Decision, pursuant to Civil Procedure Law and Rules (“CPLR”) §4213 (“Trial by the Court”), following virtual trial via the Teams application platform, held on September 1, 2021, and trial briefs submitted by counsel representing both parties. Papers submitted Received: Plaintiff’s Trial Memorandum of Law August 30, 2021 Defendant’s Trial Memorandum of Law August 30, 2021 DECISION/ORDER Procedural History Plaintiff Jules Francois Parisien M.D. (“Plaintiff”) filed this case against Defendant Amica Mutual Insurance Company (“Defendant”) on October 3, 2016 seeking assigned no-fault benefits in the amount of $1,855.20 for services it rendered to Assignor Shea Evertz, as well as statutory interest and attorney’s fees (Trial Transcript at pages 12-13, 17; ["T. 4, 12, 13, 17"]; Defendant’s Exhibit ["D.Ex."] 1).1 Defendant filed its answer on or about November 9, 2016 (T. at 18-19; D.Ex. 2). By decision dated January 12, 2018, Judge Odessa Kennedy denied Defendant’s motion for summary judgment and Plaintiff’s cross-motion for summary judgment (T. at 19-20; D.Ex. 3). By decision dated December 18, 2019, Judge Kennedy, having granted reargument, again denied Defendant’s motion for summary judgment and Plaintiff’s cross-motion for summary judgment (D.Ex. 3). After Plaintiff conceded that Defendant paid the $148,69 bill for date of service (DOS) March 22, 2016, Judge Kennedy held that the amount in dispute was reduced from $1,855.20 to $1,706.51 (D.Ex. 3). With respect to Defendant’s contention that it was entitled to summary judgment because its policy limits had been exhausted,2 Judge Kennedy ruled that Defendant’s reliance on a payment ledger absent information as to who and how the ledger was created and maintained, failed to meet the evidentiary requirements of CPLR §4518 (D.Ex. 3). Accordingly, Judge Kennedy held that the order of receipt and payment of bills remained a triable issue of fact (D.Ex. 3). Judge Kennedy granted Plaintiff’s cross-motion only to the extent that it found that the bills at issue were mailed to and received by Defendant (D.Ex. 3). On or about August 30, 2021, counsel submitted trial memoranda of law in support of their respective positions. Defendant opposes any award to Plaintiff on the grounds that the policy was exhausted and was not required to make additional payments beyond the $50,000 policy limit. Plaintiff claims it is entitled to judgment, including statutory interest, attorney and filing fees, since it submitted the disputed bills prior to the policy being exhausted and did so ahead of other claims Defendant paid; therefore, Defendant should be precluded from asserting the policy exhaustion defense. Statement of Facts and Evidence from the Trial On September 1, 2021, this Court conducted a trial via Microsoft TEAMS video. During the trial, Defendant presented documentary and testimonial evidence, including testimony from Acupuncturist Martin LoCascio, who performed the Independent Medical Examination (“IME”), and Supervising Claims Representative Maryanne Gentile. Patient-assignor Evertz alleged injuries resulting from an October 1, 2015 car accident in Brooklyn where assignor was a passenger in Defendant/policy-holder’s car (T. 4, 12, 13, 17; D.Ex. 1 and 6). Plaintiff treated assignor on multiple dates between January 5, 2016 and March 22, 2016 (D.Ex.. 4, 7). Defendant made separate payments to Plaintiff in the amount of $126.39 by check dated June 24, 2016, and two checks dated October 24, 2016 in the amounts of $3,181.59 and $3,960.04 (D.Ex. 7).3 Defendant denied payment of other disputed bills4 based on “[f]ees not in accordance with fee schedules”5 and “[b]enefits for this specialty have been terminated based on the results of an IME.” (D.Ex. 4).6 In D.Ex. 7, Defendant showed it made payments to providers of services or equipment to the assignor beginning on or about February 22, 2016, with the last payment on or about October 24, 2016. There were three payments dated October 24, 2016, two of which were to Plaintiff and the third, totaling $1729.73, to another service provider Charles Deng Acupuncture (for services rendered between October 12, 2015 and June 10, 2016). D.Ex. 7 also showed that there were four payments made on October 24, 2016, three of which were to Plaintiff. Dr. LoCascio testified that he performed an IME of assignor Evertz on November 18, 2015. (T. at 20, 35-39, 58-59). Dr. LoCascio testified that Evertz complained of pain but