Med. Imaging, P.C.
Decided on April 23, 2012
Supreme Court, Nassau County
21st Century Advantage Insurance Company, NEW HAMPSHIRE INSURANCE COMPANY; NEW HAMPSHIRE INDEMNITY COMPANY; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA; AMERICAN HOME ASSURANCE COMPANY; AIU INSURANCE COMPANY; GRANITE STATE INSURANCE COMPANY; AIG PREMIER INSURANCE COMPANY; AIG CENTENNIAL INSURANCE COMPANY; AIG PREFERRED INSURANCE COMPANY; AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC.; AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE; AMERICAN INTERNATIONAL INSURANCE COMPANY NEW JERSEY; AMERICAN INTERNATIONAL PACIFIC INSURANCE COMPANY; AIG NATIONAL INSURANCE COMPANY; AIG INDEMNITY INSURANCE COMPANY; AIG ADVANTAGE INSURANCE COMPANY; AIG MARKETING; ILLINOIS NATIONAL INSURANCE COMPANY; 21ST INSURANCE SERVICES; 21ST CENTURY INSURANCE SERVICES, INC.; 21ST CENTURY CASUALTY COMPANY; 21ST CENTURY INSURANCE COMPANY; 21ST CENTURY INSURANCE COMPANY OF THE SOUTHWEST; 21ST CENTURY INSURANCE GROUP; AIG AUTO INSURANCE COMPANY OF NEW JERSEY; FARMERS INSURANCE GROUP SAFETY FOUNDATION; FARMERS UNDERWRITERS ASSOCIATION; FGI; FARMERS UNDERWRITERS ASSOCIATION; FARMERS GROUP INC. - P.A.C.; AIF HOLDING COMPANY; FIG HOLDING COMPANY; FIG LEASING COMPANY; FIRE UNDERWRITERS ASSOCIATION; TRUCK UNDERWRITERS ASSOCIATION; PREMATIC SERVICE CORPORATION (NEVADA); FARMERS NEW WORLD LIFE INSURANCE COMPANY; INVESTORS GUARANTEE LIFE INSURANCE COMPANY; OHIO STATE LIFE INSURANCE COMPANY; BRISTOL WEST INSURANCE GROUP; FOREMOST INSURANCE GROUP; FARMERS GROUP INC., LANDMARK INSURANCE COMPANY, Petitioners,
Kissena Medical Imaging, P.C., Respondents.
Economou & Economou, Attorney for Petitioner, 485 Underhill Boulevard, Syosset, NY 11791
Brian Rothenberg, Attorney for Respondent, 100 Duffy Avenue, Hicksville, NY 11801
Robert A. Bruno, J.
Upon the foregoing papers, it is ordered that this motion is decided as follows:
Petitioner requests an Order pursuant to Article 75 and CPLR §3102( c), compelling disclosure and discovery to aid in arbitration; and, pursuant to Article 75 and CPLR §2201(b) staying any and all proceedings present, and staying the filing of any new proceedings which seek reimbursement of no-fault benefits pursuant to Article 51 (Comprehensive Motor Vehicle Insurance Reparations Act) and 11 NYCRR 65 (Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act) pending the compliance with such order. Respondent opposes said application.
In a proceeding pursuant to CPLR Article 75, to, inter alia, stay arbitration of certain No-Fault proceedings, the petitioning insurance carriers move pursuant to CPLR 3102[c] for an order: (1) compelling disclosure and discovery in aid of arbitration from the defendant Kissena Medical Imaging, P.C.; and/or (2) staying certain pending arbitrations commenced by Kissena Medical Imaging, P.C., and temporarily enjoining and/or staying it from commencing any further No-Fault arbitration proceedings for reimbursement of benefits as against the petitioners.
The petitioner insurance companies — over 40 in total — have commenced the within proceeding to stay certain pending and/or anticipated no-fault arbitrations and/or "any and all proceedings" which have been, or will be, instituted by the respondent No-Fault provider/medical corporation, Kissena Medical Imaging, P.C. ["Kissena"](Pet., ¶¶ 4-5; 19-20; Exh., "A"). The petition also demands stated disclosure in aid of the foregoing arbitration proceedings, four of which — the petitioners claim — are currently pending (Pet., ¶¶ 19-20).
According to the petitioning carriers, Kissena has billed them for radiological services it has provided to injured no-fault claimants, from whom Kissena received benefit assignments (Caio Aff., ¶¶ 6-7). The carriers have declined, however, to pay the Kissena bills, arguing in sum that Kissena is an illegally constituted and/or fraudulently incorporated medical service corporation in violation of applicable no-fault rules and regulations (see generally, State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313, 320-321 ; One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 54 AD3d 738, 740).
More specifically, the relief sought by the petitioners is based on allegations that: (1) Kissena [*2]has been fraudulently incorporated by "paper" owner, Lawrence N. Diamond, M.D; (2) it "appears" that Kissena is secretly owned and controlled by a non-physician in violation of New York law; and (3) that Kissena has billed the plaintiffs for services performed by independent contractors, not by Kissena employees, also in violation stated No-Fault rules and regulations (Pet., ¶¶ 4-7, 9-12, 15-16, 18). In response, Kissena has commenced certain arbitration proceedings under the No-Fault law to recover payment for the services it has rendered.
