Address Error on IME Letter to Claimant Doesn’t Matter if Letters Also Went to Claimant’s Lawyer
In the Matter of the Arbitration between: Right Choice Supply, Inc. and Unitrin Advantage Insurance Company
Edited by Lawrence N. Rogak
This case stems from a motor vehicle collision which occurred on November 14, 2015 wherein the EIP, (hereinafter referred to as “TC”), allegedly sustained injuries. Applicant seeks compensation for the provision of a CPM and CTU, from February 23, 2016 through May 30, 2016. Respondent denied the claim on the ground TC failed to appear for scheduled Independent Chiropractic Examinations. Another issue to be addressed is respondent’s ‘lack of coverage’ defense premised upon an alleged ‘founded belief’ the accident was staged and, consequently, not a covered incident.
The case was initially assigned to Arbitrator Paul Keenan. In his Award, the issue presented was: “Whether applicant is entitled to payment for CPM and CTU despite denials based on failure to appear for IME.” Arbitrator Keenan’s Award, dated December 4, 2017, favored applicant. Specifically, Arbitrator Keenan determined respondent mailed IME scheduling letters to the EIP, “TC” at an improper address. More to the point, he determined the scheduling letters had the wrong Zip Code. Based on the foregoing, Arbitrator Keenan concluded respondent did not substantiate its IME no-show defense. Arbitrator Keenan’s Award also notes at the hearing respondent argued that TC breached a condition precedent to coverage by failing to sign and return his EUO transcript. The Arbitrator was not persuaded by respondent’s argument
Respondent filed for Master Arbitration and the matter was assigned to Master Arbitrator Anne L. Powers. The issue, as framed by the Master Arbitrator: “Was the NFA’s decision to award benefits to the applicant, despite respondent’s denial based upon the EIP’s failure to attend an IME, arbitrary, capricious and incorrect as a matter of law …” Master Arbitrator Powers concluded Arbitrator Keenan’s Award “deserved reversal.”
She specified what aspects were to be heard before a new Arbitrator:
(1) Respondent’s claim Arbitrator Keenan misapprehended the established facts with respect to the IME defense; and
(2) Respondent’s claim Arbitrator Keenan failed to follow established law based on the claimant’s failure to subscribe his EUO testimony.
According to Master Arbitrator Powers, Arbitrator Keenan committed reversible error by not considering respondent’s defense based on a founded belief the alleged injuries and subsequent treatment were not related to an insured incident, which would be considered a non-covered event under the No-Fault Regulations. She indicated: “The Arbitrator failed to acknowledge respondent’s lack of coverage defense.”
DETERMINATION
Issue #1: Consequence of Failure to Sign/Return EUO Transcript
Respondent’s position the EIP breached a condition precedent to coverage because he failed to sign and return his EUO testimony is unpersuasive. The failure of the EIP to sign and return an EUO transcript is not a breach of condition precedent because in accordance with the Appellate Division Second Department and CPLR 3116 (a)- If the witness fails to sign and return the deposition within sixty days, it may be used as fully as though signed.
Additionally, In City Care Acupuncture, P.C. v. Hereford Ins. Co., 54 Misc.3d 131 (A), 2017 N.Y. Slip Op. 50037(U) (App. Term 2d, 11 & 13 Dists. Jan. 5, 2017) the Court held that an EUO transcript is properly considered if certified, even if it is not signed by the person examined.
#2: IME “NO-SHOW” Defense
Respondent provided the IME scheduling letters, dated December 29, 2015 and January 19, 2016. The IMEs were scheduled before chiropractor, Glenn Berman, for January 13, 2016 and February 10, 2016, respectively. Each letter was sent to the EIP at 1459 5th Avenue [apartment number omitted to protect privacy of EIP] 10033. The letters were also addressed to the law firm of Mitchell Klafter, P.C. Respondent submitted sufficient proof of the fact the EIP failed to appear for the IMEs as scheduled. Specifically, respondent provided the affidavit of Dr. Berman, who affirmed as to his personal knowledge the EIP failed to appear as scheduled.
The issue of significance here is whether the evidence provided by respondent is sufficient to establish proof of timely and properly mailing the IME scheduling letters. I have reviewed the evidence, and agree with Arbitrator Keenan that the IME scheduling letters were mailed to an incorrect address. Respondent submitted an affidavit from Deborah Chambers, an employee of its vendor retained to schedule and monitor IMEs. Therein, Ms. Chambers confirms the IME scheduling letters were mailed to the EIP at his address, with the Zip Code of 10033, “… the Assignor’s address as provided to the insurer.” Despite her claim to the contrary, there is no evidence whatsoever the EIP provided the ‘10033’ Zip Code. In fact, the EIP’s residential address is within Zip Code 10035, as confirmed upon review of the AR-1; NF-3; Police Accident Report; Applicant’s Delivery Receipt; and most significantly by the EIP himself at his EUO conducted on February 3, 2016. Respondent has not come forward with any evidence to show it used the correct Zip Code. In summary, the evidence establishes respondent mailed the IME scheduling letters to the EIP at an incorrect address.
