Barry Zalma

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310-390-4455

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Fraud Given Short Shrift By Congress in Health Bill

Culver City CA - December 1, 2009:

Proving that the United States Congress does nothing but talk about
defeating fraud and abuse the December 1, 2009 issue of Zalma's Insurance
Fraud Letter (ZIFL), analyzes the Senate Health Insurance bill presently
pending and shows that the bill does very little, if anything to actually
help those who will investigate and prosecute fraud and abuse.  Although the
U.S. Government now admits that fraud and abuse takes more than $220 billion
every year from government programs the new bills do little more than adding
to the bureaucracy to find ways to defeat fraud and abuse. It does not fund
those who can arrest and prosecute fraud perpetrators. It is, ZIFL reports,
a means to help fraud perpetrators become rich while prosecutors and
investigators get little or no funding

To aid fraud investigators in their effort to defeat fraud Mr. Zalma's
fictional story of fraud by a sweet, little old lady, can be read along with
reports of recent convictions for fraud including the successful HEAT
program that - with minimal funding - is putting a dent in health insurance
fraud and will not be funded by the bills presently pending in Congress.

ZIFL is available free at  <http://www.zalma.com/> http://www.zalma.com.
Back issues of ZIFL are available for only $1.00 each at
<http://www.zalma.com/ZIFL.HTM.> http://www.zalma.com/ZIFL.HTM.

With this issue ZIFL completes its thirteenth year of publication dedicated
to those involved in reducing the effect of insurance fraud.

ZIFL is published 24 times a year by ClaimSchool. It is provided free to
clients and friends of the Law Offices of Barry Zalma, Inc., clients of
Zalma Insurance Consultants and anyone who subscribes at
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Insurance where you can multiple articles on insurance issues and the ZIFL
archives at  <http://www.zalma.com/ZALMAONINSURANCE-INDEX.htm>
http://www.zalma.com/ZALMAONINSURANCE-INDEX.htm.

Mr. Zalma is an internationally recognized insurance coverage and insurance
claims handling expert witness or consultant. Mr. Zalma's law practice is
limited to the representation of insurers and those in the business of
insurance. He is available to provide advice and counsel concerning
insurance fraud, first and third party insurance coverage issues, and bad
faith.

To be on the FREE mailing list as a subscriber to ZIFL please go to
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If you need additional information contact Barry Zalma at 310-390-4455.





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Regards,





Barry Zalma, Esq., CFE

Law office

Barry Zalma, Inc.

Zalma Insurance Consultants

4441 Sepulveda Boulevard

CULVER CITY CA 90230-4847



310-390-4455

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AFFIDAVIT FROM ADJUSTER WHO BEGAN WORKING AFTER DENIAL WAS MAILED, CANNOT ESTABLISH MAILING

In this no fault suit, GEICO appealed from an order of the Civil Court, Kings County, granting plaintiff's motion for summary judgment.  The Appellate Term affirmed.

"...[A]s the affidavit executed by defendant's claim representative stated that she began working for defendant after the denial of claim forms at issue were allegedly mailed by defendant, and defendant did not otherwise establish actual mailing of the denial of claim forms or its standard office practice and procedure for the mailing of denial of claim forms during the pertinent time period, defendant failed to establish that its denial of claim forms were timely mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). Accordingly, as defendant was precluded from interposing its defense of lack of medical necessity (see Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), the Civil Court properly granted plaintiff's motion for summary judgment."

Comment: Note the words, "and defendant did not otherwise establish actual mailing..."  Is it possible that GEICO could have established mailing even with this same claim adjuster's affidavit?  Maybe.  Suppose the affidavit also said "I was informed by my supervisor, Mr. X,  who has been with this company for 10 years, that the company's procedure for mailing denials is [blah blah blah] and has not changed since 2003."  I have had trials where a plaintiff's billing manager who started working after the date the bills were mailed, testified that she was trained by her predecessor who worked there when the bills were mailed and was told the procedure was blah blah blah.  And judges have held that that was sufficient.

Larry Rogak 

Is there case law that states you are able to deny further treatment based on
claimant's failure to show for an IME exam from the date of the first exam, and
if you do deny will it typically hold up in arbitration?  I am unable to find
anything in the regulation that gives specifics as to how many times an
insurance company is required to set up exams as well.

[You can only deny benefits after two scheduled no-shows that have not been
adjourned on consent.  See Opinions of General Counsel, NYS Ins. Dept,
2/14/2005.  See also Stephen Fogel Psychological v. Progressive Ins. Co., 2006
NYSlipOp 09604, App.Term 2d Dept 2006. -- Larry Rogak]

so you are saying that with two no shows you can deny from the date of the first
no-show ALL No-Fault benefits for any specialty, is that correct?

Thank you
Sherri

[No, that's not exactly correct.  Normally with two IME no-shows you can deny
all claims retroactively to the date of loss.  The case reported below covers
the unusual situation where the first no-show was scheduled before the claim
(bill) came in, and the second one was scheduled afterwards.  That's still two
no-shows, and you can deny all claims in all specialties retroactively from the
date of loss to the date of the second no-show. -- Larry Rogak]