concluded that Evertz, from an acupuncturist’s standpoint, was not injured and did not need further acupuncture treatment, nor related medical supplies (T. at 62-63, 65-66). He further testified that an MRI of Evertz’s knees showed meniscal tears present (T. at 65). Dr. LoCascio also testified that he thought he remembered “this patient because I’ve never had someone who really portrayed themselves as paralyzed like that and not moving….” (T. at 66; D.Ex. 5). Dr. LoCascio also said that he was not aware whether the billed services were performed by a medical doctor (Plaintiff) (T. at 68). Supervising Claims Representative Maryanne Gentile was in charge of processing no-fault claims and testified that Defendant paid $50,000 on behalf of assignor Evertz, which was the personal injury protection (“PIP”) limit on the policy (T. at 27, 33, 36).7 Ms. Gentile testified this assignor’s account exhausted the PIP limit (T. at 33) and the limit was reached when a payment was made on October 24, 2106 (T. at 35-36, 37, 49). At the trial, the parties stipulated that six of the bills submitted by Plaintiff were received by Defendant before the policy was exhausted on October 24, 2016. Specifically, the first bill for date of service (DOS) January 7, 2016 was in the amount of $204.41, the second bill for DOS January 7, 2016 was in the amount of $602.36, the third bill for DOS January 21, 2016 in the amount of $148.69, the fourth bill for DOS February 12, 2016 in the amount of $602.32, the fifth bill for DOS March 1, 2016 in the amount of $148.69, and the sixth bill for DOS March 22, 2016 in the amount of $148.69, which were all denied based on the results of IME (T. at 39-48).8 Gentile testified that payments to other providers continued to be paid after Plaintiff’s bills were denied (T. at 42) and none of the bills were denied due to policy-exhaustion (T. at 49). Gentile testified that, even after the policy was exhausted, certain payments were made, including to Dr. LoCascio, but that these were “expense” payments and not claim payments, i.e., “loss” payments, that go towards the treatment of the claimant (T. at 51-52; Defendant’s D.Ex. 7). She testified that a “loss” payment is one typically made to a service provider and the amount paid goes towards the $50,000 limit, whereas the expense payments are other types of fees like for the IME and to pay defense counsel (T. at 52). Issues Presented: Whether Plaintiff is entitled to reimbursement despite the $50,000 policy limit having been exhausted. Defendant claims that it need not pay the claims because the services provided were not medically necessary and, in any event, it did not have to pay anything beyond the $50,000 policy limit. Plaintiff argues that Defendant cannot now argue policy-exhaustion as a reason for not paying its claims when it initially denied payment on other grounds at a time when the claims had already been received by Defendant before the $50,000 threshold was reached. Positions of the Parties: Plaintiff argues that Defendant cannot argue policy-exhaustion as a reason for not paying its claims when it initially denied payment on other grounds. Plaintiff first cites New York’s no-fault insurance rule/regulation 11 New York Codes, Rules and Regulations (“NYCRR”) §65-3.15 for the principle that payments for basic economic loss shall be made to the applicant and/or assignee in the order in which each service was rendered or each expense was incurred, provided said claims were made prior to the exhaustion of the policy. Plaintiff cites Nyack Hosp. v. General Motors Acceptance Corp., 8 N.Y.3d 294, 301 (2007) for the proposition that 11 NYCRR §65-3.15 is a “priority-of-payment rule” meaning that if Plaintiff submitted a fully-verified claim to Defendant-insurer, Defendant must pay Plaintiff ahead of any other unpaid verified claims or expenses incurred later, up to the policy’s limits. Plaintiff also relies on Alleviation Med. Servs. v. Allstate Ins. Co., 55 Misc.3d 44 (App. Term 2017), aff’d on other grounds, 191 A.D.3d 934 (2d Dep’t 2021), for its application of the priority-of-payment rule. In citing to the Nyack Hosp. case, the Court in Alleviation Medical found that: by denying the claim, defendant implicitly declared that the claim at issue was fully verified. As we read Nyack Hosp. to hold that fully verified claims are payable in the order they are received, defendant’s argument — that it need not pay the claim at issue