Attorney for Plaintiff: Edward A. Cespedes, Esq., Sanders Barshay Grossman, PLLC, 100 Garden City Plaza, Ste: 500, Garden City, NY 11530 Attorney for Defendant: Joseph A. Schwarzenberg, Esq., McDonnell Adels & Klestzick, PLLC, 401 Franklin Avenue, Garden City, NY 11530
Attorney for Plaintiff: Edward A. Cespedes, Esq., Sanders Barshay Grossman, PLLC, 100 Garden City Plaza, Ste: 500, Garden City, NY 11530 Attorney for Defendant: Joseph A. Schwarzenberg, Esq., McDonnell Adels & Klestzick, PLLC, 401 Franklin Avenue, Garden City, NY 11530 Bianka Perez, J.
As required by CPLR 2219(a), the papers considered in the review of this Motion include: Papers Numbered Notice of Motion, Affirmation in Support and Exhibits 1 Affirmation in Opposition and Exhibits 2 Reply Affirmation in Opposition and Exhibits 3
The plaintiff filed the instant action against the defendant seeking to recover assigned no-fault insurance benefits. The defendant now moves the Court pursuant to 22 NYCRR 208.17(c) and CPLR 3126 to strike plaintiff's Notice of Trial and dismiss the complaint on the ground that further pre-trial discovery is warranted on its Mallela defense, or in the alternative to striking plaintiff's Notice of Trial and directing plaintiff to appear for a deposition and to provide responses to defendant's written discovery demands pertaining to Mallela material.
Plaintiff filed a Notice of Trial and Certificate of Readiness for Trial on August 9, 2019, which stated that discovery proceedings were complete and no outstanding requests for discovery remained. On August 26, 2019, defendant objected to plaintiff's discovery responses by letter. In its motion, defendant argues that the responses received by the plaintiff are nonresponsive, because the plaintiff objected to all of the defendant's demands requesting documents and/or information intended to shed light on plaintiff's ownership, corporate structure, and operations. The plaintiff argues that the defendant's motion is moot as it served responses and documents on the defendant.
Plaintiff also contends that defendant's defenses are confined to the four corners of its denial, which was based on the fee schedule, such that Mallela material is irrelevant. The Court notes that responses to the interrogatories, combined demands, and notice to preserve attached to defendant's motion were objections with respect to Mallela material. However, plaintiff provided medical records, NYS Forms NF-3 and NF-10, and an assignment of benefits form pertaining to the medical services at issue.
Standard of Review
Pursuant to 22 NYCRR 208.17(c), a party may move within twenty days after service of a notice of trial to strike the action from the calendar. CPLR 3126 permits the Court to dismiss the action where a party "wilfully fails to disclose information which the court finds ought to have been disclosed." Dismissal of a complaint pursuant to CPLR 3126 is a drastic remedy that is only appropriate where a party's conduct is shown to be willful, contumacious or in bad faith. Henderson-Jones v. City of New York, 928 N.Y.S.2d 536, 541 (1st Dept 2011). See also, Sigma Psychological, P.C. v. Chubb Indem. Ins. Co., 40 Misc 3d 129(A) (App. Term 2d, 11th, and 13th Jud. Dists 2013). Willful and contumacious behavior can be inferred by a failure to comply with court orders without adequate excuse. Henderson, 928 N.Y.S.2d at 541-42. The Court finds that plaintiff did not engage in willful, contumacious or bad faith conduct. Thus, the Court denies defendant's motion to dismiss the complaint pursuant to CPLR 3126.
The Court may vacate a notice of trial where the certificate of readiness falsely states that there are no outstanding discovery requests. Tahir Med., P.C. v. Central Mut. Fire Ins. Co., 45 Misc 3d 135(A) (App Term, 1st Dept 2014); 22 NYCRR 208.17(c). As the Court explains below, defendant is entitled to further discovery. Thus, the Court grants defendant's motion to strike plaintiff's Notice of Trial.
Pursuant to CPLR 3124, defendant moves to compel compliance with its outstanding discovery requests for Mallela material. Contrary to plaintiff's assertion, a Mallela defense is not precludable. Matter of Acuhealth Acupuncture, P.C. v. Country-Wide Ins. Co., 149 AD3d 828 (2d Dept 2017); Lexington Acupuncture, P.C. v General Assur. Co., 35 Misc 3d 42, 44 (App Term, 2d, 11th & 13th Jud Dists 2012). A motion to compel responses to discovery demands and interrogatories is properly denied where the demands and interrogatories seek information that is irrelevant, overly broad, or burdensome. See Pesce v. Fernandez, 144 AD3d 653 (2d Dept 2016). The moving party bears the burden of demonstrating that the method of discovery sought would result in the disclosure of relevant evidence or was reasonably calculated to lead to the discovery of information bearing on the claims. See Id.; CPLR 3101(a).