While Arbitrator Keenan ceased his analysis upon finding the respondent mailed the IME scheduling letters to the EIP using the wrong Zip Code, I have reviewed the evidence and find the inquiry should not have stopped at that point. Indeed, as noted above, each IME scheduling letter was also sent to the law firm of Mitchell Klafter, P.C. Neither the No-Fault Insurance Law nor the regulations promulgated thereunder specify the manner in which a request or notice is be given. It has been held that mailing pleadings to a party’s attorney did not constitute valid service when there was no evidence that the party authorized the attorney to accept such pleadings. (Broman v Stern, 172 A.D.2d 475 [2d Dept 1991].)”
So the question becomes, did the law firm of Mitchell Klafter, P.C. represent the EIP in relation to his no-fault claim? One cannot find the answer to that question in the form of an attorney’s letter of representation, as the record before me contains no such letter. That said, I find sufficient evidence from which to infer Mitchell Klafter, P.C. was indeed authorized to, and did, represent the EIP in pursuit of his no-fault claim. To start with, respondent’s IME scheduling letters (dated 12/29/15 & 1/19/16) were both copied to the law firm of Mitchell Klafter, P.C. The Global Denial, terminating benefits based on the EIP’s failure to appear for IMEs, was copied to the law office of Mitchell Klafter, P.C. Finally, the EIP testified at an examination under oath on February 3, 2016, and the EUO transcript confirms his counsel was Mitchell Klafter, P.C. As such, it is clear the law office of Mitchell Klafter, P.C. represented the EIP on no-fault matters. The IME scheduling letters were mailed to the EIP’s attorney, and I find as agent to the EIP the attorney was authorized to receive same. In matters involving insurance claims, where the insurer has been apprised that a claimant has counsel, appellate court decisions hold that statutory notices to the claimant may properly be sent to “the claimant’s attorney, rather than to the claimant personally.” See Excelsior Insurance Company v. Antretter Contracting Corp., 262 A.D.2d 124, 127, 693 N.Y.S.2d 100 (1st Dept 1999); see also St. Vincent’s Hosp. v. Am. Tr. Ins. Co., 299 A.D.2d 338, 339-340, 750 N.Y.S.2d 98 (2d Dept 2002).
The respondent’s mailing affidavit also confirms proof of mailing the IME scheduling letters to the EIP’s attorney. Applicant has come forward with no contrary evidence. Sufficient proof of mailing and proof of the “no-shows” having been provided, I find the evidence establishes a breach of a condition precedent to coverage. I find respondent substantiated the basis for its denial on the ground the EIP failed to appear for scheduled IMEs, and as such, this claim is denied in its entirety.
Issue #3: Did Respondent Have “Founded Belief” Accident Was Not A Covered Event
As noted earlier in this Award, respondent’s position the collision was not a covered incident was made by respondent for the first time at the hearing before Arbitrator Keenan. This was the position of respondent that Master Arbitrator Powers suggested was not entertained by the lower Arbitrator. At the hearing before me, I presented respondent’s counsel with a series of questions so as to confirm what, precisely, respondent was asserting. Respondent’s counsel confirmed respondent’s position it had a founded belief the subject collision was staged and, consequently, was not a covered event.
“The defense of lack of coverage premised on an intentional collision or a staged one need not be timely asserted in a Form NF-10 denial of claim. Central General Hospital v. Chubb Group, 90 N.Y.2d 195, 659 N.Y.S.2d 246 (1997). In other words, where such a defense is asserted by a No-Fault insurer, it is not held to compliance with the 30-day Deadline prescribed by Insurance Law Section 5106(a) and 11 NYCRR 65-3.8(a)(1) for paying or denying a bill for health care services. Thus, even though respondent’s denials did not specifically state that the loss was not an accident for which there was coverage, it is legally irrelevant. “An insurer may assert at any time that the accident arises from an insurance fraud scheme or that the alleged injury was not caused by an insured incident and is therefore not covered under [the subject] policy” Vital Points Acupuncture, PC v. New York Central Mutual fire Insurance Co., 6 Misc.3d 1031(A), 800 N.Y.S.2d 358 (Table), 2005 N.Y. Slip Op. 50267(U) at 2, 2005 WL 515601 (Civ. Ct. Kings Cty., Bluth, J., Mar. 3, 2005).
No-Fault insurance policies only cover vehicular accidents. An accident is, by definition, unintentional; a deliberate collision is not an accident. Therefore, damages resulting from a deliberate collision are not covered by no-fault insurance. V.S. Medical Services, PC v. Allstate Insurance Co., 11 Misc.3d 334, 338, 811 N.Y.S.2d 886 (Civ. Ct. Kings Co. 2006), aff’d 25 Misc.3d 39, 889 N.Y.S.2d 360 (App. Term 2d, 11th & 13 Dists. 2009). Where a collision is staged – rather than being an accident – it is irrelevant whether the collision was staged in furtherance of an insurance fraud scheme or was deliberately caused under some other circumstances.