because defendant paid other claims after it had denied the instant claim, which subsequent payments exhausted the available coverage — lacks merit.9 Plaintiff appears to suggest that not only did the Appellate Term equate a denied claim as fully-verified, but that a denied claim must be paid before subsequent claims. Plaintiff further argues that the Appellate Term’s decision in Alleviation Med. Servs., followed by its decisions in several other cases including but not limited to Island Life Chiropractic, P.C. v. Commerce Ins. Co., 56 Misc.3d 129(A) (App. Term, 2d Dep’t 2017), requires this Court to find that “Defendant is prohibited from alleging as a defense to payment that the underlying insurance policy is exhausted for all claims that Defendant denied on other grounds prior to exhaustion.” (Plaintiff’s Trial Memorandum at 3).10 Plaintiff seeking payment for the $204.41 bill received by Defendant on February 2, 2016, the $602.36 bill received on February 8, 2016, the $148.69 bill received on February 1, 2016, the $602.36 bill received on February 29, 2016, and the $148.69 bill received on March 10, 2016, for a total of $1706.51.11 As for the IME conducted and testified to by Dr. LoCascio, Plaintiff asks this Court to reject his conclusion that the treatments were not medically necessary because Dr. LoCascio is an acupuncturist and the billed services were provided by Plaintiff, a medical doctor. (T. at 73). Although Defendant acknowledges that the Appellate Term in Alleviation Med. Servs. v. Allstate rejected Allstate’s argument that policy exhaustion warranted summary judgment for previously received claims that had been denied, it maintains that the Appellate Term did not hold that a policy exhaustion defense is precluded if not raised previously Defendant’s.12 Defendant further argues that the “different grounds” relied upon by the Appellate Division in affirming Alleviation Med. Servs. was that “Allstate failed to prove, in its summary judgment motion, that its policy was exhausted”.13 Discussion: New York’s No-Fault insurance regulations provide that payments for basic economic loss shall be made to the applicant and/or assignee on account of any single accident and not to exceed $50,000, at which point the policy-limit is deemed exhausted. See N.Y. Ins. Law §5102(a); 11 NYCRR §65-1.2(a); cf. Nyack Hosp. v. General Motors Acceptance Corp., 8 N.Y.3d at 296 (policy included mandatory no-fault endorsement, providing coverage for basic economic loss up to $50,000 per person/per accident). An insurer is not required to pay a claim where the policy limits have been exhausted. See, e.g., N.Y. & Presbyterian Hosp. v. Progressive Cas. In. Co., 5 A.D.2d 568, 570 (2d Dep’t 2004). Further, “payments for basic economic loss shall be made to the applicant and/or assignee in the order in which each service was rendered or each expense was incurred, provided claims therefor were made to the insurer prior to the exhaustion of the policy” 11 NYCRR §65-3.15. In Nyack Hosp. v. General Motors Acceptance Corp., plaintiff-hospital treated a patient over several weeks for injuries suffered in a car accident. See 8 N.Y.3d at 296. The patient was a covered person under an auto insurance policy that included no-fault coverage for basic economic loss up to $50,000. See id. The hospital submitted a claim to the insurer (“GMAC”) totaling $74,489.28. See id. GMAC requested that the hospital provide it with additional verification for its claims. See id. at 296-297. Ultimately GMAC paid the hospital $19,325.67 out of the $50,000 basic economic loss coverage and then notified the hospital that benefits under the policy had been exhausted, precluding further payment. See id. at 297. After the hospital sued for the balance owed of $55,163.61, the Supreme Court, agreeing with GMAC that it was not required to pay sums in excess of policy limits, granted Defendant summary judgment and dismissed the complaint. See id. The Appellate Division affirmed. See id. at 298-299. The Court of Appeals defined the “priority-of-payment” of 11 NYCRR §65-3.15 as one that would only encompass claims that had been verified, i.e., claims that were legitimate rather than “bare-bones” claims designed to cause “policy limits to be exceeded and thereby block[] other payments….” See id. at 300 (emphasis added); cf. Country Wide Ins. Co., v. Walter E. Mendoza Chiropractic P.C., 2020 N.Y. Misc. LEXIS 1960, at 5 (Sup. Ct. NY, New York