Richard Tsai, J.
Law Offices of Rubin & Nazarian (Joseph Kuroly of counsel), New York City, for defendant. Sanders Barshay Grossman, LLC (Edward A. Cespedes of counsel), New York City, for plaintiff. Richard Tsai, J.
In this action seeking to recover assigned first-party no-fault benefits, defendant moves for summary judgment dismissing the complaint on the ground that the action is premature, because plaintiff did not provide MRI films demanded pursuant to a verification request (Motion Seq. No. 001). Plaintiff opposes the motion, arguing that it had responded that it would send the films after it received payment from defendant for the reasonable costs of the films. It is undisputed that no payment for the films was ever sent.
The issue presented is whether the toll upon the insurer's time to pay or otherwise deny a claim, which was triggered by a verification request for the provider to provide MRI films, ends when the provider responds that the films will be sent only after the insurer reimburses the provider for the reproduction costs of those films.
BACKGROUNDOn October 31, 2017, plaintiff's assignor, Shahrooz Sabzehroo, was allegedly injured in an automobile accident (see defendant's exhibit C in support of motion, police accident report; see also defendant's exhibit A in support of motion, complaint ¶ 3).
On December 5, 2017, plaintiff allegedly took MRIs of Sabzehroo's right knee and left knee, billed separately in the amount of $878.67 for each knee (see defendant's exhibit E in support of motion, NF-3 forms). On December 6, 2017, plaintiff allegedly took MRIs of Sabzehroo's cervical and lumbar spine, billed in the amount of $879.73 and $912.00, respectively (see id., NF-3 forms). Plaintiff allegedly submitted these bills to defendant, and defendant allegedly neither paid nor denied the bills within 30 days of receipt (complaint ¶¶ 16-17, 20, 40-41, 44, 64-65, 68, 88-89, 92).
Verification Requests & Responses
On January 11, 2018, defendant allegedly mailed a verification request to plaintiff to submit, among other things, "copies of the MRI/CD Film for dates of services 12/5/17 & 12/6/17, lumbar, cervical, right knee, and left knee" (see defendant's exhibit E, 1st Request). On February 14, 2018, defendant allegedly mailed a follow-up verification request to plaintiff for those MRI films (see id., 2nd Request).
Defendant's verification request and follow-up requests each combined all four bills into a single letter.
On February 16, 2018 and March 8, 2018, plaintiff's counsel allegedly mailed to defendant undated letters bearing the heading "VERIFICATION COMPLIANCE" for the MRIs taken of Sabzehroo's cervical spine and one of Sabzehroo's knees (see plaintiff's exhibit 1 in opposition to motion). The letters identically stated,
Plaintiff's counsel apparently responded to the verification requests with separate letters with respect to each bill. In its exhibits to the court, plaintiff's counsel arranged all the undated responses to the verification requests and follow-up requests, which were sent on different dates and involved different bills, under a single exhibit tab. For the sake of clarity, the court will refer to documents submitted under that single exhibit tab based on the page number assigned by the document viewer used to access the electronically filed opposition papers. Pages 7 through 14, and pages 15 through 20, of plaintiff's opposition papers apparently pertain to the MRIs taken of the Sabzehroo's left and right knees. These pages reference dates of service on December 5, 2017, billed in the amount of $876.67. Pages 21 through 26 apparently pertain to the MRI taken of Sabzehroo's lumbar spine, as these pages reference a date of service on December 6, 2017, billed in the amount of $912.00. Pages 27 through 34 apparently pertain to the MRI taken of Sabzehroo's cervical spine, as these pages reference a date of service on December 6, 2017, billed in the amount of $879.73. Because the MRIs of plaintiff's knees were taken on the same day, and were billed for the same amount, it cannot be determined from the "Verification Compliance" letter allegedly mailed on February 16, 2018 whether that response was meant for the request of the MRI taken of the left or right shoulder.
