| Infinity Health Prods., Ltd. v Eveready Ins. Co. |
| 2009 NY Slip Op 08585 [67 AD3d 862] |
| November 17, 2009 |
| Appellate Division, Second Department |
| Infinity Health Products, Ltd., as Assignee of Jermaine Thomson,Respondent, v Eveready Ins. Co., Appellant. |
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In an action to recover assigned first-party no-fault benefits under an insurance contract, thedefendant appeals, by permission, from an order of the Appellate Term of the Supreme Court forthe Second, Eleventh, and Thirteenth Judicial Districts, dated July 10, 2008, which affirmed anorder of the Civil Court of the City of New York, Kings County (Chan J.), dated March 8, 2007,which granted the plaintiff's motion for summary judgment on the complaint in the principal sumof $2,028.50 and denied its cross motion for summary judgment dismissing the complaint.
Ordered that the order dated July 10, 2008 is reversed, on the facts and in the exercise ofdiscretion, with costs, the order of the Civil Court of the City of New York, Kings County, isreversed, the plaintiff's motion for summary judgment on the complaint is denied, and thedefendant's cross motion for summary judgment dismissing the complaint is granted, withoutprejudice to commencement of a new action.
On November 15, 2000 Jermaine Thomson was injured in an automobile accident. At thetime of the accident, the defendant Eveready Ins. Co. was Thomson's no-fault insurance carrier.As a result of the accident, the plaintiff Infinity Health Products, Ltd., provided medical suppliesto Thomson. On March 14, 2001 the plaintiff, as assignee of Thomson, submitted to thedefendant a claim for payment for the medical supplies.
Seven days later, on March 21, 2001, the defendant sent a letter to the plaintiffacknowledging receipt of the bills and advising that it could not process the request until itreceived further verification of the claim. The plaintiff did not respond to this verificationrequest. On April 17, 2001, 27 days after the first verification request was sent, the defendantsent a second verification request to the plaintiff. The plaintiff also did not respond to the secondverification request.
In February 2005, the plaintiff commenced this action in the Civil Court of the City of NewYork, Kings County, inter alia, to recover the sum of $2,028.50, the cost of the medical [*2]supplies it provided to Thomson. The plaintiff moved for summaryjudgment on the complaint, arguing, among other things, that the defendant failed to pay or denythe claim within 30 days as required by 11 NYCRR former 65.15 (g) (3) (now 11 NYCRR65-3.8 [c]). The defendant cross-moved for summary judgment dismissing the complaint,asserting, inter alia, that the action was "not ripe[ ] pending verification requests."
The Civil Court granted the plaintiff's motion and denied the defendant's cross motion,holding that the defendant failed to precisely comply with regulations promulgated by theSuperintendent of Insurance (hereinafter the Insurance regulations) because it did not wait a full30 days (after the plaintiff failed to respond to the first verification request) before sending out asecond verification request. The defendant appealed to the Appellate Term for the Second,Eleventh, and Thirteenth Judicial Districts, which affirmed the order in a 2-1 decision. TheAppellate Term majority concluded, among other things, that the defendant's follow-upverification demand, which was mailed 27 days after its initial demand, was "premature andwithout effect."
Pursuant to Insurance Law § 5106 (a) and the Insurance regulations, an insurer musteither pay or deny a claim for motor vehicle no-fault benefits, in whole or in part, within 30 daysafter an applicant's proof of claim is received (see Insurance Law § 5106 [a]; 11NYCRR former 65.15 [g] [3], now 11 NYCRR 65-3.8 [c]; see also 11 NYCRR 65-3.5)An insurer can extend the 30-day period within which to pay or deny a claim by making a timelydemand for further verification of the claim (see 11 NYCRR former 65.15 [d] [2]).
There is no dispute here that the defendant timely requested initial verification by sendingout its verification request within seven days (on Mar. 21, 2001) after receipt of the plaintiff'sclaim (on Mar. 14, 2001). There also is no dispute that the plaintiff did not respond to thedefendant's timely initial verification request. An insurer does not have to pay or deny a claimuntil it has received verification of all of the relevant information requested (see 11NYCRR former 65.15 [g] [1] [i]; [2] [iii]). The issue in this case is whether an insurer loses thetoll of the 30-day rule to pay or deny the claim, which is afforded by an initial timely request forverification, simply because its follow-up verification request is sent 3 days before the expirationof a full 30 days after a plaintiff fails to respond to the initial request. The Insurance regulationsstated, in pertinent part, that "if any requested verification has not been supplied to the insurer 30calendar days after the original request, the insurer shall, within 10 calendar days, follow up withthe party from whom the verification was originally requested" (11 NYCRR former 65.15 [e][2]).
Although the defendant in this case did not strictly comply with the time limitation set forthin the rule regarding the submission of a second verification request, under the circumstances ofthis case, the plaintiff is estopped from claiming that the defendant is precluded from assertingany defense to the claim. It would be inequitable to award summary judgment to the plaintiff,which ignored two verification requests, merely because the defendant, slightly prematurely, sentits second verification request a mere 3 days before the expiration of a full 30 days after the firstverification request had been sent (see New York & Presbyt. Hosp. v American Tr. Ins. Co.,287 AD2d 699 [2001]; see generally Chemical Bank v City of Jamestown, 122AD2d 530 [1986]; Guberman v William Penn Life Ins. Co. of N.Y., 146 AD2d 8[1989]). Indeed, in light of the particular factual circumstances herein, it would be incongruousto conclude that the Insurance regulation regarding follow-up verification, or any other statute orrule, warrants a result which would, in effect, penalize an insurer who diligently attempts toobtain the information necessary to make a determination of a claim, and concomitantly, rewardsa plaintiff who makes no attempt to even comply with the insurer's requests. Such a result is notcontemplated by the "no-fault law" or its regulations, which should be interpreted to promote theexpeditious handling of verification requests and prompt claim resolution.
Furthermore, inasmuch as the plaintiff did not respond to either of the verification requests,the 30-day period within which the defendant was required to pay or deny the claim did notcommence to run (see 11 NYCRR former 65.15 [g] [1] [i]; [2] [iii]; WestchesterCounty Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]). Thus, theplaintiff's action is premature (seeHospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007];Hospital for Joint [*3]Diseases v ELRAC, Inc., 11 AD3d 432 [2004]).
Accordingly, the plaintiff was not entitled to summary judgment on the complaint, and thedefendant's cross motion for summary judgment dismissing the complaint should have beengranted (see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262AD2d at 553; see generally Alvarez v Prospect Hosp., 68 NY2d 320 [1986]), withoutprejudice to commencement of a new action. Mastro, J.P., Santucci, Chambers and Lott, JJ.,concur.