County 2020) (insurer’s payment on others’ legitimate claims subsequent to denying provider’s claims, even if policy-limit became exhausted prior to arbitration decision on the propriety of the denials, was consistent with the intent of the no-fault regulatory scheme which is designed to promote prompt payment of legitimate claims). In applying priority-of-payment to the case, the Court calculated that the verification date was 16 days earlier than the lower courts’ determination. See Nyack Hosp., 8 N.Y.2d at 300-301. As the decision in Nyack Hosp. construed that it was possible that in applying the earlier verification date the result could be that there had been additional payouts to other claimants during that sixteen-day period, it would be necessary to review the payments made during that time. Accordingly, the Court of Appeals modified the lower courts’ order by denying GMAC’s summary judgment motion and remitted the matter to the Supreme Court “for further proceedings in accordance with this opinion and, as so modified, affirmed” See id. at 301. Plaintiff states that the Appellate Term in Alleviation Med. Servs. v. Allstate Ins. Co., 55 Misc.3d 44, 45 (App. Term 2017), aff’d on other grounds, 191 A.D.3d 934 (2d Dep’t 2021), held that Nyack Hosp. v. General Motors Acceptance Corp., interpreted “priority-of-payment” as meaning that denied claims would be considered fully verified, i.e., “complete” in accordance with 11 NYCRR §65-3.5. But the Appellate Term did not state that “fully verified” meant “legitimate”, [non]-”bare-bones” and “medically necessary”, and that such claims must be paid. See, e.g., Hosp. for Joint Diseases v. State Farm Mut. Auto. Ins. Co., 8 A.D. 533, 536 (2d Dep’t 2004) (“An insurer is not obligated to pay or deny a claim until it has received verification of all relevant information requested”) (emphasis supplied). In Alleviation Med. Servs., Defendant Allstate denied Plaintiff’s claim on the grounds of lack of medical necessity. See 55 Misc.3d at 45. Upon plaintiff’s ensuing lawsuit, in 2014 Allstate moved for summary judgment to dismiss the complaint on the ground that the amount of available coverage had been exhausted through payments made to other providers at some point after the initial denial. See id. While Plaintiff may be implying that the Appellate Term held that Allstate had to pay the claim, that Court only held that Allstate was not entitled to summary judgment. See 55 Misc.3d at 45-46; Island Life Chiropractic, P.C., v. Commerce Ins. Co., 56 Misc.3d 129(A), 2017 N.Y. Misc. LEXIS 2478, at 2. To the extent that Plaintiff claims that the decision in Alleviation Med. Servs. prohibits this Defendant “from alleging as a defense to payment that the underlying insurance policy is exhausted for all claims that Defendant denied on other grounds prior to exhaustion” (Plaintiff’s Trial Memorandum at 3), the Appellate Term said the opposite: “At the outset, we note that, although defendant did not deny the claim on the ground that the coverage limits of the insurance policy at issue had been exhausted, this defense is not precluded.” See 55 Misc.3d at 45 (emphasis added); see also Ortho Passive Motion, Inc. v. Allstate Ins. Co., 2018 N.Y. Misc. LEXIS 5805, at 2 (App. Term, 2d Dep’t 2918); cf. N.Y. & Presbyterian Hosp. v. Allstate Ins. Co., 12 A.D.3d 579 (2d Dep’t 2004) (insurer’s failure to issue a denial within 30 days does not preclude a policy-exhaustion defense). Accordingly, Plaintiff’s assertion that “as is blackletter law, ‘the Civil Court is bound by the decisions of the Appellate Term of this Department’”14, is inapplicable in the instant case for several reasons. First, the Appellate Term’s decision denying summary judgment to the insurer defendant is not the same as ordering payment to the service-provider. Second, the Appellate Division’s affirmance on “other grounds” in Alleviation Med. Servs. requires this Court to recognize that Court’s reasoning. See 191 A.D.3d at 934. What the Appellate Division decided in Alleviation Med. Servs. was that Allstate’s motion for summary judgment on policy-exhaustion grounds could have been granted but for the fact that it was “bereft of any specific information regarding [the] claim” See 191 A.D.3d at 935. Under those circumstances, the Appellate Division could not find that Allstate was entitled to summary judgment as a matter of law as there were issues of fact remaining as to when the claim was denied, and the basis and efficacy of the denial” See id. Accordingly, the Appellate Division in Alleviation Med. Servs. said “we affirm, albeit on different grounds than those relied upon by the Civil Court or the Appellate Term”). 