David M. Barshay

The No-Fault Regulations, 11 NYCRR 65-1.1(d) Proof of claim, provide, inter alia:

Upon request by the Company, the eligible injured person or that person’s assignee or representative shall: * * * (b) as may reasonably be required submit to examinations under oath by any person named by the Company and subscribe the same;

Case law has made it clear that a no-fault claimant’s failure to appear for a properly scheduled examination under oath (EUO) will result in denial of its claim. See Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 A.D.3d 720 (2006); Westchester Med. Ctr. v. Lincoln Gen. Ins. Co., 60 A.D.3d 1045 (2d Dept. 2009); Crescent Radiology, PLLC v. American Tr. Ins. Co., 31 Misc.3d 134(A) (App. Term 9th & 10th Jud. Dists. 2011); Viviane Etienne Med. Care, P.C. v. State Farm Mut. Auto. Ins. Co., 35 Misc.3d 127(A) (App. Term 2d, 11th & 13th Jud. Dists. 2012); Liberty Mut. Ins. Co. v. Five Boro Med. Equip., 130 A.D.3d 465 (1st Dept. 2015); Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, PLLC, 82 A.D.3d 559 (1st Dept. 2011).

It is equally clear that a no-fault claimant who fails to respond to an EUO request “will not be heard to complain that there was no reasonable basis for the EUO request.” Crescent Radiology, 31 Misc.3d 134(A); Jamaica Med. Supply v. Encompass Indem. Co., 36 Misc.3d 160[A] (App. Term, 2d Dept, 2d, 11th & 13th Jud. Dists. 2012); Viviane Etienne Med. Care, P.C., 35 Misc.3d 127(A). In fact, even where the EUO scheduling letters may be defective, where the medical provider who is scheduled to attend the EUO fails to respond in any way to the EUO requests, its objections regarding the EUO scheduling letters will likewise not be heard. Bay LS Med. Supplies v. Allstate Ins. Co., 50 Misc.3d 147(A) (App. Term 2d, 11th & 13th Jud. Dists. 2016); Eagle Surgical Supply v. Allstate Ins. Co., 46 Misc.3d 128(A) (App Term, 2d, 11th & 13th Jud. Dists. 2014).

As most insurance practitioners know, an EUO is conducted in a similar manner to, and is nearly indistinguishable from, a deposition conducted as part of discovery in a lawsuit; with the exception that in a deposition, the parties can seek a ruling from the presiding judge if the party being deposed objects to a question or a line of questioning or if there is otherwise a disagreement as to how the deposition is being conducted. As an EUO is conducted during the claims stage, there is no judge or arbitrator assigned to make such rulings. What happens, then, when a no-fault claimant does appear for an EUO, but refuses to answer certain questions?

In a recent case, Country-Wide Ins. Co. v. Gotham Med., P.C., 154 A.D.3d 608 (1st Dept. 2017), the defendant medical provider’s principal had previously been the subject of professional discipline by the New York State Office of Professional Medical Conduct (OPMC) for allegedly engaging in the fraudulent practice of medicine. The principal had agreed to a consent order in which he did not contest the charges and in which he consented to a five-year probation period during which he was allowed to practice medicine only with supervision by a board certified physician approved by OPMC. At an EUO scheduled by the plaintiff insurer, the medical provider’s principal, under advice of counsel, refused to answer questions by the insurer about his compliance with the OPMC order, claiming that such information was confidential. He also refused to answer questions regarding medical treatment rendered to certain patients. Based on his refusal to answer the questions, the insurer denied the provider’s claims and later commenced a declaratory action seeking a declaration that the medical provider is not entitled to no-fault benefits for the claims subject to the EUO because of its principal’s refusal to answer relevant questions during the EUO. Subsequently, the medical provider’s principal was indicted in federal court and charged with conspiracy to commit insurance fraud. He entered into a deferred prosecution agreement with the U.S. Attorney.

The insurer moved for summary judgment and the motion was granted. On appeal, the Appellate Division, First Department affirmed, holding, inter alia:

The refusal by defendant’s principal to answer questions at an examination under oath (EUO) about his compliance with a consent agreement and order he had entered into with the Office of Professional Medical Conduct (OPMC) constituted a failure to comply with the request for an EUO, a condition precedent to coverage under the insurance policy. See Hertz v. Active Care Med. Supply Corp., 124 A.D.3d 411 (1st Dept. 2015).

The court found unavailing the medical provider’s arguments that his compliance with the OPMC order was confidential, given that the principal voluntarily entered into the consent agreement which expressly stated it is a public document. Moreover, the court found, the principal’s compliance with the order was relevant to the EUO insofar as any violation of the consent order would constitute the unauthorized practice of medicine, which would invoke 11 NYCRR 65-3.16(a)(12) (“A provider of health care services is not eligible for reimbursement … if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York …”).

