Opinion
2017-1615 K C
11-01-2019
CHAPA PRODUCTS CORP., as Assignee of Emmanuel Vidal, Appellant, v. MVAIC, Respondent.
The Rybak Firm, PLLC (Damin J. Toell of counsel), for appellant. Marshall & Marshall, PLLC (Jeffrey Kadushin and Frank D'Esposito of counsel), for respondent.
The Rybak Firm, PLLC (Damin J. Toell of counsel), for appellant.
Marshall & Marshall, PLLC (Jeffrey Kadushin and Frank D'Esposito of counsel), for respondent.
PRESENT: MICHAEL L. PESCE, P.J., MICHELLE WESTON, BERNICE D. SIEGAL, JJ
ORDERED that the order is modified by providing that defendant's cross motion for summary judgment dismissing the complaint with prejudice is denied and, upon searching the record, the complaint is dismissed without prejudice; as so modified, the order is affirmed, without costs.
In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment, and defendant cross-moved for summary judgment dismissing the complaint on the ground that, pursuant to changes to the no-fault regulations applicable to services rendered after April 1, 2013, defendant had properly denied the claims at issue based upon plaintiff's failure to provide requested verification within 120 days after the initial verification request (see 11 NYCRR 65-3.8 [b] [3]; 65-3.5 [o] ) or, in the alternative, that it had properly denied the claims based upon plaintiff's failure to appear for an examination under oath (EUO). The Civil Court denied plaintiff's motion and granted defendant's cross motion on the first ground.
On appeal, plaintiff argues, among other things, that the defense that plaintiff failed to provide additional verification within 120 days is without merit because defendant did not demonstrate that it had denied the claims on that ground within 30 days after the expiration of the 120-day period, and that, in any event, plaintiff demonstrated that it had timely responded to the verification requests.
Plaintiff's argument that defendant's denials were untimely is raised for the first time on appeal. However, since this is a legal argument that appears on the face of the record and could not have been avoided had it been raised in the Civil Court, it may be considered by this court (see Navillus Tile, Inc. v. George A. Fuller Co., Inc. , 83 A.D.3d 919, 920, 920 N.Y.S.2d 786 [2011] ; Parry v. Murphy , 79 A.D.3d 713, 715, 913 N.Y.S.2d 285 [2010] ; Olim Realty v. Lanaj Home Furnishings , 65 A.D.3d 1318, 1320, 885 N.Y.S.2d 750 [2009] ; Chateau D' If Corp. v. City of New York , 219 A.D.2d 205, 209, 641 N.Y.S.2d 252 [1996] ). This issue in particular warrants appellate review because, to borrow principles applicable to the mootness doctrine, there is a likelihood of repetition, it has thus far evaded review, and it is a substantial no-fault issue (cf. Matter of Hearst Corp. v. Clyne , 50 N.Y.2d 707, 431 N.Y.S.2d 400, 409 N.E.2d 876 [1980] [regarding exceptions to the mootness doctrine] ).
The current version of the no-fault regulations provides that an insurer "may" issue a denial based upon an applicant's failure to provide requested verification within 120 calendar days after the initial request ( 11 NYCRR 65-3.8 [b] [3] ). However, the regulations do not specify a time frame for issuing such a denial. As a general rule, "[n]o-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim" ( 11 NYCRR 65-3.8 [a] [1] ). Defendant implicitly argues that, in the absence of a required time frame, an insurer should be allowed to issue such a denial at any time after the 120-day period has passed. We disagree.
It is noted that an insurer may do so only if the verification request "so advised the applicant" (11 NYCRR 65-3.8 [b] [3] ).