--- In TheRogakReport@yahoogroups.com, "Lawrence" <insurancelawyer@...> wrote:
>
>
> PRE-CLAIM IME NO-SHOW SUPPORTS DENIAL, EVEN IF FOR A DIFFERENT SPECIALTY
> THAN BILL;
>
> ONLY ONE PRE- AND POST-CLAIM NO-SHOWS REQUIRED FOR DENIAL
> Prime Psychological Servs., PC a/a/o Brent Horne v ELRAC, Inc.  2009 NY
> Slip Op 52579(U)  Decided on December 4, 2009  Civil Court Of The City
> Of New York, Richmond County  Levine, J.  Edited by Lawrence N. Rogak
>
>
> This case presents raises a new twist to this court's previous ruling
> that the notification requirements for verification requests, as
> contained in 11 NYCRR §§65-3.5 and 3.6, do not apply to examinations
> under oath ("EUOs") and independent medical examinations ("IME") that
> are scheduled prior to the insurance company's receipt of claim forms
> ("pre claim EUO" or "pre-claim IME").   Here, the insurance company
> seeks summary judgment based upon the assignor's failure to appear at
> both a pre-claim IME and an IME noticed and scheduled subsequent to the
> insurance company receipt of a claim from the medical services provider
> which, under precedent, triggers strict regulatory time deadlines for
> compliance with verification requests.
> Plaintiff Prime Psychological Services, P.C., a medical services
> company, brought this action to be reimbursed in the amount of $1,036.41
> for medical treatment it provided to its assignor Brent Horne. Defendant
> ELRAC, Inc.  moves for summary judgment based upon its timely denial
> that the assignor failed to appear for two IMEs, one scheduled for a
> date prior to the defendant's receipt of the claim and another scheduled
> right after its receipt of the claim. Plaintiff opposes defendant's
> motion on the grounds that the IME request was unreasonable because the
> assignor was scheduled for a neurological IME while plaintiff presented
> a claim for psychological treatment. In the alternative, plaintiff
> alleges that defendant has not established a proper mailing of the
> denial and the IME notices.
> Plaintiff provided medical treatment to its assignor from April 25 to
> May 2, 2007 for injuries he allegedly suffered as a result of an motor
> vehicle accident on April 10, 2007. Prior to its receipt of the claim,
> defendant, by letter dated May 15, 2007, scheduled the assignor for an
> IME to be held on May 25, 2007.   The assignor failed to appear on May
> 25, 2007. After receiving the claim from plaintiff on May 29, 2007,
> defendant, by notice dated May 30, 2009, scheduled the assigner for a
> second IME to be held on June 8, 2007. After the assignor again failed
> to appear at the scheduled IME, the defendant mailed out its denial on
> June 29, 2007, within 30 days after its receipt of the plaintiff's claim
> on May 29th, 2007, citing the assignor's failure to attend two scheduled
> IMEs.
> As a condition to coverage under the revised Personal Injury Endorsement
> ("PIP"). "the eligible injured person ...shall...as may reasonably be
> required submit to examinations under oath by any person named by the
> [insurer] and subscribe the same."[11 NYCRR §65 - 1.1(d) (Sec. I.
> Conditions, Proof of Claim (b) ). Another condition to coverage under
> this section sets forth that "an eligible person shall submit to medical
> examination by physicians selected by or acceptable to the insurer as
> often as the insurer may reasonably require."
> 11 NYCRR § 65-3.5 details the verification procedures to be followed
> after the insurer receives the completed application for no fault
> benefits (NYS form N-F2,) The insurance regulations provide for IMEs
> (and EUOs) as part of an insurer's "entitlement to additional
> verification" following receipt of a provider's statutory claim forms.
> Stephen Fogel Psychological v. Progressive Casualty Ins. Co., 7 Misc 3d
> 18 <http://www.courts.state.ny.us/reporter/3dseries/2004/2004_24527.htm>
> , 19 (App. Term. 2d Dept. 2004) aff'd in pert part 35 AD3d 720
> <http://www.courts.state.ny.us/reporter/3dseries/2006/2006_09604.htm>  (
> 2d Dept. 2006). See 11 NYCRR 65-1.1(d) and 65-3.5(d). See also, All-Boro
> Medical Supplies, Inc. v Progressive Ins. Co., 20 Misc 3d 554
> <http://www.courts.state.ny.us/reporter/3dseries/2008/2008_28207.htm>  (
> Civil Ct., Kings Co,. 2008); Lumbermen's Mutual Casualty Company v.
> Inwood Hill Medical P.C., et al, 8 Misc 3d 1014(A), 801 N.Y.S. 2d 778
> (Sup. Ct., NY Co. 2005); Inwood Hill Medical P.C., v. Allstate Ins. Co.,
> 3 Misc. 1110(A), 787 N.Y.S. 2d 678 (Civil Ct.,NY Co. 2004) . An insurer
> may toll the 30 day period it has in which to deny a claim by properly
> requesting verification within 15 days from the receipt of the proof of
> claim form or bill (11 NYCRR 65.3.5).See, Psych. & Massage Therapy
> Assoc., PLLC v. Progressive Casualty Ins. Co., 5 Misc 3d 723
> <http://www.courts.state.ny.us/reporter/3dseries/2004/2004_24432.htm>
> (Civ Ct, Queens Co., 2004).
> Where an EUO or IME is requested as additional verification after
> receipt of the claim, the insurer must schedule the IME within the same
> time frame as medical examinations - within 30 days from the date of
> receipt of the prescribed verification form (§65-3.5(d)) - and must
> schedule an EUO within a reasonable time frame and as "expeditiously as
> possible." Eagle Surgical Supply, Inc. v. Progressive Cas. Ins. Co., 21
> Misc 3d 49, 51 (App. Term, 2d Dept. 2008). See Bayside Rehab. & Physical
> Therapy P.C., v, GEICO, 24 Misc 3d 542 , 546 ( Civil Ct., Richmond Co.
> 2009). If the "requested verification has not been supplied to the
> insurer 30 calendar days after the original receipt, the insurer shall,
> within 10 calendar days, follow up with the party from whom the
> verification was requested, either by a telephone call or by mail. 11
> NYCRR § 65-3.6(b). "A claim need not be paid or denied until all
> demanded verification is provided." New York & Presbyt. Hosp. v
> Progressive Cas. Ins. Co., 5 AD3d 569, 570 (2d Dept. 2004). See,
> Insurance Law § 5106(a); 11 NYCRR §§65-3.5(c), 65-3.8(a)(1).
> However, failure to submit a timely follow up request will void the
> tolling of defendant's time in which to submit a denial, and will
> preclude a defendant from asserting the defense based on failure to
> produce requested verification, including failure to appear for a post
> -claim IME. See, All-Boro Medical Supplies supra at 557; Kings Medical
> Supply Inc. V. Kemper Auto & Home Ins. Co., 2005 NY Slip Op 51450U, 7
> Misc 3d 128A ( App. Term, 2 & 11th Dist. 2005). Therefore, in order for
> an insurer to take advantage of the tolling provisions and submit a
> defense based upon failure to appear for a post claim IME , it must
> prove that it sent both an original and follow up request and that the
> injured party failed to appear for both scheduled IMEs. See, Advanced
> Medical, P.C. v. Utica Mutual Ins. Co., 2009 NY Slip Op 51023U, 23 Misc
> 3d 141A (App. Term, 2d Dept. 2009).
> The "detailed and narrowly construed verification procedures" contained
> in 11 NYCRR 65-1.1(d) and 65-3.5(d) governing IMEs and EUOs that are
> requested after receipt of a claim do not apply to IME s scheduled prior
> to the submission of a claim form. Stephen Fogel Psychological, P.C. v.
> Progressive Ins. Co., 7 Misc 3d 18
> <http://www.courts.state.ny.us/reporter/3dseries/2004/2004_24527.htm> ,
> 21 (App. Term, 2nd Dept. 2004). This is because the the right to an IME
> or an EUO prior to an insurer's receipt of the claim is "not afforded by
> the verification procedures and timetables," but rather by the mandatory
> personal injury protection, "which is independent of the verification
> procedures."
> Furthermore, these detailed verification procedures are "not amenable to
> application at a stage prior to the submission of a claim form."  See,
> Prime Psychological Services, P.C. v. Nationwide Property and Cas. Ins.
> Co., 24 Misc 3d 230
> <http://www.courts.state.ny.us/reporter/3dseries/2009/2009_29100.htm>
> (Civil Ct., Richmond Co. 2009) ( an insurer was not required to send pre
> -claim EUO requests to the provider's attorney, as required by the
> verification procedures for post -claim EUO requests); Bayside Rehab.,
> supra (post- claim notification procedures do not apply to pre claim
> IMEs and hence, the insurer need not notify the assignee medical
> services provider of a pre claim IME cut off notice).
> Here, defendant timely denied the claim based upon the assignor's
> failure to appear for two scheduled IMEs, one pre-claim and one post
> claim. Defendant provided detailed affidavits from employees with
> personal knowledge as to its procedures in scheduling and mailing out
> the IME notices as well as the procedures at the doctor's office to
> determine nonappearances.  It therefore would be entitled to summary
> judgment.
> The question thus presented is whether, by basing its denial in part
> upon the assignor's failure to attend a post- claim IME, the insurance
> company forfeited its right to deny the claim based solely upon the
> assignor's failure to attend the pre-claim IME. If so, the insurer would
> have to have sent out a follow up request for the post -claim IME within
> 10 days after the initial 30 day period had passed after the IME
> no-show, before it could properly deny the claim. The court answers this
> question in the negative.
> It is clear that after the assignor failed to appear for the pre-claim
> IME, the defendant was not obliged to send out a follow up request since
> the only mandate for a follow up request is contained in the regulations
> governing post-claim verification. 11 NYCRR § 65-3.6(b). As such,
> defendant could have properly denied the claim, retroactive to the date
> of loss, for the assignor's failure to attend the one scheduled pre
> claim IME, so long as it mailed the denial within 30 days of its receipt
> of the claim, which it did in the instant matter. Stephen Fogel
> Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720, 722 (2d
> Dept. 2006); Amaze Medical Supply, Inc., 2006 NY Slip Op 50909U, 12 Misc
> 3d 127A (App. Term, 2d Dept. 2006); All- Boro , supra, 20 Misc 2d at
> 556.
> The language in the denial setting forth that the assignor failed to
> appear for two IMEs does not negate defendant's right to submit its
> denial based solely upon the non-appearance at the one pre-claim IME. To
> require the defendant to abdicate its right to submit a denial, and
> start the process anew after receiving the claim by sending out both an
> initial IME request and follow up request, would frustrate the
> fundamental goal of the no- fault regulatory scheme, which is designed
> to promote the "prompt payment of legitimate claims" Nyack Hosp. v.
> General Motors Acceptance Corp., 8 NY3d 294
> <http://www.courts.state.ny.us/reporter/3dseries/2007/2007_02439.htm> ,
> 300 (2007), and the prompt resolution of injury claims (Pommells v.
> Perez, 4 NY3d 566
> <http://www.courts.state.ny.us/reporter/3dseries/2005/2005_03277.htm>
> (2005). See also Presbyterian Hosp. in City of NY v. Maryland Cas. Co.,
> 90 NY2d 274, 285(1997); Prime Psychological Servs., PC v. Am. Tr. Ins.
> Co., 20 Misc 3d 844
> <http://www.courts.state.ny.us/reporter/3dseries/2008/2008_28273.htm> ,
> 847-48 (Civil Ct., Richmond Co. 2008); Marigliano v. New York Cent.
> Mutual Fire Ins. Co., 15 Misc 3d 766
> <http://www.courts.state.ny.us/reporter/3dseries/2007/2007_27104.htm> ,
> 774 (Civ Ct. NY County 2007) .
> The court also finds no merit to plaintiff's contention that the IME
> request was unreasonable because the defendant scheduled the assignor
> for a neurological IME while plaintiff presented a claim for
> psychological treatment. Statutory construction must be sought which is
> "consistent with achieving [the statute's] purpose and with justice and
> common sense." Freeman v; Kiamesha Concord, Inc., 76 Misc 2d 915,
> 920-21(Civil Ct., NY Co. 1974). "The common mandate of statutory
> construction is to assume that the Legislature "did not intend a
> patently absurd result." Covington v. Walker, 307 AD2d 908 ((2d Dept
> 2003). See, McKinney's Statutes § 141, 145; In re Adamo , 619 F.2d
> 216, 219 (2d Cir. 1980).
> This court has previously held that an insurance company can not
> prophesize which medical services entity, out of the hundreds which
> exist in the metropolitan area, an injured party might seek services
> from. " Bayside Rehab. & Physical Therapy P.C., supra, 24 Misc 3d at 542
> ( it would be an exercise in futility to require an insurance company to
> send a pre-claim IME cut-off notice to an assignee). Here, it would be
> patently absurd to foreclose an insurer from pursuing its right to
> demand that an insured attend a pre-claim IME in a medical speciality
> that it deems pertinent because at some point in the future, the
> assignor might seek treatment at a medical provider in a different
> specialty.
> Accordingly, summary judgment is granted to defendant.
> Comment:  This is a bit complex.   Elrac set up a neuro IME before
> receiving the bill from Prime Psychological.   The assignor no-showed.
> Then Elrac set up the second IME.  Assignor no-showed again.   This
> Court says, first, that the fact that the IME was with a neurologist is
> irrelevant to the fact that the denial was for a psychological bill.
> An IME no-show supports a denial against any bill, regardless of the
> specialty of the IME and the specialty of the bill being denied.
>
> In addition, this court holds that ONE pre-claim IME is sufficient for a
> denial, while two post-claim IMEs are required for the same.  But if
> there has already been one pre-claim IME no-show, it is not necessary to
> start all over and have two more IME n0-shows after a bill is presented
> to the insurer.
>
> Larry Rogak
>

I just need some clarity as I read through the case you suggested. Am I reading
correctly that case precedent is that you can deny ALL no-fault benefits
retroactively to the claimant's date of loss for two IME no shows?

[Yes -- all bills that have been properly delayed or which were received by the
insurer less than 30 days before the second no-show. -- Larry Rogak]

what are your thoughts with prevailing on peer reviews for medical bills and if
and when they should be done?

Thanks

[That's a big subject, too much to cover in a forum like this. I cover it in my
book, "Rogak's New York No-Fault Law & Practice 2009," Section 63. -- Larry
Rogak]

In the Matter of the Arbitration between Immediate Imaging PC and Global Liberty Insurance Company, AAA Case No. 412009041330, AAA Assessment No. 17 991 21272 09 (Insurer's Claim File No. 083889) (Aaron D. Maslow, Esq., arbitrator)

Edited by Lawrence N. Rogak

The Applicant commenced this No-Fault arbitration, seeking as compensation $912.00, which it billed for performing a lumbar spine MRI on July 16, 2008, on Assignor, a 42-year old male, who was injured in a motor vehicle accident on Feb. 3, 2008. Respondent Insurwer denied payment, invoking the 30-day rule for providing written notice of claim.

"Respondent's timely issued denial set forth the following as the basis for denial of payment: 'The policy conditions were violated, as the claimant failed to submit written notice of claim within 30 days of the date of accident. This is a violation of regulation 68, and the company's rights have been prejudiced. All benefits for this claim are denied. As per Regulation 68, late notice may be excused upon the receipt of reasonable written justification of the failure to submit timely notice.'"

"The mandatory No-Fault endorsement to motor vehicle liability insurance policies provides that written notice of an accident shall be given 'as soon as reasonably practicable, but in no event more than 30 days after the date of the accident. . . .' 11 NYCRR 65-1.1(d)."

"An insurer issuing a timely denial is within its rights to deny No-Fault benefits if the applicant does not comply with this time limitation for submitting notice of claim. See Matter of Medical Society v. Serio, 100 N.Y.2d 854, 768 N.Y.S.2d 423 (2003); New York Presbyterian Hospital v. Elrac, Inc., 8 A.D.3d 541, 779 N.Y.S.2d 524 (2d Dept. 2004); Bronx Expert Radiology, P.C. v. Motor Vehicle Accident Indemnification Corp., 23 Misc.3d 129(A), 885 N.Y.S.2d 710 (Table), 2009 N.Y. Slip Op. 50621(U), 2009 WL 962217 (App. Term 1st Dept. Apr. 9, 2009); Maximum Care Chiropractic Care, P.C. v. Granite State Ins. Co., 10 Misc.3d 144(A), 814 N.Y.S.2d 891 (Table), 2006 N.Y. Slip Op. 50116(U), 2006 WL 236986 (App. Term 1st Dept. Feb. 1, 2006); cf. St. Clare's Hospital v. Allcity Insurance Co., 201 A.D.2d 718, 608 N.Y.S.2d 325 (2d Dept. 1994); Bridges v. Allstate Insurance Co., N.Y.L.J., Oct. 31, 2002, p. 25, col. 2 (City Ct. New Rochelle, Preston Scher, J.)."

