Aetna Health Plans,, Appellant,v.Hanover Insurance Company, Respondent.

Brief

N.Y.May 4, 2016

APL-2015-00009 New York County Clerk’s Index No. 303241/12 Court of Appeals STATE OF NEW YORK AETNA HEALTH PLANS, as assignee of LUZ HERRERA, Plaintiff-Appellant, against HANOVER INSURANCE COMPANY, Defendant-Respondent. >> >> BRIEF FOR PLAINTIFF-APPELLANT SHAYNE, DACHS, SAUER & DACHS, LLP Attorneys for Plaintiff-Appellant 114 Old Country Road, Suite 410 Mineola, New York 11501 516-747-1100 Appellate Counsel to: HARRY I. KATZ, P.C. 61-25 Utopia Parkway Fresh Meadows, New York 11365 718-463-3700 Of Counsel: Jonathan A. Dachs Date Completed: March 5, 2015 To Be Argued By: Jonathan A. Dachs Time Requested: 15 Minutes STATE OF NEW YORK COURT OF APPEALS -----------------------------------------------------------------J( AETNA HEALTH PLANS, as assignee of LUZ HERRERA, Plaintiff-Appellant, -against- HANOVER INSURANCE COMPANY, Defendant-Respondent. ------------------------------------------------------------------J( STATEMENT OF STATUS OF RELATED LITIGATION PURSUANT TO §500.13(A) OF THE RULES OF THE COURT OF APPEALS Pursuant to Section 500.13(a) of the Rules ofPractice of the New York State Court of Appeals (22 NYCRR §500.13 [aD, counsel for Plaintiff-Appellant, Aetna Health Plans, as assignee of Luz Herrera, advises and certifies that there are no related actions presently pending. Dated: Mineola, New York March 4,2015 ~~~!'CHS.LLP J NATHAN A. DACHS, ESQ. Attorneys for Plaintiff-Appellant/Movant 114 Old Country Road, Suite 410 Mineola, New York 11501 (516) 747-1100 Jdachs@shaynedachs.com STATE OF NEW YORK COURT OF APPEALS -----------------------------------------------------------------)( AETNA HEALTH PLANS, as assignee of LUZ HERRERA, Plaintiff-Appellant, -against- HANOVER INSURANCE COMPANY, Defendant-Respondent. ------------------------------------------------------------------)( CORPORATE DISCLOSURE STATEMENT PURSUANT TO §500.1 (0 OF THE RULES OF THE COURT OF APPEALS Pursuant to Section 500.1 (f) of the Rules of Practice of the New York State Court of Appeals, counsel for Plaintiff-Appellant/Movant, Aetna Health Plans, as assignee ofLuz Herrera, certifies that the following is a list ofits parents, subsidiaries and affiliates in the State of New York: Aetna Health Inc.; Aetna Health Insurance Company ofNew York; Aetna Life Insurance Company; and Coventry Dated: Mineola, New York March 4,2015 ~~~~CHS'LLP J ATHAN A. DACHS, ESQ. Attorneys for Plaintiff-Appellant/Movant 114 Old Country Road, Suite 410 Mineola, New York 11501 (516) 747-1100 Jdachs@shaynedachs.com TABLE OF CONTENTS TABLE OF AUTHORITIES .... . . . . . . . . . . . . . . -.- -. . . . . . . . . . . . . . . . . . . . . .. III PRELIMINARY STATEMENT 1 JURISDICTIONAL STATEMENT 3 SUMMARY OF ARGUMENT 4 QUESTIONS PRESENTED FOR REVIEW AND DETERMINATIONS OF THE COURT BELOW 6 STATEMENT OF PERTINENT FACTS 8 Aetna's Motion for Summary Judgment 12 Hanover's Opposition and Cross-Motion 12 Aetna's Reply/Opposition to Cross-Motion 13 Decision/Order of the Supreme Court 14 The Appeal to the Appellate Division, First Department 15 The Decision and Order Sought to Be Appealed 16 ARGUMENT POINT I UNDER THE FACTS AND CIRCUMSTANCES, AND UPON THE RECORD IN THIS CASE, THE APPELLATE DIVISION'S DECISION AND ORDER SHOULD BE VACATED OR REVERSED AND THE ORDER OF THE SUPREME COURT SHOULD BE REVERSED AS WELL 18 A. The Invalidity and Preclusion of Hanover's "Standing" Defense 18 B. Estoppel Against Inconsistent Positions ("Judicial Estoppel") and Collateral Estoppel 25 C. Privity of Contract 27 D. Public Policy 30 CONCLUSION FOR THE REASONS HEREINABOVE SET FORTH, THE DECISION AND ORDER APPEALED FROM SHOULD BE REVERSED, WITH COSTS, AND SUMMARY JUDGMENT SHOULD BE GRANTED TO THE PLAINTIFF FOR THE AMOUNT DEMANDED IN THE COMPLAINT, TOGETHER WITH INTEREST FROM JANUARY 6, 2010, AND ATTORNEY'S FEES 32 -11- TABLE OF AUTHORITIES CASES: 3105 Grand Corp. v. City ofNew York, 288 NY 178, 182 (1942) 21 A.M Medical Services, P. C. v. Progressive Cas. Ins. Co., 101 AD3d 53 (2d Dept. 2012) 15,21,23,24 Allstate Ins. Co. v. Stein, 1 NY3d 416,422 (2004) 20 Allstate Ins. Co.v. Mazzola, 175 F.3d 255 (2d Cir. 1999) 20 Catskill Nat!' Bank v. Dumary, 206 NY 550, 559 (1912) 27 Eagle Ins. Co. v. ELRAC, Inc, 291 AD2d 272 (1 st Dept. 2002) 22 Fair Price Med. Supply Corp. v. Travelers Indem. Co., 10 NY3d 556, 563 (2008) 25 Fidelity General Ins. Co. v. Aetna Ins. Co., 27 AD2d 932 (2d Dept. 1967) 22 Hartford Acc. & Indem. Co. v. CNA Ins. Cos., 99 AD2d 310 (1984) 22 Health Insurance Plan ofGreater N. Y a/slo Jamwantie Chatoredussy v. Allstate Ins. Co., 2007 N.Y. Slip Op. 33925(U), 2007 WL 4367045 (Sup. Ct. N.Y. Co. 2007) 21 Hospital for Joint Diseases v. Travelers Prop. Cas. Ins. Co., 9NY3d312(2007) 15,24 Jones Lang Wootton USA v. LeBoeufLamb, Greene & MacRae, 243 AD2d 168 (1 st Dept. 1998) 26 -lll- King v. Pelkoftki, 20 NY2d 326, 332 (1967) 29 Kuehne & Nagel, Inc. v. Baiden, 36 NY2d 539, 544 (1975) 27 Laye v. Shepard, 48 Misc.2d 478, affd 25 AD2d 498 (1 s! Dept. 1966) 27 Mas v. Two Bridges Assoc., 75 NY2d 680,690 (1990) 23 Matter ofRanni (Ross), 58 NY2d 715 (1982) 26 NYP Holdings, Inc. v. McClier Corp., 65 AD3d 186, 189 (1 s! Dept. 2009) 29 Ocean Ace. & Guar. Corp. v. Hooker Elec. Co., 240 NY 37 (1925) 20 Pease v. Egan, 131 NY 262, 272 (1892) 28 Peoples Commercial Bank v. Jerry Greene Distributing, Inc., 149 AD2d 774 (3d Dept. 1989) 28 Pierce v. City ofNew York, 253 AD2d 545 (2d Dept. 1998) 20 Pittsburgh-Westmoreland Coal Co. v. Kerr, 220 NY 137 (1917) 28 Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 NY 304 (1929) 27 Schwartz v. Merola Bros. Const. Corp., 263 AD 631 (1S! Dept. 1942) affd. 290 NY 145 [1943] 27 Simpson v. County ofWestchester, 5 AD3d 780 (2d Dept. 2004) 26 -lV- Teichman v. Community Hosp. ofWestern Suffolk, 87 NY2d 514 (1996) 20 Todaro v. GEICO General Ins. Co., 46 AD3d 1087 (3d Dept. 2007) 13 Viviane Etienne Med. Care, P. C. v. Country-Wide Ins. Co., 114 AD3d 33 (2d Dept. 2013) 25 Westbank Contracting, Inc. v. Rondout Valley Cent. School Dist., 46 AD3d 1187 (3d Dept. 2007) 23 Winkelmann v. Excelsior Ins. Co., 85 NY2d 577 (1995) 20 STATUTES AND REGULATIONS: CPLR 3211 15 CPLR 3211(a)(7) 1, 12, 14 CPLR 3212 12 CPLR 5501(b) 3 CPLR 5602 (a) 3 General Obligations Law §13-101 19 Ins. L. §5105 16 Ins. L. §5106(a) 9 Ins. L. §5106(d) 16 11 NYCRR 65-3.11(a) 2,5,6,16,18,21,25,30,31 -v- 11 NYCRR §65-3.8 9 22 NYCRR §500.13[a] [3] 1 TREATISES: 6A N.Y. JuI'. 