Assigned first-party personal injury protection (PIP) cases, more commonly referred to as no-fault cases, have proliferated in New York’s courts over the past dozen years. According to a 2011 estimate by the Property Casualty Insurers Association of America, no-fault cases account for approximately 40 percent of the New York City Civil Court caseload.

No-fault cases litigated in the New York City Civil Court as well as the Nassau and Suffolk county district courts typically involve relatively small sums in dispute. Therefore, no-fault provider plaintiffs frequently attempt to establish their prima facie case by way of motions seeking summary judgment. The benefit of moving for summary judgment to the no-fault provider is threefold; if the no-fault provider is successful in establishing its prima facie case, it need not do so again at trial. Furthermore, the insurer’s opposition to the motion gives the no-fault provider insight into the strengths and weaknesses of insurer’s defense positions. In a best-case scenario for the no-fault provider, an insurer with a weak defense posture or one who encounters difficulty in obtaining documents and affidavits necessary to resist a summary judgment motion will lose the motion or be compelled to settle the case.

As no-fault providers apprehended the boon brought by moving for summary judgment, the Civil Courts became inundated with such motions. The burden on no-fault providers was light, and there was little downside in moving for summary judgment. In December 2006 the Appellate Term Second Department reversed the trend which permitted no-fault providers to establish their prima facie case with relative ease. The court published a decision holding that a no-fault provider was required to authenticate its claim forms as business records pursuant to CPLR 4518 as part of its prima facie case. The Appellate Term had mentioned such a requirement once before, but had done so only in passing.1 Since December 2006, the courts have systematically increased a no-fault provider’s burden in establishing its prima facie case. This article addresses how the requirements for a no-fault provider to establish its prima facie case have evolved over the past decade.

Early Case Law

In December 2003, the Appellate Term, Second Department,2 issued its decision in Amaze Med. Supply v. Eagle Ins., 2 Misc.3d 128A, 784 N.Y.S.2d 918 (App Term, 2nd Dept. 2003).3 The no-fault provider moved for summary judgment on an unpaid claim for no-fault benefits. The insurer contended that as part of its prima facie burden the no-fault provider was required to prove that the medical supplies at issue were medically necessary—even if the insurer was precluded from introducing evidence controverting such proof. The no-fault provider argued that its proof of submission of its properly completed claim forms establishes its prima facie case for the recovery of no-fault benefits.

The Appellate Term agreed with the no-fault provider’s position reasoning: “[T]o hold otherwise would undermine the clear legislative mandate to facilitate the prompt and efficient resolution of first-party no-fault claims, many of which involve small sums for medical supplies, by imposing on the provider the unwarranted burden to obtain the necessary affidavits or other proof extrinsic to the forms to establish medical necessity. Thus, we reaffirm our holding that a provider’s proof of a properly-completed claim makes out a prima facie case upon its motion for summary judgment.”

The Appellate Term was clear in its holding. It put to rest the insurers’ contention that no-fault providers were required to establish medical necessity of the services/goods provided to a patient in order to establish a prima facie case.

In March 2004, the Appellate Division, Second Department, applied the same prima facie threshold as the one elucidated by the Appellate Term in Amaze Medical. In Mary Immaculate Hospital v. Allstate Ins., 5 A.D.3d 742, 774 N.Y.S.2d 564 (2d Dept. 2004), the court held: “the plaintiff hospitals made a prima facie showing of their entitlement to judgment as a matter of law by submitting evidentiary proof that the prescribed statutory billing forms had been mailed and received, and that payment of no-fault benefits was overdue.” The Appellate Division’s terse decision sets forth two requirements for a no-fault provider to establish its prima facie case: (1) submission of billing forms; and (2) the fact that payment was overdue.4

In June 2006, the Appellate Term, Second Department (Second and Eleventh Judicial Districts)5 issued its decision in Vista Surgical Supplies v. Metropolitan Prop. & Casualty Ins., 12 Misc.3d 130A, 819 N.Y.S.2d 214 (App Term, 2nd Dept. 2006). The Appellate Term held that a no-fault provider could establish its prima facie case by relying upon an affidavit submitted in opposition to its motion. Specifically, the court held: “plaintiff’s moving papers were insufficient to establish the mailing of the appended claim forms to defendant. However, said deficiency was cured by defendant’s acknowledgment of receipt of both of plaintiff’s claims in the affidavit of its claims adjuster.” The Appellate Term held in effect, that even with deficient motion papers, the no-fault provider could establish its prima facie case so long as the insurer acknowledged receipt of the provider’s claim(s).