"However, to properly invoke this defense, the insurer's denial 'must advise the applicant that late notice will be excused where the applicant can provide reasonable justification of the failure to give timely notice.' 11 NYCRR 65-3.3(e). If this advisory is not included in the denial form, the form is rendered invalid. See Delta Diagnostic Radiology, P.C. v. Interboro Ins. Co., 25 Misc.3d 134(A), 2009 N.Y. Slip Op. 52222(U), 2009 WL 3645647 (App. Term 2d, 11th & 13th Dists. Oct. 23, 2009); Radiology Today, P.C. v. Citiwide Auto Leasing, Inc., 15 Misc.3d 92, 838 N.Y.S.2d 336 (App. Term 2d & 11th Dists. Mar. 8, 2007); SZ Medical P.C. v. Country-Wide Insurance Co., 12 Misc.3d 52, 817 N.Y.S.2d 851 (App. Term 2d & 11th Dists. 2006)."

"In the case at bar, Respondent included an advisory concerning excusal of the late provision of notice of claim but instead of using the words 'will be excused,' wrote 'may be excused.' The question becomes whether Respondent, by using 'may' instead of 'will,' complied with the mandate to include the advisory in its denial. In Hempstead Pain & Med Services, P.C. v. General Assur. Co., 13 Misc.3d 980, 821 N.Y.S.2d 841 (Dist. Ct. Suffolk Co. 2006), the court held that stating 'If there is any additional information you wish to submit, we may reconsider our position' sufficed to meet 11 NYCRR 65-3.3(e)'s requirement as to the advisory."

"The No-Fault Law is in derogation of the common law and so must be strictly construed. Presbyterian Hospital in the City of New York v. Atlanta Casualty Co., 210 A.D.2d 210, 211, 619 N.Y.S.2d 337, 338 (2d Dept. 1994). Bearing this in mind, I hold as a matter of law that the Respondent's advisory was in conflict with 11 NYCRR 65-3.3(e), and that since the advisory was not properly stated in the denial, the 30-day rule was improperly invoked. I disagree with the decision in Hempstead Pain & Med Services, P.C., supra, but in any event, that court's reasoning was based in part on the fact that the applicant there did make an excuse submission; no such excuse submission was made to Respondent during claims processing, as per the record."

"A claimant who is told that late notice may be excused is less likely to even attempt to provide an excuse than if he is told that late notice will be excused. The word 'may' implies that even if a claimant can provide reasonable justification of the failure to give timely notice, it remains discretionary with the insurer as to whether the lateness will be excused."

"This is contrary to the regulation which imposes a mandate upon the insurer to affirmatively accept reasonable justification of the failure to give timely notice. Inasmuch as the wording of the advisory used by Respondent did not convey the thrust of the regulation, I hold that it was not in compliance with it. The defense of late notice is rejected."

"A prima facie case of entitlement to No-Fault compensation is made out where the evidence proves that a clamant submitted proof of claim to an insurer and that the billed amount was not paid within 30 days. Sunshine Imaging Association/WNY MRI v. Government Employees Ins. Co., 66 A.D.3d 1419, 885 N.Y.S.2d 557 (4th Dept. 2009); Westchester Medical Center v. Lincoln General Ins. Co., 60 A.D.3d 1045, 877 N.Y.S.2d 340 (2d Dept. 2009); Westchester Medical Center v. Clarendon National Ins. Co., 57 A.D.3d 659, 868 N.Y.S.2d 759 (2d Dept. 2008); New York and Presbyterian Hosp. v. Allstate Ins. Co., 31 A.D.3d 512, 818 N.Y.S.2d 583 (2d Dept. 2006); Nyack Hospital v. Metropolitan Property Casualty Insurance Co., 16 A.D.3d 564, 791 N.Y.S.2d 658 (2d Dept. 2005); New York Hospital Medical Center of Queens v. Motor Vehicle Accident Indemnification Corp., 12 A.D.3d 429, 784 N.Y.S.2d 593 (2d Dept. 2004); Mary Immaculate Hospital v. Allstate Insurance Co., 5 A.D.3d 742, 774 N.Y.S.2d 564 (2d Dept. 2004). 'The court may, in its discretion, rely on defendant's documentary submissions establishing defendant's receipt of plaintiff's claims.' Lenox Hill Radiology MIA, P.C. v. American Transit Ins. Co., 19 Misc.3d 358, 363, 851 N.Y.S.2d 861, 866 (Civ. Ct. New York Co. 2008)."

"Applicant proved that it submitted proof of claim to Respondent, which did not pay the bill contained therein. The proof that Applicant mailed its proof of claim forms to Respondent is embodied in the latter's denial, which references receipt of the proof of claim. See Ultra Diagnostics Imaging v. Liberty Mutual Insurance Co., 9 Misc.3d 97, 804 N.Y.S.2d 532 (App. Term 9th & 10th Dists. 2005). The submission of an NF-10 denial of claim form does establish prima facie that the insurer received the claim referenced therein as having been submitted by the provider and that the insurer did not pay the claim. Lopes v. Liberty Mutual Ins. Co., 2009 N.Y. Slip Op. 51279(U), 2009 WL 1799812 (Table) (App. Term 2d, 11th & 13th Dists. Jan. 26, 2009)."

"In its Nov. 13, 2009 cover letter / memorandum of law, Respondent's counsel argued that Applicant was required to establish medical necessity and proximate causation as elements of its prima facie case. In support of this proposition, it cited an award of mine, Boro Medical Supply a/a/o JP v. Kemper Ins. Co., AAA Case No. 17-991-32295-2. However, this award was written by me on Sept. 30, 2002, prior to the extensive case law on the subject of prima facie entitlement to No-Fault benefits which was issued thereafter by the appellate courts in this state, and followed by the trial courts. As such, it is not in accord with the current status of the law, it certainly does not reflect the undersigned's opinion of the law on the prima facie case, and it should no longer be cited [bold face type by the Arbitrator]. The undersigned has written hundreds of awards since then, in which the prima facie case was analyzed as set forth above -- a claimant need merely prove that proof of claim was mailed to the insurer and that the amount billed was not paid within 30 days thereafter."

"To cite this old award of mine despite the hundreds of court decisions (perhaps thousands) and hundreds of my awards articulating a different standard borders on impropriety."  [emphasis by editor]

"Additional evidence to establish medical necessity, beyond a complete proof of claim and the fact that benefits were overdue, is not an element of a prima facie case of entitlement to No-Fault benefits. Metropolitan Radiological Imaging, P.C. v. Country-Wide Insurance Co., 19 Misc.3d 130(A), 859 N.Y.S.2d 904 (Table), 2008 N.Y. Slip Op. 50539(U), 2008 WL 711878 (App. Term 2d & 11th Dists. Mar. 13, 2008). In fact, were an arbitrator to hold that medical necessity is a requisite element of a prima facie case, the arbitrator's award would be contrary to settled law and properly vacated. Preferred Medical Imaging, P.C. v. Countrywide Ins. Co., 2009 N.Y. Slip Op. 52577(U), 2009 WL 4894349 (App. Term 1st Dept. Dec. 18, 2009). Moreover, unlike negligence actions where plaintiffs must prove causation, claimants seeking to recover first party No-Fault payments bear no such initial burden, as causation is presumed. Kingsbrook Jewish Medical Center v. Allstate Insurance Co., 61 A.D.3d 13, 21, 871 N.Y.S.2d 680, 686 (2d Dept. 2009)."

"Applicant having established a prima facie case of entitlement to No-Fault benefits, and Respondent's sole defense to non-payment -- untimely notice of claim -- having been rejected, the within arbitration claim is granted. Applicant is awarded the $912.00 billed."

Comment:  I don't recall seeing any other insurer criticized by courts and arbitrators as often as this one for the manner in which it handles its claims.  This insurer was, a short while back, held by the Supreme Court to be "atrocious, shocking and criminal", and by Arbitrators recently of taking "improper, adversarial"  stances towards claimants, and submitting peer review reports of questionable authenticity.
Of course, sometimes there is another side to a story, and I invite Global Liberty to submit to me any commentary it may have in this regard in its own defense.

Larry Rogak

As per the regulation, if a bill is submitted and not paid, delayed or denied in
a timely fashion, do you have to pay as you have lost all your defenses? and if
you do I would suspect it still can be reduced accordingly to the no fee
schedule with any interest that may be owed, is that correct.

I realize the only time it would not have to be paid would be if there  the
denial would be based on lack of coverage and it was untimely.



[Without a timely and proper denial, you lose ALL defenses except for lack of
coverage.  That includes the fee schedule defense, unless the fees were
overcharged in such a way that cannot be defended by a fair interpretation of
the fee schedule; recent case law holds that defense to be preserved. -- Larry
Rogak]

Larry,in regard to your answer to Sheri regarding a fee schedule defense.

The way I read the case law is that under all circumstances a fee schedule
denial must be asserted in 30 days. It is never exempt from the 30 day rule.

                   Regards

                   Mitch Lustig



[Mitch: In Cornell Med. PC v. Mercury Casualty Co., 24 Misc.3d 58, the Appellate
Term, 2d Dept, held that fee schedule overcharges which cannot be explained by
an interpretation of the schedules or an inadvertent miscalculation, entitle the
insurer to summary judgment despite a late denial. See:
http://www.nycourts.gov/reporter/3dseries/2009/2009_29228.htm

-- Larry Rogak]

POLICYHOLDER'S ALLEGATION THAT HOMEOWNERS POLICY IS DECEPTIVE AS TO SUBROGATION RIGHTS SURVIVES DISMISSAL MOTION

Plaintiffs, insureds under an Allstate homeowner's policy, alleged in their suit that Allstate's policies are deceptive because they interpret the requirement to protect Allstate's subrogation rights, as requiring them to sue a tortfeasor, at their own expense, who caused their damages.

Supreme Court, Nassau County, denied Allstate's motion to dismiss.  The Appellate Division affirmed, and so Allstate must litigate the issue of whether the subrogation clause in their policies violates General Business Law section 349 (deceptive business practices), and in the process, is forced to turn over the claim files of hundreds of other policyholders who have no connection with the plaintiffs' claim.  (See my comments at the end).

"APPEAL by the defendant, in an action, inter alia, to recover under a homeowner's insurance policy, as limited by its brief, from so much of an order of the Supreme Court (F. Dana Winslow, J.), entered January 21, 2009, in Nassau County, as denied those branches of its motion pursuant to CPLR 3211(a)(7) which were to dismiss the third cause of action alleging a violation of General Business Law § 349, and to dismiss the demand for punitive damages and attorney's fees, and granted the plaintiffs' cross motion to compel discovery."

"The plaintiffs commenced this action by summons and complaint dated September 11, 2007. In their complaint, the plaintiffs alleged that they bought a home owner's insurance policy from the defendant, entitled the Allstate Deluxe Plus Homeowners' Policy, to insure the real property they owned in the Village of Roslyn. The policy was to be effective from April 19, 2005, through April 19, 2006. On or about October 8, 2005, a storm allegedly caused a hillside on the plaintiffs' property to collapse, destroyed their retaining wall, felled several trees, and caused other damage."

"In the first cause of action, the plaintiffs alleged that the defendant breached the contract by refusing to pay the amounts due to them under the policy of insurance. In the second cause of action, the plaintiffs alleged that the defendant breached the contract in refusing to provide a defense to the plaintiffs after the Village instituted criminal proceedings against them for damage to Village property which resulted from the collapse. In the third cause of action, the plaintiffs alleged that the defendant violated General Business Law § 349."