2d, Assignments, §1 19 6A N.Y. JuI'.2d, Assignments, §39 19 6A N.Y. JuI'.2d, Assignments, §7 19 71 N.Y. JuI'.2d. §2360 22 -Vl- PRELIMINARY STATEMENT This Brief is respectfully submitted in suppOli of the appeal by Plaintiff- Appellant, Aetna Health Plans, as assignee of Luz Herrera ("Aetna"), from the Decision and Order ofthe Appellate Division, First Depatiment, dated April 15, 2014 [CA6-7]!, which affimled, with costs, the Order ofthe Supreme COUli, Bronx County (Mary Ann Brigantti-Hughes, J.), entered on January 7, 2013 [CAlO-l5, 5-10], in this action to recover for No-Fault benefits paid by Aetna, the injured party's health insurer, which should have been paid by Hanover Insurance Company ("Hanover"), the No-Fault insurer, based, inter alia, on principles of subrogation, conUllon law indemnity, and/or breach ofcontract. That Order granted Hanover's cross-motion to dismiss the Complaint pursuant to CPLR 3211(a) (7), and denied Aetna's motion for summary judgment on the issue of liability. The instant case involves issues of great significance and impOliance to the insurance industry -- including health insurers, No-Fault insurers, and millions of individual insurance consumers in the State. The rights of one insurance company, which has paid insurance benefits to an insured that were more properly the obligation of another insurance company to pay, to subrogate against, and recover 1Unless othelwise indicated, numbers in brackets refer to pages in the Record on Appeal. Numbers preceded by "CA" refer to pages added to the original Appellate Division Record on Appeal in order to make a proper Court of Appeals Record on Appeal (see 22 NYCRR §500.13[a] [3]). from, that other insurance company, have long been recognized bythe law and the courts. That well-established rule of law and equity has effectively been turned on its head by the Order appealed from herein, which effectively precluded a health insurer from recovering, under principles of subrogation and/or common law indemnity, reimbursement from a No-Fault insurer for the No-Fault benefits it paid to the claimant/assignor. The Order appealed from will undoubtedly have a chilling effect upon the prompt payment of claims by health insurers, who must now recognize that they will be unable to recoup such payments, made in good faith and/or for the benefit of their insureds, from the legally responsible party. Such a scenario, aside from being inherently unfair, can only be detrimental to claimants in that it will discourage payments by health care insurers and result in delayed payment ofclaims - - which is contrmy to the purpose of the law. The Appellate Division's Decision and Order, taken to its logical conclusion, would preclude recovelY by health insurers, including Medicare, Medicaid, ERISA insured plans, ERISA self-funded plans, and the like, which have paid bills submitted by a health care provider or hospital unaware that they should have been submitted to a No-Fault insurer. This is a fairly common scenario. Clearly, 11 NYCRR 65- 3.11(a) was not intended to give the No-Fault insurer a free ride and afford it the -2- ability to thumb its proverbial nose at such otherwise secondary payers without recourse on their part. This case also involves issues dealing with the procedures for proper claims handling by insurers, including the issue that has been spoken to in the past by this Comi on several occasions regarding the ramifications and effects of a No-Fault insurer's failure timely to deny a claim presented to it. Other impOliant issues peliain to the standing of litigants in insurance dispute matters. As will be demonstrated below, the Decision and Order of the Appellate Division was enoneous on numerous grounds - - technical, procedural, and substantive - - and the resulting inequitable, and dangerous, precedent should, therefore, be reversed. JURISDICTIONAL STATEMENT The Court of Appeals, by its Order dated January 8, 2015, granted Plaintiff Aetna leave to take this appeal [CAI-3]. Moreover, CPLR 5501 (b) and 5602 (a) give the Court ofAppeals jurisdiction to enteliain the instant appeal and to determine the issues of law and fact that are raised herein. The Decision and Order appealed from is from a final Order of the Appellate Division, First Depmiment, which is not appealable as of right. -3- The issues raised on this appeal were preserved for review by the Court by the Order appealed from [CA2-3], throughout the entire Record on Appeal before the Appellate Division [see especially, 11-17,200-203], as well as the Briefs submitted to the Appellate Division. SUMMARY OF ARGUMENT As will be demonstrated below, Hanover's contention that Aetna lacked standing to bring the instant action was waived by its failure to issue a denial ofclaim on that ground or, for that matter, on any ground. Furthermore, Hanover's "standing" defense was inconsistent with the position it previously took in a No-Fault arbitration proceeding brought by its insured, Luz Herrera (hereinafter referred to as "Herrera"), upon which it succeeded in having her claim dismissed on the ground that Aetna, the entity that paid the bills, rather than the insured, whose health service expenses had already been paid by Aetna, was entitled to seek reimbursement from Hanover. Thus, this contention should have been rejected as violative of the doctrine of "estoppel against inconsistent positions." It will be further demonstrated that under the doctrines of subrogation, indemnification, or both, or perforce an assignment, Aetna was the proper pmiy and had standing to bring the instant action to recover payments it made that should have been paid by Hanover. -4- Aetna contends that 11 NYCRR 65-3.l(a), the Regulation relied upon by Hanover and the court(s) below, does not prevent a