"Please see the attached responses to your request for verification dated 01/11/2018. This comprises full and complete compliance with the demand based on documents and information in control of the Provider. . . .Pursuant to Radiology Ground Rule 8, a copy of the MRI Film/CD/or Electronic Media will be provided upon receipt of $5.00, made payable to Lenox Hill Radiology, P.C." (see plaintiff's exhibit 1 in opposition to motion). On March 13, 14, and 21, 2018, plaintiff's counsel allegedly mailed to defendant undated "VERIFICATION COMPLIANCE" letters in response to defendant's follow-up verification request dated February 14, 2018, with respect to all four bills (see id.).
Meanwhile, by a letter dated March 14, 2018, defendant acknowledged receipt of an undated "Verification Compliance" letter, and responded, in relevant part:
"When a carrier or self insured employer requests x-rays, MRI's or other recorded images and satisfactory reproductions including electronic media are furnished in lieu of the original films, a fee of $5.00 may be charged for the first sheet of duplicating film or electronic media and $3.00 for each additional film or electronic media; payment issued under separate cover(defendant's exhibit E in support of motion). On April 18, 2018, defendant allegedly mailed to plaintiff a similar letter stating,
Your claim remain [sic] in delay for the requested verification. . . .
In order to properly evaluate your claim, we are still awaiting:
Submit the MRI film/CD of the right knee, left knee, lumbar spine and cervical spine performed on 12/05/17 and 12/06/17.
Regulation 68 65-3 . 5(c) states the insurer is entitled to receive all items necessary to verify the Claim directly from the parties from which such verification was requested[ . ]
Until all verification is received, your claim will remain in delay status"
"Payment for MRI invoice will be paid under separate cover[.](defendant's exhibit E in support of motion).
Your claim remain [sic] in delay for the requested verification. . . .
In order to properly evaluate your claim, we are still awaiting:
Submit the MRI film/CD of the right knee, left knee, lumbar spine and cervical spine performed on 12/05/17 and 12/06/17[.]
* * *
Until all verification is received, your claim will remain in delay status"
On May 1, 2018, plaintiff's counsel allegedly mailed to defendant undated "VERIFICATION COMPLIANCE" letters in response to defendant's follow-up verification request dated March 14, 2018, with respect to all four bills, which were nearly identical to the prior responses which plaintiff sent in February and March 2018 (plaintiff's exhibit 1 in opposition to motion). On May 29, 2018, plaintiff's counsel allegedly mailed to defendant undated "VERIFICATION COMPLIANCE" letters in response to defendant's April 18, 2018 follow-up request, and the responses were nearly identical to plaintiff's prior responses (id.).
Meanwhile, on May 15, 2018, defendant allegedly mailed to plaintiff another follow-up verification request, which was almost identical to the follow-up request which defendant allegedly mailed on April 14, 2018, i.e., that defendant was still awaiting the MRI films and that the claims were in delay status until they were received (see defendant's exhibit E in support of motion). This follow-up request indicated that the MRI invoice was paid under separate cover (see id.).
The instant action
On September 27, 2018, plaintiff commenced this action seeking to recover assigned first-party no-fault benefits, with interest plus attorneys' fees accident (defendant's exhibit A in support of motion, summons and complaint). On October 30, 2018, defendant allegedly answered the complaint (id., answer and affidavit of service).
On December 15, 2020, the court held oral argument on defendant's motion. At argument, the parties agreed that the only items requested for verification which remained outstanding were the MRI films. Additionally, it was undisputed that no payment for the MRI films was ever sent. The court allowed the parties to submit supplemental papers on the issue of whether defendant may be allowed to assert that the verification was outstanding due to MRI films, when defendant had not paid for the cost of those films, after due demand from plaintiff in accordance with Radiology Ground Rule 8. Plaintiff submitted a supplemental affirmation in opposition; defendant apparently did not submit any supplemental papers.
DISCUSSION
"On a motion for summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. If the moving party produces the required evidence, the burden shifts to the nonmoving party to establish the existence of material issues of fact which require a trial of the action"(Xiang Fu He v Troon Mgt., Inc., 34 NY3d 167, 175 [2019] [internal citations and quotation marks omitted]).