"Specifically, the plaintiffs alleged that a provision of the insurance policy required them to protect the defendant's subrogation interest by instituting an action against the Village before the statute of limitations expired. According to the plaintiffs, the defendant refused to reach a timely decision on coverage, thereby compelling the plaintiffs to comply with that provision and sue the Village at their own expense."

"The plaintiffs alleged that the defendant's actions 'caused injury to Plaintiffs, and have the potential to harm the public at large' because every Allstate Deluxe Plus Homeowners' Policy contains the provision requiring those insured to protect the defendant's right to subrogate. The plaintiffs sought, inter alia, actual damages on their General Business Law § 349 cause of action, punitive damages, and attorney's fees."

"The defendant moved pursuant to CPLR 3211(a)(7) to dismiss the second and third causes of action and the plaintiffs' demand for punitive damages and attorney's fees. With regard to the third cause of action, the defendant argued that the plaintiffs failed to allege consumer-oriented conduct, that any act by the defendant was deceptive or misleading in a material way, and that they had been injured as a result of an allegedly deceptive act. In addition, the defendant asserted that the insurance policy did not require an insured to file a lawsuit against anyone, and no reasonable policy holder would conclude that it did. The defendant also claimed that attorney's fees and punitive damages were not recoverable under the circumstances."

"The defendant submitted, among other items, a copy of its Deluxe Plus Homeowners' Policy. The language allegedly requiring the insured to protect the defendant's subrogation rights provided, in pertinent part,

"When we pay for any loss, an insured person's right to recover from anyone else becomes ours up to the amount we have paid. An insured person must protect these rights and help us enforce them. You may waive your rights to recover against another person for loss involving the property covered by this policy. This waiver must be in writing prior to the date of loss."

"The plaintiffs opposed the defendant's motion and cross-moved to compel the defendant to provide full unredacted versions of relevant computer notes, and documents and information pertaining to other claims filed under the Deluxe Plus Homeowners' Policy resulting from the October 2005 storm."

"In an order entered October 7, 2008, the Supreme Court ordered the defendant to

"produce in camera all property damage claims under the Allstate Deluxe Plus Homeowners Policy for damages resulting from a rain and/or wind storm which occurred on or about October 7, 2005 in Nassau County as well as all claims that resulted in litigation, such documents being limited to property damage claims between October 7, 2005 to January 7, 2007 in Nassau County only."

"By order to show cause returnable December 8, 2008, the defendant, inter alia, sought leave to reargue, asserting, among other things, that the order went beyond the scope of the relief sought by the plaintiffs in their cross motion. The defendant claimed that the plaintiffs sought information regarding claims under the Deluxe Plus Homeowners Policy, while the court's order compelled production of all property damage claims arising from the storm at issue. The defendant claimed that the requirements of the order were onerous."

"In an order entered January 21, 2009, the Supreme Court, Nassau County (Winslow, J.), granted that branch of the defendant's motion which was to dismiss the second cause of action. The court denied those branches of the defendant's motion which were pursuant to CPLR 3211(a)(7) to dismiss the third cause of action alleging a violation of General Business Law § 349, and to dismiss the demand for punitive damages and attorney's fees, stating that, 'at this stage of the proceedings, it [could not] determine that Plaintiffs cause of action under [General Business Law] § 349 is insufficient as a matter of law.' The court granted the plaintiffs' cross motion to compel discovery."

"...General Business Law § 349 prohibits deceptive and misleading business practices and its scope is broad indeed.  General Business Law § 349 on its face applies to virtually all economic activity, and its application has been correspondingly broad. The reach of this statute provides needed authority to cope with the numerous, ever-changing types of false and deceptive business practices which plague consumers in our State.  This Court has broadly construed general consumer protection laws to effectuate their remedial purposes, applying the state deceptive practices law to a full spectrum of consumer-oriented conduct, from the sale of vanishing premium' life insurance policies to the provision of infertility services . . . In determining what types of conduct may be deceptive practices under state law, this Court has applied an objective standard which asks whether the representation or omission was likely to mislead a reasonable consumer acting reasonably under the circumstances,  taking into account not only the impact on the average consumer but also on the vast multitude which the statutes were enacted to safeguard—including the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions.  General Business Law § 349 encompasses a significantly wider range of deceptive business practices that were never previously condemned by decisional law. General Business Law § 349 was intended to be broadly applicable, extending far beyond the reach of common law fraud."

"The types of goods and services to which General Business Law § 349 applies is expansive. With regard to matters pertaining to insurance, it has been determined to apply to:  Coverage & Rates (see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330 ['out-of-pocket premium payments [for life insurance policies] would vanish within a stated period of time']; Monter v Massachusetts Mut. Life Ins. Co., 12 AD3d 651 [allegations of misrepresentations concerning terms of Flexible Premium Variable Life Insurance Policies, and deception concerning marketing thereof]; Beller v William Penn Life Ins. Co. of N.Y., 8 AD3d 310 [plaintiff stated General Business Law § 349 cause of action by alleging that the defendant engaged in deceptive practices by increasing the cost of insurance rates without regard to certain flexible factors which would have required the raise to decrease]; Skibinsky v State Farm Fire & Cas. Co., 6 AD3d 975 [allegations of intentional misrepresentation concerning coverage of a insurance policy provided to plaintiff]; Brenkus v Metropolitan Life Ins. Co., 309 AD2d 1260 [amount of life insurance coverage]; Batas v Prudential Ins. Co. of Am., 281 AD2d 260; Makastchian v Oxford Health Plans, 270 AD2d 25 [allegations of deceptive practices that would cause subscribers to believe that they still had health insurance when coverage had already been cancelled]);  Provision Of Defense Counsel (see Elacqua v Physicians' Reciprocal Insurers, 52 AD3d 886 ["This threat of divided loyalty and conflict of interest between the insurer and the insured is the precise evil sought to be remedied . . . hence the requirement that independent counsel be provided at the expense of the insurer and that the insurer advise the insured of this right. Defendant's failure to inform plaintiffs of this right, together with plaintiffs' showing that undivided and uncompromised conflict-free representation was not provided to them, constitutes harm within the meaning of General Business Law § 349"]); Claims Procedures (see Shebar v Metropolitan Life Ins. Co., 25 AD3d 858 [allegations that "despite promises to the contrary in its standard-form policy sold to the public, defendant made practice of not investigating claims for long-term disability benefits in good faith, in a timely fashion, and in accordance with acceptable medical standards . . . when the person submitting the claim . . . is relatively young and suffers from a mental illness'"]; Makuch v New York Cent. Mut. Fire Ins. Co., 12 AD3d 1110; Acquista v New York Life Ins. Co., 285 AD2d 73 ["allegation that the insurer makes a practice of inordinately delaying and then denying a claim without reference to its viability, may be said to fall within the parameters of" an unfair or deceptive practice]; Rubinoff v U.S. Capitol Ins. Co., NYLJ, May 10, 1996, at 31, col 3 [automobile insurance company fails to provide timely defense to insured as promised])." 

"Stating a cause of action to recover damages for a violation of General Business Law § 349 is fairly straightforward and should identify consumer-oriented misconduct which is deceptive and materially misleading to a reasonable consumer, and which causes actual damages.  Thus, to state a claim under General Business Law § 349, a plaintiff must allege that the defendant has engaged in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof'. Intent to defraud and justifiable reliance by the plaintiff are not elements of the statutory claim. However, proof that a material deceptive act or practice caused actual, although not necessarily pecuniary harm' is required to impose compensatory damages. 

"...The defendant asserts that the alleged misconduct attributed to it is not consumer-oriented, but rather involves a private dispute.   However, where the conduct being complained of is not a private contract dispute as to policy coverage but instead involves an extensive marketing scheme that has a broader impact on consumers at large, the courts will permit a cause of action pursuant to General Business Law § 349."

"Here, the plaintiffs allege, in their third cause of action, that the insurance policy, which requires that they protect the defendant's subrogation interest while their claim is being investigated, compelled them to institute a suit against the Village before the statute of limitations expired. This provision, according to the plaintiffs, in effect forces Plaintiffs to litigate a claim on Allstate's behalf if Allstate's investigation of the claim exceeds the statute of limitations."

"The policy provision in question provides, in pertinent part, that, when the defendant pays for any loss, an insured person's right to recover from anyone else becomes the defendant's up to the amount . . . paid, and an insured person must protect these rights and help the defendant enforce them.  The plaintiffs allege that this provision is not unique to the plaintiffs, but is contained in every Allstate Deluxe Plus Homeowners' Policy. Consequently, any consumer holding this policy, whose loss is potentially attributable to a third party, is required to protect the defendant's rights. Therefore, the conduct complained of has a broad impact on consumers at large and is thus consumer-oriented."

"A plaintiff seeking to state a cause of action under General Business Law § 349 must plead that the challenged act or practice was misleading in a material way. Whether a representation or an omission, the test is whether the allegedly deceptive practice is likely to mislead a reasonable consumer acting reasonably under the circumstances. Such a test . . . may be determined as a matter of law or fact (as individual cases require)."

"Here, the plaintiffs allege that the defendant has engaged in deceptive acts and practices in violation of General Business Law § 349 of New York by refusing to reach a timely decision on coverage, thereby compelling Plaintiffs to comply with the provision . . . which requires Plaintiffs to protect the defendant's interests. According to the plaintiffs, the defendant's failure to reach a timely decision is part of a pattern and practice by the defendant to force claimants to litigate its claims and incur the costs and expense of hiring an attorney to prevent forfeiture of coverage for a covered loss under the Allstate Deluxe Plus Homeowners Policy of insurance."

"In essence, the plaintiffs are alleging that the defendant purposely failed to reach a decision on the merits of their insurance claim in order to force the plaintiffs to bring a suit against the Village before the statute of limitations expired, because, if they did not do so, the defendant could refuse reimbursement of the claim on the ground that the plaintiffs had failed to protect the defendant's subrogation rights. Presumably, the purpose of this alleged conduct would be to save the defendant money; if the plaintiffs initiate the suit, the plaintiffs have to pay for it, whereas if the defendant initiates its own suit, the cost will fall upon the defendant. Accepting the plaintiffs' allegations as true, the plaintiffs have successfully pleaded conduct on the part of the defendant which was misleading in a material way." 

"The defendant argues that no reasonable consumer acting reasonably would interpret the subrogation language to mean that the consumer is required to file a lawsuit against an alleged tortfeasor. The language of the subrogation provision is ambiguous, in that it does not explain how the insured is to 'protect [the defendant's] rights and help [the defendant] enforce them.'  The Court of Appeals has stated that whether a deceptive practice is likely to mislead a reasonable consumer acting reasonably may be determined as either a question of law or fact, depending upon the circumstances (see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 26)."

"Under the circumstances of this case, the reasonableness of the plaintiffs' belief as to their responsibilities under the contract of insurance is a question of fact, and should be determined by the factfinder."

