Opinion
2002-1686 K C.
Decided December 24, 2003.
Appeal by plaintiff from an order of the Civil Court, Kings County (A. Schack, J.), entered October 7, 2002, denying its motion for summary judgment. Order unanimously modified by providing that plaintiffs motion for summary judgment is granted to the extent of awarding it partial summary judgment in the sum of $1,695, and matter remanded to the court below for calculation of statutory interest and an assessment of attorney's fees, and for all further proceedings on the remaining portion of the claim in accordance with the decision herein; as so modified, affirmed without costs.
PRESENT: PESCE, P.J., ARONIN and PATTERSON, JJ.
In this action to recover $1,895 in first-party no-fault benefits, for medical supplies furnished to its assignor, plaintiff moved for summary judgment. The motion papers establish that after plaintiff submitted its proof of claim, i.e., the completed statutory forms ( 11 NYCRR 65-3.3 [d]; 65-3.5 [a]), defendant denied the claim on the ground that the prescribed medical equipment was medically unnecessary. Defendant did not seek verification of the "proof of the fact and amount of loss sustained" (Insurance Law § 5106 [a]; see 11 NYCRR 65-3.5 [a]) and its denial based on lack of medical necessity, although timely ( 11 NYCRR 65-3.8 [c]), was Conclusory, unsupported by a peer review or any other proof, such as an independent medical examination, setting forth a sufficiently detailed factual basis and medical rationale for the claim's rejection (e.g. Choicenet Chiropractic P.C. v. Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d 11th Jud Dists]). Thus, having failed to issue a proper denial of benefits, fully and explicitly supporting its claim that the prescribed equipment was medically unnecessary, and having failed to set forth any other basis for denial of the claim within 30 days of the claims' receipt, the denial is deemed ineffective and, accordingly, defendant is precluded, with certain exceptions not relevant here, from interposing a defense ( 11 NYCRR 65-3.8 [b] [4]; Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 NY2d 195, 199; New York Presbyt. Hosp. v. American Tr. Ins. Co., 287 AD2d 699, 701; Mount Sinai Hosp. v. Triboro Coach, 263 AD2d 11, 17; Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co., 226 AD2d 613, 614; Liberty Queens Med. P.C. v. Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d 11th Jud Dists]).
In opposition to plaintiffs motion for summary judgment, defendant challenged the equipment's medical necessity via a physician's affirmation, dated nine months after the claim's denial, based on an examination of the insured's treatment file. In addition, defendant argued that because no-fault compensation is available only for medically necessary health benefits (e.g. Insurance Law § 5102 [a] [1]), on summary judgment, plaintiff must establish medical necessity by proof in admissible form even if defendant is precluded from controverting said proof. Plaintiff contends that its properly completed claim form establishes its prima facie case for the recovery of no-fault benefits in summary judgment, and we agree.
In furtherance of the legislative mandate "to encourage prompt payment of claims, to discourage investigation by insurers and to penalize delays" ( Dermatossian v. New York City Tr. Auth., 67 NY2d 219, 225), the Insurance Department regulations provide that the "written notice [of claim] required by section 65-2.4 . . . shall be deemed to be satisfied by the insurer's receipt of a completed prescribed application for motor vehicle no-fault benefits" ( 11 NYCRR 65-3.3 [d]), that is, the approved claim forms or their functional equivalent ( 11 NYCRR 65-3.5 [g]). Because such submissions suffice to place the burden on the insurer to timely interpose its objections, with the requisite supporting allegations where necessary, or be precluded thereafter from asserting those objections or defenses, including the claim that the health benefits were medically unnecessary, the clear implication is that 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" ( 11 NYCRR 65-1.1), and the "proof of the fact and amount of loss sustained" (Insurance Law § 5106 [a]), is all that is necessary at the claim stage to establish the health benefits' medical necessity (Insurance Law § 5102 [a] [1]; see Dermatossian v. New York City Tr. Auth., 67 NY2d at 224 ["to receive payment (a claimant) need only file a 'proof of claim' (which) the insurers are obliged to honor . . . promptly or suffer the statutory penalties"]).
