I. Papers The following papers were read on Defendant’s motion for summary judgment seeking dismissal of Plaintiff’s complaint and Plaintiff’s cross-motion for summary judgment seeking judgment on its claims against Defendant: Papers Numbered Defendant’s Notice of Motion and Affirmation in Support dated April 21, 2021 (“Motion”) and electronically filed with the court on April 23, 2021. 1 Plaintiff’s Notice of Cross-Motion seeking summary judgment and Affirmation in Support dated and electronically filed with the court on August 30, 2021 (“Cross-Motion”). 2 Defendant’s Affirmation in Opposition to Cross-Motion and Reply dated as of January 10, 2022 (“Opposition to Cross-Motion”) and electronically filed with the court on January 11, 2022. Decision and Order II. Background In a summons and complaint filed November 15, 2019, Plaintiff sued Defendant insurance company to recover a total of $2,114.99 in unpaid No-Fault benefits for medical services provided to Plaintiff’s assignor Soto from January 29, 2019 to May 8, 2019 resulting from an automobile accident on September 11, 2018, plus attorneys’ fees and statutory interest. Defendant moved for summary judgment dismissing the complaint on the ground that Plaintiff failed to provide additional documentary verification within one-hundred twenty (120) days (11 NYCRR §65-3.8[b][3]). Plaintiff cross-moved for summary judgment on its claims against Defendant. III. Discussion and Decision CPLR 3212 provides that “a motion for summary judgment shall be supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions” (CPLR 3212[b]). “Mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient” (Zuckerman v. City of New York, 49 NY2d 557, 562 [1980]). “A defendant moving for summary judgment [seeking an order dismissing plaintiff's complaint] has the initial burden of coming forward with admissible evidence, such as affidavits by persons having knowledge of the facts, reciting the material facts and showing that the cause of action has no merit” (GTF Mktg. v. Colonial Aluminum Sales, 66 NY2d 965, 967 [1985]; Anghel v. Ruskin Moscou Faltischek, P.C., 190 AD3d 906, 907 [2d Dept 2021], see Jacobsen v. New York City Health & Hosps. Corp., 22 N.Y.3d 824, 833 [2014]). A motion for summary judgment “shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party” (CPLR 3212[b]; Zuckerman v. City of New York, at 562, see GTF Mktg. v. Colonial Aluminum Sales, 66 NY2d at 968). Insurers must pay or deny No-Fault benefit claims “within thirty (30) calendar days after receipt of the proof of the claim” (Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co., 25 NY3d 498, 501 [2015]; Fair Price Med. Supply Corp. v. Travelers Indem. Co., 10 NY3d 556, 563 [2008]; Hospital for Joint Diseases v. Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007]; see Insurance Law §5106[a]; 11 NYCRR §65-3.8[c]; Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co., 90 NY2d 274, 278 [1997]). “New York Law prohibits unlicensed individuals from organizing a professional service corporation for profit or exercising control over such entities” (Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 33 NY3d 389, 404 [2019], see Business Corporation Law §§1507; 1508; Nationwide Affinity Ins. Co. of Am. v. Acuhealth Acupuncture, P.C., 155 AD3d 885, 886 [2d Dept 2017]; Liberty Mut. Ins. Co. v. Raia Med. Health, P.C., 140 AD3d 1029, 1031 [2d Dept 2016]; One Beacon Ins. Group, LLC v. Midland Med. Care, P.C., 54 AD3d 738, 740 [2d Dept 2008]). “A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York…” (11 NYCRR §65-3.16[a][12]; Nationwide Affinity Ins. Co. of Am. v. Acuhealth Acupuncture, P.C., 155 AD3d at 886; Liberty Mut. Ins. Co. v. Raia Med. Health, P.C., 140 AD3d at 1031; One Beacon Ins. Group, LLC v. Midland Med. Care, P.C., 54 AD3d at 740). In the No Fault context, corporate practices evincing a willful, material noncompliance with licensing and incorporation statutes may establish a medical provider’s ineligibility to receive reimbursement (Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 33 NY3d at 405, see State Farm v. Mallela, 4 NY3d 313, 321 [2005]; Radiology Today, P.C. v. GEICO Gen. Ins. Co., 32 Misc 3d 4, 