If the incident was a deliberate act, it would not be covered. However, unsubstantiated hypotheses and suppositions are insufficient to raise a triable issue of Assignor’s fraud. A.B. Medical Services PLLC v Eagle Insurance Co., 3 Misc.3d 8. That said, an insurer’s evidence of a purposeful collision will often be circumstantial. In the absence of a confession from one of the participants, the arbiter of the facts must examine the facts and circumstances of the incident to determine whether they give rise to an inference of a staged collision. Circumstantial evidence is sufficient if a party’s conduct may be reasonably inferred based upon logical inferences to be drawn from the evidence.
Fraud in No-Fault cases may be proven by circumstantial evidence. ‘Circumstances insignificant in themselves may acquire probative force as links in the chain of circumstantial proof.’ A.B. Medical Services, PLLC v. State Farm Mut. Auto. Ins. Co., 7 Misc.3d 822-828, 795 N.Y.S.2d 843, 849 (Civ. Ct. Kings Cty. 2005). The strength of inferences of fraud must be measured by common sense and the logic of common experience itself.”
While there is not much evidence tending to indicate an intentional collision on the part of the EIP, what there is, in my view, simply defies common sense and raises genuine questions regarding the validity of the loss and subsequent medical treatment. There were three (3) occupants of the insured vehicle, the driver, “TC”, the front seat passenger, “DA” and the back seat passenger, “XH”. The following is some of the noteworthy testimony:
– XH did not know her own home address;
– XH claimed the driver, TC, was like a brother to her boyfriend, DA, and like a brother to her as well, yet she did not know his first name. Moreover, TC testified he did not know XH well and never met her before the date of the accident;
– XH and DA testified TC exited the vehicle at the scene after the accident, whereas TC testified he did not exit his vehicle;
– XH testified TC drover his vehicle away from the scene after the accident, and took her and DA back to DA’s home. However, TC testified after the accident his son arrived to the scene and drove TC back home in TC’s vehicle, but that XH and DA remained at the scene;
– XH and DA did not know the make, model or color of the vehicle in which they were occupants at the time of the accident;
– XH testified all three occupants first went to dinner at a buffet, but then went back to DA’s home. She testified at some point it was decided the three would drive to DA’s niece and the accident occurred on the way to DA’s niece. However, TC and DA both make no mention of visiting the niece of DA and, in fact, both testified the accident occurred immediately after leaving the buffet dinner on their way back to DA’s home;
– XH treats four times per week, yet could not recall the name of the clinic, address or names of any providers;
– TC testified he was walking down the street one day and stumbled upon the clinic where he treats, whereas XH testified she knew of the clinic prior to the accident and after the accident told both TC and DA about it;
– DA had little to no knowledge of the treatment he had received.
***
These factors, combined, give rise to an inference of a staged collision, leading me to find that Respondent did possess a ‘founded belief’ that the alleged injuries in this case did not arise out of a covered insured accident. See, Central General Hospital v. Chubb Group. While they might be considered circumstantial, they are compelling in leading one to objectively believe that the subject loss was a staged collision.
A claimant’s prima facie showing establishes a presumption of coverage, and the burden of going forward on the issue of coverage falls upon the insurer; once the insurer comes forward with proof for its belief that the claimed loss was a staged accident, the burden shifts to the claimant to prove coverage by a preponderance of the evidence. New York Massage Therapy, PC v. State Farm Mutual Insurance Co., 14 Misc.3d 1231(A), 836 N.Y.S.2d 494 (Table), 2006 N.Y. Slip Op. 52573(U), 2006 WL 4057169 (Civ. Ct., Kings Cty., Sylvia G. Ash, J., Dec. 22, 2006). Respondent here met its prima facie burden of coming forward with persuasive proof for its objective founded belief that the claimed loss was a staged accident. The burden shifted back to applicant to prove coverage by a preponderance of the evidence. Applicant here failed to meet its burden.
Based upon the evidence submitted for review, I find respondent did possess a founded belief the collision was not a covered event. Respondent is relieved from having to pay No-Fault compensation under the subject insurance policy.
CONCLUSION
For all of the foregoing reasons, set forth in issues 2 & 3, above, the within arbitration claim is denied in its entirety.
I find as follows with regard to the policy issues before me:
– The policy was not in force on the date of the accident
– The applicant was excluded under policy conditions or exclusions
– The applicant violated policy conditions, resulting in exclusion from coverage
– The applicant was not an “eligible injured person”
– The conditions for MVAIC eligibility were not met
– The injured person was not a “qualified person” (under the MVAIC)
– The applicant’s injuries didn’t arise out of the “use or operation” of a motor vehicle The respondent is not subject to the jurisdiction of the New York No-Fault arbitration forum.
Accordingly, this award is in full settlement of all no-fault benefit claims submitted to this arbitrator.
AAA Case No. 17-16-1044-7502
Keith Tola, arbitrator
Award date: 05/23/2018
