Court Of Appeals Addresses Plaintiff’s Prima Facie Burden

As published in

New York Law Journal

No-Fault Insurance Law Wrap-Up

Court of Appeals Addresses Plaintiff’s Prima Facie Burden

David M. Barshay, New York Law Journal

October 8, 2015

David M. Barshay

In my Feb. 13, 2014, No-Fault Insurance Law Wrap-Up column,1 I reported on Viviane Etienne Medical Care v. Country-Wide Ins. Co.2 and the Appellate Division’s holding as to what is, and what is not, a no-fault plaintiff’s prima facie burden. The Court of Appeals subsequently granted leave to appeal, and on June 10, 2015, issued its decision, affirming, by a majority, the Appellate Division’s decision.3 A recap of the Appellate Division’s decision follows.

The plaintiff in that case, a medical provider office, moved for summary judgment, annexing to its motion copies of the bills in dispute and an affidavit of its third-party biller who averred that he prepared and mailed the plaintiff’s bills to the defendant insurer. The civil court denied plaintiff’s motion, finding plaintiff failed to satisfy its prima facie burden, and the plaintiff appealed. Citing Art of Healing,4 the Appellate Term affirmed, finding that plaintiff’s third-party biller “failed to demonstrate that he had personal knowledge of the plaintiff’s practices and procedures and that he was competent to testify about those practices and procedures.”5 Thus, the Appellate Term concluded, since the plaintiff failed to lay the proper business record foundation to admit the billing forms in evidence, it failed to meet its prima facie burden, and its motion was therefore properly denied.

The Appellate Division reversed, holding “the plaintiff established, prima facie, its entitlement to judgment as a matter of law by demonstrating that its prescribed statutory billing forms used to establish proof of claim (see 11 NYCRR 65-1.1) were mailed to and received by the defendant and that the defendant failed to either timely pay or deny the claims.”6 Recognizing that its decision in Art of Healing Medicine v. Travelers Home & Mar. Ins. Co.,7 requiring a plaintiff to demonstrate the admissibility of its billing records under the business records exception to the hearsay rule, was “an anomaly, a jurisprudential drift,”8 the Appellate Division overruled Art of Healing.

Court of Appeals

In its appeal to the Court of Appeals, the defendant argued, inter alia, that plaintiff’s motion for summary judgment should have been denied because, although it was supported by the bills in question9 and by an affidavit from its third-party biller attesting to the mailing and to the insurer’s failure to pay or deny the bills, it was not supported by an affidavit from an individual with personal knowledge of the plaintiff medical provider office’s practices and procedures. Thus, according to the defendant, although the defendant was precluded from raising most defenses, such as lack of medical necessity or services not rendered, or otherwise challenging the veracity of the bills, the plaintiff failed to satisfy the business records exception of CPLR 4518 to admit the bills into evidence and therefore failed to satisfy its prima facie burden.

The plaintiff argued, inter alia, that consistent with decisions from the other judicial departments, as well as the Second Department prior to Art of Healing, the Appellate Division properly ruled that plaintiff satisfied its prima facie burden by establishing that its bills were mailed and neither paid nor denied. With respect to the argument that a summary judgment motion must be supported by admissible evidence, including an affidavit by a person with knowledge of the facts, plaintiff argued that the supporting affidavit of its biller was sufficient because he had personal knowledge of the submission of the bills.

In a 5-2 opinion written by Judge Sheila Abdus-Salaam, in which Chief Judge Jonathan Lippman and Judges Eugene Pigott, Jenny Rivera and Eugene Fahey joined, the Court of Appeals affirmed the Appellate Division’s decision. “We hold that a plaintiff demonstrates prima facie entitlement to summary judgment by submitting evidence that payment of no-fault benefits are overdue, and proof of its claim, using the statutory billing form, was mailed to and received by the defendant insurer.”10

Addressing the argument that a finding in favor of the plaintiff would be tantamount to dispensing with evidentiary requirements, the court held: “Proof evincing the mailing must be presented in admissible form, including where it is applicable, meeting the business records exception to the hearsay rule…To establish entitlement to summary judgment on overdue no-fault benefits, the medical provider is required to submit proof of mailing through evidence in admissible form.”11

Interestingly, Judge Pigott, who dissented in both Hospital for Joint Diseases v. Travelers Prop. Cas. Ins. Co.12 and Fair Price Med. Supply Corp. v. Travelers Indem. Co.13 and opined in those cases that the insurer who failed to timely deny or request additional verification was not precluded from challenging the validity of the assignment of benefits (Hospital for Joint Diseases) or raising a billing fraud defense (Fair Price) joined the majority’s opinion in Viviane Etienne that an insurer who fails to timely address a claim, whether by properly denying or requesting additional verification, will be precluded from challenging the bill later on in court.