While under the facts presented we are only called upon to decide whether a proper proof of claim establishes a prima facie case on a provider's motion for summary judgment where the insurer is precluded from raising the defense of lack of medical necessity, courts have declined to distinguish a proper proof of claim under the insurance regulations from the quantum of proof necessary to prevail on a motion for summary judgment in an ensuing action on the claim whether or not the defendant was precluded ( Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co., 226 AD2d at 614; Interboro Gen. Hosp. v. Allcity Ins. Co., 149 AD2d 569, 570; see S M Supply Inc. v. Geico Ins., NYLJ, July 17, 2003 [App Term, 2d 11th Jud Dists] ["(P)laintiff establishes its prima facie entitlement to summary judgment . . . by showing that it submitted a complete proof of claim"]; Choicenet Chiropractic P.C. v. Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d 11th Jud Dists] ["Plaintiff established a prima facie case (for summary judgment) by the submission of statutory forms for proof of claim and the amount of the loss."]; Liberty Queens Med. P.C. v. Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d 11th Jud Dists] [same]; Park Health Ctr. v. Prudential Prop. Cas. Ins. Co., NYLJ, Dec. 14, 2001 [App Term, 2d 11th Jud Dists] [same]; Sehgal v. Royal Ins. Co. of Am., NYLJ, Apr. 15, 1999 [App Term, 9th 10th Jud Dists]; accord Vinings Spinal Diagnostic, P.C. v. Liberty Mut. Ins. Co., 186 Misc 2d 287, 291 [Dist Ct, Nassau County 2000]). Indeed, to 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 (e.g. Choicenet Chiropractic P.C. v. Allstate Ins. Co., NYLJ, Mar. 7, 2003 [App Term, 2d 11th Jud Dists]; Liberty Queens Med. P.C. v. Liberty Mut. Ins. Co., NYLJ, Nov. 4, 2002 [App Term, 2d 11th Jud Dists]; Park Health Ctr. v. Prudential Prop. Cas. Ins. Co., NYLJ, Dec. 14, 2001 [App Term, 2d 11th Jud Dists]) thereby shifting the burden to the insurer who, if not precluded, may rebut the inference by proof in admissible form establishing that the health benefits were not medically necessary ( Alvarez v. Prospect Hosp., 68 NY2d 320, 324). If not refuted by the no-fault benefits claimant, such proof may entitle the insurer to summary judgment.
An examination of the record on appeal in a recent Appellate Division, Second Department case, St. Luke's Roosevelt v. American Transit Ins. Co., AD2d (2nd Dept, Nov. 17, 2003), reveals that the plaintiff therein relied exclusively on proof of its properly-submitted claim forms to establish its case for summary judgment. In its papers in opposition to the motion and on appeal from the order granting the provider's motion for summary judgment, the insurer contended, as in the instant case, that a claimant must prove that the medical services were "necessary" whether or not the insurer's default at the claim stage precluded the defense: "[e]ven if the claims were not properly denied . . . [t]he Plaintiff must still prove a prima facie case that the hospital services were necessary." On appeal, plaintiffs cited Dermatossian v. New York City Tr. Auth. ( 67 NY2d 219) and Liberty Queens Med. P.C. v. Liberty Mut. Ins. Co. (NYLJ, Nov. 4, 2002 [App Term, 2d 11th Jud Dists]) for the proposition that the submission of the statutory forms setting forth the fact and amount of the loss establishes a prima facie case of entitlement to summary judgment. The Appellate Division affirmed the lower court's order and held that "plaintiffs made a prima facie showing of entitlement to judgment as a matter law" ( St. Luke's-Roosevelt Hosp. v. American Tr. Ins. Co., ___ AD2d ___ [2nd Dept, Nov. 17, 2003]; cf. Wagner v. Baird, 208 AD2d 1087, 1088 [3rd Dept 1994]).
Where, as here, the insurer is precluded from raising the defense of lack of medical necessity, the logic of the result reached in St. Luke's-Roosevelt Hosp. v. American Tr. Ins. Co. (AD2d [2nd Dept, Nov. 17, 2003]) is even more compelling. A contrary rule would require a claimant to prove the health benefits' medical necessity by evidence additional to the proof necessary to establish a proper claim, even when the insurer has waived the defense, thereby rewarding an insurer's dilatory response to the claim in the first instance by imposing a greater burden of proof after the action is commenced than was necessary at the claim stage to require that the insurer act on the claim or be precluded from most defenses. Moreover, the situation may be analogized to an account stated where, upon the insurer's failure timely and properly to deny the bill as embodied in the claim form, the insurer is presumed to have acquiesced to its correctness, thereby rendering the insurer liable thereon. Thus, when an action is commenced, the prima facie case is the unchallenged claim form. Indeed, the Court of Appeals has expressed its impatience with insurers "who sit on their many procedural rights and requirements and then belatedly deny claims they should have acted upon earlier" ( Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co., 90 NY2d at 285).
In light of the foregoing, the plaintiff would normally be entitled to the granting of its motion for summary judgment in its entirety. However, in addition to its claim forms, plaintiffs proof in support of its motion for summary judgment contained documents that had not accompanied the claim form, which revealed that the prescribed medical equipment did not include two items, a TENS belt ($78) and a TENS kit ($122), listed in the invoices of supplies delivered. While the waiver rules generally preclude defenses based on defects in the proof of claim if not timely asserted, plaintiff, having interjected an issue of fact which, if true, amounts to a complete defense to a portion of the claim, should be estopped from invoking waiver to avoid a defense that the cost of unprescribed medical equipment is not a recoverable no-fault benefit. There is no proof that defendant knew or should have known of the discrepancy, and absent an explanation therefor, the non-prescribed equipment cannot be justified as a loss sustained.
Accordingly, the matter is remanded to the court below for a calculation of the statutory interest and an assessment of attorney's fees due on $1,695, the portion of the claim for which summary judgment is granted (Insurance Law § 5106 [a]; 11 NYCRR 65-3.9 [a]; 65-3.10 [a]; see St. Clare's Hosp. v. Allstate Ins. Co., 215 AD2d 641), and for all further proceedings on the remainder of the claim.