Bath Medical Supply, Inc., a/a/o Lynn Karam v. Allstate Indemnity Company (2010 WL 653874 (N.Y. Sup .App. Term), 2010 N.Y. Slip Op. 20059), decided by the Appellate Term, 9^th and 10^th Judicial Districts on February 19, 2010, illustrates the lack of available defenses for an insurer faced with an untimely denial.  In this proceeding, the provider of durable medical equipment appealed the order of Nassau County District Court, which denied the provider's motion for summary judgment and granted the insurer's cross-motion to dismiss the complaint.  The District Court denied the plaintiff's motion for summary judgment as premature and granted the cross-motion of Allstate Indemnity Company pursuant to CPLR Section 3126 unless the provider submitted to an examination under oath within 30 days. 

The Appellate Term reversed the decision, indicating the defenses raised in the Court below are unavailable to the insurance carrier in the face of an untimely denial.  Allstate argued fraudulent billing as a defense, indicating the provider billed Allstate for medical supplies which were never provided.  This defense was precluded with an untimely denial under the 2008 Court of Appeals decision in Fair Price Medical Supply Corporation v. Travelers Indemnity Company, 10 NY 3rd 556 (2008).  Similarly, the carrier's Mallela defense, which would survive even an untimely denial, was precluded where Allstate offered no grounds for a conclusion that the medical equipment provider was improperly incorporated or failed to obtain available licenses.  Similarly, the demand for an examination under oath of the plaintiff's assignor was improper grounds for the Court below to grant a conditional order of preclusion as the plaintiff's assignor was not a proper party to the action and the sanctions provided under CPLR Section 3126(3) were inapplicable.  Finally, the Carrier's opposition indicating the plaintiff failed to appear for an examination under oath was precluded based on the Carrier's failure to prove a timely denial (see Advanced Medical P.C., v. Utica Mutual Insurance Company, 23 Misc. 3d 141 (A) (Appellate Term, 2d, 11^th and 13^th Judicial Districts 2009). 

The Appellate Term decision in SZ Medical P.C, Life Chiropractic, P.C. and Somun Acupuncture, P.C. a/a/o Clarice Cowan v. Lumbermans Mutual Casualty Company, decided on February 5, 2010 by the Appellate Term for the 2^nd, 11^th and 13^th Judicial Districts (2010 WL 536931 (N.Y. Sup App. Term), 2010 N.Y. Slip Op 20044) is more notable for the dissent by Judge Joseph Golia then for the decision.  Judge Golia, in a spirited dissent, cites the dilatory tactics by the provider's counsel as proper grounds for vacating an order of default.  The majority of the Appellate Term reversed the prior order of the Queens County Civil Court which granted the motion to vacate the default judgment.  The majority held Lumbermans Mutual Casualty Company failed to submit an affidavit from an individual with personal knowledge, setting forth a reasonable excuse for failing to oppose a prior motion for summary judgment.  The fact that Lumbermans was able to demonstrate that 40% of the claims have been paid and annexed checks to the application and was further able to demonstrate bills submitted were outside of the fee schedule was insufficient in light of the failure of Lumbermans to establish that it timely denied the claims (see New York Insurance Department Regulations 11NYCRR Section 65-3.5(b)). 

Judge Golia, in a lengthy dissent, discussed the dilatory tactics of the provider's counsel.  Here a motion for summary judgment was granted on default in December of 2003, requiring the provider to enter judgment within 30 days of service upon the defendant of a copy of the order. Despite the directive in the December 2003 order, a judgment was not entered until February 26, 2008, where the original principal of $9,350.09 included a judgment for a greater sum for interest for over 4 years, totaling $10,537.68.  Judge Golia's recitation of the facts included the suspension from the practice of law of the original attorney of record for the provider and the substitution of a new attorney for two years who also failed to enter judgment in accord with the original order.  Judge Golia indicated, "such tactics are clearly in contravention of this court's holding in East Acupuncture, P.C. v. Allstate Insurance Company, 15 Misc 3d 104 (2007) as it was further expanded by the holding of the Appellate Division, Second Department.  The Appellate Division stated that to continue to accrue interest... throughout this period of delay [would be]  rewarding such delay with what amounts to essentially a windfall of punitive interest payments [and that such] would be at odds with the legislative goal of properly resolving no-fault claims (East Acupuncture, P.C. v. Allstate Insurance Company 61 A.D. 3d 210)".  Judge Golia has provided a memorable quote for all defense counsel in no-fault litigation, "I believe that a court should not allow itself to be even tacitly complicit in such a perversion of the court rules and the insurance department regulations".  The dissent in this case should be often quoted, perhaps in 20-point type and in bold.

The Appellate Term, 2^nd, 11^th and 13^th Judicial Districts addressed verification and fee schedule issues in First Aid Occupational Therapy, PLLC., a/a/o Boakye-Ameyau Gifty v. Country-Wide Insurance Company, decided on January 29, 2010 (26 Misc. 3d 135 (A).  Here the lower court granted the plaintiff's motion for summary judgment in favor of the provider, holding Country-Wide failed to establish proper tolling pursuant to the verification requirements of the insurance regulations (11 NYC RR 65-3.3).  Although Country-Wide provided proof of timely mailing of the verification requests and further provided proof of the provider's failure to respond, the follow-up verification requests were mailed on the 30^th day after the initial verification request but prior to the expiration of the full 30 day period which the provider was required to respond to Country-Wide's initial verification request.  The Appellate Term, reversing the decision of the Queens Civil Court, indicated the facts in this proceeding were identical to Infinity Health Products, LTD, v. Eveready Insurance Company, 67 A.D. 3d 862 (Appellate Division, 2^nd Department, 2009), in which the Appellate Division indicated, "it would be inequitable to award summary judgment to the plaintiff, which ignored two verification requests, merely because the defendant, slightly premature, sent its second verification request a mere three days before the expiration of a full 30 days after the first verification request had been sent." 

Although Country-Wide prevailed on the verification issue, the carrier lost their claims with respect to the fee schedule.  Here, the medical provider sought to recover fees in excess of the fee schedule by "unbundling" the services from an initial evaluation into separate bills.  Country-Wide failed to submit an affidavit from an individual with sufficient expertise to establish that ground as a matter of law or to demonstrate a triable issue of fact.  Without a "fee schedule expert" Country-Wide failed in their bid for dismissal of the provider's submitted bills which were outside of the fee schedule.  The Appellate Term continues to require a fee schedule expert in order to successfully defeat a motion for summary judgment on these grounds.