"The plaintiffs must, of course, allege an injury as a result of the deceptive act or practice. Here, the plaintiffs allege that, as a result of the defendant's conduct, they were forced to incur the costs and expense of hiring an attorney to prevent forfeiture of coverage for a covered loss.  The defendant argues that the plaintiffs have not suffered any injury, since, if it had issued a denial prior to the expiration of the statute of limitations, the plaintiffs would have been in the exact same position as they now occupy—having to commence and pay for their own action against the Village. Whether the plaintiffs would have commenced the action against the Village if they had received an earlier denial is a question of fact, and must be determined by the factfinder. The plaintiffs alleged that they were forced to pay for an attorney, and thus adequately pleaded damages under General Business Law § 349."

"Accordingly, based on the foregoing, we find that, contrary to the defendant's contention, the plaintiffs' allegations are sufficient to state a cause of action pursuant to General Business Law § 349. Thus, the Supreme Court properly denied that branch of the defendant's motion which was to dismiss the third cause of action."

"Under General Business Law § 349 consumers may recover actual damages in any amount, and may recover treble damages under General Business Law § 349(h) up to $1,000. Moreover, the plaintiffs may seek both treble damages and punitive damages."

"An award of punitive damages is warranted where the conduct of the party being held liable evidences a high degree of moral culpability, or where the conduct is so flagrant as to transcend mere carelessness, or where the conduct constitutes willful or wanton negligence or recklessness. Initially, it should be noted that the plaintiffs do not seek punitive damages on their breach of contract claim, but only on their claim under General Business Law § 349. Under that claim, they allege that the defendant intentionally did not reach a final decision on their claim, so as to force them to commence a suit against the Village. If that is true, and for purposes of a CPLR 3211(a)(7) motion to dismiss, all allegations must be accepted as true, such conduct may be considered to be so flagrant as to transcend mere carelessness'. Consequently, the plaintiffs' claim for punitive damages should not be dismissed."

"The defendant argues that attorney's fees are not available for disputes between insurers and the insured, but it concedes that, under General Business Law § 349, the court has the discretion to award attorney's fees. The plaintiffs only seek attorney's fees on their General Business Law § 349 claim. Since General Business Law § 349(h) provides that the court has the discretion to award reasonable attorney's fees, the plaintiffs' request for attorney's fees should not be dismissed." 

"With regard to their cross motion, the plaintiffs are correct that, since the defendant's objections to their discovery demands were not served within 20 days of service, as required by CPLR 3122(a), this Court's review is limited to determining whether the requested material is privileged under CPLR 3101 or the demand is palpably improper.  The defendant states that the information sought is likely to contain privileged information. However, this conclusory statement is insufficient to establish that the information sought is, in fact, privileged. Moreover, there is nothing 'palpably improper' about the plaintiffs' demand. Here, the court has already narrowed the plaintiffs' request and ordered the defendant to produce documents relating to 375 claims made in connection with the October 2005 storm."

"The defendant argues that it was improper for the court to allow discovery to bolster what is otherwise an insufficient cause of action. However, as discussed above, the cause of action was sufficiently pleaded. The information sought, regarding claims the defendant has handled for other insureds, relates to the plaintiffs' attempt to establish that the defendant has engaged in a pattern of deception, and, thus, the request is proper."

"The defendant also argues that the plaintiffs should be compelled to pay for the discovery. However, this contention was improperly raised for the first time on appeal and thus is not properly before this Court."

"Accordingly, the order is affirmed insofar as appealed from."

Comment:  I find this decision to be, in a word, horrifying.  It makes the hairs on my arms stand on end.   Nobody in their right mind would ever interpret the requirement to "protect the insurer's subrogation right" as meaning that the insured, while awaiting a decision on a claim, must commence a lawsuit against the party whose negligence caused their damages.  In fact, I would venture a guess that no policyholder in the history of subrogation has ever reached such an interpretation.

The obligation to protect an insurer's subrogation rights is commonly understood to mean (and has been interpreted in many court decisions to mean) that the insured must not give a release to the tortfeasor without the permission of the insurer.

Where did these plaintiffs get the idea that they had to sue the tortfeasor?  Did Allstate tell them they had to do it?  If so, that's another story -- but that does not seem to be the case.   Just because these policyholders and their attorney were the first people to ever interpret the subrogation clause as requiring them to sue the tortfeasor does not make the policy "deceptive."

What does "deceptive" mean, anyway?  In our society, the trend is apparently that anything that could give a complete idiot the wrong idea about something is somehow actionable.  That's why products have to have warning labels on them to advise stupid people not to use the product in stupid ways.  Like the microwave food packages that warn the consumer that "product will be hot after heating."  D-uh! Ya think???

But so far that's simply annoying.   That's not the part that give me goosebumps.  It's the result that does that.  Because of this policyholder's misinterpretation of the subrogation clause, Allstate now has to produce the complete claim files from 375 homeowners claims that resulted from the storm of April 2005.   These files have to be copied, at Allstate's expense, and delivered to the plaintiffs' attorneys so they can rummage through them at leisure, looking for more ammunition to support their case.

Allstate raised the issue of the privacy of the homeowners on those 375 claims, but neither the Supreme Court nor the Appellate Division cared a whit about that, calling Allstate's claims of privilege "conclusory."   As if it were a real stretch to conclude that allowing a law firm to sift through other people's claim files, with all the details about their homes, their damages, their incomes, their tax returns, their social security numbers, the way the storm caused them personal expenses and affected their lives -- would not reveal privileged information.

Of course, these disclosed files will also enable the plaintiffs' law firm to gain information that will help them identify and solicit potential clients for other claims.  Nifty, huh?

One dumb consumer does not make for a deceptive business practice.  No more than the consumer who sued a cereal company because she was "deceived" into believing that Captain Crunch With Crunchberries contained real fruit.   But here we have a dangerous and ridiculous decision which allows a foolish homeowner to open up the personal and private claim files of innocent policyholders in an attempt to find validation for their own unreasonable behavior.

Once again, we all lose, and we all pay the price, because the courts keep lowering the intelligence requirement placed on the general public.

Larry Rogak

----- Original Message -----

From: Lawrence

To: TheRogakReport@yahoogroups.com

Sent: Thursday, January 14, 2010 6:11 PM

Subject: The Rogak Report: The Most Useful Publication In The Insurance Claims Industry The Rogak Report: 14 Jan 2010 ** Coverage - Subrogation **

 

POLICYHOLDER'S ALLEGATION THAT HOMEOWNERS POLICY IS DECEPTIVE AS TO SUBROGATION RIGHTS SURVIVES DISMISSAL MOTION

Wilner v Allstate Ins. Co.

2010 NY Slip Op 00248

Decided on January 12, 2010

Appellate Division, Second Department

Dickerson, J.

Edited by Lawrence N. Rogak

Plaintiffs, insureds under an Allstate homeowner's policy, alleged in their suit that Allstate's policies are deceptive because they interpret the requirement to protect Allstate's subrogation rights, as requiring them to sue a tortfeasor, at their own expense, who caused their damages.

Supreme Court, Nassau County, denied Allstate's motion to dismiss.  The Appellate Division affirmed, and so Allstate must litigate the issue of whether the subrogation clause in their policies violates General Business Law section 349 (deceptive business practices), and in the process, is forced to turn over the claim files of hundreds of other policyholders who have no connection with the plaintiffs' claim.  (See my comments at the end).

"APPEAL by the defendant, in an action, inter alia, to recover under a homeowner's insurance policy, as limited by its brief, from so much of an order of the Supreme Court (F. Dana Winslow, J.), entered January 21, 2009, in Nassau County, as denied those branches of its motion pursuant to CPLR 3211(a)(7) which were to dismiss the third cause of action alleging a violation of General Business Law § 349, and to dismiss the demand for punitive damages and attorney's fees, and granted the plaintiffs' cross motion to compel discovery."

"The plaintiffs commenced this action by summons and complaint dated September 11, 2007. In their complaint, the plaintiffs alleged that they bought a home owner's insurance policy from the defendant, entitled the Allstate Deluxe Plus Homeowners' Policy, to insure the real property they owned in the Village of Roslyn. The policy was to be effective from April 19, 2005, through April 19, 2006. On or about October 8, 2005, a storm allegedly caused a hillside on the plaintiffs' property to collapse, destroyed their retaining wall, felled several trees, and caused other damage."

"In the first cause of action, the plaintiffs alleged that the defendant breached the contract by refusing to pay the amounts due to them under the policy of insurance. In the second cause of action, the plaintiffs alleged that the defendant breached the contract in refusing to provide a defense to the plaintiffs after the Village instituted criminal proceedings against them for damage to Village property which resulted from the collapse. In the third cause of action, the plaintiffs alleged that the defendant violated General Business Law § 349."

"Specifically, the plaintiffs alleged that a provision of the insurance policy required them to protect the defendant's subrogation interest by instituting an action against the Village before the statute of limitations expired. According to the plaintiffs, the defendant refused to reach a timely decision on coverage, thereby compelling the plaintiffs to comply with that provision and sue the Village at their own expense."

"The plaintiffs alleged that the defendant's actions 'caused injury to Plaintiffs, and have the potential to harm the public at large' because every Allstate Deluxe Plus Homeowners' Policy contains the provision requiring those insured to protect the defendant's right to subrogate. The plaintiffs sought, inter alia, actual damages on their General Business Law § 349 cause of action, punitive damages, and attorney's fees."

"The defendant moved pursuant to CPLR 3211(a)(7) to dismiss the second and third causes of action and the plaintiffs' demand for punitive damages and attorney's fees. With regard to the third cause of action, the defendant argued that the plaintiffs failed to allege consumer-oriented conduct, that any act by the defendant was deceptive or misleading in a material way, and that they had been injured as a result of an allegedly deceptive act. In addition, the defendant asserted that the insurance policy did not require an insured to file a lawsuit against anyone, and no reasonable policy holder would conclude that it did. The defendant also claimed that attorney's fees and punitive damages were not recoverable under the circumstances."

"The defendant submitted, among other items, a copy of its Deluxe Plus Homeowners' Policy. The language allegedly requiring the insured to protect the defendant's subrogation rights provided, in pertinent part,

"When we pay for any loss, an insured person's right to recover from anyone else becomes ours up to the amount we have paid. An insured person must protect these rights and help us enforce them. You may waive your rights to recover against another person for loss involving the property covered by this policy. This waiver must be in writing prior to the date of loss."

"The plaintiffs opposed the defendant's motion and cross-moved to compel the defendant to provide full unredacted versions of relevant computer notes, and documents and information pertaining to other claims filed under the Deluxe Plus Homeowners' Policy resulting from the October 2005 storm."

"In an order entered October 7, 2008, the Supreme Court ordered the defendant to

"produce in camera all property damage claims under the Allstate Deluxe Plus Homeowners Policy for damages resulting from a rain and/or wind storm which occurred on or about October 7, 2005 in Nassau County as well as all claims that resulted in litigation, such documents being limited to property damage claims between October 7, 2005 to January 7, 2007 in Nassau County only."