In a November 2006 decision bearing the caption Dilon Medical Supply v. State Farm Mutual Auto. Ins., 13 Misc. 3d 141A, 831 N.Y.S.2d 358 (App Term, 2nd Dept. 2006) the Appellate Term, Second Department, held: “In the instant case, by annexing to its moving papers defendant’s claim denial form, the contents of which corresponded to the appended claim forms, plaintiff established that it sent and that defendant received the claims in question. Accordingly, plaintiff’s prima facie entitlement to summary judgment as to the aforementioned claims was established” (citation omitted).

Here, the Appellate Term held that a no-fault provider could establish its prima facie case so long as the moving papers included an acknowledgement from the insurer that the no-fault provider’s claim(s) was/were received.

A Turnaround

Less than a month after issuing its decision in Dilon Medical, the Appellate Term, Second Department, executed an apparent about-face. In Dan Med. v. New York Central Mutual Fire Ins., 14 Misc.3d 44, 829 N.Y.S.2d 404 (App Term)6 the court held: “The affidavit submitted by plaintiff’s ‘corporate officer’ failed to demonstrate that he possessed sufficient personal knowledge of plaintiff’s office practices and procedures so as to lay a foundation for the admission of the annexed documents as business records.”

In Dan Medical, in which the author prepared appellate briefs for the provider, the Appellate Term held that the insurer’s acknowledgement that it received claim forms from the no-fault provider did not necessarily enable the no-fault provider to establish its prima facie case. Confounding matters further, the Appellate Term, Second Department, issued a ruling in Oleg Barshay v. State Farm Ins., 14 Misc.3d 74, 831 N.Y.S.2d 821 (App Term, 2nd Dept. 2006) dated seven days after its Dan Medical decision.

In Oleg Barshay, the court held that the no-fault provider’s moving papers did not contain adequate proof to establish the submission of its claims to the insurer. Additionally, the Appellate Term observed that the no-fault provider did not annex a denial of claim form to its motion. The court held that the no-fault provider’s deficient moving papers were cured because the insurer appended the relevant denial of claim form to its opposition papers. As such, the no-fault provider was able to establish its prima facie case.

In Oleg Barshay, in which the author prepared appellate briefs for the provider, it must be inferred that while the Appellate Term deemed the no-fault provider’s supporting affidavit inadequate to establish claim submission, it was nonetheless sufficient to lay a foundation for the admission of Oleg Barshay’s claim documents pursuant to CPLR 4518. The insurer’s denial of claim form, which only appeared in the record as an exhibit to the insurer’s opposition papers, enabled the provider to establish its claim submission, and its prima facie case. In a lengthy dissent, Justice Joseph Golia lamented at the ease in which the no-fault provider was able to establish its prima facie case.

In May 2007, the Appellate Term, First Department, held that an insurer’s responses to the no-fault provider’s interrogatories in which the insurer “admitted that it received the no-fault claims at issue and made partial payment on the claims were sufficient to establish the no-fault provider’s prima facie entitlement to judgment.” The Appellate Term, First Department, did not discuss any requirement for a no-fault provider to establish its claim forms as business records pursuant to CPLR 4518. The Appellate Term did acknowledge that the Appellate Term for the Second Department arrived at a divergent conclusion on the same issue. See Fair Price Med. Supply v. St. Paul Travelers Ins., 16 Misc.3d 8, 838 N.Y.S.2d 848 (App Term, 1st Dept. 2007).7

In Art of Healing Medicine v. Travelers Home and Marine Ins., 55 A.D.3d 644, 864 N.Y.S.2d 792 (2d Dept. 2008) the Appellate Division, Second Department, once again weighed in on the no-fault provider’s prima facie case. The court applied the Dan Medical standard that the no-fault provider must establish its claim forms as business records in order to establish its prima facie case. Specifically, the court held: “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.” In effect, the Appellate Division endorsed the Appellate Term, Second Department, methodology for determining whether or not a no-fault medical provider established its prima facie case while rejecting the Appellate Term, First Department, approach.

A Further Development

In 2010, the Appellate Division seemingly increased a no-fault provider’s prima facie burden. In Westchester Med. Center v. Nationwide Mutual Ins., 78 A.D.3d 1168, 911 N.Y.S.2d 907 (2d Dept. 2010) the Second Department held: “[T]he plaintiff failed to establish its prima facie entitlement to judgment as a matter of law on its claim for benefits since the evidence demonstrates that the defendant made a partial payment and a partial denial of the claim within 30 days after receipt thereof. Furthermore, under the circumstances of this case, the minor factual discrepancy contained in the defendant’s denial of claim form did not invalidate the denial. In addition, the denial was not conclusory or vague, and did not otherwise involve a defense which had no merit as a matter of law” (citation omitted).

