And then the Appellate Division, Second Department spoke

Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co.
2008 NY Slip Op 07846 (2d Dept. 2008)

The Appellate Division Second Department has now, in pertinent part, decided to follow Dan Medical as it relates to the necessity for the records to be entered into evidence for the truth of the matter asserted.

To quote the court: "The plaintiffs failed to establish their prima facie entitlement to judgment as a matter of law. The plaintiffs' medical service providers failed to demonstrate the admissibility of their billing records under the business records exception to the hearsay rule (see CPLR 4518[a]"

So there goes the literal interpretation of Mary Immaculate (discussed in the prior post) that the Plaintiffs' bar has relied upon to meet a prima facie case. Indeed, the Appellate Term, First Department has been adamant that the billing forms do not need to be placed into evidence to make a prima facie case.

Yet, let us not forget that the Appellate Division, First Department, adopted the Mary Immaculate rule in Countrywide Ins. Co. v. 563 Grand Medical, P.C., 50 AD3d 313 (1st Dept. 2008), when they held as to prima facie in a trial denovo setting that:

"Defendant medical provider established prima facie its entitlement to judgment as a matter of law by demonstrating that the necessary billing documents were mailed to and received by plaintiff insurer and that payment of the no-fault benefits was overdue"

I therefore do not think this case will represent much of a shift in the law, as it stands today. What this case opens up the door to, at some point, is a Court of Appeals ruling should the Appellate Division, First Department continue to follow Mary Immaculate. This would render a split in the Appellate Divisions, which would allow the prima facie issue to make it all the way to the top of the appellate food chain.

Prima facie: schizophrenia from the Appellate Term

Mary Immaculate Hosp. v New York Cent. Mut. Fire Ins. Co.
2008 NY SlipOp 52046(U)(App. Term 2d Dept. 9th and 10th Jud. Dis. 2008)

I have been waiting for the day when a Henig Hospital case with the famous Hospital Receivable's third-party billing affidavit (which we all know is insufficient to lay a proper foundation for entry into evidence of the billing forms) to be evaluated by the Appellate Term, Second Department.

Let me explain. The famous Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 (2d Dept. 2004) case is a Appellate Division, Second Department case, which involved a Henig third-party biller affidavit. The Apppellate Division, as we all know, said that a prima facie case consists of submission of a claim form, and proof that the bill is overdue. Therefore, Mary Immaculate was granted summary judgment.

Here, the Appellate Term today ducked the prima facie issue. The Court said that the issue is not preserved since the issue was not raised in the initial answering papers of New York Central Mutual. Therefore, the issue was not before the Court.

However, the case which this case "cf" cited said that the issue of admissiblity of business records may be raised for the first time on appeal. See, Bath Med. Supply, Inc. v Deerbrook Ins. Co. , 14 Misc 3d 135(A)(App. Term 2d and 11th Jud. Dis. 2007). Yet, this case said that an appellate court may not do this. My suspicion is that the Appellate Term did not want to deal with the fact that these third-party affidavits are sufficient before the Appellate Division, yet are not acceptable before the Appellate Term.

I feel that at some point, we are going to have a prima facie showdown in the Second Department. I believe this will happen soon.

Escaping the four corners of the denial

At this point in our PIP jurisprudence, it has been taken for granted that a defense of medical necessity extends to the four corners of the peer review or the medical examination which recommends cessation of treatment.

The foundation for the principle appears in 11 NYCRR Sec. 65-3.8(a)(4), which states the following: "If the specific reason for a denial of a no-fault claim, or any element thereof, is a medical examination or peer review report requested by the insurer, the insurer shall release a copy of that report to the applicant for benefits, the applicant's attorney, or the applicant's treating physician, upon the written request of any of these parties."

In construing this regulation, the Appellate Division observed in A.B. Medical Services, PLLC v. Liberty Mut. Ins. Co. 39 A.D.3d 779 (2d Dept. 2007): "The applicable regulations provide that if a no-fault claim is denied in whole or in part based on a medical examination or peer review report requested by the insurer, then the insurer shall release a copy of that report to, among others, the applicant or its attorney, upon written request. Had it been the intent of the Department of Insurance to require the carrier to set forth a medical rationale in the prescribed denial of claim form, it would have so provided"

Thus, it is has been assumed that the the peer or IME is an extension of the denial. This was the methodology behind the Appellate Term, Second Department's holding in A.B. Medical Services, PLLC v. Liberty Mut. Ins. Co. 10 Misc.3d 128(A)(App. Term 2d Dept. 2005), prior to it being reversed by the Appellate Division, Second Department. See, 39 AD3d 779. In fact, all the Appellate Division really said was that the peer report or IME report does not have to be annexed to the denial.

