Hereford Ins. Co. v. 21 Century Chiropractic Care

2024 NY Slip Op 33425(U)

• Court: New York Supreme Court, New York County
• Decided: September 30, 2024
• Docket: Index No. 150314/2022
• Status: Unpublished

Opinion

Hereford Ins. Co. v 21 Century Chiropractic Care 2024 NY Slip Op 33425(U) September 30, 2024 Supreme Court, New York County Docket Number: Index No. 150314/2022 Judge: Mary V. Rosado Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY

PRESENT: HON. MARY V. ROSADO PART 33M Justice ----------------X INDEX NO. 150314/2022 HEREFORD INSURANCE COMPANY, MOTION DATE 08/25/2024 Plaintiff, MOTION SEQ. NO. 002 - V -

21 CENTURY CHIROPRACTIC CARE, ALL CITY FAMILY HEALTHCARE, AMERIPATH NY, ANDREW HALL, CITYMD URGENT CARE, COMPREHENSIVE MRI OF NEW YORK, CROSS BAY ORTHOPEDIC SURGERY, CVAP MEDICAL P.C.,D&D DRUGS, INC.,DRAK MEDICAL EQUIPMENT INC.,EAST SIDE PRIMARY MEDICAL CARE, PC.ELENA BORISOVNA STYBEL, EMOTE MEDICAL SERVICES, EXACT ORTHOMED, INC.,EZ RELIEF MEDICAL, PC,FIFTH AVENUE SURGERY CENTER, FLORAL PARK DRUGS INC.,GALAXY RX INC.,INTERVENTIONAL PHYSICAL MEDICINE & REHAB MEDICINE OF NEW YORK PLLC,JR MEDICAL PC,LENCO DIAGNOSTIC DECISION + ORDER ON LABORATORY, MACINTOSH MEDICAL PC,MASPETH MED SUPPLY, INC.,MIKLOS LOSONCZY, MJG MEDICAL MOTION SERVICES PC,MULTIMED SUPPLY, INC.,NYC BEST SUPPLY, INC.,OLD STAR INC.,OPP RAPID DIAGNOSTIC INC.,OZONE RX INC.,PRIMAVERA PHYSICAL THERAPY, P.C.,REFUAH DIAGNOSTIC LLC,ROCKAWAY ASC DEVELOPMENT, LLC,RN SUPPLY INC.,S&N NYC INC.,SEDATION VACATION PERIOPERATIVE MEDICINE, PLLC,SKY RADIOLOGY P.C.,ST. BARNABAS HOSPITAL, TOTAL ANESTHESIA PROVIDER, PC,WELLCARE NEUROLOGY PLLC,RACHEL STEPNEY, VERONICA STEPNEY

Defendant. ------X

The following e-filed documents, listed by NYSCEF document number (Motion 002) 106, 107, 108, 109, 110,111,112,113,114,115,116,117,118,119,120,122,123,124,125,126,127 were read on this motion to/for DISMISSAL

Upon the foregoing documents, Defendants Cross Bay Orthopedic Surgery, Maspeth Med

Supply, Inc., Multimed Supply, Inc., NYC Best Supply, Inc., and Ozone RX Inc. (collectively

"Moving Defendants") motion to dismiss Plaintiff Hereford Insurance Company's Complaint

150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 1 of 7 AL Motion No. 002

[* 1] 1 of 7 INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

("Plaintiff') pursuant to CPLR 3211 (a)(5) and (7) is denied. Plaintiffs cross-motion for summary

judgment against Moving Defendants is granted.

I. Background

This is an action by Plaintiff attempting to disclaim no-fault benefits arising from a car

accident involving Defendants Veronica Stepney and Rachel Stepney (collectively "Claimants").

After the alleged accident, the Claimants sought treatment with various medical providers,

including the Moving Defendants. Plaintiff is attempting to disclaim coverage under a "founded

belief' defense and because Claimants failed to subscribe their EUO transcripts.

According to the Moving Defendants, Defendant Macintosh Medical PC ("Macintosh")

has already arbitrated against Plaintiff its entitlement to no-fault reimbursement related to

treatment provided to Claimants. Moving Defendants claim the arbitrator awarded Macintosh

reimbursement because the arbitrator found that Plaintiff failed to support its founded belief

defense by a preponderance of the evidence. Moving Defendants argue that the finding of the

arbitrator is entitled to collateral estoppel and res judicata. Moving Defendants argue that because

Plaintiff did not raise Claimants' failure to subscribe their EUO transcripts in the arbitration

proceeding against Macintosh, collateral estoppel should also be applied to that defense. They

further request this Court find that reimbursement to no fault benefits should not be denied simply

because the Claimants did not subscribe their EUO transcripts.