Does this holding impose an absolute requirement on a claimant to answer every question posed at an EUO, regardless of the relevance of the questions? The answer is no. It so happens that in this case, the court found the questions to be relevant and therefore, the medical provider’s refusal to answer, even under advice of counsel, “constituted a failure to comply with the request for an EUO” for which the insurer did not owe no-fault benefits. Presumably, had the court found the questions to be improper or unnecessary to process the claims, the court would have denied the insurer’s motion and ultimately ruled that the insurer was not relieved from paying the claims.

The more important question, however, is, if an insurer believes its questions are relevant and necessary and the deponent reasonably believes they are inappropriate, should the deponent answer those questions anyway or run the risk of having his claims denied? Conversely, what risk, if any, does the insurer take if it denies the claims based on a failure to answer questions at an EUO if the court ultimately determines the questions to be improper? Unlike the cases wherein the claimant ignored or refused to respond to and appear at the requested EUO, where a claimant does respond and appear and voices his objection to certain questions, is there a method, similar to a deposition in a lawsuit, where the claimant and insurer can submit the question or questions to an independent arbiter who then decides whether they should be answered? Presumably, a declaratory action, such as the one in Country-Wide Ins. Co. v. Gotham Med., P.C., would be the proper method for determining whether a medical provider should be compelled to answer questions at an EUO. However, at least in that case, it would appear to be too late for the medical provider to agree to go back and answer the objected to questions, as the court sustained the insurer’s denial based on failure to comply with the EUO request. Interestingly, the medical provider had obtained favorable rulings in individual no-fault arbitrations on the issues presented in the declaratory action, which may have had a res judicata/collateral estoppel effect in the declaratory action. Unfortunately for the medical provider, its res judicata/collateral estoppel arguments were deemed waived due to its failure to raise that defense in its answer, in a motion or in opposition to the insurer’s summary judgment motion.

Order Granted on Consent Is the Equivalent of a Stipulation

An unopposed motion for summary judgment will usually (assuming the moving papers are sufficient) result in the motion being granted on default. In order to vacate the order, the non-moving, defaulting party will be required, pursuant to CPLR 5015(a)(1), to establish both a reasonable excuse for their default and a meritorious claim or defense.

The recent case of Zayas Physical Therapy, P.C. v. Auto One Ins. Co., 2018 NY Slip Op 50038(U) (App. Term 2d, 11th & 13th Jud. Dists. 2018) presented a scenario wherein the non-moving party not only failed to oppose the motion, but apparently agreed to the order granting the motion. In that case, the plaintiff moved for summary judgment and the defendant failed to submit written opposition to the motion. The Civil Court issued an order granting the motion and further noted, “both sides agreed [that the plaintiff may enter judgment] and will not appeal the order.” The defendant thereafter moved to vacate the order, arguing that it had a reasonable excuse for its default and a meritorious defense. The Civil Court denied the motion, finding the defendant failed to establish a reasonable excuse for its default.

On appeal, the Appellate Term affirmed, but on a different ground. The Appellate Term held, “As the [order granting the motion] was entered on consent, defendant bore the burden of establishing grounds sufficient to set aside a stipulation … Defendant failed to make such a showing.” The Appellate Term cited Hallock v. State of New York, 64 N.Y.2d 224 (1984), in which the Court of Appeals held, inter alia:

Stipulations of settlement are favored by the courts and not lightly cast aside * * * This is all the more so in the case of “open court” stipulations * * * within CPLR 2104, where strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process. Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation [citations omitted].

As the decision in Hallock and subsequent case law has demonstrated, the courts will not freely set aside orders issued on consent. See, e.g., CCU, LLC v. Steier, 44 Misc.3d 130(A) (App. Term 2d, 11th & 13th Jud. Dists. 2014) (finding no duress or mistake even though plaintiff’s counsel who appeared in court did not have the case file with him to review the facts of the case before consenting to vacatur of a default judgment); Matter of Nori-Alyce Y. v. Mark Y., 100 A.D.3d 1116 (3d Dept. 2012) (counsel’s assertion of miscommunication between him and his client was insufficient to set aside order of protection issued on consent); Landau, P.C. v. Oliveri & Schwartz, P.C., 49 Misc. 3d (Sup. Ct. NY Cty. 2015) (conclusory allegation that counsel lacked authority to bind its client was insufficient to set aside post-mediation settlement agreement). Cf. Delta Diagnostic Radiology, P.C. v. Infinity Group, 49 Misc. 3d 42 (App. Term 2d, 11th & 13th Jud. Dists. 2014) (order issued on consent, denying summary judgment and limiting issues for trial vacated where trial is still pending and issues previously preserved for trial are no longer applicable due to subsequent change in law).

Presumably, a party moving to set aside and vacate an order such as the one issued in Zayas, would need to establish a basis for both vacating the default and setting aside the open court stipulation. 

David M. Barshay is a member of Baker Sanders in Garden City. Steven J. Neuwirth, a member of the firm, assisted in the preparation of this article.