Pro-Align Chiropractic, P.C. v Travelers Prop. Cas. Ins. Co.

[*1] Pro-Align Chiropractic, P.C. v Travelers Prop. Cas. Ins. Co. 2017 NY Slip Op 27415 Decided on December 19, 2017 District Court Of Suffolk County, Third Disrict Matthews, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on December 19, 2017
District Court of Suffolk County, Third Disrict

Pro-Align Chiropractic, P.C., a/a/o FATOUMATA KOUYATE, Plaintiff,

against

Travelers Property Casualty Insurance Company, Defendant.



CV-853-16/HU



Gabriel & Shapiro, P.C.

Steven F. Palumbo

Attorney for the Plaintiff

3361 Park Avenue

Wantagh, NY 11793

Law Office of Aloy O. Ibuzor

Attorney for the Defendant

3 Huntington Quadrangle, Suuite 302S-B

Melville, New York 11747
James F. Matthews, J.

Upon the following papers numbered 1 to 23 read on this motion

for summary judgment in favor of defendant by Notice of Motion/Order to Show Cause and supporting papers 1,2,8 ; Notice of Cross Motion and supporting papers 9-11,19 ; Answering Affidavits and supporting papers 20,21 ; Replying Affidavits and supporting papers 22,23 ; Filed papers ; Other exhibits: 3-7,12-18,;(and after hearing counsel in support of and opposed to the motion),

it is,

ORDERED that motion by defendant seeking an order granting summary judgment for dismissal of the complaint, pursuant to CPLR 3212, is denied; and it is further

ORDERED that defendant's uncontested request for partial summary judgment concerning the timely and proper mailing of its verification requests, is granted; and it is further

ORDERED that the cross-motion by plaintiff seeking an order granting summary judgment for the relief demanded in the complaint, is granted.

Defendant moves by summary judgment for dismissal of plaintiff's complaint which seeks reimbursement of assigned first-party no-fault benefits for medical services provided to plaintiff's assignor from 06/04/15 through 06/16/15 in the aggregate sum of $6,396.08, as the result of an automobile accident of 03/11/15. The grounds for dismissal are the failure of plaintiff's assignor to fully comply with defendant's written verification requests, thereby rendering the action premature.

Defendant alternatively seeks partial summary judgment in the event its motion for summary judgment is denied, asserting it has demonstrated a prima facie showing that timely and proper mailing procedures were used to send its verification requests to plaintiff.

In opposition, plaintiff asserts that defendant has failed to demonstrate any "good reasons" to support its verification requests as required by insurance regulation 11 NYCRR 65-3.2[c]). Plaintiff alleges that defendant has made onerous and burdensome "Mallela" type verification requests which plaintiff brought to defendant's attention in its 3 responding "objection" letters dated 7/28/15, 9/4/15 and 10/23/15. These letters were timely provided to defendant in response to its verification requests, and plaintiff contends defendant ignored the "objection" letters with its responsive letter dated 8/5/15, where it refused to narrow the verification requests to the issues of plaintiff's reimbursement claims and stated it was entitled to all the requested information pursuant to law.

Plaintiff also cross-moves for summary judgment for the relief demanded in the complaint. Plaintiff asserts that defendant has failed to properly respond to plaintiff's "objection" letters and the 30 calendar days to pay or deny the claim has expired, thereby requiring payment by defendant.

A proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; see also Manhattan Medical v State Farm Mut. Ins. Co., 20 Misc 3d 1144[A][Civ. Ct. Richmond Cty. 2008]).

A summary judgment motion must be supported by an affidavit of a person having knowledge of the facts and the affidavit shall recite all the material facts and show there is no defense to the cause of action or that the cause of action or defense has no merit (see CPLR 3212[b]). A conclusory affidavit or an affidavit by an individual who lacks personal knowledge of the facts does not satisfy the proponent's prima facie burden (see JMD Holding Corp. v Congress Financial Corp., 4 NY3d 373 [2005]).