Therefore, recent Appellate Term, First Department cases are quite questionable. In Mollins v Allstate Ins. Co. 20 Misc 3d 141(A)(App. Term 1st Dept. 2008), the Appellate Term, stated the following: "In opposition, defendant failed to raise a triable issue since it did not submit the IME report upon which its denials were based or any other evidentiary proof to support its defense of lack of medical necessity (see Vista Surgical Supplies, Inc. Travelers Ins. Co., 50 AD3d 778 [2008]; Response Med. Equip. v General Assur. Co., 13 Misc 3d 129[A], 2006 NY Slip Op 51765[U] [2006]).

And the Appellate Term case, Response Med. Equipment said the following: "With respect to the $650 claim for assignor Edwin Milanes, defendant failed to support its defense of lack of medical necessity with the peer review upon which the denial was based, or any other competent proof in admissible form."

It therefore appears arguable that an insurance carrier may escape the four corners of the denial, as amplied by the peer review and denial. It should be interesting to see how the Appellate Term, First Department and the other courts rule when the "Cerucci" four corner rule collides with the "other competent proof in admissible form" rule.

Dan Medical is safe for now (well sort of)

Bajaj v General Assurance
2008 NYSlipOp 84460(U)(2d Dept. 2008)

"Motion by the plaintiff for leave to appeal to this court from an order of the Appellate Term, Second and Eleventh Judicial Districts, dated October 22, 2007, which reversed a judgment of the Civil Court of the City of New York, Queens County, entered February 9, 2006.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is

ORDERED that the motion is denied."

Comment: Baja was the case that held that a Plaintiff cannot make its prima facie case based upon a notice to admit. This was the companion to Empire State Psychological Servs., P.C. v Travelers Ins. Co. (App. Term 2d Dept. 2007), which held that interrogatories admitting receipt and the bills being overdue was insufficient to make a prima facie case. The above cases were ruled on as they were because the Appellate Term, Second Department, has consistently opined that the billing claim forms need to be entered into evidence.

This is in contrast to the Appellate Term, First Department, which has routinely held that a prima facie case is set forth through a literal interpretation of Mary Immaculate Hospital as observed in Fair Price Med. Supply, Inc. v St. Paul Travelers Ins. Co., 16 Misc.3d 8 (App. Term 1st Dept. 2007), to wit:

"[d]efendant insurer admitted that it received the no-fault claims at issue and made partial payment on the claims. Inasmuch as defendant's verified answers to the interrogatories constituted admissions of a party, which are admissible as evidence, defendant may not now be heard to argue that plaintiff failed to submit proof that the claims had been mailed and received, and that they were overdue (see Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). To the extent that Empire State Psychological Servs., P.C. v Travelers Ins. Co. (13 Misc 3d 131[A], 2006 NY Slip Op 51869[U] [2006]) supports a contrary conclusion, we decline to follow it."

Had Baja made its way to the Appellate Division, Second Department, then it is likely that the world of Dan Medical would have gone the way of vicarious liability in leasehold cases following the Graves Amendment.

Appellate Division, Fourth Department opines on the issue of non-cooperation

Progressive Ins. Co. v Strough
2008 NY Slip Op 07463 (4th Dept. 2008)

We further conclude that the court properly denied that part of plaintiff's cross motion for [*2]summary judgment declaring that plaintiff has no duty to indemnify defendant for claims arising from the motor vehicle accident in question, including claims for no-fault benefits. Plaintiff failed to support its motion with evidence provided by an individual with personal knowledge of the facts (see Chiarini v County of Ulster, 9 AD3d 769, 769-770), and the documents provided by plaintiff in support of the cross motion do not establish that defendant failed to cooperate with plaintiff, as alleged in the complaint.

Comment: Does the no-fault endorsement provide a non-cooperation defense? I remember a case entitled Utica Mut. Ins. Co. v. Timms, 293 AD2d (2d Dept. 2002) , which says otherwise. There is another case from the Fourth Department a few years ago, which opined on the non-cooperation defense as it relates to no-fault benefits. See, Simmons v. State Farm Mut. Auto. Ins. Co. 16 A.D.3d 1117 (4th Dept. 2005).

Causation - Be aware of seeking a trial de novo after a master arbitrator affirms an award

State Farm v. Stack
2008 NY Slip Op 07651 (2d Dept. 2008)

"A no-fault arbitration tribunal twice concluded that the defendant, James Stack, was entitled to benefits arising from an automobile accident. Subsequently, the plaintiff, State Farm Automobile Insurance Company (hereinafter State Farm), commenced a de novo plenary action seeking a determination that medical expenses for Stack's hospitalization were for a condition unrelated to the accident and that Stack failed to demonstrate his entitlement to lost earnings."