Significantly, apart from the four arbitrations identified in an attachment to the petition (Exh., "A"), the petition does not allege that the remaining carriers have actually received specifically identified claims or arbitration demands from Kissena; nor does it identify precisely what arbitrations — pending or otherwise — are imminent with respect to the extensive list of carriers whose names have been included in the caption.
The disclosure sought in connection with the application is extensive and requests, inter alia: the production of Kissena's owner, Lawrence N. Diamond, M.D., for a deposition; the identity of all billing and management companies and/or agents for Kissena; all written agreements and contracts, including those between Kissena and any billing and/or management agents; all written agreements between Diamond personally and any of Kissena's billing or management companies or agents; all contracts between Diamond and Kissena; all financial statements of Kissena, including all banks records for accounts maintained by Kissena; all federal and state tax documentation, including all filings and returns for both for Kissena and Diamond personally; all corporate documents/leases for premises where the clinic may be located; and as well as all equipment leases, documents of incorporation and all filings made with the Secretary of State (Pet., ¶ 32).
Upon submission of the petitioners' order to show cause, this Court struck the temporary restraining order contained therein. The foregoing temporary restraining order would have broadly stayed "any and all" pending proceedings and enjoined Kissena from commencing any additional arbitration matters as against all of the named petitioners (Order to Show Cause, 2nd and 3rd decretal paragraphs).
The petitioners' underlying application for injunctive relief and discovery in aid of arbitration is now before the Court. The application should be denied.
It is settled that petitioner seeking disclosure in aid of an arbitration pursuant to CPLR 3102[c] must affirmatively demonstrate that "extraordinary circumstances" exist, "such that this relief would be absolutely necessary for the protection of its rights" (see, Progressive Specialty Ins. Co. v. Alexis, 90 AD3d 933, 834; Travelers Indem. Co. v. United Diagnostic Imaging, P.C., 73 AD3d 791, 792 see also, De Sapio v. Kohlmeyer, 35 NY2d 402, 406 ; Hendler & Murray v. Lambert, 147 AD2d 442, 443 cf., Government Employees Ins. Co. v. Morris, 83 AD3d 709; Kissena Medical Imaging, P.C., 25 Misc 3d 1214(A), 901 NYS2d 911, 2009 WL 3337597 [Supreme Court, Nassau County 2009]). Indeed, disclosure devices are to be "sparingly used in arbitration proceedings'" (De Sapio v. Kohlmeyer, supra, 35 NY2d 402, 406; Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra, 73 AD3d at 792; Matter of Flood, 157 AD2d 780, 781).
With these principles in mind, the Court agrees that the petitioners have not sustained their [*3]burden of demonstrating that extraordinary circumstances exist (Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra).
Significantly, in opposition to the motion, Kissena has persuasively argued, among other things, that: (1) it has been duly incorporated by a physician licensed to practice medicine in the State of New York; (2) the affidavits submitted by the carriers' investigators (who are apparently employees of one particular carrier), are inconclusive and lacking in the requisite factual detail; and (3) only two arbitration proceedings (with amounts in issue of $2,670.40 and $878.67) are actually now pending before an arbitrator, which claims have been denied on medical necessity grounds (Caio Aff., ¶¶ 31, 41-45, 48, 50, 52). The record also supports Kissena's assertions that many of the document demands are excessively broad and unlimited in their temporal scope (cf., Accent Collections, Inc. v. Cappelli Enterprises, Inc., 84 AD3d 1283). The petitioners have not submitted reply papers in which they have responded to, or otherwise materially disputed, the foregoing assertions.
Lastly, there is no dispute that the petitioners possess the right to request that the involved arbitrators direct Kissena to produce materials relating to, inter alia, Kissena's corporate structure(Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra, 73 AD3d at 791-792). Nor does the evidence indicate "that if a disclosure directive is made during those proceedings, the requested disclosure will, at that point, be unavailable" (Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra). Surprisingly, during oral argument when this Court struck petitioner's application for a temporary restraining order, petitioner's admitted they did not bother seeking the discovery they are requesting herein, in the arbitrary proceeding they request this Court to stay.
Under these circumstances, and upon the exercise of its broad discretion, the Court agrees that the petitioners' submissions do not establish the existence of extraordinary circumstances warranting the requested, discovery in aid of arbitration.
The Court has considered the petitioners' remaining contentions and concludes that they are lacking in merit.
According, it is,
ORDERED petitioners' order to show cause pursuant to CPLR 3102[c], for an order, inter alia, granting a stay and stated discovery in aid of arbitration, is denied.
All matters not decided herein are DENIED.
This constitutes the decision and order of this Court.
Dated: April 23, 2012
Mineola, New YorkE N T E R: [*4]
Hon. Robert A. Bruno, J.S.C.