The Appellate Division, Second Department, has applied the 30-day time period in which to pay or deny a claim in an analogous situation where there is no time frame specified in the no-fault regulations in which an insurer must pay or deny a claim—the defense that an applicant failed to appear for an EUO or an independent medical examination (see Westchester Med. Ctr. v. Lincoln Gen. Ins. Co. , 60 A.D.3d 1045, 877 N.Y.S.2d 340 [2009] ). In that case, the 30 days to pay or deny the claim begins to run on the date of the second failure to appear—the date that the insurer is permitted to conclude that there was a failure to comply with a condition precedent to coverage (see e.g. Veraso Med. Supply Corp. v. 21st Century Ins. Co. , 61 Misc. 3d 146[A], 2018 N.Y. Slip Op. 51696[U], 2018 WL 6202043 [App. Term, 2d Dept., 2d, 11th & 13th Jud. Dists. 2018] ). We apply a similar logic here, and hold that the deadline to issue a denial based upon the ground that an applicant failed to provide complete verification (see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3] ) is 150 days after the initial request for verification—or 30 days after the insurer is permitted to conclude that there was a failure to fully comply with a verification request, i.e., the date on which the 120-day period ends.
In this case, the record reflects that defendant mailed its denial of claim forms 208 days after the initial verification requests had been mailed out. Consequently, plaintiff correctly argues that defendant did not preserve the precludable, complete defense that plaintiff had not provided all of the requested verification within 120 days after the initial verification request (see 11 NYCRR 65-3.5 [o]; 65-3.8 [a] [1]; [b] [3]; see generally Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co. , 90 N.Y.2d 274, 660 N.Y.S.2d 536, 683 N.E.2d 1 [1997] ), and, thus, that the Civil Court should not have granted defendant's cross motion for summary judgment dismissing the complaint with prejudice on that ground.
However, we agree with the Civil Court's determination that the documentation plaintiff provided in response to defendant's verification requests is "not in compliance with the request" (see New Way Med. Supply Corp. v. State Farm Mut. Auto. Ins. Co. , 56 Misc. 3d 132[A], 2017 N.Y. Slip Op. 50925[U], 2017 WL 3122855 [App. Term, 2d Dept., 2d, 11th & 13th Jud. Dists. 2017] ). Historically, an insurer has not been required to pay or deny claims upon receipt of a "partial response" to a verification request (see St. Vincent's Hosp. of Richmond v. American Tr. Ins. Co. , 299 A.D.2d 338, 340, 750 N.Y.S.2d 98 [2002] ["(a)n insurer is not obligated to pay or deny a claim until it has received verification of all relevant information requested"]; see also Central Suffolk Hosp. v. New York Cent. Mut. Fire Ins. Co. , 24 A.D.3d 492, 493, 807 N.Y.S.2d 382 [2005] ; Compas Med., P.C. v. Travelers Ins. Co. , 53 Misc. 3d 136[A], 2016 N.Y. Slip Op. 51441[U], 2016 WL 5922448 [App. Term, 2d Dept., 2d, 11th & 13th Jud. Dists. 2016] ). The current version of 11 NYCRR 65-3.8 (b) (3) also does not obligate an insurer to pay or deny a claim prior to its receipt of all requested verification—it merely provides that an insurer "may" issue a denial. Previously, when a request for verification had not been fully complied with prior to the commencement of a no-fault action, the action was dismissed as premature (see Proscan Imaging, P.C. v. Travelers Indem. Co. , 28 Misc. 3d 127[A], 2010 N.Y. Slip Op. 51176[U], 2010 WL 2681691 [App. Term, 2d Dept., 2d, 11th & 13th Jud. Dists. 2010] ; Vista Surgical Supplies, Inc. v. General Assur. Co. , 12 Misc. 3d 129[A], 2006 N.Y. Slip Op. 51034[U], 2006 WL 1540358 [App. Term, 2d Dept., 2d & 11th Jud. Dists. 2006] ), and we see no reason to deviate from that rule now.
In light of the foregoing, we hold that a denial of claim form issued following the expiration of the 150-day period after the issuance of the initial request for verification is a nullity with respect to that defense. Therefore, we find that the untimely denials issued in this case offer no basis to dismiss the complaint with prejudice. Rather, upon searching the record, we conclude that the action should be dismissed as premature, i.e., without prejudice, which is the same position the parties would have been in before 11 NYCRR 65-3.8 (b) (3) was amended to permit a denial on the ground that verification was not provided.
