Recitation, as required by CPLR §2219 (a), of the papers considered in the review of this application: Papers NYSCEF Numbered Defendant’s Motion and Supporting Documents 4-9 Plaintiff’s Cross Motion and Supporting Documents 11-18 Defendant’s Opposition and Supporting Documents 19-22 DECISION and ORDER Defendant Norfolk and Dedham Mutual Fire Insurance Company (hereinafter “Defendant”) brought a Motion to dismiss pursuant to CPLR 3211(a) and CPLR 3212. The Plaintiff Mission Health PT, (hereinafter “Plaintiff”) as assignee of Adelina Rodriguez (hereinafter “Assignor”), brought a cross-motion pursuant to CPLR 3212, seeking summary judgment. This litigation arises out of a motor vehicle accident on or about June 19, 2020, in which the assignor was the driver and the Plaintiff rendered medical services to the Assignor in connection with the accident. The Plaintiff alleges that they are entitled to recover No-Fault benefits in the sum of $5,788.15, plus fees. The Defendant alleges that the claim is barred under the principles of res judicata and collateral estoppel and must be dismissed. Res Judicata and Collateral Estoppel “Res judicata serves to preclude the renewal of issues actually litigated and resolved in a prior proceeding, as well as claims for different relief which arise out of the same factual grouping ‘or transaction,’ and which should have or could have been resolved in the prior proceeding,” Braunstein v. Braunstein, 114 AD2d 49 [2d Dept 1985]. Furthermore, the doctrine of collateral estoppel, “a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding, and decided against that party or those in privity, whether or not the tribunals or causes of action are the same.” Breslin Realty Development Corp. v. Shaw, 72 AD3d 258 [2d Dept. 2010]. Under the doctrine of collateral estoppel, a party is precluded from relitigating an issue which has been decided against it in a prior proceeding where it had a full and fair opportunity to litigate the issue. Active Care Med. Supply v. Delos Ins. Co. 2017 NY Slip Op 50652[U]. Insurance Law 5106(b) states “every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits…to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.” Furthermore, a claimant provider “may independently exercise the right to elect to submit their respective claims to arbitration, and the election to arbitrate by one provider does not bar another provider from resorting to the court in the first instance for resolution of disputed no-fault benefits.” AB Med Servs. PLLC v. USAA Gen. Indem. Co., 9 Misc. 3d 19 [App Term 2d Dept]. The Defendant argues here that No-Fault benefits for this accident and assignor had previously been decided in an arbitration proceeding. The Arbitrator found that the assignor was not entitled to medical benefits, due to material misrepresentations in the procurement of the subject policy. “Courts have consistently held that an election to arbitrate a no-fault claim forecloses litigation of subsequent claims arising out of the same accident.” Gaul v. American Employer’s Ins. Co. 302 AD2d 875 [4th Dept. 2003], Generally, “two requirements must be met before collateral estoppel can be invoked. There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling.” Gillberg v. Barbiere, 53 NY2d 285 [1983]. The instant case was filed on September 23, 2021. Two NF-10s were sent by the Defendant to the Plaintiff, with a letter explaining the basis for denial on December 15, 2021. The arbitration was held on February 28, 2022. The Answer was filed months after the arbitration, on October 18, 2022. The Defendant here has offered no reason why the denial was issued so long after the claims were mailed, nor did the Defendant offer a reason as to why the answer was interposed more than a year after the commencement of the action. It is of importance that at the arbitration, the parties stipulated as follows: “Respondent’s denial of the subject claim was timely issued.” As a result of that stipulation, the Plaintiff in this action did not have a full and fair opportunity to contest the matter in the arbitration because there is not an identity of issue that was decided: the timely denial of the Plaintiff’s claim. Though a prior tribunal found that the insurance policy was fraudulently procured and this court is bound by that finding, the sole issue in this case is whether the Defendant can raise a fraud defense in this action if they failed to issue a timely denial of the claim. Accordingly, the Defendant’s application for dismissal on the basis of res judicata and collateral estoppel is hereby denied. Summary Judgment “The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case.” Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]. Both the Plaintiff and Defendant allege that there are no material factual issues in dispute in this action. However, this Court finds differently. To establish a prima facie case, a plaintiff must “demonstrate that the claim forms at issue were received by the defendant insurer and that the claims were not paid.” Wave Med. Servs. PC v. Hertz Veh. LLC, 76 Misc. 3d 131[A], [App Term 2d Dept. 2022]. Furthermore, the Plaintiff must demonstrate that the “defendant failed to deny the claims within the prescribed 30-day period…or issued a timely denial of claim forms that were conclusory, vague, or without merit as a matter of law.” Id. The Defendant’s denial of the claims includes the sole basis for denial: “a material misrepresentation…in the procurement of her policy,” The Defendant alleges that the assignor obtained the subject insurance policy using an address in Massachusetts, while residing in New York. “An insured may be denied no fault benefits where an insurer submits evidence in admissible form showing that the insured had fraudulently procured the insurance policy.” See Jamaica Dedicated Med. Care PC v. Praetorian Ins. Co., 47 Misc.3d 147[A] [App Term 2015]. However, if the claim was not timely denied, an insurer is precluded from asserting the defense that the assignor made a misrepresentation in connection at the issuance of the subject insurance policy. Westchester Med. Ctr. V. GMAC Ins. Co. Online, Inc. 80 AD3d 603 [2d Dept. 2011]. The Court notes that the Defendant, as well as the arbitration decision, relies on the matter of AB Med. Servs. PLLC v. Commercial Mut. Ins. Co., which explicitly states “the defense of fraudulent procurement of an insurance policy, which is nonwaivable and hence exempt from the 30-day preclusion rule, may be asserted as against plaintiff’s providers in this action seeking to recover assigned no-fault benefits.” AB Med. Servs, PLLC v. Commercial Mut. Ins. Co., 12 Misc. 3d 8, 12 [App Term 2d Dept 2006]. However, in its decision, this Court relies upon the later decided Second Department. Appellate Division matter of Westchester Med. Ctr. v. GMAC Ins, which addresses an assignor that “misrepresented his state of residence in connection with the issuance of the subject insurance policy,” which is identical to the issue at hand in this matter. See Westchester Med. Ctr. v. GMAC Ins. Co. Online, Inc. 80 AD3d 603 [2d Dept. 2011]. Though these two cases seem to have very different outcomes as to the thirty-calendar day rule, it ultimately comes down to a single question: does the thirty-calendar day rule pursuant to 11 NYCRR 65-3.8 apply? Vehicle and Traffic Law §313 provides in part. “No contract of insurance…shall be terminated by cancellation by the insurer until…after mailing to the named insured…a notice of termination by regular mail…” AB Med. Servs. PLLC v. Commercial Mut. Ins. Co., 12 Misc.3d 8, 12 [App Term 2d Dept 2006]. Furthermore, Vehicle and Traffic Law §313 “supplants an insurance carrier’s common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively.” Id. The statute “places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured’s negligence.” Id. Courts have routinely found that medical providers are not “innocent third parties” and are not protected against fraud. Id. “No-fault reform was enacted to provide prompt uncontested, first-party insurance benefits. That is part of the price paid to eliminate common-law contested lawsuits…the tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate, and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices.” See Fair Price Med. Supply Corp. v. Travelers, Indem. Co., 10 NY3d 556 [2008] citing Presbyterian Hosp. v. Md. Cas. Co., 90 NY2d 275 [1997].1 The Plaintiff alleges that since the Defendant failed to timely deny the claims the Defendant is therefore precluded from raising the fraud defense. The first bill submitted by the Plaintiff to the Defendant was mailed on July 23, 2020. Bills were subsequently mailed on the following dates: August 21, 2020; September 18, 2020; October 16, 2020; November 17, 2020; December 15, 2020; January 12, 2021; February 17, 2021; March 17, 2021; April 16, 2021; and May 12, 2021. The Defendant’s letter dated December 15, 2021, which accompanied the denial forms, states that verification requests were sent by the Defendant on September 21, 2020; October 13, 2020; November 13, 2020; December 11, 2020; and January 6, 2021. It is unclear which bills the verification requests were sent in response to, which provider verifications were sent to, and if they were mailed timely, however, the mere fact that verification requests were mailed raises a material issue of fact regarding tolling that would prevent the granting of summary judgment in this case. This Court is bound by the matter of Westchester Med. Ctr. and finds that the fraud denial must comply with the time limits set by 11 NYCRR 65-3.8. Accordingly, the Court finds material issues of fact regarding whether the claims were timely denied, as there were several requests made for verification. Furthermore, as the timely denial of the claims is not one that was raised in the arbitration, this Court must litigate the question of fact regarding the timely denial of the claims. Accordingly, the Defendant’s motion to dismiss and the Plaintiff’s motion for summary judgment are both denied. This constitutes the Decision and Order of this Court. Dated: May 15, 2023