7 [App Term 2d Dept 2011]). The elements of common law fraud need not be shown (Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 33 NY3d at 405) if noncompliance with the above-described licensing requirement is established through admissible evidence. Failure to establish timely payment or denial of the claim precludes the insurer from offering evidence of its defense to non-payment (Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co., 25 NY3d at 506; Fair Price Med. Supply Corp. v. Travelers Indem. Co., 10 NY3d at 563; Hospital for Joint Diseases v. Travelers Prop. Cas. Ins. Co., 9 NY3d at 318; Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co., 90 NY2d at 281-86). However, the defense that a health care provider is ineligible to receive No Fault insurance benefit payments is not subject to preclusion (All Boro Psychological Servs., P.C. v. Auto One Ins. Co., 35 Misc 3d 136[A], 2012 NY Slip Op 50777[U] *2 [App Term 2d Dept 2012]; Radiology Today, P.C. v. GEICO Gen. Ins. Co., 32 Misc 3d at 6; Midborough Acupuncture P.C. v. State Farm Ins. Co., 13 Misc 3d 58, 59 [App Term 2d Dept 2006]; A.B. Med. Servs. PLLC v. Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term 2006]). In the instant matter, Defendant received Plaintiff’s eight (8) bills from February 26, 2019 to May 31, 2019 for services rendered from January 29, 2019 to May 8, 2019 respectively and denied those claims from July 18, 2019 to October 16, 2019 respectively. Defendant denied the claims for Plaintiff’s failure to provide requested verification. While Defendant denied Plaintiff’s claims well after the thirty (30) days required for timely payment or denial, Defendant may delay payment pending an investigation of Plaintiff’s alleged noncompliance with licensing and incorporation statutes, but only upon showing good cause to pursue the investigation (Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 33 NY3d at 405; State Farm v. Mallela, 4 NY3d at 322). A. Defendant’s Requests for Verification “An applicant from whom verification is requested shall, within 120 calendar days from the date of the initial request for verification, submit all such verification under the applicant’s control or possession or written proof providing reasonable justification for the failure to comply” (11 NYCRR §65-3.5[o]). In the instant matter, Defendant acknowledged receiving the bills and mailed to Plaintiff a request (“First Verification Request”) for additional verification, in letters dated March 13, 2019, March 21, 2019, April 5, 2019, April 29, 2019, May 7, 2019, May 21, 2019 and June 11, 2019 (see Motion, Linwood Aff). Here, Plaintiff had one-hundred twenty (120) days to provide Defendant with requested verification under Plaintiff’s control or possession or a written explanation supporting Plaintiff’s failure to comply. In the First Verification Request, Defendant requested “1. all written agreements between Jiang Acupuncture and…Jiang and Top One Medical Billing…; 2.montly statements sent by Top One Medical Billing to Jiang Acupuncture detailing amounts billed and collected by Top One Medical Billing on behalf of Jiang Acupuncture for the past 12 months; 3. all documents reflecting payments to or from Top One Medical Billing during the past 12 months, including endorsed payment drafts issued by Jiang Acupuncture to Top One Medical Billing for the period of September 2016-August 2017; 4. All documents reflecting or relating to gifts given by Jiang Acupuncture and/or…Jiang to…Davis, Graham Wellness Medical PC., or any person who worked at [XXX] Graham Avenue during the past 12 months, including but not limited to credit or debit card statements, credit or debit card receipts, purchase receipts, or documents reflecting cash withdrawals; 5. General ledger of Jiang Acupuncture for the past 12 months; 6. W-2/1099 issued by Jiang Acupuncture to…Jiang for most recent tax year available; 7. All schedule K-1s issued by Jiang Acupuncture for most recent tax year available; 8. Jiang Acupuncture’s complete copy of corporate tax returns for most recent tax year available; and 9. Jiang Acupuncture’s corporate bank records for the past 12 months” (id.). Defendant made