Defendant argues that the action must be dismissed as premature because defendant's time to pay or deny the claims is currently tolled, pending receipt of the MRI films from plaintiff (affirmation of defendant's counsel ¶¶ 10-16). To establish that verification requests and follow-up verification requests were timely mailed, plaintiff submitted an affidavit from Tony Singh, a No-Fault Supervisor employed by defendant (see defendant's exhibit D in support of motion, aff of Tony Singh ¶ 2). According to Singh, defendant received the four bills at issue on December 18, 2017 (Singh aff ¶ 6 [a]). Verification requests were issued and mailed on January 11, 2018 and February 14, 2018 (id.), and defendant submitted copies of proofs of mailing for these requests (see defendant's exhibit E in support of motion).
According to Singh, defendant received a letter from plaintiff on February 27, 2018, and defendant issued a "Missing/Incomplete Verification" acknowledging receipt on March 14, 2018 (Singh aff ¶ 6 [a]). On March 19, 2018, defendant received another letter from plaintiff, and defendant issued another "Missing/Incomplete Verification" acknowledging receipt on April 18, 2018 (id.). On May 8, 2018, defendant received several letters from plaintiff, and defendant issued another "Missing/Incomplete Verification" acknowledging receipt on May 15, 2018 (id.). According to Singh, defendant has still not received the verification requested (id.).
In opposition, plaintiff argues that defendant's motion should be denied for issues of fact as to whether plaintiff's response to the verification requests was sufficient. Alternatively, plaintiff argues that "plaintiff's claims were fully verified ending the toll on defendant's time to pay or deny," because defendant "failed to respond to plaintiff's response" (affirmation of plaintiff's counsel at 4). Lastly, plaintiff argues that defendant failed to demonstrate a "good reason" to request a copy of the MRIs films in its verification request (id. at 5). "[A]n insurer must either pay or deny a claim for motor vehicle no-fault benefits, in whole or in part, within 30 days after an applicant's proof of claim is received" (Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862, 864 [2d Dept 2009]).
"Where there is a timely original request for verification, but no response to the request for verification is received within 30 calendar days thereafter, or the response to the original request for verification is incomplete, then the insurer, within 10 calendar days
after the expiration of that 30—day period, must follow up with a second request for verification (see 11 NYCRR 65—3.6[b] ). If there is no response to the second, or follow-up, request for verification, the time in which the insurer must decide whether to pay or deny the claim is indefinitely tolled. . . . Accordingly, any claim for payment by the medical service provider after two timely requests for verification have been sent by the insurer subsequent to its receipt of [a claim form] from the medical service provider is premature, if the provider has not responded to the requests"(Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 106 AD3d 157, 163 [2d Dept 2013][citations omitted]).
Defendant met its prima facie burden of establishing that the action was premature based on the affidavit of the no-fault supervisor, who averred that defendant has not received any MRI films in response to its initial and follow-up verification requests. Plaintiff's argument that a triable issue of fact arises as to the sufficiency of plaintiff's responses to defendant's verification requests for the MRI films is without merit. Plaintiff does not dispute that the initial and follow-up verification requests were timely mailed. It is also undisputed that plaintiff did not provide any MRI films to defendant. There is no circumstance under which it could be reasonably inferred that plaintiff sent the MRI films. Thus, there are no disputed issues of fact for the trier of fact to determine.
To the extent that plaintiff argues that the action is not premature because: (1) its demand for reimbursement for the MRI films was a response that complied with the verification request, or (2) defendant "failed to act upon receipt of plaintiff's response to defendant's verification requests," i.e., that defendant did not pay plaintiff for the costs of the MRI films when defendant had indicated payment was forthcoming, the analysis is more complex.