No-fault regulations mandate that a written proof of claim for health service expenses rendered on or after April 1, 2013 (see 11 NYCRR 65-3.5[o]; 11 NYCRR 65-3.8[b][3]), are overdue, if not paid or denied by the defendant (or "insurer") within 30 calendar days of receipt (see Insurance Law §5106[a]; 11 NYCRR §65-3.8[a][1]). An insurer may toll the 30 day period by requesting additional verification of the claim within 15 days from its receipt of the claim (see 11 NYCRR 65-3.5[b]; NY & Presbyt. Hosp. v Allstate Ins. [*2]Co., 30 AD3d 492, 493 [2nd Dept 2006]). If the insurer has not received requested verification from the plaintiff (or "applicant") within 30 calendar days of the initial request, the insurer may send a follow-up verification request by phone or mail within 10 calendar days (see 11 NYCRR §65-3.6[b]). At the same time, the insurer shall inform the applicant and its attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested (see 11 NYCRR §65-3.6[b]).

An insurer may not issue a denial of claim form (NF-10) prior to its receipt of verification of all relevant information requested by the insurer (see Insurance Law §5106[a];11 NYCRR §65-3.8[b][3]; 11 NYCRR §65-3.5[c]). A verification demand by an insurer will extend the 30 day period until such time as the requested verification is received (see 11 NYCRR §65-38[a][1]; Hosp. For Joint Diseases v Elrac, Inc., 11 AD3d 423 [2nd Dept 2004]). Where a requested verification is not provided an insurer is not required to pay or deny the claim (see 11 NYCRR §65-3.8[b][3]; NY & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2nd Dept 2004]; St. Vincent's Hospital of Richmond v American Transit Ins. Co., 299 Ad2d 338 [2nd Dept 2002]).

However, an insurer may issue a denial of claim for health service expenses rendered on or after April 1, 2013, if more than 120 calendar days have transpired after the initial request for verification, and the applicant has not submitted the verification requested under the applicant's control or possession or written proof providing reasonable justification for the failure to comply, provided the verification request so advised the applicant as required in section 65-3.5(o)(see 11 NYCRR 65-3.8[b][3]).

A plaintiff applicant has a duty to respond to a proper and timely verification request from a defendant insurer, even where a plaintiff anticipates it will be unable to fully satisfy the insurer's request or the request is unintelligible(see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 Ad2d 553 [2nd Dept 1999]). Also, any additional verification

sought from plaintiff's assignor, can be sought from plaintiff's assignee, as an assignee stands in the shoes of the assignor (see Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489 [2nd Dept 2001]).

A defendant also has a duty to act, by payment or denial of the claim or request for further verification, upon receipt of plaintiff's response to defendant's verification request, so long as plaintiff's documentation is arguably responsive to defendant's verification request (see All Health Med. Care v Government Employees Ins. Co., 2 Misc 3d 907 [NY City Civ Ct. 2004]; 11 NYCRR §65-3.8[a]). Where a defendant remains silent in the face of plaintiff's verification response, this inaction constitutes a waiver of all defenses (Id.).

Though an insurer is entitled to request and receive information necessary to the processing and verifying of the applicant's claim (see 11 NYCRR §65-3.5[c]), the scope of the requested materials are not unlimited (see generally 11 NYCRR §65-3.6[b]). Insurance regulations require the existence of "good reasons" to demand verification (see 11 NYCRR §65-3.2[c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [2nd Dept 2007). Also, insurance regulations require an insurer to clearly inform an applicant of the insurer's position concerning any disputed matter (see 11 NYCRR §65-3.2[e]). In addition, the insurance regulations require insurers to follow the basic principle of providing prompt and fair payment (see 11 NYCRR §65-3.2[a]). In this regard, the insurance regulations provide that an insurer is to assist an applicant in the processing of a claim (see 11 NYCRR §65-3.2[b]) and insurers are directed to not treat the applicant as an adversary (see 11 NYCRR §65-3.2[b]).

Insurance carriers are entitled to withhold reimbursement of no-fault claims "provided by fraudulently incorporated enterprises to which patients have assigned their claims" (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319 [2005]). Consequently, a medical provider which is not wholly owned and controlled by physicians (see BCL §1507[a] and

§1508[a]), is ineligible to collect no-fault reimbursements and insurers can examine how a medical practice is owned and controlled to determine whether unlicensed individuals were violating state and local laws (Id. at page 321). However, insurers can not delay payments of no-fault claims to pursue investigations unless they have "good cause" (Id. at page 322; see also 11 NYCRR §65-3.2[c] for "good reason").