Plaintiff cross-moves for summary judgment. Plaintiff cites to First Department precedent

holding that failure to subscribe an EUO transcripts constitutes a violation of a condition precedent

allowing for disclaimer of no-fault benefits. They also argue that Moving Defendants' motion is

procedurally defective because there it is not supported by an affidavit from someone with personal

knowledge. Plaintiff argues the Moving Defendants' motion is without merit as none of the

150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 2 of 7 AL Motion No. 002

2 of 7 [* 2] INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

Moving Defendants were parties to any of the arbitrations they rely on, and that the Moving

Defendants initiated their own arbitrations but withdrew from those arbitrations prior to any final

determination. Plaintiff argues because the failure to subscribe defense was not brought in any

arbitration, there is no preclusive effect, and in any event, where an arbitral award ignores First

Department precedent, it must be vacated.

Moving Defendants oppose the cross-motion by asserting that the Claimants executed and

returned their EUO transcripts on June 19, 2024. Moving Defendants argue therefore the second

cause of action which seeks to disclaim coverage based on failure to subscribe their EUO

transcripts is now moot. They also argue that Plaintiff's post-EUO verification requests lacked the

requisite language to place them on notice that failure to subscribe could result in denial of their

claims.

In reply, Plaintiff argues that their requests for post-EUO verification were proper. They

also argue that the executed EUO transcripts lack the proper foundation to be deemed evidence in

opposition to the motion as there is no affidavit indicating how these signatures were obtained or

that the signatures do in fact belong to Claimants. Plaintiff argues that in any event, the executed

transcripts are untimely.

II. Discussion

A. Moving Defendants' Motion to Dismiss

i. Collateral Estoppel & Res Judicata

Collateral estoppel is an equitable doctrine, grounded in the facts and realities of a

particular litigation, and is not to be applied rigidly (Buechel v Bain, 97 NY2d 295, 303 [2001];

Tydings v Greenfield, Stein & Senior, LLP, 43 AD3d 680,684 [1st Dept 2007]; Pustilnikv Battery

Park City Authority, 71 Misc.3d 1058, 1069 [Sup Ct, New York County 2021]). "The fundamental

150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 3 of 7 AL Motion No. 002

3 of 7 [* 3] INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

inquiry is whether re-litigation should be permitted in a particular case in light of fairness to the

parties, conservation of the resources of the courts and the litigants, and the societal interests in

consistent and accurate results." Buechel at 304. The litigant seeking the benefit of collateral

estoppel must show that the decisive issue was necessarily decided in the prior action against a

party, or one in privity with a party, while the party to be precluded bears the burden of

demonstrating the absence of a full and fair opportunity to contest the prior determination (id.).

Under the doctrine of res judicata, a final adjudication of a claim precludes relitigating that

claim and all claims arising out of the same transaction or series of transactions by a party

(Martinez v JRL Food Corp., 194 AD3d 488 [1st Dept 2021 ]).

Here, the Court declines to apply the doctrines of collateral estoppel and res judicata to

Plaintiffs failure to subscribe cause of action. 1 Moving Defendants concede that the failure to

subscribe defense was not raised by Plaintiff in the prior arbitrations and therefore there has been

no determination on the merits of that claim. Moreover, there is a lack of identical parties as

Moving Defendants rely on an arbitration which did not include them but included Plaintiff and

co-defendant Macintosh. As there has been no final adjudication of this claim between Plaintiff

and the Moving Defendants, neither res judicata nor collateral estoppel can apply to bar this cause

of action.

11. Failure to State a Claim

When reviewing a motion to dismiss for failure to state a claim, the Court must give the

Plaintiff the benefit of all favorable inferences which may be drawn from the pleadings and

determines only whether the alleged facts fit within any cognizable legal theory (Sassi v Mobile

1 Because the Court grants Plaintiffs motion for summary judgment based on Claimants' failure to subscribe, Moving Defendants' arguments related to Plaintiffs founded belief cause of action are moot and the Court need not address them. 150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 4 of 7 AL Motion No. 002

4 of 7 [* 4] INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

Life Support Services, Inc., 37 NY3d 236,239 [2021]). All factual allegations must be accepted as

true (Allianz Underwriters Ins. Co. v Landmark Ins. Co., 13 AD3d 172, 174 [1st Dept 2004]).

Conclusory allegations or claims consisting of bare legal conclusions with no factual specificity

are insufficient to survive a motion to dismiss (Godfreyv Spano, 13 NY3d 358,373 [2009]; Barnes

v Hodge, 118 AD3d 633, 633-634 [1st Dept 2014]). A motion to dismiss for failure to state a claim

will be granted if the factual allegations do not allow for an enforceable right of recovery

(Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d 137, 142 [2017]).