On the one hand, it is undisputed that plaintiff never provided the MRI films requested for verification. On the other hand, it is equally undisputed that a provider may charge the insurer a fee for the costs for reproduction of MRI films. Although neither party submitted a copy of Ground Rule 8 of the New York State Workers' Compensation radiology fee schedule, both parties agreed that, pursuant to Ground Rule 8, when an insurance carrier (or self-insured employer) requests x-rays, MRI's, or other recorded images, and the provider furnishes satisfactory reproductions (including electronic media) in lieu of the original films, the provider may charge the insurer, at most, a fee of $5.00 for the first sheet of duplicating film or electronic media and $3.00 for each additional sheet of film or electronic media (compare defendant's exhibit E in support of motion with supplemental affirmation of plaintiff's counsel in opposition to motion at 3; see also Ops Gen Counsel NY Ins Dept No. 08-04-08 [April 2008], available at https://www.dfs.ny.gov/insurance/ogco2008/rg080408.htm [accessed 5/28/2021]).
The issue presented is how the provider's right to reimbursement for the reproduction of films fits within the no-fault regulatory scheme. If the provider's duty to provide the MRI films is contingent upon the insurer's payment of the reproduction costs, then plaintiff complied with the verification request when plaintiff demanded payment of the reproduction costs. However, if the provider has no right to insist that the insurer reimburse the reproduction costs before sending the MRI films, then plaintiff's responses to the insurer would not be adequate, and it would be irrelevant whether the insurer had, in fact, paid the reproduction costs—even if the insurer had promised payment.
The no-fault regulations do not expressly require defendant to reimburse plaintiff in advance of receiving the MRI films. The no-fault regulations are silent as to when the provider must receive payment of these reproduction costs. Thus, the insurer's duty to pay the reproduction costs appears independent from the insurer's right to demand verification. Conceivably, plaintiff could have submitted the reproductions to defendant, along with a bill for the reproduction costs. Alternatively, plaintiff could have also decided to submit the original MRI films to defendant for verification in lieu of sending reproductions of the films. In that scenario, the insurer would not incur any fee for reproductions, but it would have to return the original films to the provider within 20 days of receipt (see Ops Gen Counsel NY Ins Dept No. 08-04-08). Thus, the question of whether or not insurer must pay a reproduction fee at all lies within the control of the provider.
As a practical matter, it seems unlikely that providers would send originals to an insurer for verification, given the risk that originals could be lost while in transit to the insurer. This court also understands why a provider would insist that the reproduction costs be paid before the MRI films are sent, because a $5 bill for reproduction costs may go ignored.
However, to accept plaintiff's approach that a provider may insist upon reimbursement before it must comply with a verification request for films "runs counter to the no-fault regulatory scheme, which is designed to promote prompt payment of legitimate claims" (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]). A core and essential objective in the no-fault regulations is "to provide a tightly timed process of claim, disputation and payment" (Presbyterian Hosp. in the City of NY v Maryland Cas. Co., 90 NY2d 274, 281 [1997]). In this case, the back-and-forth disagreement over whether defendant was paying the reproduction costs of the films went on for four months, before ending in a stalemate.
Plaintiff's approach also goes too far. First, plaintiff essentially advocates that a provider would be excused from complying with any verification requests to provide the MRI films until it was reimbursed the reproduction costs. Second, plaintiff appears to argue that, when it responded that defendant must pay the reproduction costs before receiving the MRI films, the toll on the insurer's time to pay or otherwise deny a claim ended, even though the verification sought was never provided, and plaintiff had not objected to providing the MRI films. Those arguments find no support in either the no-fault regulations themselves, or in the regulatory scheme. As discussed above, the decision to charge a reproduction fee is within the control of the provider.
The no-fault regulations also specify that when a provider requests Examination Under Oath or Independent Medical Examination, the insurer must reimburse the person being examined for "any loss of earnings and reasonable transportation expenses incurred in complying with the request" (11 NYCRR 65-3.5 [e]). The no-fault regulations are similarly silent as to when these costs must be paid. Plaintiff's approach that the insurer must reimburse costs in advance of the provider's compliance because it is entitled to be reimbursed under the no-fault regulatory scheme could logically extend to these reimbursements as well.