Here, the Court determines that defendant has failed to demonstrate a prima facie entitlement to summary judgment for dismissal, with proof in admissible form sufficient to establish there are no material issues of fact (see Alvarez v Prospect Hospital, 68 NY2d 320,324 [1986]; Hempstead Gen. Hosp. v New York Cent. Mut. Fire Ins. Co., 232 AD2d 454 [2nd Dept 1996]).

It is uncontested that defendant has demonstrated it timely requested verification of facts on 7/22/15 ("First Request") and on 8/26/15 ("Second Request") from plaintiff, with mailings in accordance with defendant's standard office practices and procedures, as shown by the supporting affidavits of Joyce Mooney and Patricia S. Pierce, which is uncontradicted by plaintiff (see St. Vincent's Hosp. of Richmond v Government Employees Ins. Co., 50 AD3d 1123 [2nd Dept 2008]; Elmont Open MRI & Diagnostic Radiology, P.C., 30 Misc 3d 126[A][App Term, 9th & 10th Jud Dists 2010]. Therefore, defendant's request for partial summary judgment concerning the timely and proper mailing of the verification requests, is granted. Defendant has demonstrated a prima facie showing that timely and proper mailing procedures were used to send its verification requests to plaintiff.

However, the Court finds that defendant has failed to establish an objective, reasonable basis for the contents of the verification demands mailed to plaintiff, for the four (4) contested bills totaling $6,396.08, for medical services rendered from 06/04/15 through 06/16/15 (see 11 NYCRR 65-3.2[c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [2nd Dept 2007).

The evidence shows that the verification requests from defendant for each bill were identical, and contained 34 un-numbered or unlettered bulletpoint demands, for the short time span of the medical reimbursement requests of 6/4/15 through 6/15/15. The Court notes that if plaintiff wished to respond to specific verification requests, it had no method by which to refer to a specific request, since the voluminous requests were not numbered or lettered or presented in any cogent way with specificity. It is difficult to imagine this was not by deliberate design, adding further difficulty to an already voluminous verification list.

Plaintiff asserts he tried to have defendant narrow the voluminous items of information demanded, by mailing "objection" letters which challenged the requested verifications as being "unduly burdensome and abusive" and seeking further clarification, but was rebuffed by defendant who stated it was entitled to each item as a matter of law.

The Court finds that plaintiff provided reasonable justification for the failure to comply with defendant's verification requests (see 11 NYCRR 65-3.5[o]), by providing its "objection" letters dated 7/28/15, 9/4/15 and 10/23/15.

This occurred despite defendant's failure, under the insurance regulations, to advise the applicant in the same verification requests that:

"the insurer may deny the claim if the applicant does not provide within 120 calendar days from the date of the original request either all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply"(see 11 NYCRR 65-3.5[o]; 11 NYCRR 65-3.8[b][3]).

Plaintiff contends in his opposition papers that the delay verification demands from defendant were sensitive "Mallela" type of corporation information, which were imposed without any explanation or reason. Plaintiff points to defendant's verification demands, where it requests "a copy of the lease, sublease and/or financial agreement between Joseph Quashie MD and Devonshire Surgical Facility LLC...verification of employment of Dipti Patel DC (W-2 or 1099 and/or current paystub) by Pro-Align Chiropractic...copy of lease, sublease and or financial agreement between Pro-Align Chiropractic and Devonshire Surgical Facility...copy of the lease, sublease and/or financial agreement between Total Chiropractic PC and NYS Diagnostic Medicine PC...copy of the lease, sublease and/or financial agreement between Total Chiropractic PC and Life Circles Healthcare Medical PC...copy of the lease, sublease and/or financial agreement between Pro-Align Chiropractic PC and NYS Diagnostic Medicine PC...verification of employment (W-2 or 1099 and/or current paystub) for Sarl Ramzan DC with Total Chiropractic PC..."

Plaintiff asserts these verification requests failed to show a link with plaintiff, are abusive discovery demands absent any explanation or reasons, and are part of an improper "fishing expedition" by defendant.

Plaintiff also points to the lack of any SIU [FN1] affidavit from defendant in support of its verification demands, or in answer to plaintiff's "objection" letters, which it implies would link an ongoing insurance investigation with a plaintiff medical provider who is a fraudulently incorporated enterprise (see State Farm Mut. Auto. Ins. Co. v Mallela, supra at 319).