follow up requests (“Second Verification Request,” together with the First Verification Request, the “Verification Request”) for the documents in letters dated April 17, 2019, April 25, 2019, May 8, 2019, June 4, 2019, June 11, 2019, June 27, 2019 and July 18, 2019 respectively (id.). Plaintiff did not dispute that Plaintiff did not provide the requested documents to Defendant. B. Good Cause for Requested Verification Defendant argued that the requested documents were necessary to verify the medical necessity of the billed services, and whether the ownership, control, and operation of Plaintiff complied with New York State licensing requirements. Plaintiff countered that the verification was improper, that Defendant failed to establish “that the verification requests were necessary”; and that “EUO transcripts [were] inadmissible hearsay, as the transcripts [were] not signed by the Plaintiff.” Plaintiff further argued that “CPLR 3116(a) provides that an EUO transcript must be submitted to the witness so that the witness can read it and make any changes.” (Cross-Motion, Fagan Aff.) The Court notes that Defendant’s supporting documents indicates that Plaintiff in the instant matter had various claims resulting from different assignors, including Plaintiff assignor in the matter before this Court, pending with the Defendant. Contrary to Plaintiff’s contention, tax returns and bank statements were probative on whether a medical service provider complied with licensing laws (see All Boro Psychological Servs., P.C. v. Auto One Ins. Co., 2012 NY Slip Op 50777[U] *1-2; Q-B Jewish Med. Rehabilitation, P.C. v. Allstate Ins. Co., 33 Misc 3d 64, 66 [App Term 2d Dept 2011], see Dore v. Allstate Indem. Co., 264 AD2d 804, 804-05 [2d Dept 1999]). While mere allegations of fraud would be sufficient to sustain a motion to compel discovery of evidence of noncompliance with licensing laws (see Lexington Acupuncture, P.C. v. General Assur. Co., 35 Misc 3d 42, 43 [App Term 2d Dept 2012]; Medical Polis, P.C. v. Progressive Specialty Ins. Co., 34 Misc 3d 153[A], 2012 NY Slip Op 50342[U] *2 [App Term 2d Dept 2012]), here, Defendant sought summary judgment, which requires admissible evidence (see Nationwide Affinity Ins. Co. of Am. v. Acuhealth Acupuncture, P.C., 155 AD3ed at 886; One Beacon Ins. Group, LLC v. Midland Med. Care, P.C., 54 AD3d at 740; Vista Surgical Supplies, Inc. v. Utica Mut. Ins. Co., 22 Misc 3d 142[A], 2009 NY Slip Op 50493[U] *2 [App Term 2d Dept 2009]; Oleg Barshay, P.C. v. State Farm Ins. Co., 14 Misc 3d 74, 78 [App Term 2d Dept 2006]). In our instant matter, Defendant failed to support its good cause with admissible evidence for investigating Plaintiff’s alleged noncompliance with the licensing statutes as explained below. Defendant presented an affidavit sworn December 22, 2020, in which Baines, an investigator in Defendant’s Special Investigative Unit, detailed Defendant’s investigation of Plaintiff, as part of an alleged broader scheme of non-compliance with licensing laws, leading to the Verification Request at issue. In her affidavit, Baines stated that Defendant concerned that “whether (i) the services billed by the providers operating from 150 Graham Avenue (including Jiang Acupuncture) were medically necessary; (ii) whether the services billed were actually provided; and (iii) whether the ownership control and operation of Jiang Acupuncture and the other professional corporations (“PCs”) operating from [XXX] Graham Avenue complied with New York State licensing requirements.” As a result, an examination under oath (“EUO”) was requested and conducted. In her affidavit, Baines quoted Jiang Acupuncture’s listed owner, Jiang, L.Ac.’s testimony at the EUO to demonstrate that Jiang’s “testimony did not resolve State Farm’s questions[; and that, t]o the contrary, her testimony only raised additional questions as to whether Jiang Acupuncture’s services were reimbursable”. (see Motion, Baines Aff.) To support its Motion, Defendant presented the transcript of Jiang’s EUO, however, the transcript was not subscribed by Jiang. CPLR 3116 requires that the transcript “shall be submitted to the witness for examination and shall be read