health insurer from recovering sums it paid, which a No-Fault insurer should have paid. Nor does that Regulation ovenide the doctrine of subrogation, and, therefore, it does not prevent a health insurer from recovering such sums. Moreover, where a No-Fault insurer fails to issue a timely disclaimer to a health insurer seeking reimbursement from the No-Fault insurer of bills paid by it instead of the No-Fault insurer, whose obligation it was to make payment thereof, the No-Fault insurer may not raise the lack of standing as a defense to the health insurer's claim. Privity of contract is not required where, as here, the health insurer's claim is made under principles ofsubrogation or indemnity. And, in any event, the doctrine of"estoppel against inconsistent positions" precludes the No-Fault insurer, Hanover herein, from asseliing a lack of standing in this case. Accordingly, it is respectfully submitted that the Decision/Order appealed from should be reversed, with costs, and summaryjudgment should be granted to Aetna for the amount demanded in the Complaint, plus interest and attorney's fees. -5- QUESTIONS PRESENTED FOR REVIEW AND DETERMINATIONS OF THE COURT BELOW I. QUESTION PRESENTED: Does Insurance Regulation 11 NYCRR 65- 3.11(a) prevent a health insurer from recovering sums paid that a No-Fault insurer should have paid? DETERMINATION OF THE COURT BELOW: The Appellate Division, First Department, we believe erroneously, constlued that Regulation overly narrowly, and answered this question in the affirmative. II. QUESTION PRESENTED: Does Insurance Regulation 11 NYCRR 65- 3.11 (a) override the doctrine ofsubrogation and thereby prevent a health insurer from recovering sums it paid that a No-Fault insurer should have paid? DETERMINATION OF THE COURT BELOW: The Appellate Division, First Depmiment, we believe erroneously, answered this question in the affirmative. III. QUESTION PRESENTED: Where a No-Fault insurer fails to issue a timely disclaimer to a health insurer seeking reimbursement from the No-Fault insurer of bills it paid that should have been paid by the No-Fault insurer, may the No-Fault insurer raise a lack of standing as a defense to the health insurer's claim? -6- DETERMINATION OF THE COURT BELOW: The Appellate Division, First Depmiment, we believe enoneously, answered this question in the affirmative. IV. QUESTION PRESENTED: Is privity of contract required where the health insurer's claim for reimbursement is made under principles of subrogation or indemnity? DETERMINATION OF THE COURT BELOW: The Appellate Division, First Depmiment, we believe enoneously, answered this question in the affimlative. V. QUESTION PRESENTED: Does the doctrine of "estoppel against inconsistent positions" preclude the No-Fault insurer from asseliing a lack of standing defense in this case? DETERMINATION OF THE COURT BELOW: The Appellate Division, First Department, we believe enoneously, answered this question in the affinnative. -7- STATEMENT OF PERTINENT FACTS The pertinent facts are essentially not in dispute, and were accepted and well- summarized by the Supreme Court in its Decision/Order below [5-10]. Luz Herrera, whose auto was insured by Hanover, sustained personal injuries and consequent expenses for medical treatment in a motor vehicle accident that occuned on April 25, 2008. On that date, Henera was also covered for health service expenses under an ERISA-qualified private medical insurance policy issued by Aetna [5,12]. Although Henera's medical providers should have submitted bills for treatment of her auto accident- related injuries to Hanover, the No-Fault insm:er, such bills were, instead, submitted by the providers to Aetna, which paid the bills presented to it [6, 13, 15]. When Aetna, through its representative (The Rawlings Company), wrote to Hanover in March, 2009 seeking reimbursement on behalf of Aetna of the medical bills it had already paid out by that time -- in the sum of $19,649.10 -- it provided Hanover with a list of the dates of service, names of providers and billed amounts paid by Aetna [13, 63-68]. Hanover did not respond to that request, nor, significantly, did it issue a denial ofthe claim [13]. After Aetna (by Rawlings) filed a lien on March 9, 2009, against Henera's recovery in her personal injury action against the tOlifeasor [13], Henera's attorney submitted, on January 6,2010, a series ofdocuments, including a list ofcharges from Lawrence Hospital Center, and several -8- Health Insurance Claim forms from various health care providers, which he referred to as "outstanding bills," which totaled $19,649.19, and requested that Hanover "immediately pay these bills or issue us a denial within 30 days" [6, 14, 69-86]. Significantly, at no time did Hanover respond in any way to that submission and at no time did it ever issue a denial ofclaim [6, 14]. On April 12, 2010, Herrera requested AAA arbitration, seeking payment from Hanover for the medical expenses totaling $19,649.10, which she was required, pursuant to Aetna's lien, to pay back to Aetna, and which Hanover did not deny, but refused to pay [14, 87-88]. At the arbitration, Hanover conceded that it did not pay the medical bills at issue, and conceded that it did not issue any denials for Herrera's claims [6, 14, 87]. In opposition to Herrera's claims, Hanover argued that it was not required to either payor deny the claims within the statutory period (i.~., 30 days) (see Ins. L. §5106[a]; 11 NYCRR §65-3.8), because the documents it received from Herrera were not "bills." Hanover further contended (contradictorily) that insofar as "the bills in dispute were paid for by the Applicant's health insurance carrier, the Applicant [i.