"An insurer seeking to deny no-fault benefits on the basis that a claimant's condition is not causally related to an accident "has the burden to come forward with proof in admissible form to establish the . . . evidentiary foundation for its belief' that the patient's treated condition was unrelated to his or her automobile accident" (Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 19-20). The testimony of State Farm's expert witness, an anesthesiologist and pain management specialist, that his opinion was based solely upon a hospital discharge summary and insurance claim form, rendered his opinion speculative and of little probative value (see Gordon v Tibulcio, 50 AD3d 460)."

"In contrast, the testimony of Stack's expert witness, a neurologist who based his opinion upon his examination of Stack and his review of Stack's relevant medical records, including, inter alia, CT scans and magnetic resonance imaging, and determined that Stack's symptoms first appeared within two weeks of the accident and progressively worsened, was sufficient to establish that Stack's condition was causally related to the accident (see Scudera v Mahbubur, 299 AD2d 535, 536)."

Comment: Another case where the Appellate Courts are loathe to sustain an insurance carrier's proof that a service is not causally related to a motor vehicle accident.

Avoid the invectives

Great Wall Acupuncture, P.C. v General Assur. Co.
2008 NY Slip Op 28350 (App. Term 2d Dept. 2008)


This case has been commented on numerous times before. It is one of many Mallela discovery motions that are granted as long as there is some shred of evidence that there is an improper incorporation issue. This follows the recent Appellate Division case of One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 2008 N.Y. Slip Op. 06813 (2d Dept. 2008), which held as follows:

"However, in opposition to the motion, the plaintiffs submitted sufficient evidentiary proof to raise an issue of fact as to whether Proscan was actually controlled by a management company owned by unlicensed individuals in violation of the Business Corporation Law"Accordingly, the appellants' motion for summary judgment was properly denied with respect to all three causes of action, which allege fraudulent incorporation."

"The Supreme Court properly granted that branch of the plaintiffs' cross motion which was for disclosure of certain financial documents. Contrary to the appellants' contention, the plaintiffs were not required to make a showing of “good cause” for such disclosure"

I like this case for the following quotation: "Although plaintiff contends that the court erred in denying the cross motion for an order sanctioning defendant and defendant's counsel, in our opinion, the court providently exercised its discretion. We remind plaintiff's counsel that "[f]rivolous conduct shall include the making of a frivolous motion for costs and sanctions" (Rules of the Chief Administrator [22 NYCRR] § 130-1.1). We further caution plaintiff's counsel to refrain from including invective and ad hominem attacks in his papers."

Fee schedule defense - competent evidence?

OS Tigris Acupuncture, P.C. v Liberty Mut. Insurance Co.
2008 NY Slip Op 51996(U)(App. Term 1st Dept. 2008)


"Nor did defendant produce competent evidence in support of its defense of nonconformity with the applicable fee schedule (see Continental Med. P.C. v Travelers Indem. Co., 11 Misc 3d 145[A], 2006 NY Slip Op 50841[U] [2006])"

Comment: I am going to assume that the movant did not provide a copy of the applicable portions of the fee schedule and annex the Department of Insurance Letter allowing the carrier to pay the chiropractor or physician fee schedule for acupuncture or a geographical rate it deemed proper.

Fee schedule defense - Appellate Division gives due deference to the DOI

Forrest Chen Acupuncture Services, P.C. v. GEICO Ins. Co.
2008 N.Y. Slip Op. 07211 (2d Dept. 2008)

"Furthermore, the defendant made a prima facie showing of its entitlement to summary judgment dismissing the complaint by submitting evidentiary proof that no fee schedule for the reimbursement of acupuncture treatments existed in 2001, and that it properly limited payment to “charges permissible for similar procedures under schedules already adopted” (11 NYCRR 68.5[b]; see Insurance Law § 5108; Ops Gen Counsel N.Y. Ins Dept No. 04-10-03 [October 2004] ). In opposition to the cross motion, the plaintiff failed to raise an issue of fact as to whether reimbursement for its acupuncture services was properly limited."

Comment: I would opine that "competent evidence" to support a prima facie fee schedule defense would include (besides a timely denial) the following: (a) Pertinent portion of the fee schedule including conversion factor and CPT Codes with relative values; (b) DOI letter indicating it is proper; and (c) Affidavit from claims examiner indicating compliance with the foregoing.