The dissent opinion by Judge Leslie Stein, in which Judge Susan Phillips Read joined, agreed with the majority that an insurer’s failure to pay or deny a no-fault claim within 30 days of receipt renders it overdue and “will result in an insurer being precluded from interposing a defense against payment of the claim, except where the defense raised is lack of coverage…” However, the dissent went on to state that the preclusion doctrine does not “obviate plaintiff’s burden to make a prima facie showing of entitlement to benefits—i.e., that the loss arose from an automobile accident and that the expenses incurred were medically necessary…” Moreover, the dissent held that the plaintiff’s bills were inadmissible as the plaintiff failed to lay a proper business record exception through the affidavit of its third-party biller. “[H]ere, the objection is to the evidentiary admissibility of the NF-3 verification of treatment forms—not to the accuracy or validity of their contents…”

CPLR 4518(a), the business record exception, provides, inter alia: “Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event…” Thus, if it were plaintiff’s burden in the first instance to prove the “transaction, occurrence or event” contained in a verification of treatment form, i.e., that the services listed were performed on the date(s) listed, that the accident occurred, that the injuries sustained were causally related to the accident and that the services were medically necessary, for example, then an argument can be made that the plaintiff who offers the verification of treatment form into evidence to prove the contents therein must therefore satisfy a hearsay exception, such as the business record exception of CPLR 4518, to admit the verification of treatment form into evidence.

It is undisputed, however, that it is the defendant insurer’s burden to timely deny the claim to preserve its right to challenge the accuracy or validity of the contents of the verification of treatment form, and an insurer who fails to properly deny a claim is thus precluded from challenging the accuracy or validity of a bill or its contents. Therefore, it is argued, it cannot be plaintiff’s burden to prove the contents of the form as part of its prima facie case, and as the verification of treatment form is not offered to prove the “act, transaction, occurrence or event” contained in the claim form, the plaintiff need not satisfy the business record exception in CPLR 4518 regarding the verification of treatment form.

Other Cases

A similar argument has been made and upheld by the appellate courts regarding other documents offered into evidence in no-fault actions, particularly denial of claim forms offered by defendant insurers. For example, in Five Boro Psychological Servs. v. Progressive Northeastern Ins. Co.14 the Appellate Term held, “Defendant did not offer the denial of claim forms to establish the truth of the matters asserted therein, such as plaintiff’s assignor’s failure to appear for scheduled examinations under oath (EUOs), but rather to show that such denials were sent and that, therefore, the claims were denied. As the denial of claim forms were not offered for a hearsay purpose, they did not need to qualify as business records.”

See also Jesa Medical Supply, Inc. v. NYC Transit Authority (“Contrary to plaintiff’s argument, defendant was not required to establish that its denial of claim forms constituted evidence in admissible form pursuant to the business records exception to the rule against hearsay as set forth in CPLR 4518. Defendant did not submit the denials as memoranda “of any act, transaction, occurrence, or event” recorded therein (CPLR 4518[a]…[citations omitted] Instead, defendant submitted its copies of the denials only to show that these were the denials at issue in this case”)15; Beal-Medea Products v. NY Central Mutual Fire Ins. Co. (“Defendant did not offer the denial of claim forms to establish the truth of the matters asserted therein, but rather to show that the denials had been sent and that, therefore, the claims had been denied. As the denial of claim forms were not offered for a hearsay purpose, they did not need to qualify as business records…”)16

Looking Ahead

Addressing the argument raised by the dissent as well as a similar argument raised in Fair Price Med. Supply Corp. v. Travelers Indem. Co.,17 that failure to hold a plaintiff medical provider to a standard of proving the contents of its bills, i.e., that the services were actually performed, may lead to the onslaught of fraudulent claims, the majority held, “the risk of an insurer paying out fraudulent claims has been recognized by this Court (see Presbyterian Hosp., 90 NY2d at 285)[18]; however, as we have stated that risk is part of the price paid for swift, uncontested resolution of no-fault claims. Where no-fault benefits are not overdue, because of timely denial, the insurer’s compliance with the statute and regulations allows it to retain its right to contest the claims and prevent payment of fraudulent claims. An insurer providing no-fault benefits may not simply sit on its hands until litigation is commenced. Some action is required.”

The decision finally puts to bed the issue of whether a plaintiff may rely upon a third-party biller’s affidavit to satisfy its prima facie burden.

Endnotes:

  1. See “Blockbuster Decision Changes The No-Fault Landscape (Again)” by David M. Barshay, NYLJ, Feb. 13, 2014.
  2. 114 A.D.3d 33 (2d Dept. 2013).
  3. Viviane Etienne Med. Care v. Country-Wide Ins. Co., 25 N.Y.3d 498 (2015).
  4. 55 A.D.3d 644 (2d Dept. 2008).
  5. 31 Misc.3d at 24.
  6. 114 A.D.3d at 46.
  7. 55 A.D.3d 644 (2d Dept. 2008).
  8. 977 N.Y.S.2d at 301.
  9. The treating physician did not physically sign the bills, but instead, a notation on the signature line on each bill said “signature on file.”
  10. 2015 N.Y. Slip Op. 04787 (2015).
  11. Id.
  12. 9 N.Y.3d 312 (2007).
  13. 10 N.Y.3d 556 (2008).
  14. 27 Misc.3d 141(A) (App Term 2d, 11th & 13th Jud Dists. 2010).
  15. 41 Misc.3d 140(A) (App Term 2d, 11th & 13th Jud Dists. 2013).
  16. 36 Misc.3d 135(A) (App Term 2d, 11th & 13th Jud Dists. 2012).
  17. 10 N.Y.3d 556 (2008).
  18. Presbyterian Hospital in the City of New York v. Maryland Casualty Company, 90 NY2d 274 at 285 (1997).

David M. Barshay is a member of Baker Sanders in Garden City. Steven J. Neuwirth, a member of the firm, assisted in the preparation of this article.

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