~., Herrera] does not have the requisite standing to arbitrate this matter" [88]. By Arbitration Award dated February 14, 2011 [87-89], the No-Fault Arbitrator, Jonathan Hill, rejected Herrera's claims, finding that although Hanover -9- did not pay nor timely deny Ms. Herrera's claims, it did not have to do so because "the documents fOlwarded to the Respondent [Hanover] concerning the medical treatment provided to the Assignor were not bills" [88]. Moreover, the Arbitrator held that "even if one was to concede that the aforementioned documents were bills, the party requesting reimbursement for said 'bills' was the Applicant's private health care provider [sic], not the Applicant," and, therefore, "if any person and/or entity have a claim against the Respondent in this matter it is the Applicant's private health care provider [sic], not the Applicant" [88]. Notably, from the context of the Arbitrator's Award, it is clear beyond any doubt that his references to the "private health care provider" were intended to refer to Aetna, the private health care insurer (rather than to Herrera's doctors and/or medical care treaters). This is clearly seen from his statement that "the medical entities which provided the medical services in dispute to the Applicant have already been reimbursed for their services by the Applicant's private health care provider" and his subsequent reference to "the Applicant's private health care provider's lien against the Applicant" [88] -- undoubtedly references to Aetna, the health care insurer. By Master Arbitration Award dated June 9, 2011 [90-93], the Decision of Arbitrator Hill was affinned in its entirety by Master Arbitrator Donald T. DeCarlo, who held, continuing the unfOliunate misnomer first introduced by Arbitrator Hill, -10- that "the Applicant's health care provider [sic] is the proper party not the Applicant" [91]. In addition to the bills totaling $19,649.10 that were the subject ofthe No-Fault arbitration, Henera's medical service providers continued to submit bills to Aetna for further and additional treatment she received as a result ofher motor vehicle accident, for the period ofNovember 25,2008 to October 24,2011, which totaled an additional $23,525.73 [6, 15, 26-57]. Those bills were also paid by Aetna [6, 15]. Thus, on February 6, 2012, Henera, by her attorney, resubmitted all of the outstanding bills, which had not been reimbursed by Hanover, i.~., the prior bills for $19,649.10 and the new bills totaling $23,525.73 -- for a total of $43,174.83 -- and requested that Hanover either pay the bills or issue a denial within 30 days [6, 94, 26- 52, 96-170]. Herrera also assigned to Aetna her rights against her N0-Fault canier, Hanover, for medical expenses paid by Aetna for medical treatment she received resulting from her motor vehicle accident of April 25, 2008 [171]. Based upon the arbitration determinations that Aetna was the proper party to assert the claim for reimbursement of the medical bills it paid, which should have been paid by Hanover, as well as the assignment it received from Herrera, on April 9, 2012, Aetna commenced the instant action to recover the amount of $43, 174.83, -11- plus interest and attorneys fees [18-53]. Hanover answered the Complaint on or about June 16,2012 [54-62], denying knowledge or information sufficient to fonn a beliefconcerning the material factual allegations and denying the liability allegations of the Complaint. Aetna's Motion for Summary Judgment By Notice of Motion, dated August 8, 2012, Aetna moved for smllillary judgment on the basis ofHanover' s breach ofcontract for its failure to pay the claims for No-Fault benefits of its assignor, Herrera [11, 12-17, 18-171]. Hanover's Opposition and Cross-Motion Hanover opposed Aetna's motion and cross-moved, on September 21,2012, for summary judgment pursuant to CPLR 3212 and/or dismissal of the Complaint pursuant to CPLR 3211(a)(7) [172-173, 174-199]. In opposition to Aetna's priJna facie showing of entitlement to summary judgment, Hanover did not dispute any aspect of Aetna's factual presentation, including the critical fact that Hanover never issued a denial of claim. Instead, contrary to the position it took before the No-Fault Arbitrator, with which the Arbitrator agreed and consequently rendered a decision in Hanover's favor, Hanover -12- argued that "plaintiff [Aetna] lacks standing to litigate this action" [175], and that inasmuch as Aetna is not a provider of health care services, the assignment made to it by Hen-era was invalid [176, 178]. It fUliher contended that no privity of contract existed between Aetna and Hanover. Finally, in suppOli of its cross-motion for sUllliuary judgment, Hanover argued that Aetna's submission was late and not in compliance with the regulatOly time frame for such submissions [182]. Aetna's Reply/Opposition to Cross-J\1otion Aetna replied to Hanover's opposition papers and opposed Defendant's Cross- Motion on September 27, 2012 [200-203]. Therein, Aetna noted that Hanover's contention that a private health insurance company that pays No-Fault bills is not entitled to be reimbursed for those payments was and is "simply not the law," and that the fact that the bills were paid by the insured's private health insurer does not extinguish the No-Fault insurer's obligation [citing Todaro v. GEICO General Ins. Co., 46 AD3d 1087 (3d Dept. 2007)] [200-201]. Aetna also observed that Hanover's "standing" arguments were in direct contravention of the position it took and won at the arbitration, which was that the only entity that could properly state a claim was Aetna [201]. Finally, Aetna argued that the documents submitted to Hanover for reimbursement were, in fact, "bills," or, at the velY least, their functional equivalent, -13- and that Hanover's failure to timely deny the bills and the claims based thereon obligated Hanover to pay those bills in accordance with the No-Fault Law and Regulations [202-203]. Decision/Order of the Supreme Court By Decision/Order dated January 3,2013 [5-10], the Supreme Court granted Hanover's cross-motion to dismiss the Complaint pursuant to CPLR §3211(a)(7), and denied Aetna's motion for sUlllinmy judgment as moot. In so holding, the cOUli concluded that "the matter must be dismissed because Plaintiff, Aetna, is not a 'health care provider' under the statute," and, thus, could not maintain a claim for No-Fault benefits [9]. The cOUli also concluded that Aetna could not sustain a cause of action for breach of contract because it was not "in privity of contract" with