to or by him or her, and any changes in form or substance which the witness desires to make shall be entered at the end of the deposition with a statement of the reasons given by the witness for making them…[; that i]f the witness fails to sign and return the [transcript] within sixty days, it may be used as fully as though signed.” (CPLR 3116[a].) Here, it is unclear based on the Motion if the transcript was ever presented to Jiang for signature. Since Defendant failed to present a signed transcript of Jiang to support its Motion, Baines’ account of Jiang’s EUO testimony is hearsay. (see Alleviation Med. Servs., P.C. v. Allstate Ins. Co., 191 AD3d 934, 935 [2d Dept 2021]; United Specialty Ins. v. Columbia Cas. Co., 186 AD3d 650, 651 [2d Dept 2020]; Wells Fargo Bank, N.A. v. Sesey, 183 AD3d 780, 783 [2d Dept 2020]; Jamaica Dedicated Med. Care, P.C. v. Praetorian Ins. Co., 47 Misc 3d 147[A], 2015 NY Slip Op 50756[U] *1 [App Term 2d Dept 2015]; Apazidis, M.D., P.C. v. State Farm Mut. Auto. Ins. Co., 71 Misc 3d 1225[A].) In Defendant’s Opposition to Cross-Motion, Defendant did not address the issue of unassigned transcripts, however, simply relied on the truth of Jiang’s EUO testimony to establish good cause for requesting verification from Plaintiff which in the context of a summary judgment motion requires admissible evidence. Since Defendant failed to demonstrate its prima facie entitlement to a judgment as a matter of law, the court must deny Defendant’s motion for summary judgment (Pullman v. Silverman, 28 NY3d 1060, 1063 [2016]; United Specialty Ins. v. Columbia Cas. Co., 186 AD3d at 651-52; Matter of Long Is. Power Auth. Hurricane Sandy Litig., 165 AD3d 1138, 1140 [2d Dept 2018]; Nationwide Affinity Ins. Co. of Am. v. Acuhealth Acupuncture, P.C., 155 AD3d at 887). Defendant’s motion for summary judgment dismissing Plaintiff’s complaint is denied. C. Plaintiff’s Cross-Motion Regarding the Cross-Motion, Plaintiff bore the burden to show it submitted the statutory claim forms indicating the fact and amount of the loss sustained and “that payment of no-fault benefits was overdue” (Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co., 25 NY3d at 501; New York Hosp. Med. Ctr. of Queens v. QBE Ins. Corp., 114 AD3d 648, 648 [2d Dept 2014]; NYU-Hospital for Joint Diseases v. Esurance Ins. Co., 84 AD3d 1190, 1191 [2d Dept 2011]; Fair Price Med. Supply Corp. v. ELRAC Inc., 12 Misc 3d 119, 120 [App Term 2d Dept 2006]). Here, Defendant’s denial of claim forms acknowledging receipt of Plaintiff’s claims constituted prima facie evidence that Defendant received Plaintiff’s claims and that the denial was overdue (see Lopes v. Liberty Mut. Ins. Co., 24 Misc 3d 127[A], 2009 NY Slip Op 51279[U] *2 [App Term 2d Dept 2009]). However, an ineligibility of receiving No Fault insurance benefit due to noncompliance with licensing statutes defeats such prima facie showing. Based on foregoing discussion, Defendant had identified the existence of evidence in Plaintiff’s exclusive control which raised the issue of Plaintiff’ ineligibility to receive No Fault benefit payments. Because the requested verification are still outstanding, factual issues exist as to Plaintiff’ eligibility to receive No Fault benefit payments. Since Defendant’s defense of Plaintiff’s ineligibility to receive No Fault benefit payments is not precluded by Defendant’s untimely denial of Plaintiff’s claims and Plaintiff still has not provided the requested verification, this Court also must deny Plaintiff’s Cross-Motion (CPLR 3212[f]; RLC Med., P.C. v. Allstate Ins. Co., 29 Misc 3d 134[A], 2010 NY Slip Op 51962[U] *1 [App Term 2d Dept 2010]; Points of Health Acupuncture, P.C. v. Lancer Ins. Co., 28 Misc 3d 133[A], 2010 NY Slip Op 51338[U] *3 [App Term 2d Dept 2010]; Five Boro Psychological Servs., P.C. v. AutoOne Ins. Co., 27 Misc 3d 89, 90 [App Term 2d Dept 2010]). IV. Order Accordingly, it is ORDERED that Defendant’s Motion for summary judgment (Motion Seq. #1) is denied, and it is further ORDERED that Plaintiff’s Cross-Motion for summary judgement for it’s claim (Motion Seq. #3) is denied. This constitutes the DECISION and ORDER of the Court. Dated: September 11, 2023