"By order to show cause returnable December 8, 2008, the defendant, inter alia, sought leave to reargue, asserting, among other things, that the order went beyond the scope of the relief sought by the plaintiffs in their cross motion. The defendant claimed that the plaintiffs sought information regarding claims under the Deluxe Plus Homeowners Policy, while the court's order compelled production of all property damage claims arising from the storm at issue. The defendant claimed that the requirements of the order were onerous."

"In an order entered January 21, 2009, the Supreme Court, Nassau County (Winslow, J.), granted that branch of the defendant's motion which was to dismiss the second cause of action. The court denied those branches of the defendant's motion which were pursuant to CPLR 3211(a)(7) to dismiss the third cause of action alleging a violation of General Business Law § 349, and to dismiss the demand for punitive damages and attorney's fees, stating that, 'at this stage of the proceedings, it [could not] determine that Plaintiffs cause of action under [General Business Law] § 349 is insufficient as a matter of law.' The court granted the plaintiffs' cross motion to compel discovery."

"...General Business Law § 349 prohibits deceptive and misleading business practices and its scope is broad indeed.  General Business Law § 349 on its face applies to virtually all economic activity, and its application has been correspondingly broad. The reach of this statute provides needed authority to cope with the numerous, ever-changing types of false and deceptive business practices which plague consumers in our State.  This Court has broadly construed general consumer protection laws to effectuate their remedial purposes, applying the state deceptive practices law to a full spectrum of consumer-oriented conduct, from the sale of vanishing premium' life insurance policies to the provision of infertility services . . . In determining what types of conduct may be deceptive practices under state law, this Court has applied an objective standard which asks whether the representation or omission was likely to mislead a reasonable consumer acting reasonably under the circumstances,  taking into account not only the impact on the average consumer but also on the vast multitude which the statutes were enacted to safeguard—including the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions.  General Business Law § 349 encompasses a significantly wider range of deceptive business practices that were never previously condemned by decisional law. General Business Law § 349 was intended to be broadly applicable, extending far beyond the reach of common law fraud."

"The types of goods and services to which General Business Law § 349 applies is expansive. With regard to matters pertaining to insurance, it has been determined to apply to:  Coverage & Rates (see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330 ['out-of-pocket premium payments [for life insurance policies] would vanish within a stated period of time']; Monter v Massachusetts Mut. Life Ins. Co., 12 AD3d 651 [allegations of misrepresentations concerning terms of Flexible Premium Variable Life Insurance Policies, and deception concerning marketing thereof]; Beller v William Penn Life Ins. Co. of N.Y., 8 AD3d 310 [plaintiff stated General Business Law § 349 cause of action by alleging that the defendant engaged in deceptive practices by increasing the cost of insurance rates without regard to certain flexible factors which would have required the raise to decrease]; Skibinsky v State Farm Fire & Cas. Co., 6 AD3d 975 [allegations of intentional misrepresentation concerning coverage of a insurance policy provided to plaintiff]; Brenkus v Metropolitan Life Ins. Co., 309 AD2d 1260 [amount of life insurance coverage]; Batas v Prudential Ins. Co. of Am., 281 AD2d 260; Makastchian v Oxford Health Plans, 270 AD2d 25 [allegations of deceptive practices that would cause subscribers to believe that they still had health insurance when coverage had already been cancelled]);  Provision Of Defense Counsel (see Elacqua v Physicians' Reciprocal Insurers, 52 AD3d 886 ["This threat of divided loyalty and conflict of interest between the insurer and the insured is the precise evil sought to be remedied . . . hence the requirement that independent counsel be provided at the expense of the insurer and that the insurer advise the insured of this right. Defendant's failure to inform plaintiffs of this right, together with plaintiffs' showing that undivided and uncompromised conflict-free representation was not provided to them, constitutes harm within the meaning of General Business Law § 349"]); Claims Procedures (see Shebar v Metropolitan Life Ins. Co., 25 AD3d 858 [allegations that "despite promises to the contrary in its standard-form policy sold to the public, defendant made practice of not investigating claims for long-term disability benefits in good faith, in a timely fashion, and in accordance with acceptable medical standards . . . when the person submitting the claim . . . is relatively young and suffers from a mental illness'"]; Makuch v New York Cent. Mut. Fire Ins. Co., 12 AD3d 1110; Acquista v New York Life Ins. Co., 285 AD2d 73 ["allegation that the insurer makes a practice of inordinately delaying and then denying a claim without reference to its viability, may be said to fall within the parameters of" an unfair or deceptive practice]; Rubinoff v U.S. Capitol Ins. Co., NYLJ, May 10, 1996, at 31, col 3 [automobile insurance company fails to provide timely defense to insured as promised])." 

"Stating a cause of action to recover damages for a violation of General Business Law § 349 is fairly straightforward and should identify consumer-oriented misconduct which is deceptive and materially misleading to a reasonable consumer, and which causes actual damages.  Thus, to state a claim under General Business Law § 349, a plaintiff must allege that the defendant has engaged in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof'. Intent to defraud and justifiable reliance by the plaintiff are not elements of the statutory claim. However, proof that a material deceptive act or practice caused actual, although not necessarily pecuniary harm' is required to impose compensatory damages. 

"...The defendant asserts that the alleged misconduct attributed to it is not consumer-oriented, but rather involves a private dispute.   However, where the conduct being complained of is not a private contract dispute as to policy coverage but instead involves an extensive marketing scheme that has a broader impact on consumers at large, the courts will permit a cause of action pursuant to General Business Law § 349."

"Here, the plaintiffs allege, in their third cause of action, that the insurance policy, which requires that they protect the defendant's subrogation interest while their claim is being investigated, compelled them to institute a suit against the Village before the statute of limitations expired. This provision, according to the plaintiffs, in effect forces Plaintiffs to litigate a claim on Allstate's behalf if Allstate's investigation of the claim exceeds the statute of limitations."

"The policy provision in question provides, in pertinent part, that, when the defendant pays for any loss, an insured person's right to recover from anyone else becomes the defendant's up to the amount . . . paid, and an insured person must protect these rights and help the defendant enforce them.  The plaintiffs allege that this provision is not unique to the plaintiffs, but is contained in every Allstate Deluxe Plus Homeowners' Policy. Consequently, any consumer holding this policy, whose loss is potentially attributable to a third party, is required to protect the defendant's rights. Therefore, the conduct complained of has a broad impact on consumers at large and is thus consumer-oriented."

"A plaintiff seeking to state a cause of action under General Business Law § 349 must plead that the challenged act or practice was misleading in a material way. Whether a representation or an omission, the test is whether the allegedly deceptive practice is likely to mislead a reasonable consumer acting reasonably under the circumstances. Such a test . . . may be determined as a matter of law or fact (as individual cases require)."

"Here, the plaintiffs allege that the defendant has engaged in deceptive acts and practices in violation of General Business Law § 349 of New York by refusing to reach a timely decision on coverage, thereby compelling Plaintiffs to comply with the provision . . . which requires Plaintiffs to protect the defendant's interests. According to the plaintiffs, the defendant's failure to reach a timely decision is part of a pattern and practice by the defendant to force claimants to litigate its claims and incur the costs and expense of hiring an attorney to prevent forfeiture of coverage for a covered loss under the Allstate Deluxe Plus Homeowners Policy of insurance."

"In essence, the plaintiffs are alleging that the defendant purposely failed to reach a decision on the merits of their insurance claim in order to force the plaintiffs to bring a suit against the Village before the statute of limitations expired, because, if they did not do so, the defendant could refuse reimbursement of the claim on the ground that the plaintiffs had failed to protect the defendant's subrogation rights. Presumably, the purpose of this alleged conduct would be to save the defendant money; if the plaintiffs initiate the suit, the plaintiffs have to pay for it, whereas if the defendant initiates its own suit, the cost will fall upon the defendant. Accepting the plaintiffs' allegations as true, the plaintiffs have successfully pleaded conduct on the part of the defendant which was misleading in a material way." 

"The defendant argues that no reasonable consumer acting reasonably would interpret the subrogation language to mean that the consumer is required to file a lawsuit against an alleged tortfeasor. The language of the subrogation provision is ambiguous, in that it does not explain how the insured is to 'protect [the defendant's] rights and help [the defendant] enforce them.'  The Court of Appeals has stated that whether a deceptive practice is likely to mislead a reasonable consumer acting reasonably may be determined as either a question of law or fact, depending upon the circumstances (see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 26)."

"Under the circumstances of this case, the reasonableness of the plaintiffs' belief as to their responsibilities under the contract of insurance is a question of fact, and should be determined by the factfinder."

"The plaintiffs must, of course, allege an injury as a result of the deceptive act or practice. Here, the plaintiffs allege that, as a result of the defendant's conduct, they were forced to incur the costs and expense of hiring an attorney to prevent forfeiture of coverage for a covered loss.  The defendant argues that the plaintiffs have not suffered any injury, since, if it had issued a denial prior to the expiration of the statute of limitations, the plaintiffs would have been in the exact same position as they now occupy—having to commence and pay for their own action against the Village. Whether the plaintiffs would have commenced the action against the Village if they had received an earlier denial is a question of fact, and must be determined by the factfinder. The plaintiffs alleged that they were forced to pay for an attorney, and thus adequately pleaded damages under General Business Law § 349."

"Accordingly, based on the foregoing, we find that, contrary to the defendant's contention, the plaintiffs' allegations are sufficient to state a cause of action pursuant to General Business Law § 349. Thus, the Supreme Court properly denied that branch of the defendant's motion which was to dismiss the third cause of action."

"Under General Business Law § 349 consumers may recover actual damages in any amount, and may recover treble damages under General Business Law § 349(h) up to $1,000. Moreover, the plaintiffs may seek both treble damages and punitive damages."

"An award of punitive damages is warranted where the conduct of the party being held liable evidences a high degree of moral culpability, or where the conduct is so flagrant as to transcend mere carelessness, or where the conduct constitutes willful or wanton negligence or recklessness. Initially, it should be noted that the plaintiffs do not seek punitive damages on their breach of contract claim, but only on their claim under General Business Law § 349. Under that claim, they allege that the defendant intentionally did not reach a final decision on their claim, so as to force them to commence a suit against the Village. If that is true, and for purposes of a CPLR 3211(a)(7) motion to dismiss, all allegations must be accepted as true, such conduct may be considered to be so flagrant as to transcend mere carelessness'. Consequently, the plaintiffs' claim for punitive damages should not be dismissed."

"The defendant argues that attorney's fees are not available for disputes between insurers and the insured, but it concedes that, under General Business Law § 349, the court has the discretion to award attorney's fees. The plaintiffs only seek attorney's fees on their General Business Law § 349 claim. Since General Business Law § 349(h) provides that the court has the discretion to award reasonable attorney's fees, the plaintiffs' request for attorney's fees should not be dismissed." 

"With regard to their cross motion, the plaintiffs are correct that, since the defendant's objections to their discovery demands were not served within 20 days of service, as required by CPLR 3122(a), this Court's review is limited to determining whether the requested material is privileged under CPLR 3101 or the demand is palpably improper.  The defendant states that the information sought is likely to contain privileged information. However, this conclusory statement is insufficient to establish that the information sought is, in fact, privileged. Moreover, there is nothing 'palpably improper' about the plaintiffs' demand. Here, the court has already narrowed the plaintiffs' request and ordered the defendant to produce documents relating to 375 claims made in connection with the October 2005 storm."