Hanover and was not a third-party beneficiary of Hanover's contract (policy) with HelTera [9-10]. And, finally, the cOUli concluded that Aetna could not sustain a cause of action "under subrogation principles" because "there is ... no authority permitting a health insurer to bring a subrogation action against a No-Fault insurer for sums the health insurer was contractually obligated to pay to its insured" [10]. The court did not address the arguments based upon the fonn or timing of -14- Aetna's submissions, nor, more significantly, the effect of Hanover's failure timely to deny the claim(s). The Appeal to the Appellate Division, First Department As noted above, Aetna timely appealed to the Appellate Division, First Department by its Notice of Appeal dated February 20, 2013 [3-4], and timely perfected that appeal. In its initial Brief, Aetna argued that its Complaint stated a cause of action upon which relief could be granted, and, therefore, it was error to dismiss the Complaint upon Hanover's CPLR 3211 motion. Specifically, Aetna argued that: (1) its Complaint stated a cause of action for equitable subrogation and/or common law indemnity; (2) Hanover was precluded from raising a "standing" defense by viliue of its failure timely to deny the claim(s) [citing and relying upon, inter alia, A.M Medical Services. Pc. v. Progressive Cas. Ins. Co., 101 AD3d 53 (2d Dept. 2012) and Hosvital fOr Joint Diseases v. Travelers Provo Cas. Ins. Co., 9 NY3d 312 --- ..... (2007)]; (3) Hanover's "standing" argument violated the doctrine of"estoppel against inconsistent positions" ("judicial estoppel"); (4) Hanover's contention that "bills" were never received was "semantical nonsense"; and (5) Hanover waived its defense that the claim was not timely submitted. -15- For its part, Hanover argued in its Respondent's Briefthat Aetna failed to state a cause of action upon which relief may be granted because: (1) Aetna was not a provider ofhealth care services (2) Aetna did not have a proper assignment; (3) Aetna was not in privity ofcontract with Hanover; and (4) Aetna did not submit bills within the statutory time frame. In Reply, Aetna argued that: (1) Hanover had failed to rebut Aetna's contention that Hanover's "standing" argument violated the doctrine of "estoppel against inconsistent positions" ("judicial estoppel"); (2) Aetna's standing was derived from its status as subrogee or indemnitee of the insured's claim; and (3) Hanover was precluded from raising defenses to Aetna's action by virtue of its failure to issue a timely denial thereof. The Decision And Order Sought To Be Appealed By Decision and Order dated April 15,2014 [CA6-7], the First Department unanimously affirmed the Decision/Order below, with costs, based upon its conclusions that Aetna was not a "health care provider" under 11 NYCRR 65.3 .11 (a), but, rather, a "health care insurer;" that the statutory provisions that provide "a limited window of arbitration between no-fault insurers" [Ins. L. §51 05, 51 06(d)] "do not pertain to a health insurer such as Aetna," and, thus, "Aetna cannot maintain a claim -16- against Hanover under the principle of subrogation;" and that Aetna may also not assert a breach of contract claim against Hanover because it was not in privity of contract with Hanover, and there was no indication that it was an intended third-pmiy beneficimy ofthe contract. Notably, the comi completely disregarded Aetna's critical waiver and estoppel arguments. Aetna's motion to the First Depmiment to reargue and/or for leave to appeal timely ensued, and was denied. Aetna's subsequent motion to this Court for leave to appeal was granted by Order dated January 8,2015 [CA2-3]. This appeal timely ensued. -17- ARGUMENT POINT I UNDER THE FACTS AND CIRCUMSTANCES, AND UPON THE RECORD IN THIS CASE, THE APPELLATE DIVISION'S DECISION AND ORDER SHOULD BE VACATED OR REVERSED AND THE ORDER OF THE SUPREME COURT SHOULD BE REVERSED AS WELL. A. The Invalidity And Preclusion ofHanover's "Standing" Defense The focus ofthe First Department's decision was directed almost entirely upon the question ofwhether Aetna, a health insurer that paid health service benefits that should have been paid by Hanover, aN0-Fault insurer, had standing -- whether under the principle of subrogation or otherwise - - to maintain a claim for reimbursement against Hanover. Concluding that 11 NYCRR 65-3.11 (a) does not allow anyone other than the eligible injured insured person, or his or her health care provider, to make such claim, the court affirmed the dismissal ofAetna's action for that reason. While Aetna respectfully disagrees that this Regulation should be so narrowly constIued, this appeal is primarily predicated upon Aetna's contention that, contrary to the court's conclusion, and as will hereinafter be shown, the principle of subrogation does independently afford Aetna the requisite standing. In addition, Aetna seeks to have this Comi consider a point that it argued in both its main and reply briefs below, -18- i.~., that Hanover's failure to issue a denial ofAetna's claim precluded it from relying upon the lack of standing defense. Aetna's "standing" in this action was and is derived not only from its status as assignee, but also from its status as a subrogee or indemnitee of the insured's claim. Although Hanover contended below (without citation to any legal authority) that the written assignment by HelTera to Aetna [171] was improper because it was "in improper form and undated," that contention was and is legally untenable. As defined in 6A N.Y. Jur. 2d, Assignments, §1 "[A]n assignment is a transfer or conveyance which rests in the assignee the property owned by the assignor and embraced in the telms of the instlument." In general, rights under a contract involving no personal confidential relation and no exceptional personal skill or knowledge are assignable. Id. at §7. Furthelmore, General Obligations Law §13-101 specifically pelmits the transfer ofany claim or demand, subject to celiain exceptions not applicable herein. Indeed, unless specifically interdicted by statute, a valid assignment even may be made orally. 