While plaintiff's approach would incentivize insurers to pay reproduction fees, the approach is unworkable and would add another layer of complexity and litigation over a host of new issues regarding the toll: Does the toll end when the plaintiff responds with a demand for payment? Does the toll restart if defendant sends payment for the reproduction costs? At what point in time would the toll be restarted? What would happen to the toll if the payment were delayed, or if plaintiff denies that the payment was ever sent? In this case, defendant promised payment, but payment was never sent. The host of issues that would follow from adopting plaintiff's approach would undermine the objectives of the No-Fault Law of "promoting prompt resolution of injury claims, limiting cost to consumers and alleviating unnecessary burdens on the courts" (Pommells v Perez, 4 NY3d 566, 570-71 [2005]).
Finally, as a policy matter, the downside of plaintiff's approach is that the sanction against the insurer for failing to pay the reproduction fees would be the entire amount of the claim, which could be significantly disproportionate to reproduction cost, which is very modest. Here, defendant would be liable for $3,549.07 because defendant did not pay $5.00 in reproduction fees.
Although plaintiff submitted decisions from no-fault arbitrations where the arbitrators ruled that the provider's responses to demand payment of reproduction costs complied with the insurer's verification requests (see plaintiff's supplemental affirmation in opposition, arbitration awards), this court declines to follow those arbitration decisions. Those decisions rest on the premise that the toll triggered by the insurer's verification request ended when the provider demanded payment of the reproduction costs. However, as discussed above, in this court's view, the insurer's right to demand and receive verification is not contingent upon the insurer's payment of the reproduction costs. Thus, the provider is not excused from complying with any verification requests to provide the MRI films until it was reimbursed the reproduction costs. Consequently, the toll did not end either when plaintiff responded that defendant must pay the reproduction costs before receiving the MRI films, or when defendant had promised but failed to pay the reproduction costs. The toll should not end because plaintiff had not objected to providing the MRI films, and the verification sought was never provided.
The court leaves open the question of whether the outcome might be different if an insurer had not paid the reproduction costs for the MRI films and yet sought dismissal of the claims, due to provider's failure to supply the requested verification within 120 days after the date of the initial verification request (see 11 NYCRR 65-3.5 [o]; see Psychology YME, P.C. v Travelers Ins., 65 Misc 3d 146[A], 2019 NY Slip Op 51798[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]). In that situation, the no-fault regulations allow a provider to provide written proof providing reasonable justification for the failure to comply (11 NYCRR 65-3.5 [o]), which does not apply here. --------
In its supplemental opposition papers, plaintiff argues that defendant failed to "[c]learly inform the applicant of the insurer's position regarding any disputed matter," which is one of the principles of claim settlement practices (see 11 NYCRR 65-3.2 [e]), in that defendant promised to send payment but never did (see plaintiff's supplemental affirmation in opposition at 6). As discussed above, because a provider has no right to insist upon payment of reproduction costs before complying with a verification request for MRI films, the insurer's response to such demands is irrelevant. "[T]o rule otherwise would sanction the parties' sending countless letters to each other, which would violate the intent of the No-Fault Law which encourages the prompt resolution of no fault claims" (LK Health Care Prods. Inc. v GEICO Gen. Ins. Co., 39 Misc 3d 1230[A], 2013 NY Slip Op 50810[U] [Civ Ct, Kings County 2013]).
Because the toll has not ended due to the outstanding MRI films, the action is therefore premature.
Plaintiff's objection to the reasonableness of the request for the MRI films is unavailing. It is readily apparent that copies of any MRI films (or lack of such films) would substantiate whether the billed MRIs were, in fact, actually performed. Moreover, plaintiff never objected to the request for these films in its verification responses (see Compas Med., P.C. v Travelers Ins. Co., 53 Misc 3d 136[A], 2016 NY Slip Op 51441[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016] ["plaintiff did not allege, much less demonstrate, that it objected to such requests during claims processing"]).
Therefore, defendant's motion for summary judgment dismissing the complaint is granted, and the complaint is dismissed without prejudice as premature.
CONCLUSIONUpon the foregoing cited papers, it is hereby ORDERED defendant's motion forsummary judgment dismissing the complaint is GRANTED, and the complaint is dismissed without prejudice.
This constitutes the decision and order of the court. Dated: June 1, 2021 New York, New York Richard Tsai, J. Judge of the Civil Court
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