The Appellate Term for the Second Department has issued decisions citing to the Appellate Division’s holding in Westchester Med. Center. In Top Choice Med. v. GEICO, 35 Misc.3d 136A, 2012 N.Y. Misc. LEXIS 2067 (App Term, 2nd Dept. 2012) the court held: “A no-fault provider establishes its prima facie entitlement to summary judgment by proof of the submission to the defendant of a claim form, proof of the fact and the amount of the loss sustained, and proof either that the defendant had failed to pay or deny the claim within the requisite 30-day period, or that the defendant had issued a timely denial of claim that was conclusory, vague or without merit as a matter of law.” (See also: Ave T MPC v. Auto One Ins., 32 Misc.3d 128A, 934 N.Y.S.2d 32 (App Term, 2nd Dept. 2011).

The Appellate Division, First Department, has not spoken on the issue of the no-fault provider’s prima facie case since Art of Healing Medicine was decided in 2008. As recently as September 2011, the Appellate Term, First Department, cited to its 2007 Fair Price holding, thereby implying that it continues to be good law. See for example: Devonshire Surgical Facility v. American Transit Ins., 32 Misc. 3d 142A; 938 N.Y.S.2d 226 (App Term, 1st Dept. 2011).

However, it is settled law that the trial courts (and presumably the Appellate Terms) are bound by the holdings of the Appellate Division so long as there is no conflicting Appellate Division case law in the department where the trial court (or Appellate Term) is located. See: Mountain View Coach v. Storms, 102 A.D.2d 663, 476 N.Y.S.2d 918 (2d Dept. 1984). Presumably, the trial courts and Appellate Term in the First Department are constrained to apply the Art of Healing Medicine and Westchester Med. Center holdings.

Conclusion

Appellate case holdings have made it increasingly difficult for a no-fault provider to establish its prima facie case. The Second Department, where the majority of no-fault cases are pending has been at the forefront of this development.

Jeff Henle is the principal attorney at the Law Office of Jeff Henle and can be reached at jhenle@jeffhenlelaw.com. He prepared the appellate briefs submitted on behalf of the providers in the ‘Dan Medical’ and ‘Oleg Barshay’ cases discussed in this article.

Endnotes:

1. See: Midborough Acupuncture v. New York Cent. Mutual Fire Ins., 13 Misc.3d 132A, 2006 WL 2829993 (App Term, 2nd Dept. 2006)

2. As most no-fault actions are commenced in the New York City Civil Court and the District Courts of Nassau and Suffolk counties, the Appellate Terms are the courts from which much of the relevant case law has arisen. Additionally, there is no appeal as of right to the Appellate Division from the Appellate Term. As such, the Appellate Term’s decision on an issue is not always subject to additional appellate review.

3. The Appellate Term for the 9th & 10th Judicial Districts issued a contemporaneous decision with a similar holding. See Damadian MRI of Elmhurst v. Liberty Mutual Ins., 2 Misc.3d 128A, 784 N.Y.S.2d 919 (App Term, 2nd Dept. 2003).

4. Payment is overdue if the insurer does not pay a claim within 30 days of receiving the same. The insurer may “toll” its time to pay or deny a claim by issuing demands for additional verification pursuant to the no-fault regulation during the 30-day period. A point of contention remains as to whether a claim is overdue if the insurer has timely and properly denied payment of the claim.

5. On Jan. 1, 2009, Richmond County, formerly part of the Second Judicial District, was designated as the Thirteenth Judicial District. The Appellate Term that adjudicates appeals from Kings, Queens and Richmond counties, is now identified as the Appellate Term for the Second, 11th and 13th Judicial Districts.

6. In February 2007, the Appellate Term for the 9th & 10th Judicial Districts issued a similar holding. See Fortune Medical v. Allstate Ins., 14 Misc.3d 136A, 836 N.Y.S.2d 492 (App Term, 9th & 10th Jud Dists)

7. In Bajaj v. General Assurance, 18 Misc.3d 25, 852 N.Y.S.2d 576 (App Term, 2nd Dept. 2007), the court held that a no-fault provider could not rely upon the insurer’s responses to its notice to admit to establish its prima facie case. The court reasoned that responses to its notice to admit did not enable the no-fault provider to lay a proper foundation for the admissibility of its claim forms under the business records exception to the hearsay rule.