"The defendant argues that it was improper for the court to allow discovery to bolster what is otherwise an insufficient cause of action. However, as discussed above, the cause of action was sufficiently pleaded. The information sought, regarding claims the defendant has handled for other insureds, relates to the plaintiffs' attempt to establish that the defendant has engaged in a pattern of deception, and, thus, the request is proper."

"The defendant also argues that the plaintiffs should be compelled to pay for the discovery. However, this contention was improperly raised for the first time on appeal and thus is not properly before this Court."

"Accordingly, the order is affirmed insofar as appealed from."

Comment:  I find this decision to be, in a word, horrifying.  It makes the hairs on my arms stand on end.   Nobody in their right mind would ever interpret the requirement to "protect the insurer's subrogation right" as meaning that the insured, while awaiting a decision on a claim, must commence a lawsuit against the party whose negligence caused their damages.  In fact, I would venture a guess that no policyholder in the history of subrogation has ever reached such an interpretation.

The obligation to protect an insurer's subrogation rights is commonly understood to mean (and has been interpreted in many court decisions to mean) that the insured must not give a release to the tortfeasor without the permission of the insurer.

Where did these plaintiffs get the idea that they had to sue the tortfeasor?  Did Allstate tell them they had to do it?  If so, that's another story -- but that does not seem to be the case.   Just because these policyholders and their attorney were the first people to ever interpret the subrogation clause as requiring them to sue the tortfeasor does not make the policy "deceptive."

What does "deceptive" mean, anyway?  In our society, the trend is apparently that anything that could give a complete idiot the wrong idea about something is somehow actionable.  That's why products have to have warning labels on them to advise stupid people not to use the product in stupid ways.  Like the microwave food packages that warn the consumer that "product will be hot after heating."  D-uh! Ya think???

But so far that's simply annoying.   That's not the part that give me goosebumps.  It's the result that does that.  Because of this policyholder's misinterpretation of the subrogation clause, Allstate now has to produce the complete claim files from 375 homeowners claims that resulted from the storm of April 2005.   These files have to be copied, at Allstate's expense, and delivered to the plaintiffs' attorneys so they can rummage through them at leisure, looking for more ammunition to support their case.

Allstate raised the issue of the privacy of the homeowners on those 375 claims, but neither the Supreme Court nor the Appellate Division cared a whit about that, calling Allstate's claims of privilege "conclusory."   As if it were a real stretch to conclude that allowing a law firm to sift through other people's claim files, with all the details about their homes, their damages, their incomes, their tax returns, their social security numbers, the way the storm caused them personal expenses and affected their lives -- would not reveal privileged information.

Of course, these disclosed files will also enable the plaintiffs' law firm to gain information that will help them identify and solicit potential clients for other claims.  Nifty, huh?

One dumb consumer does not make for a deceptive business practice.  No more than the consumer who sued a cereal company because she was "deceived" into believing that Captain Crunch With Crunchberries contained real fruit.   But here we have a dangerous and ridiculous decision which allows a foolish homeowner to open up the personal and private claim files of innocent policyholders in an attempt to find validation for their own unreasonable behavior.

Once again, we all lose, and we all pay the price, because the courts keep lowering the intelligence requirement placed on the general public.

Larry Rogak

 

Dear Readers:

I invite all of you to submit your comments and thoughts on the
following unsettled question of law:

"Should the medical necessity of any given test or treatment be judged
from the patient's condition on the date it is prescribed, or the date
it is performed?"

In many no-fault trials, the medical necessity of some test, often an
MRI, is at issue.  And in many of these cases, the test may have been
prescribed shortly after an accident, but then not performed until days
or even weeks later.  In the meantime, of course, the patient's
condition may have changed for the better or worse.

The debate at trial then becomes whether the test must be established as
medically necessary (or unnecessary) at the time it is prescribed, or at
the time it is actually performed.

Arguments have been made on both sides, of course.   On the one hand, no
test should be prescribed if it is not deemed to be medically necessary
at the time of the prescription.  For example, if an MRI is prescribed
one day after an accident and the patient is referred for physical
therapy at the same time, the physical therapy should be given a chance
to work, and then the patient should be re-examined before an MRI is
considered.

On the other hand, it is argued, if the MRI is not actually performed
for three or four weeks after it is prescribed, then the patient has had
an opportunity to respond to conservative treatment, so the need for the
MRI should be judged by the patient's condition on the day of the MRI.

While MRIs are expensive, cost alone does not dictate the standard of
care.   Still, tests do not make a patient get well; they only help
doctors evaluate a patient's condition.  Should an MRI costing $900 or
more be prescribed before it becomes clear that it is truly necessary
for the doctor to make decisions as to further treatment?

My personal view is that no test, no drug, and no treatment should ever
be prescribed unless the doctor believes it to be necessary at the time
of prescription.   If an MRI is prescribed on a given day and not
performed until a month later, why then was it prescribed?

The medical protocols for MRIs is generally that they should not be done
unless the doctor expects the results to alter the patient's treatment
plan, especially if surgery is contemplated as an option.  However, in a
large number of cases, the patient's treatment seems to have been run a
course that made no reference at all to MRIs, and the test seems to have
been purely incidental.

Considering the high cost of MRIs, the efficient allocation of both
insurance resources and medical resources would seem to dictate that
they not be performed as a matter of routine, like taking blood
pressure.   Certainly, there are some symptoms that make an MRI a
prudent option; however, common aches and pains following a motor
vehicle accident are generally considered by the medical community not
to warran an MRI, even if in the acute phase they are accompanied by
tingling, numbness, changes in sensation, and other subjective symptoms.

I throw this topic open to my readers.  Please participate.

Larry Rogak

COURT REJECTS ATTEMPT TO CLAIM CONSEQUENTIAL DAMAGES FROM NO-FAULT INSURER

In a deceptively short decision which discusses none of the important implications, the Appellate Term has rejected -- for the first time, to my knowledge -- the concept of bad-faith damages (or perhaps more accurately, Bi-Economy-style consequential damages) arising from a denial of no-fault benefits.

It would appear from the decision that the plaintiffs made a Motion to amend their Complaint to allege consequential damages against defendant no-fault insurer, as a result of a denial of benefits.  Civil Court, New York County (Arthur F. Engoron, J.), denied their motion for leave to amend the complaint.   The Appellate Term affirmed.

"Plaintiffs' proposed amended complaint does not specify any damages sustained by plaintiffs other than unpaid first-party no-fault benefits. Because plaintiff did not specify any consequential damages (see Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of NY, 10 NY3d 187 [2008]) caused by defendant's failure to pay plaintiffs' claims for such benefits, the proposed amendment is palpably insufficient as a matter of law (see Peach Parking Corp. v 346 W. 40th St., LLC, 42 AD3d 82, 86 [2007]; Davis & Davis, P.C. v Morson, 286 AD2d 584, 585 [2001]), and Civil Court providently exercised its discretion in denying plaintiffs' motion to amend." 

Comment:  When I reported and reviewed the Bi-Economy decision, I predicted that some plaintiffs in no-fault suits would attempt to use that ruling to support claims for consequential damages.  Here is the first one, and the win goes to the insurer.  I am sure they will keep trying.

Larry Rogak 

TECHNICAL DEFECT IN OUT-OF-STATE AFFIDAVIT CAN BE CORRECTED EVEN AFTER MOTION DATE

After Civil Court, Bronx County (Raul Cruz, J.), denied defendant's motion for summary judgment dismissing the complaint, the defendant no-fault insurer appealed.  The Appellate Term reversed, the motion granted and the complaint dismissed "on the condition that defendant, within 60 days of service upon it of a copy of this order with notice of entry, files with the Clerk of the Civil Court and serves upon plaintiffs an affidavit of Steven Esteves that is accompanied by a certificate demonstrating that the notary administered the oath as prescribed by the laws of the State of New Jersey. In the event defendant fails to duly file and serve such an affidavit, the order is affirmed, without costs."

"The affidavit submitted by defendant of its employee (Esteves) established defendant's entitlement to summary judgment dismissing this action to recover first-party no-fault benefits. Plaintiffs, however, raised a timely objection to the form of this affidavit, asserting that it did not comply with CPLR 2309(c)."

"Specifically, plaintiffs correctly note that the affidavit failed to include a certificate demonstrating that the notary administered the oath as prescribed by the laws of the State of New Jersey, the state in which the oath was administered (see CPLR 2309[c]; Real Property Law § 299-a[1]; PRA III, LLC v Gonzalez, 54 AD3d 917 [2008])."

"Inasmuch as the document can be given nunc pro tunc effect once the appropriate certificate is obtained (Nandy v Albany Med. Ctr. Hosp., 155 AD2d 833, 834 [1989]; see Moccia v. Carrier Car Rental, Inc., 40 AD3d 504, 505 [2008]; see also Matapos Tech. Ltd. v Compania Andina de Comercio Ltda, ___AD3d___, 2009 NY Slip Op. 09713 [Dec. 29, 2009]), we reverse the order and grant defendant's motion for summary judgment dismissing the complaint on the conditions stated above."

Comment:  Pretty neat!  I can't think of too many defects in motion papers that can be remedied nunc pro tunc (that's "retroactively" for those of you who forgot your Latin).

Larry Rogak

Hi Larry,

First thank you for all the help you provide.

Ok here is the situation, if you set up an IME and the claimant reschedules the
first exam and you set up a second exam but find out that the claimant has
surgery three days prior to the second exam date, can you change the date and be
within your rights to enforce seeing the claimant before his surgery.

Thanks so much,
Sherri


Sherri: You can change the date of the IME, but you can't force the claimant to
put off his surgery until you conduct the IME.  All you can do is to demand all
the surgical records so you can send them to the IME doctor so he can form an
opinion as to the pre-surgical condition.  -- Larry Rogak

ONCE NO-FAULT INSURER ISSUES DENIAL, INSURED MAY SETTLE BI CASE WITHOUT PRESERVING APIP SUBROGATION RIGHTS

Scalzo v. State Farm Ins. Co., 2010 NYSlipOp 30109 (Supreme Court, Nassau Co.) 

State Farm, which issued an auto policy with both basic PIP and APIP to Scalzo, denied coverage after Scalzo's accident because the accident occurred during the course of Scalzo's employment, and also because State Farm believed that the vehicle he was standing on at the time of the accident was not in use or operation at the time.  However, the denial was erroneous because the vehicle was indeed in use, and Scalzo's APIP provided lost wage coverage above and beyond what Scalzo was collecting from worker's comp.   When Scalzo sued State Farm for the lost wage benefits, State Farm claimed as a defense that Scalzo had settled his BI case with the tortfeasor without preserving State Farm's APIP subrogation rights -- a policy violation.   Scalzo argued that once State Farm denied benefits, Scalzo was no longer required to preserve State Farm's subro rights.  State Farm argued that although its denial was erroneous on the use or operation issue, it was correct as to the workers comp issue.

The Supreme Court held that once State Farm issued its denial -- correct or incorrect -- the insured was no longer bound by the obligation to preserve its subrogation rights in his BI suit.   Therefore State Farm's defense of policy violation was held unavailing, and the plaintiff was granted summary judgment on liability. 