6A N.Y. Jur.2d, Assignments, §39. Neither by statue nor by common law is there any requirement that an assignment such as the one involved herein be dated. FUlihelmore, Hanover's argument below that Aetna lacked standing because it had not sustained an "injury in fact" was and is totally devoid of merit. The fact -19- that Aetna paid a substantial sum ofmoney to its insured that Hanover was primarily obligated to pay instead of it, clearly constituted the requisite "injury in fact." Therefore, contrary to Hanover's contention, Aetna undeniably has an "actual legal stake in the action." In any event, Aetna was not limited to relying upon the validity of a legal assignment to validate its cause of action against Hanover. As was shown by Aetna below, by paying their mutual insured the amount that Hanover was primarily obligated to pay, Aetna became subrogated to the insured's rights against Hanover. As held in Pierce v. City ofNew York, 253 AD2d 545 (2d Dept. 1998), " ... an insurer, paying on a loss, is subrogated in a conesponding amount to the insured's right of action against any other person responsible for the loss [emphasis added]." See also Allstate Ins. Co. v. Mazzola, 175 F.3d255 (2dCir. 1999) ("An insurer's right ofsubrogation attaches, by operation oflaw, upon its payment ofan insured's loss"). As stated almost a century ago, "[T]his right of subrogation is based upon principles of equity and natural justice." Ocean Ace. & Guar. Corp. v. Hooker Elec. Co., 240 NY 37 (1925). See also Allstate Ins. Co. v. Stein, 1 NY3d 416, 422 (2004). As fmiher repeatedly recognized by this Court, it is intended to prevent unjust enrichment (see Teichman v. COl1llnunity Hasp. of Western Suffolk, 87 NY2d 514 [1996]; Winkelmann v. Excelsior Ins. Co., 85 NY2d 577 [1995]), and as a favored -20- remedy to be extended by the comis rather than restricted (3105 Grand Corp. v. City a/New York, 288 NY 178, 182 [1942]). Thus, while the Insurance Depmiment Regulations allow the insured to assign his or her right to proceed directly against the no-fault insurer to the health care provider, nothing therein suggests that such right lies exclusively with the health care provider and may not be created in another, historically legally recognized, manner, such as by subrogation or indemnification. Any suggestion to the contrmy in the nisi prius unpublished decision in Health Insurance Plan a/GreaterNY a/s/o Jamwantie Chatoredussv v. Allstate Ins. Co., 2007 N.Y. Slip Gp. 33925(U), 2007 WL 4367045 (Sup. Ct. N.Y. Co. 2007), cited by Hanover and by the comiCs) below, is plainly wrong. The ratio decidendi of that case, i.e., that the No-Fault Regulations allow assignments to be made only to the health care provider, is based upon an erroneous and overly broad reading of the Second Depmiment's decision in A.M Medical Services. Pc. v. Progressive Cas. Ins. Co., 101 AD3d 53 (2dDept. 2012), which held that "11 NYCRR 65.3.11 (a) does not authorize direct payment to a medical provider which submits a bill identifying the treating provider as an independent contractor." As the comi there explained, the "impOliant" reason for its decision, based upon an informal opinion of the Insurance Depmiment's General Counsel, was that to allow such direct billing "may facilitate fraud." No such concern is implicated here, -21- however, where Aetna seeks to recover only that which it paid, but which Hanover should have paid on a primary basis. Numerous cases in this and other appellate courts have recognized the right of one insurer to recoup from another insurer that which the other insurer was obligated, in the first instance, to pay, but failed or refused to do so. Har{ford Acc. & Inde711. Co. v. CNA Ins. Cos., 99 AD2d 310 (1984), is one such case. Eagle Ins. Co. v. ELRAC, Inc, 291 AD2d 272 (1 st Dept. 2002) is another. As the court there stated, "[H]aving reimbursed Campbell for his medical expenses under the circumstances presented herein, respondent became subrogated to Campbell's claim against petitioner insurer for first-pmiy benefits...." See also, Fidelity General Ins. Co. v. Aetna Ins. Co., 27 AD2d 932 (2d Dept. 1967) ("...as excess insurer, in discharging defendant's obligation, was entitled to be reimbursed for the reasonable expenses thereof as equitable subrogee to the right of the insured"). See also, 71 N.Y. Jur.2d. §2360 ("A liability insurer providing secondary coverage, which is compelled to pay a claim on behalfofan insured for whose benefit there is insurance affording primary coverage ofthe risk, is permitted to be subrogated to the rights of the insured against the latter insurer, both by viIiue of general equitable principles and by viliue of any subrogation clause which may be contained in the policy issued by the secondmy insurer." -22- Aetna's cause ofaction also can be sustained on the basis ofyet another theory, i.~., common law indemnity. Indemnity "may be based upon an express contract, but more commonly the indemnity obligation is implied ... based upon the law's notion of what is fair and proper as between the parties." Mas v. Two Bridges Assoc., 75 NY2d 680,690 (1990). Implied indemnification is based in simple fairness and seeks to avoid unjust enrichment by recognizing that a person who, in whole or in part, has discharged a duty that is owed by him or her but that as between himself or herself and another should have been discharged by the other is entitled to indemnity. Westbank Contracting. Inc. v. Rondout Valley Cent. School Dist., 46 AD3d 1187 (3d Dept. 2007). The Complaint herein alleges that the expenses paid by Aetna should have been paid by Hanover, the No-Fault insurer [22]. Notably, Hanover, in its attorney's Affirmation in opposition to Aetna's motion and in support ofits cross-motion [174- 186], did not deny that it was responsible for the payment ofthose bills had they been timely submitted by its insured, Herrera. Rather, Hanover asserted other defenses to payment, which, as will be shown, were all invalid and ineffective. Not only is A.M Medical Services. PC. v. Progressive Cas. Ins. Co., supra, not favorable to Hanover's position herein, it totally defeats it. -23- Indeed, Aetna cited below to A.M Medical Services. P. C. v. Progressive Cas. Ins. Co., supra, for the proposition that a lack of standing defense is precluded ifnot timely asserted in a denial of claim. It so held based upon the detelTI1ination of this COUli in Hospital/or Joint Diseases v. Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 319 (2007), wherein the COUli observed: "To conclude othelwise... frustrates a core objective ofthe no-fault regime -- to provide a tightly timed process of claim, disputation and payment. Upon receipt ofa no-fault claim, the regulations shift the burden to the carrier to obtain fuliher verification or deny or pay the claim. When, as here, an insurer does neither, but instead waits to be sued for nonpayment, the canier should bear the consequences of its nonaction. To allow an insurance company to later challenge a hospital's standing as an assignee merely encourages the carTier to ignore the prescribed statutory scheme [internal quotation marks omitted]." InA.M Medical Services, supra, the pariy submitting the claim was neither the insured nor the health care provider. Concluding that the issue was one of standing, this COUli held "that this defense is not exempt from the preclusion rule, which rule vitiates a denial of coverage where the insurer fails, within the statutory time limit, to issue a denial of claim on the ground on which it purpOlis to rely." There, the denial was based on the ground that the treating medical providers were independent -24- contractors. Here, the denial was based on the ground that Aetna was a health insurer, not a health provider. Any distinction between the two cases is without a difference. Thus, even if this Court concludes that 11 NYCRR 65-3.11(a) divests Aetna ofstanding to sue, Hanover is precluded from relying upon that defense by its failure to timely deny the claim on that ground. See Viviane Etienne Med. Care, P. C. v. Country-Wide Ins. Co., 114 AD3d 33 (2d Dept. 2013), quoting Fair Price Med. Supp~y Corp. v. Travelers Indem. Co., 10 NY3d 556,563 (2008). In ShOli, Hanover's non-compliance with the 30-day rule trumped Aetna's purpOlied lack ofstanding, and the Appellate Division should have so held. B. Estoppel Against Inconsistent Positions ("Judicial Estoppel") and Collateral Estoppel Aetna demonstrated that in an earlier arbitration proceeding brought by Ms. Herrera, Hanover succeeded in opposing her claim upon the ground that she lacked standing to make claim against Hanover, the Arbitrator concluding therein that "ifany person and/or entity have (sic) a claim against the Respondent [Hanover] in this matter it is the applicant's private health care provider (sic) [i.~. Aetna], not the Applicant." Indeed, the Master Arbitrator agreed that "The Applicant's health care provider is the proper patiy not the Applicant." It cannot be, and has not been, -25- gainsaid that the Master Arbitrator's references to Applicant's "private health care provider" were intended to refer to her health care insurer, Aetna. Thus, Hanover's contention in this action that Aetna was not the proper party and had no standing to bring the action violated the doctrine of"estoppe1 against inconsistent positions," also known as "judicial estoppel". This doctrine was aptly explained by the First Depmiment itself in Jones Lang Wootton USA v. LeBoeufLamb. Greene & MacRae, 243 AD2d 168 (lstDept. 1998), as follows: "The doctrine of judicial estoppel or the doctrine of inconsistent positions precludes a pmiy who assumed a celiain position in a prior legal proceeding and who secured a judgment in his or her favor from assuming a contrary position in another action simply because his or her interests have changed. As stated by the United States Supreme Comi, 'where a party assumes a celiain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simplybecause his interests have changed, assume a contrary position.' The doctrine rests upon the principle that a litigant should not be permitted to lead a comi to find a fact one way and then contend in another judicial proceeding that the same fact should be found otherwise [citations and some internal quotation marks and punctuation omitted]." FmihelIDore, the doctrine of collateral estoppel or issue preclusion, which is applicable to determinations made in arbitration proceedings (see Matter ofRanni [Rossl, 58 NY2d 715 [1982]; Simpson v. County o"fWestchester, 5 AD3d 780 [2d Dept. 2004]), is applicable herein. It having been determined in the arbitration -26- proceeding that Aetna, not Herrera, had standing to seek to recover the amounts paid by it to reimburse Herrera for her medical expenses, Hanover should have been estopped from contending othelwise. See Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 NY 304 (1929). Not surprisingly, Hanover's Reply Briefbelow wholly failed to address these points. Accordingly, Hanover should have been deemed to have admitted the validity ofAetna's arguments in this regard. Kuehne & Nagel. Inc. v. Baiden, 36 NY2d 539, 544 (1975); Lave v. Shepard, 48 Misc.2d 478, affd 25 AD2d 498 (1st Dept. 1966). Surprisingly, however, the First Depmiment, too, wholly failed to address these issues, which are, and should have been dispositive in favor of Aetna. C. Privity of Contract In addition to the foregoing, the First Department's conclusion that Aetna may not proceed directly against Hanover because it is not in privity of contract with it was and is legallyunsuppOlied and unsupportable. Privity ofcontract is not essential to the existence of Aetna's implied right of indemnity (Schwartz v. Merola Bros. Canst. Corp., 263 AD 631 [IstDept. 