191 A.D.3d at 934. The evidence presented at trial sufficiently demonstrated that Defendant denied four of the disputed bills on February 18, 2016 (Ex. 7). On February 22, 2016, i.e., four days after Defendant denied those four bills, Defendant made sixteen separate payments to other service providers totaling $40,894.05 (Ex. 7). On March 2, 2016, Defendant made a payment of $78.20 to another provider (Ex. 7). On June 24, 2016, Defendant paid Plaintiff $126.39. Defendant reached the policy-exhaustion limit of $50,000 with three payments it made on October 24, 2016, two of which were to Plaintiff in the amounts of $3,181.59 and $3,960.04, and the third to another provider in the amount of $1,729.73 (Ex. 7). Accordingly, excluding the three payments that were made to Plaintiff, this pay-out breakdown reveals there was $42,701.98 ($40,894.05 + $78.20 + $1,729.73) paid to other service providers, prior to exhaustion, from which Plaintiff claims Defendant could have used to pay their four denied claims. The evidence presented at trial further showed that Defendant denied a fifth Plaintiff’s bill of $148.69 on March 16, 2016 (Ex. 7). Excluding payments made to Plaintiff after March 16 and prior to policy-exhaustion on October 24, 2016, $1,729.73 of the $50,000 basic economic loss coverage remained. That $1,729.73, which was paid-out to another service provider on October 24, 2016, is what Plaintiff claims should have been used to pay its fifth claim of $148.69. But Defendant denied that claim, like the four others it denied on February 18, 2016, on grounds that included that benefits were terminated based on the IME results. As this Court finds that Defendant was not precluded from interposing a defense of policy exhaustion, it must address the issue as to whether the services rendered by Plaintiff were medically necessary. At the outset, Plaintiff did not provide any statutory or case authority that the testimony of Defendant’s expert, Dr. LoCascio, must be disregarded as a matter of law because he is an acupuncturist and Plaintiff is a medical doctor, nor was evidence presented to demonstrate that Dr. LoCascio was not competent to assert his opinion as to the lack of medical necessity for the treatment performed. See, e.g., New Horizon Surgical Ctr., L.L.C. v. Allstate Ins. Co., 52 Misc. 3d 139(A), 2016 N.Y. Misc. LEXIS 2753, at 2-3 (App. Term, 2d Dep’t 2016) (insurer’s chiropractor was competent to testify about lack of medical necessity for procedure performed by physician). Further, Defendant’s denial of claim forms, along with Dr. LoCascio’s report and his testimony about the examination that he performed as well as his review of Plaintiff’s medical records, established that there was no medical necessity for the services at issue. See, e.g., Urban Radiology, P.C. v. Tri-State Consumer Ins. Co., 27 Misc.3d 140(A), 2010 N.Y. Misc. LEXIS 1530, at 3 (App. Term, 2d Dep’t 2010). The fact that neither Plaintiff nor the patient testified, or that Defendant paid on some of Plaintiff’s claims but not others,15 does not warrant a contrary result. See, e.g., New Horizon Surgical Ctr., L.L.C. v. Allstate Ins. Co., 52 Misc. 3d 139(A), 2016 N.Y. Misc. LEXIS 2753, at 3-4; (plaintiff called no witnesses to rebut chiropractor’s testimony of no medical necessity, much less show by preponderance of evidence that services were medically necessary); cf. Urban Radiology, P.C. v. Geico Gen. Ins. Co., 29 Misc.3d 142(A), 2010 N.Y. Misc. LEXIS 6012, at 1-2 (App. Term, 2d Dep’t 2010); (where insurer had submitted denial of claim forms and peer review reports reporting lack of medical necessity and plaintiff submitted no written opposition, plaintiff failed to rebut prima facie showing of lack of medical necessity); Dayan v. Allstate, 49 Misc.3d 151(A), 2015 N.Y. Misc. LEXIS 4378, at 3 (App. Term, 2d Dep’t 2015) (insurer, who preserved defense by timely denial, presented sufficient proof at trial that services were not rendered or that equipment was not provided to shift burden of proof back to provider that services were necessary). Conclusion: For the foregoing reasons, the case is dismissed with prejudice. This constitutes the Decision and Order of the Court. Dated: October 22, 2021