Finally, we note that, contrary to defendant's argument, plaintiff's failure to appear for EUOs does not provide an alternative basis for affirming the dismissal of the complaint with prejudice, as, based on the proof submitted, defendant's EUO requests were nullities with respect to the claims at issue (see Neptune Med. Care, P.C. v. Ameriprise Auto & Home Ins. , 48 Misc. 3d 139[A], 2015 N.Y. Slip Op. 51220[U] [App. Term, 2d Dept., 2d, 11th & 13th Jud. Dists. 2015] ; O & M Med., P.C. v. Travelers Indem. Co. , 47 Misc. 3d 134[A], 2015 N.Y. Slip Op. 50476[U], 2015 WL 1566101 [App. Term, 2d Dept., 2d, 11th & 13th Jud. Dists. 2015] ).
Accordingly, the order is modified by providing that defendant's cross motion for summary judgment dismissing the complaint with prejudice is denied and, upon searching the record, the complaint is dismissed without prejudice.
PESCE, P.J. and SIEGAL, J., concur.
WESTON, J., concurs in part and dissents in part and votes to affirm the Civil Court's order in the following memorandum:
By imposing a 150-day time limit on when an insurer must deny a claim based upon a plaintiff's failure to provide requested verification, the majority's decision effectively recognizes a new rule where none exists, ignoring longstanding principles of statutory construction and jurisprudence. Among them is the principle—grounded in the doctrine of separation of powers—that a court's role is to interpret statutes and regulations based on their plain meaning and to consider only the arguments and record before it (see Riley v. County of Broome , 95 N.Y.2d 455, 463, 719 N.Y.S.2d 623, 742 N.E.2d 98 [2000] ; Matter of Kevin M. , 136 A.D.3d 826, 26 N.Y.S.3d 84 [2016]. " ‘[I]t is not for the courts to correct supposed errors, omissions or defects in legislation’ "(Matter of Kevin M. , 136 A.D.3d at 827, 24 N.Y.S.3d 519, quoting McKinney's Cons Laws of NY, Book 1, Statutes § 73, Comment at 147-148 [1971 ed.]; see Bright Homes, Inc. v. Wright , 8 N.Y.2d 157, 203 N.Y.S.2d 67, 168 N.E.2d 515 [1960] ). Yet, today's decision does precisely that—it imposes a time restriction that has no basis in either the no-fault regulations or the record. Accordingly, I am compelled to comment on the modification and what the true and practical effect of changing the order below from "with prejudice" to "without prejudice" means. While such a change may appear to be insignificant, its impact cannot be overlooked.
At the outset, it must be emphasized that this issue, raised for the first time on appeal, is not properly before this court. Although defendant's denial clearly states that it is based, in part, on plaintiff's failure to respond to its initial verification request, plaintiff failed to challenge the denial on this basis in the Civil Court. Instead, plaintiff chose to argue that the denial issued by defendant based upon plaintiff's failure to appear at the examination under oath was untimely. Plaintiff had ample opportunity to object to defendant's denial on the ground now asserted on appeal. Moreover, the argument raised here is not " ‘one which could not have been countered by the [defendant] had it been raised in the trial court’ " ( Smith v. Smith , 116 A.D.2d 810, 812, 497 N.Y.S.2d 192 [1986], quoting Sega v. State of New York , 60 N.Y.2d 183, 190, n 2, 469 N.Y.S.2d 51, 456 N.E.2d 1174 [1983] ). Accordingly, plaintiff's argument is not properly before this court and I would decline to review it in the interest of justice. Nevertheless, the majority chooses to review the issue and, in doing so, has effectively rewritten the no-fault regulations.
It is a fundamental principle of regulatory and statutory construction that where the wording of a statute or regulation is "clear and unambiguous, the court should construe the statute to give effect to the plain meaning of the words used" ( Eaton v. New York City Conciliation & Appeals Bd. , 56 N.Y.2d 340, 345, 452 N.Y.S.2d 358, 437 N.E.2d 1115 [1982] ; see Nadkos, Inc. v. Preferred Contrs. Ins. Co. Risk Retention Group LLC , 34 N.Y.3d 1, 108 N.Y.S.3d 375, 132 N.E.3d 568 [2019] ). " ‘Absent ambiguity the courts may not resort to rules of construction to [alter] the scope and application of a statute’ because no such rule ‘gives the court discretion to declare the intent of the law when the words are unequivocal’ " ( Kuzmich v. 50 Murray St. Acquisition LLC , 34 N.Y.3d 84, 90, 108 N.Y.S.3d 431, 132 N.E.3d 624 [2019], quoting Bender v. Jamaica Hosp. , 40 N.Y.2d 560, 562, 388 N.Y.S.2d 269, 356 N.E.2d 1228 [1976] ).