However, issues of fact existed as to the amount of lost wage benefits were available under the APIP policy which required a trial.

Larry Rogak

In the Matter of the Arbitration between [Applicant] and OneBeacon Insurance Co., AAA Case No. 412008040607, AAA Assessment No. 17 991 02213 09, Insurer's Claim File No. 0AA145872 (Andrew M. Horn, arbitrator)

Edited by Lawrence N. Rogak

In dispute in this no-fault arbitration were, inter alia, the Applicant's claims for reimbursement for dentures received by the 81 year old man on May 1, 2007, purportedly as a result of injuries sustained in an automobile accident on November 28, 2005.

One Beacon Insurance Company timely denied the dentures claim, which was received on October 16, 2007, on November 1, 2007, alleging that "reimbursement for misplacing/losing your dentures…after this motor vehicle accident is not reimbursable under this no-fault policy". The insurer also asserted that the fee charged was not in accordance with the fee schedule.

"In regards to the disputed dentures, Respondent interposed the defense that assignor's injuries were not causally related to the accident.  That is, that there was no causal nexus between the accident and the loss of Applicant's dentures, which the injured person alleged were 'missing' 'a day or so after the accident' and he 'thought would turn up'".

"He further contended that, prior to the accident, he 'had no problems with (his) memory', and waited for eighteen months before replacing his dentures 'hoping they would be found', but 'paid the $2,400…because the doctor told him that (he was) ruining his health' without them."

"Unlike negligence actions where claimants must prove causation, claimants seeking No-Fault payments bear no such initial burden, as causation is presumed, and establishes his or her prima facie case by proof that the claim forms were mailed and received, and that the insurer failed to pay within the 30-day statutory period.  Causation is presumed since it would not be reasonable to insist that an applicant must prove as a threshold matter that a patient's condition was caused by the automobile accident."

"Thus, the burden is on the insurer to come forward with proof establishing by fact or founded belief its defense that the claimed injuries have no nexus to the accident." 

"An insurer disclaiming coverage has the burden of establishing that the medical condition for which the assignor was treated was not related to the accident at all, and the question of whether such conditions were wholly unrelated to his automobile accident or not exacerbated by the accident cannot be resolved without recourse to medical facts."

"In the instant case, Respondent relied on an independent medical examination conducted by its psychologist Dr. Michael H. Rosenfeld more than a year after the accident, on December 13, 2006. In his report, Dr. Rosenfeld noted that Applicant's prior medical history included treatment for depression 'for the past 50 years', as well as 'a history of hypertension, diabetes, osteoarthritis in his bilateral knees for the past 15 years, and neuropathy in his bilateral feet for the past ten years'. After reviewing available medical records, including a report of a psychological consultation with Dr. Paul Gunser, a psychologist, on October 21, 2006, taking Applicant's history and conducting a psychological examination, Dr. Rosenfeld diagnosed the EIP with a resolved Adjustment Disorder with Anxious Mood, a history of Chronic Pain Disorder and Depression 'unrelated to MVA', and a history of 'Possible Cognitive Dysfunction' 'Secondary to Long-Term Usage of Psychiatric Medication', and concluded that 'the original psychological complaints are only partially causally related to the…motor vehicle accident', inasmuch as 'the claimant has a pre-existing medical and psychiatric history that clearly has a direct effect on his current psychological and cognitive status."

"Dr. Gunser, a Diplomate of the American Board of Medical Psychotherapists and Psychodiagnosticians, challenged the IME findings and pointed out that psychological testing of Applicant was conducted because 'his neurologist was concerned about his complaints of failing memory'.  Among the tests performed were: Wechsler Adult Intelligence Scale III, Wechsler Memory Scale III, the Stroop Color and Word Test, Trail Making Part A and B Tests, REY Complex Figure Test, Controlled Oral Word Association Test (FAS), Animal Naming, Boston Naming Test, and Purdue Pegboard Test."

"Dr. Gunser noted that: Significant differences were observed when comparing verbal comprehension to working memory. The results were significant at the .15 level with a difference score of 10. Likewise, a significant discrepancy between perceptual organization and working memory at the .15 level was obtained. This was also a 10 point difference. These results suggest that working memory was significantly weaker than verbal comprehension and perceptual organization abilities."

"Dr. Gunser further reported that: Applicant demonstrates some weaknesses with working memory, auditory attention, mild weakness with tasks examining impulsive tendencies, and a significant weakness with planning, organization and the execution of the plan. It is also significant to make a note that the patient added information about his experiencing depression at the time of this evaluation. His processing speed was not reflective of depressed performance. It is therefore unlikely that his weakness and impairment would be attributed to depression. His Depression was pre-existing to his current injuries sustained from the motor vehicle accident of 11—28-05."

"Dr. Gunser concluded that Applicant suffered from a Cognitive Disorder. In an addendum dated January 11, 2007 prepared in response to Dr. Gunser's letter, Dr. Rosenfeld pointed out that 'there was no documented head injury or head trauma', and that Applicant 'did not even go (to) the hospital on the same day of the accident'. However, he also acknowledged that the 'neurological report does indicate memory complaints, but these could be attributable to a number of factors (i.e. advanced aging, chronic usage of psychotropic medications, etc.)', and that while the psychologist indicated that the claimant has deficits in 'working memory',…such a finding in a 79-year old man would not be that uncommon in that it is well documented that some aspects of memory decline with advanced aging. He further contended that, even though the claimant did report some memory complaints during (the IME) examination, he said that these occurred `mostly' at home (i.e. not in the working setting)."

"Such a finding, Dr. Rosenfeld claimed, would not be consistent with a head injury, which would be likely to occur across multiple settings, and might also suggest that any memory complaints he might have could be attributable to emotional or psychological factors. In any event, Dr. Rosenfeld's opinion remained unchanged. Respondent's attorney also pointed out that Applicant continued to work as a pharmacist subsequent to the accident, from which she argued it was fair to assume that any memory loss was not disabling enough to be the cause of the EIP losing his dentures. Applicant, on the other hand, countered that prior to the accident he worked a total of eight hours per week (and afterwards less), but that he held a babysitting job, employed solely because he had a license and the law required that a licensed pharmacist be present even if the actual work was undertaken by unlicensed individuals. He was adamant that he had no problems with memory prior to the accident."

"As unsavory as the picture is that it conjures up -- an individual without dentures and with the EIP's documented psychiatric history working as a pharmacist – I find that it is not dispositive of the issues of whether Applicant suffered from memory loss and, if so, whether said condition was in no way attributable or exacerbated by the accident."

"After consideration of credible evidence in the record, I find that, given Dr. Gunser's medical report and the history of complaints of memory loss documented by both Applicant's treating neurologist and the insurer's own IME doctor, Applicant was indeed suffering from memory loss. Furthermore, I conclude that Respondent has failed to establish that said injury was casually incompatible with the subject accident. Dr. Rosenfeld is far from definitive on the subject: In his original IME report, he did not conclude that Applicant's memory loss complaints were totally unrelated to the accident, but rather that they were only partially causally related to the…motor vehicle accident because of the EIP's pre-existing medical and psychiatric history."

"I am further convinced that the insurer failed to prove that the accident did not aggravate any pre-existing memory loss condition, and I note that exacerbations of pre-existing conditions are covered by the No-Fault Law. See, e.g., Wolf v. Holyoke Mut. Ins. Co., 3 A.D.3d 660 (3d Dept. 2004); Mount Sinai Hosp. v. Triboro Coach, 263 A.D.2d 11, 18 (2d Dept. 1999)."

"After careful review of the record, and in spite of Respondent's attorney's fine advocacy, it is my opinion that the insurer has failed to meet its heavy burden of proving that the medical condition which resulted in the loss of Applicant's dentures was not related to the accident at all."

"An insurance carrier's timely asserted defense that the bills submitted were not properly No-Fault rated or that the fees charged were in excess of the Workers' Compensation fee schedule is sufficient, if proven, to justify a reduction in payment or denial of a claim. Notwithstanding that Respondent was given the opportunity to make a post-hearing submission in support of its excessive charge defense, it declined to avail itself of the chance, contending instead that it was unable to do so without a proper NF3/Bill which include the dx codes and CPT codes, an item that I duly note the insurer never sought as additional verification of the claim. In light of the insurer's failure to submit proof in support of its defense of nonconformity with the worker's compensation fee schedule, said defense is unproven."

"Accordingly, Respondent's denial is vacated and Applicant's dentures claim is granted in its entirety: $2,400.00."

Comment:  Boy oh boy ---  a 79-year old man can't find his dentures after an accident, and he gets reimbursement for them because he claims his memory was affected by the accident even though he has a 50-year psychiatric history??  It's a good thing he didn't claim he couldn't remember where he parked his Lamborghini.

Larry Rogak

Hi Larry,

What happens if you receive a no fault claim from a passenger who is a UK
resident and they get injured and do not reside in the states.  Additionally,
they are working here but apparently illegally, therefore they don't have a
social security number or valid passport information to provide. Furthermore,
you only have the NF5 from the hospital and the records.

Are you as the carrier able to deny the hospital bills based on this situation,
and if so how would it be worded to be effective.

Thanks so much,
Sherri

[Sherri: You demand verification just like with anybody else, process their
claim based on the information they do have, and when they tell you they don't
have an SS number, that answers your question.  I would also demand an EUO.  --
Larry Rogak]

Hi Larry,

So when they do not provide the requested information you are able now to deny
stating that we are unable to process your claim without a valid social security
number or passport/visa. Will that denial hold up in court.

In other words if you are an illegal alien and cannot prove status the claim can
be denied?

Thanks again,
Sherri


[Sherri:  No, you cannot deny PIP benefits to an illegal alien.  When you demand
their SS number and they say they don't have one, that's your answer -- you
can't delay or deny based on the lack of an SS. -- Larry Rogak]


--- In TheRogakReport@yahoogroups.com, "Sherri" <mshlyn01@...> wrote:
>
> Hi Larry,
>
> What happens if you receive a no fault claim from a passenger who is a UK
resident and they get injured and do not reside in the states.  Additionally,
they are working here but apparently illegally, therefore they don't have a
social security number or valid passport information to provide. Furthermore,
you only have the NF5 from the hospital and the records.
>
> Are you as the carrier able to deny the hospital bills based on this
situation, and if so how would it be worded to be effective.
>
> Thanks so much,
> Sherri
>
> [Sherri: You demand verification just like with anybody else, process their
claim based on the information they do have, and when they tell you they don't
have an SS number, that answers your question.  I would also demand an EUO.  --
Larry Rogak]
>

Hi Larry,

Just as a follow up, I was under the impression that all carriers / tpa's had to
provide at minimum, the claimant's full name, date of birth, social security
number and medicare HIC number, on all new no fault claims; If they failed to do
so a fine of $1,000 would be imposed, is that correct?

I am unsure what to do in the cae of illegal aliens filing no fault claims. 
Would you just advise medicare of their full name and DOB and let them know no
additional information exists and would that absolve you of any civil penalty ?

Thanks again,
Sherri