King's Medical Supply Inc. v. Country-Wide Insurance

This is an action to recover first-party no-fault benefits, attorney’s fees and costs pursuant to New York’s Insurance Law and no-fault regulations. The cause of action allegedly arose out of an automobile accident on June 24, 2002, in which Robert Nieves, plaintiff’s assignor, was injured. Plaintiff, a medical equipment supplier, allegedly provided Mr. Nieves with medical supplies for which it submitted a claim for $705 to defendant insurer. Defendant denied plaintiffs claim on the ground that the supplies were not medically necessary. Plaintiff now moves for summary judgment, arguing that defendant’s denial was untimely and without any evidentiary support. Defendant, in opposition, asserts that plaintiff has not established its prima facie entitlement to summary judgment with admissible evidence, including evidence as to the documented cost of the supplies provided. For the following reasons, plaintiffs motion is granted in all respects.

Under the No-Fault Insurance Law and regulations, a medical equipment supplier must submit a properly completed proof of claim^[1] to the insurer within 180 days after the supplies have been provided under the “old regulations” in effect prior to April 4, 2002 (11 NYCRR 65.12) or 45 days after the supplies have been provided under the “new regulations” in effect on April 4, 2002 and thereafter (11 NYCRR 65-1.1 [h]). The insurer then has 30 days from the date the claim is received to pay or deny the claim under both the old and new regulations (11 NYCRR 65.15 [g] ^[1] [i]; 65-3.8 [a] ^[1]). If the insurer has any objections to or questions about the claim, including, among other things, the necessity for the supplies provided, the amount of the claim, or the adequacy of the claim form,^[2] it may request that the claimant provide further information to verify the claim (11 NYCRR 65.15 [d] ^[1] [old regulations]; 11 NYCRR 65-3.5 [b] [new regulations]; see Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51701 [U], *2 [App Term, 2d Dept 2003] [“a properly completed claim form, which suffices on its face to establish the particulars of the nature and extent of the injuries and (health benefits) received and contemplated

In support of its motion for summary judgment, plaintiff submitted a copy of its NF-3 proof of claim form, accompanied by an affidavit of its billing manager attesting on personal knowledge to the issuance of the claim, and a copy of defendant’s denial form (NF-10), indicating defendant received the claim on August 28, 2002, and denied it on November 21, 2002.^[3] In this case, the NF-10 denial form, which is admissible as an admission by defendant, is sufficient to establish plaintiff’s prima facie entitlement to summary judgment, i.e., that the claim was transmitted, that defendant received it, and that defendant failed to pay or deny the claim within 30 days of receipt^[4] (see A.B. Med. Servs., PLLC v New York Cent. Mut. Fire Ins. Co., 3

Defendant offers nothing in response to plaintiff’s motion other than a generic attorney’s affirmation in opposition and a generic memorandum of law with little but a passing connection to the claims in issue here. In any event, construing defendant’s opposition in the most favorable light possible, defendant fails to overcome plaintiffs prima facie case for several reasons.

First, the denial is untimely, and, therefore, defendant is precluded from asserting any defense other than fraud or lack of coverage (Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997]; Presbyterian Hosp. v Aetna Cas. & Sur. Co., 233 AD2d 433 [2d Dept 1996]; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999]).

Second, the stated reason for the denial in defendant’s NF-10 is that “an extended delay between the motor vehicle accident and the beginning of treatment suggest not medically necessary and raises issue of casualty [sic].” It is by now firmly established that the burden is on the insurer to prove that the medical services or supplies in question were medically unnecessary (see, e.g., A.B. Med. Servs, v GEICO Ins., 2 Misc 3d 26 [App Term, 2d Dept 2003], and cases cited therein). In addition, a denial premised on lack of medical necessity must be supported by evidence such as an independent medical examination, peer review, or examination under oath “setting forth a sufficiently detailed factual basis and medical rationale for the claim’s rejection” (Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128 [A], 2003 NY Slip Op 51701 , *1 [App Term, 2d Dept 2003]; see also Rockaway Blvd. Med. P.C. v Travelers Prop. Cas. Corp., 2003 NY Slip Op 50842 [U] [App Term, 2d & 11th Dists 2003]; see also 11 NYCRR 65-3.8 [b] [4]; Choicenet Chiropractic P.C. v Travelers Prop. Cas. Corp., 2003 NY Slip Op 50697 [U] [App Term, 2d & 11th Jud Dists 2003]; Rockaway Blvd. Med. P.C. v Allstate Ins. Co., 2003 NY Slip Op 50681DJ] [App Term, 2d & 11th Jud Dists

Finally, to the extent defendant’s defense to the summary judgment motion is that plaintiff did not document the cost of the supplies provided as part of its claim, the defense is without merit. It is true that, under the regulations, no-fault benefits available for medical supplies are limited to 150% of their “documented cost” (see 11 NYCRR Appendix 17-C, part E [b] [1]). However, in this court’s view, “documented cost” is not an element of plaintiffs prima facie case. As is the case with issues of medical necessity, any questions about the amount claimed for medical supplies can and should be asked through a request for verification and, if possible, resolved at the claim stage, not by a court on a motion for summary judgment or at trial. Defendant had the opportunity to ask plaintiff to document the costs of the supplies when it received the claim. Because defendant failed to do so within the time permitted by the regulations, defendant is precluded from raising it now as a defense to plaintiffs summary judgment motion.^[6]

For the foregoing reasons, plaintiffs motion is granted in all respects. Judgment shall be entered in favor of plaintiff for $705 plus statutory interest and attorney’s fees plus costs.