The Court notes that defendant does not address plaintiff's claims of "Mallela" type of verification requests in any responsive letters to plaintiff, or in any opposition papers. Therefore, the Court accepts these circumstances as an admission by defendant.

The Court further finds that plaintiff properly fulfilled its duty to respond to defendant's timely verification requests, by mailing its "objection" letters dated 7/28/15, 9/4/15 and 10/23/15, even though plaintiff anticipated in the letters it would be unable to fully satisfy the insurer's request(see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., supra).

However, the Court also finds that though defendant properly fulfilled its duty to act upon plaintiff's responsive "objection" letters with its responsive letter dated 8/5/15 (see All Health Med. Care v Government Employees Ins. Co., supra), it remained silent in the face of plaintiff's "Mallela" type verification responses, which inaction constituted a waiver of all defenses (Id.).

Plaintiff's correspondence also invited further discussion if defendant disagreed with the position taken by plaintiff. Plaintiff's three "objection" letters of 7/28/15, 9/4/15 and 10/23/15, ended with the last letter stating defendant had ignored its prior letters, did not address plaintiff's concerns, and that payment or denial was overdue.

The Court's review of the evidence finds the closest statement by defendant which provides an explanation for its verification demands, is through the affidavit of Joyce Mooney, [*3]the Claim Litigation Representative for defendant, who simply states:

"the claim was directed to a claims representative for processing. The claims representative determined additional information was needed to process the claim (emphasis added) and therefore, sent a request for additional information to PRO-ALIGN CHIROPRACTIC, PC dated 7/22/2015." (see paragraph 10).

The Court's review of the affidavit of Patricia S. Pierce, Unit Manager of the Mail Service Center for defendant, shows it does not address any explanation for the basis of the verification requests.

The Court's review of the affirmation of defendant's counsel reveals defendant received bills from plaintiff on 7/2/2015 in the amount of $78.20 for medical services on 6/4/2015; on 7/13/2015 in the amount of $2,105.96 for medical services on 6/9/2015; on 7/8/2015 in the amount of $2,105.96 for medical services on 6/11/2015; on 7/14/2015 in the amount of $2,105.96 for medical services on 6/16/2015. Counsel then states:

"Upon receipt, a determination was made to request further verification in order to process the bills in dispute(emphasis added) as additional information was needed" (see paragraph 11).

Counsel for defendant further states:

"Travelers mailed timely verification requests respective to the bill as stated above. Such an event effectively tolled the time within which Defendant had to either pay or deny the claims" (see paragraph 14).

Defendant's responding letter dated 8/5/15 to plaintiff's "objection" letters which protested the verification requests, stated the following:

We are in receipt of your 7 letters dated 7/28/2015 that contained none of the requested verification. Please note the following:Please be advised that we are in receipt of your 7 letters dated 7/28/15. In your letter, you state that our letter is improper and asks for a "large amount of information of all kinds" which you find "unduly burdensome and abusive." In addition, you request that we resubmit a request that is narrowly tailored to the specific provider and dates of service at issue.To the contrary, we disagree that our letter is "improper or unduly burdensome and abusive." The letter is specific to a particular claim and provider, as is referenced in the letter. The information is necessary in order to verify this claim (emphasis added). Furthermore, we only seek information that is necessary to verify the claim (emphasis added). As such, the letter is already as "narrowly tailored" as possible.Are you aware, pursuant to 11 NYCRR 65-3.5[c] an insurer is entitled to receive all items necessary to verify the claim(emphasis added). Thus, please forward such information so that the claim can be reviewed.

Defendant asserts that no responsive verification was provided by plaintiff. In support, the affidavit of Joyce Mooney states that "no notations were found in the computer indicating that any response or the remaining requested documents had been received from Pro-Align Chiropractic P.C." (see paragraph 32). In addition, "a search of the physical file was also conducted. No documents and/or correspondence of any kind were found in response to Travelers requests for additional verification" (see paragraph 32).