Moving Defendants seek dismissal of Plaintiffs failure to subscribe cause of action under

CPLR 321 l(a)(7). On a motion to dismiss for failure to state a claim, the Court merely ascertains

whether a claim has been alleged based on the pleadings. The Court finds Moving Defendants'

argument that their founded belief cause of action contradicts the failure to subscribe cause of

action to be without merit. There is no bar on Plaintiff seeking to disclaim no-fault benefits under

multiple grounds, and in any event, Plaintiff may maintain a founded belief defense while at the

same time seeking to disclaim coverage for failure to comply with a condition precedent to

coverage. Moreover, Moving Defendants' citation to a variety of arbitral decisions which refused

to enforce the failure to subscribe defense contradicts First Department precedent and is no

grounds to dismiss Plaintiffs second cause of action (see Kemper Independent Ins. Co. v

Cornerstone Chiropractic, P.C., 185 AD3d 468 [1st Dept 2020]). Therefore, Moving Defendants'

motion to dismiss is denied.

B. Plaintiff's Cross-Motion for Summary Judgment

Plaintiffs motion for summary judgment against the Moving Defendants on its second

cause of action seeking to disclaim coverage based on Claimants' failure to subscribe is granted.

The First Department has repeatedly held that failure to subscribe and return an EUO transcript

150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 5 of 7 AL Motion No. 002

5 of 7 [* 5] INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

constitutes a violation of a condition precedent to no-fault coverage (see Kemper Independent Ins.

Co. v Cornerstone Chiropractic, P.C., 185 AD3d 468 [1st Dept 2020]; Hereford Ins. Co. v Forest

Hills Medical, P.C., 172 AD3d 567 [1st Dept 2019]; Hertz Vehicles, LLC v Gejo, LLC, 161 AD3d

549 [1st Dept 2018]).

Plaintiff has met itsprimafacie burden of showing Claimants' failure to subscribe through

the affidavit of Joronda McBurnie, a no-fault adjuster employed by Plaintiff (NYSCEF Doc. 118).

Moreover, Plaintiff produced multiple letter requests to Claimants and their attorney seeking

verification of their EUO transcript with a warning that failure to do so will result in denial of their

claim (NYSCEF Doc. 120). Moreover, it is undisputed that the EUO transcripts were never

executed in the allotted time period, despite same being provided to the Claimants and their

counsel. Thus, under well-established First Department case law, Plaintiff is entitled to disclaim

reimbursement to Moving Defendants based on treatment provided to Claimants whose coverage

was denied (Kemper Independence Ins. Co. v Cornerstone Chiropractic, P.C., 185 AD3d 468 [1st

Dept 2020]).

Although Moving Defendants have produced unauthenticated and executed EUO

transcripts, this was done nearly three years after the verification requests were sent and well after

this declaratory judgment action was initiated. Moreover, there is no foundation as to the

authenticity of the signatures and therefore it would be improper for this Court to consider them

in opposition to Plaintiffs motion for summary judgment. Although Moving Defendants argue

that because Claimants were not put on notice that they had 120 days to provide a verification,

they were sent multiple verification requests, with the last requesting return of an executed

transcript within 30 days (see NYSCEF Docs. 119-120). The failure to state explicitly Claimants

had 120 days to return an executed EU O transcript may be considered a "technical defect excusable

150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 6 of 7 AL Motion No. 002

[* 6] 6 of 7 INDEX NO. 150314/2022 NYSCEF DOC. NO. 134 RECEIVED NYSCEF: 09/30/2024

under 11 NYCRR 65-3.5(p)" (Kemper, supra at 469). In any event, the verified transcripts were

never returned, either within the 30-day or 120-day window, and failure to comply with a condition

precedent to coverage voids the policy ab initio ( Unitrin Advantage Ins. Co. v Bayshore Physical

Therapy, PLLC, 82 AD3d 559, 560 [1st Dept 2011] citing Central Gen. Hosp. v Chubb Group of

Ins. Cos., 90 NY2d 195, 199 [1997]). Therefore, Plaintiff's cross-motion for summary judgment

is granted.

Accordingly, it is hereby,

ORDERED that Moving Defendants' motion to dismiss Plaintiff's Complaint is denied;

and it is further

ORDERED that Plaintiff's cross-motion for summary judgment against Moving

Defendants based on the Claimants failure to subscribe their EUO transcripts is granted; and it is

further

ORDERED that within ten days of entry, Plaintiff shall e-mail to SFC-

Part33@nycourts.gov a proposed order containing the requested declaratory relief against Moving

Defendants seek in its summary judgment motion; and it is further

ORDERED that within ten days of entry, Plaintiff shall serve a copy of this Decision and

Order, with notice of entry, on all parties via NYSCEF; and it is further

ORDERED that the Clerk of the Court is directed to enter judgment accordingly.

This constitutes the Decision and Order of the Court.

9/30/2024 DATE HON MARY V. ROSADO, J.S.C.

~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED □ DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

150314/2022 HEREFORD INSURANCE COMPANY vs. 21 CENTURY CHIROPRACTIC CARE ET Page 7 of 7 Al Motion No. 002

7 of 7 [* 7]