Where an insurer requests discovery concerning a Mallela defense, the request should be granted as long as there are sufficient allegations supporting such a defense. Lexington Acupuncture, P.C. v General Assur. Co., 35 Misc 3d 42, 43 (App Term, 2d, 11th & 13th Jud Dists 2012). Courts have permitted extensive discovery where the movant alleges that an unlicensed individual receives a disproportionate share of the corporation's revenue. See One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 54 AD3d 738 (2d Dept 2008). But where a party does not set forth case-specific allegations in support of its defense of fraudulent incorporation, discovery is not justified. Pomona Medical Diagnostic v. Adirondack Ins. Co., 36 Misc 3d 127(A) (App Term, 1st Dept 2012).
Defendant's motion relies on the affidavit of Michelle Whalen, who works at defendant's Special Investigative Unit. Whalen affirms that plaintiff consistently billed identical units of pf-NCS testing for the cervical and lumbar spine. Whalen affirms that this suggests a pattern of billing designed by profit-motivated, unlicensed lay persons. Whalen also affirms that according to an expert retained by defendant, this testing was medically unnecessary. Such allegations have been found sufficient to warrant discovery pertaining to a Mallela defense. See Statewide Med. Servs., P.C. v. Travelers Ins. Co., 16 Misc 3d 127(A) (App Term, 1st Dept 2007) (reversing 9 Misc 3d 1124(A) (Civ. Ct, Bronx County 2005)). In light of the case-specific allegations set forth by defendant about the pattern of treatment provided by plaintiff, the Court now grants defendant's motion to compel in part as to matters that are material and necessary to the prosecution of this action.
The Court finds that the defendant's interrogatories are not fully or meaningfully responded to. See Total Chiropractic, P.C. v. USAA Cas. Ins. Co., 56 Misc 3d 1213(A) (Dist Ct, Suffolk County 2017) (citing Kihl v. Pfeffer, 94 NY2d 118, 123 (1999) (affirming trial court's striking of complaint where plaintiff failed to correct initial interrogatory responses that were "not responsive" and "lack[ed] any reasonable detail")). Moreover, plaintiff's responses were untimely. CPLR 3133(a) ("Within twenty days after service of interrogatories, the party upon whom they are served shall serve upon each of the parties a copy of the answer to each interrogatory, except one to which the party objects . . ."). When a party fails to object to interrogatories in the time and manner prescribed by CPLR 3133, the Court's inquiry is limited to whether the demands call for disclosure of privileged information or whether the demands are palpably improper. Reichmann v. Pro Performance Sports, LLC, 2009 NY Slip Op. 33059(U) (Sup. Ct, New York 2009) (citing Cooper v. Drobenko Bros. Realty, Inc., 200 AD2d 415 (1st Dept 1994). See also Midborough Acupuncture, P.C. v. State Farm, 21 Misc 3d 10, 12 (App Term, 2d Dept 2008). The defendant is entitled to further responses to their interrogatories where they are not palpably improper, privileged, or adequately responded to.
The plaintiff is directed to fully and adequately respond to the following interrogatories: No.2, #3, #4, #5, #6, #8, #9, #10, and #11. The plaintiff must fully respond to the questions asked with a written response, verified by a person with knowledge. See CPLR 3133(b).
The plaintiff is directed to answer the following combined demands: #2, #3, #6, #7, #12, #13, #14, #15, #16, #17, #18, #19, #20, and #21. The Court denies defendant's application as to the remaining demands.
Defendant's application for an order directing plaintiff to appear for a deposition is granted, as defendant is entitled to discovery on its Mallela defense. See Bonsai Med. Acupuncture, P.C. v. Chubb Group of Ins., 22 Misc 3d 140(A) (App Term, 1st Dept 2009); New Era Acupuncture, P.C. v. State Farm Mut. Auto Ins. Co., 24 Misc 2d 134(A) (App. Term 2d, 9th, and 10th Jud. Dists 2009).
Accordingly, it is
ORDERED, that the Clerk of the Court vacate the Notice of Trial. It is further,
ORDERED, that the defendant's motion to compel discovery is granted in accordance with this Order. And it is further,
ORDERED, that within sixty (60) days from the date of service of a copy of this Order with Notice of Entry upon the parties, the plaintiff shall serve supplemental responses in accordance with this Order. And it is further,
ORDERED, in light of the ongoing COVID-19 pandemic, that plaintiff appear for a telephonic or videoconference deposition at a date and time mutually convenient to all parties, using audio-video technology mutually agreed upon by all parties, within forty-five (45) days of receipt of all responses to discovery. And it is further,
ORDERED, that the plaintiff may be precluded upon motion from offering any evidence at trial as to items it fails to provide or respond to per this order.
This constitutes the decision and order of the Court. Dated: August 7, 2020 Hon. Bianka Perez