Here, the wording of the relevant portion of section 65-3.8 (b) (3) of the no-fault regulations could not be clearer:
"[A]n insurer shall not issue a denial of claim form ... prior to its receipt of verification of all of the relevant information requested pursuant to sections 65-3.5 and 65-3.6 of this Subpart .... However, an insurer may issue a denial if, more than 120 calendar days after the initial request for verification, the applicant has not submitted all such verification under the applicant's control or possession or written proof providing reasonable justification for the failure to comply, provided that the verification request so advised the applicant as required in section 65-3.5(o) of this Subpart."
Contrary to the majority's opinion, nothing in the regulation's language requires an insurer to issue a denial within 30 days after the 120-day period following an initial request for verification has expired. To read such a requirement into the regulation is to disregard the plain terms of the regulation in favor of improper judicial legislation (see Matter of Chemical Specialties Mfrs. Assn. v. Jorling , 85 N.Y.2d 382, 394, 626 N.Y.S.2d 1, 649 N.E.2d 1145 [1995] ["a court cannot amend a statute by inserting words that are not there, nor will a court read into a statute a provision which the Legislature did not see fit to enact" (internal quotation marks omitted) ]; Matter of City of New York , 275 App. Div. 948, 89 N.Y.S.2d 779 [1949] [reading a time limitation into a statute where none exists is tantamount to improper judicial legislation], affd 300 N.Y. 600, 90 N.E.2d 63 [1949] ). The regulation unequivocally provides that an insurer "shall not" issue a denial before receipt of complete verification from the applicant. To temper this mandate, the regulation was revised in 2013 to allow an insurer to issue a denial, even if verification is not complete, as long as more than 120 days have elapsed since the initial request for verification. By providing that an insurer "may" issue a denial in these circumstances, the regulation clearly intends for the denial to be permissive, not mandatory.
Despite this permissive language, the majority has made it mandatory for a provider to deny a claim within 30 days after the 120-day period. Conspicuously absent from the regulatory language is any reference to a time frame as to when the denial has to be issued. In other parts of the amended regulations, time frames were included as part of the amendment. Had the Department of Financial Services intended to impose a 150-day time limit on when an insurer must deny a claim for failure to provide the requested verification, it would have included such language in the regulations (see Patrolmen's Benevolent Assn. of City of N.Y. v. City of New York , 41 N.Y.2d 205, 391 N.Y.S.2d 544, 359 N.E.2d 1338 [1976] ). The fact that it did not is a clear indicator that the insurer's obligations are consistent with what is written, and I decline to insert a directive requiring otherwise (see Matter of Chemical Specialties Mfrs. Assn. , 85 N.Y.2d at 394, 626 N.Y.S.2d 1, 649 N.E.2d 1145 ["a court cannot amend a statute by inserting words that are not there, nor will a court read into a statute a provision which the Legislature did not see fit to enact" (internal quotation marks omitted) ] ).
It is not the judiciary's role to amend regulations to achieve a particular result. The fact that an insurer is not obligated to issue a denial after the 120 days have passed should not be our focus. Our role is to apply statutes and regulations as written, and if a situation arises where clarification is required, courts have not been shy about recommending legislative/regulatory changes to those statutes and regulations (see e.g. Central Gen. Hosp. v. Chubb Group of Ins. Cos. , 90 N.Y.2d 195, 659 N.Y.S.2d 246, 681 N.E.2d 413 [1997] ).
Accordingly, I would affirm the Civil Court's order, which denied plaintiff's motion for summary judgment and granted defendant's cross motion for summary judgment dismissing the complaint with prejudice.