1~42], affd. 290 NY 145 [1943]), or under the doctrine of subrogation. As this Comi explained more than a centmy ago in Catskill Natl. Bank v. Dumarv, 206 NY 550,559 (1912): -27- "The right of subrogation is founded upon principles of equity and not in contract. It is to be so administered as to accomplish, through general equitable lules, what is just and fair between the parties. It does not depend upon privity, nor is it confined to cases of strict suretyship. Subrogation is an act oflaw and a mode which it adopts to compel the ultimate discharge of the debt by him who in good conscience ought to pay it, and to relieve him whom none but the creditor could ask to pay." See also, Peoples COl1unercial Bank v. Jerry Greene Distributing. Inc., 149 AD2d 774 (3d Dept. 1989) ("In this case, plaintiff mistakenly discharged Santos' debt to Greene and, therefore, plaintiff was entitled to be subrogated to the rights of Green against Santos, even though there was no privity between the parties... "); Pease v. Egan, 131 NY 262,272 (1892) ("No contract is necessary upon which to base the right, for it is founded upon principles ofequity and benevolence and may be decreed where no contract exists... It was said by Chief Justice Marshall that equity would clothe the party thus paying with the legal garb with which the contract he has discharged was invested, and it would substitute the party paying to every equitable interest and purpose, in the place of the creditor whose debt he has discharged); Pittsburgh-Westmoreland Coal Co. v. Kerr, 220 NY 137 (1917) ("The right of subrogation or of equitable assignment is not founded upon contract nor upon the absence of contract, but is founded upon the facts and circumstances of a paIiicular case and upon principles ofnatural justice, and generally where it is equitable that a -28- person furnishing money to pay a debt should be substituted for the creditor or in place of a creditor such person will be so substituted"). In NYP Holdings. Inc. v. McCUer Corp., 65 AD3d 186, 189 (1 st Dept. 2009), the First Department explained this concept in clear and unmistakable terms, stating that "[I]n a claim made pursuant to an insurer's right to subrogation, the insurer stands in the shoes of the insured. The insurer's right to recovery in subrogation is premised not on a legal fabrication, such as an insurer's implied contract ofindemnity with the tOltfeasor, but, rather, by viItue of its succession to the position previously held by its insured" [citations omitted]. And, as that COUlt fulther stated therein, quoting from this COUlt'S decision in King v. Pelkofski, 20 NY2d 326,332 (1967): "Where propelty of one person is used in discharging an obligation owed by another ... under such circumstances that the other would be unjustly enriched by the retention of the benefit thus confened, the former is entitled to be subrogated to the position of the obligee or lienholder. Regardless of whether Lloyd's is the actual party in interest, permitting appellants to escape liability ifthey are responsible for some of the damages, would be the unjust enrichment that the principle of equitable subrogation seeks to avoid." It is unfathomable that the above principles and analysis were not applied to the facts ofthis case. Here, Aetna stands in Henera's shoes, and is, therefore, entitled -29- to pursue all ofHerrera' s rights against any pmiy that was indebted to Herrera for any item that Aetna paid. D. Public Policy The Decision/Order ofthe Appellate Division, First Depmiment, and the result achieved by Hanover herein, allows a No-Fault insurer that has wrongfully refused to pay its insured's health services expenses to escape liability therefor simply because the insured's private health insurer paid the health care provider, thereby enabling their mutual insured to continue to receive treatment ofhis or her injuries. Such a result, premised as it is on an unduly narrow interpretation of 11 NYCRR 65- 3.11 (a), completely emasculates the equitable doctrine of subrogation. Reversing the Appellate Pivision' s erroneous Order, and allowing recovery by Aetna or similarly situated health insurers under the facts and circumstances presented herein would also be consistent with the principles ofindemnity, discussed above. The issue involved herein is whether a health insurer, such as Aetna, or, for that matter, such as Medicare, Medicaid, self-funded ERISA Plans, insured ERISA plans, or the like, are precluded from recovering benefits paid by them that should have been paid by a N0-Fault insurer, thereby allowing the N0-Fault insurer to escape liability and be unjustly enriched thereby. The holding ofthe First Department, ifleft -30- to stand, would place injured policyholders in the unenviable position ofhaving no insurer to which to tum for the payment of outstanding health service bills and, consequently, being unable to receive necessary medical treatment when their health insurers, alerted to the decision herein that affords them no recourse when they pay bills the No-Fault insurer should have paid, refuse payment themselves, with the inevitable result that health service providers will refuse to continue their treatments. This Court should determine whether 11 NYCRR 65-3.11(a) should be so narrowly construed as to obliterate the venerable doctrines of subrogation, indemnity, and unjust enrichment and, indeed, in this case, as well, the time-honored doctrines of "estoppel against inconsistent positions," collateral estoppel and res judicata. For all of the foregoing reasons, it is respectfully submitted that the result in this case was and is improper, incorrect, unfair, and against public policy. Accordingly, the Decision and Order of the Appellate Division, First Department should be reversed, and the Decision/Order of the Supreme Court, Bronx County should be reversed, as well. -31- CONCLUSION For the reasons hereinabove set fOlih, the Decision and Order appealed from should be reversed, with costs, and summary judgment should be granted to the Plaintiff for the amount demanded in the Complaint, together with interest from January 6,2010, and attorney's fees. Dated: Mineola, New York March 5, 2015 Respectfully submitted, SHAYNE, DACHS, SAUER & DACHS, LLP BY:~ JATHANADACHS Attorneys for Plaintiff 114 Old Country Road, Suite 410 Mineola, New York 11501 (516) 747-1100 jdachs@shaynedachs.com Appellate Counsel to: HARRY 1. KATZ, P.C. 61-25 Utopia Parkway Fresh Meadows, New York 11365 (718) 463-3700 harrykatz@hikpc.com -32-