However, the Court notes that her sworn statement is contradicted by the affirmation of defendant's counsel, who admits receipt from plaintiff of:

a partial response on 7/31/2015 to defendant's verification requested on 7/22/15 (see paragraph 17);a partial response on 8/5/2015 to defendant's verification requested on 7/28/15 (see paragraph 19);a partial response on 9/9/2015 to defendant's verification, responded to by defendant on 9/18/2015 (see paragraphs 22 and 24) and responded to by defendant on 11/18/2015 (see paragraph 29);a partial response on 9/18/2015 to defendant's verification requested on 9/9/2015 (see paragraph 24);a partial response on 10/27/2015 to defendant's verification (see paragraph 27);

The Court finds that there is no sworn statement from anyone with knowledge, which provides a reasonable basis for the verification demands. The affirmation of Joyce Mooney, the Claim Litigation Representative for defendant, states in pertinent part, "The claims representative determined additional information was needed to process the claim." This statement is hearsay and conclusory, and does not satisfy the proponent's prima facie burden for summary judgment (see JMD Holding Corp. v Congress Financial Corp., supra). There is also no statement from the claims representative.

The Court notes that the affirmation of defendant's counsel also states in pertinent part, "a determination was made to request further verification in order to process the bills in dispute." This statement is also hearsay and conclusory and does not satisfy the proponent's prima facie burden for summary judgment (Id.).

In addition, the statement of defendant's counsel is not based upon personal knowledge, and is therefore without probative value or evidentiary significance (see Warrington v Ryder Truck Rental, Inc., 35 AD3d 455, 456 [2nd Dept 2006]; see also Wesh v Laidlaw, 59 AD3d 534 [2nd Dept 2009]).

Finally, the Court notes that defendant's responsive letter dated 8/5/15 to plaintiff's "objection" letters, states "the information is necessary in order to verify this claim" and "we only seek information that is necessary to verify the claim" is a replay of the same statements provided by Joyce Mooney and defendant's counsel. The statements are conclusory, provide no information used as the basis for the verification requests and do not satisfy the proponent's prima facie burden for summary judgment (see JMD Holding Corp. v Congress Financial Corp., [*4]supra).

Moreover, the Court determines that all the pertinent statements do not satisfy the insurance regulation which requires an insurer to provide "good reasons" to demand verification (see 11 NYCRR §65-3.2[c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., supra). Consequently, without the required "good reasons" to demand verification, an insurer cannot delay payments of no-fault claims to pursue investigations (see State Farm Mut. Auto. Ins. Co. v Mallela, supra at 322).

Furthermore, though defendant correctly states in their letter of 8/5/15 to plaintiff that "an insurer is entitled to receive all items necessary to verify the claim" pursuant to 11 NYCRR 65-3.5[c], there are other duties which defendant failed to follow.

The Court finds that defendant failed to satisfy its obligation to clearly inform applicant of the insurer's position concerning any disputed matter (see 11 NYCRR §65-3.2[e]); failed to satisfy the regulation to follow the basic principle of providing prompt and fair payment (see 11 NYCRR §65-3.2[a]); failed to assist applicant in the processing of the claim (see 11 NYCRR §65-3.2[b]); and failed to not treat the applicant as an adversary (see 11 NYCRR §65-3.2[b]).

Moreover, defendant's verification demands seek certain documents from plaintiff, but reject in advance certain documents which do not meet its criteria. On point, defendant's demand that "initials, electronic signatures, and/or stamped signatures are not acceptable." This raises issues of fact for the reasonableness of the verification demands, since the requested documents speak for themselves and cannot be changed by plaintiff to meet the criteria of defendant's demands.

Therefore, the Court determines defendant has failed to establish a prima facie showing of entitlement to summary judgment dismissing the complaint as a matter of law.

Accordingly, the motion for summary judgment by defendant dismissing plaintiff's complaint pursuant to CPLR 3212, is denied.

Defendant's motion for partial summary judgment concerning that timely and proper mailing procedures were used to send its verification requests to plaintiff, is granted.

Plaintiff's cross-motion for summary judgment seeking an order granting summary judgment for the relief demanded in the complaint, is granted.

The foregoing constitutes the decision and order of this Court.

Settle judgment on ten (10) days' notice.

Dated: December 19, 2017

Hon. James F. Matthews J.D.C. Footnotes

Footnote 1:Plaintiff does not provide a definition of its use of the term SIU, however the Court assumes it to be a reference to an investigative unit since this relates to the subject matter plaintiff speaks about.