VELEN MEDICAL SUPPLY INC v. TRAVELERS INSURANCE COMPANY (2008)

Plaintiff brought this action to recover no-fault payments totaling the sum of $ 1,559 for medical supplies provided to the insured/ assignor on September 21, 2005 and on October 3, 2005, for treatment of alleged injuries sustained in a motor vehicle accident occurring on September 16, 2005, together with statutory interest, statutory attorneys fees and costs.

A previous decision by Judge Lebedeff of this court, issued on May 9, 2007, had determined that plaintiff had made out its prima facie case, that defendant's NF-10 denial dated November 16, 2005 was timely issued, that said denial was based upon a peer review and that the only triable issue was as to the medical necessity of the items furnished to the assignor.   The parties further stipulated at trial as to the expertise of the peer review doctor, Dr. Susan Corcoran, in internal medicine and to the introduction into evidence of the peer review itself.

Based upon Judge Lebedeff's previous finding regarding the plaintiff's prima facie case and the stipulation entered into by the parties, the plaintiff rested, thus shifting to the defendant insurer the burden of rebutting plaintiff's prima facie case of medical necessity.

The defendant called Dr. Corcoran who testified, in sum and substance, that there was no medical necessity for any of the supplies provided.   Of particular relevance in this matter is that while the parties did stipulate to the admission of the peer review, they did not stipulate to the entrance into evidence of any of the underlying medical records and reports upon which the peer review was based.   Nor did the defendant attempt to have them introduced even though they were relied upon by Dr. Corcoran in preparing both the peer review and her testimony.

After Dr. Corcoran's testimony was completed, the defendant rested.   Plaintiff presented no witnesses and also rested.   Defendant then moved for a directed verdict of dismissal, arguing that the findings and opinions of Dr. Corcoran in her peer review and in her testimony were sufficient to demonstrate the lack of medical necessity for the supplies provided to the assignor and that they were not rebutted by the Plaintiff.

Plaintiff opposed the motion, contending that pursuant to Wagman v. Bradshaw, 292 A.D.2d 84, 739 N.Y.S.2d 421 (2nd Dept.2002).   Dr. Corcoran's testimony must be disregarded by this court since it was based upon medical records and reports that were not in evidence and for which there was no evidence presented regarding their reliability.  (See Hambsch v. New York City Tr. Auth., 63 N.Y.2d 723, 480 N.Y.S.2d 195, 469 N.E.2d 516 [1984] ) Defendant countered that this court should apply the ruling of the Appellate Term, First Department in Cross Continental Medical, P.C. v. Allstate Insurance Company, 13 Misc.3d 10, 822 N.Y.S.2d 356 (2006), wherein the court held that a “plaintiff may not be heard to argue that defendant's expert opinion was not derived from a professional [,] reliable' source or to otherwise challenge the reliability of its own medical records and reports.”   (Id., at 11, 822 N.Y.S.2d 356).

The court denied defendant's motion for a directed verdict of dismissal, and reserved decision on the ultimate issue as to the medical necessity, or lack thereof, of the billed for supplies, pending a determination as to the admissibility of Dr. Corcoran's testimony.

For the reasons stated herein, the court now finds that the testimony of Dr. Corcoran regarding the various reports not in evidence are admissible.   As such, judgment is made in favor of the defendant and the matter is dismissed.

“It is well settled that, to be admissible, opinion evidence must be based upon one of the following:  first, personal knowledge of the facts upon which the opinion rests:  second, where the expert does not have personal knowledge of the facts upon which the opinion rests, the opinion may be based upon facts and materials in evidence, real or testimonial;  third, material not in evidence provided that the out-of-court material is derived from a witness subject to full cross-examination;  and fourth, material not in evidence provided the out-of-court material is of the kind accepted by the profession as a basis in forming an opinion and the out-of-court material is accompanied by evidence establishing its reliability.”  (Wagman v. Bradshaw, supra, at 87, 739 N.Y.S.2d 421).The Court of Appeals has held that an expert witness may testify that he or she relied on out-of-court material provided that it is of a kind generally accepted in the profession as reliable and there is evidence presented establishing the reliability of the out-of-court material referred to by the witness (Hambsch v. New York City Transit Authority, supra).

Clearly in this matter, the first three possible requirements are not relevant, thereby leaving this court to decide if, pursuant to Wagman, the material not in evidence, which was relied upon by defendant's witness, is accompanied by any evidence establishing its reliability.   Pursuant to Hambsch, the court must also determine if the material in question is the kind accepted in the profession and if there has been any evidence presented establishing the reliability of those materials.

As to the Wagman issue, an initial interpretation of the testimony in relation to that case seems to indicate that the defendant offered no evidence as to the reliability of the documents relied upon, therefore requiring the court to disregard the testimony and thereby find in favor of the Plaintiff.   However, in addition to Cross Continental Medical P.C., supra, several recent cases in both the First and Second Departments, including the First Department's Appellate Term, seem to indicate, that, at least in the context of no fault first party benefits, a plaintiff may not challenge the reliability of its own medical records which were relied upon by the insurer in preparing a preparing a peer review report.

First, in Home Care Ortho. Med. Supply, Inc. v. American Mfrs. Mut. Ins. Co., 14 Misc.3d 139(A), 2007 WL 581912 [App. Term, 1st Dept.2007], the Appellate Term First Department reversed a judgment in favor of the plaintiff in an action, as in the case here, brought by a medical goods supply company to recover assigned, first party, no fault benefits.   The lower court's decision was at least partially based on its preclusion of the insurer's expert's testimony because it relied, at least in part, on a review of the assignors' medical records.   Following its previous decision in Cross Continental Medical, P.C., supra, the court held that “[P]laintiff may not be heard to challenge the reliability of the assignors' medical records and reports, which, in response to defendant's verification requests, were affirmatively relied upon by plaintiff as proof of claim.”

Following the decision in Home Care Ortho Med. Supply, Inc., supra, Judge Peter Sweeney of the Civil Court of the City of New York rejected the plaintiff's contention that the insured's experts should have been precluded from basing their professional opinions, in part, on the information obtained from plaintiff's assignors during independent psychological examinations.   Judge Sweeney went further in finding that “the holding in Home Care Ortho. Med. Supply, Inc. is consistent with the legislative policy reflected in the numerous provisions of the No-Fault Law which provide for the prompt verification and disposition of claims (Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 222, 652 N.Y.S.2d 584, 674 N.E.2d 1349 [1996];  Presbyterian Hosp. in City of New York v. Maryland Cas. Co., 90 N.Y.2d 274, 281, 660 N.Y.S.2d 536, 683 N.E.2d 1 [1997];  Dermatossian v. New York City Tr. Auth., 67 N.Y.2d 219, 224-225, 501 N.Y.S.2d 784, 492 N.E.2d 1200 [1986];  Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 A.D.3d 720, 827 N.Y.S.2d 217, 220 [2nd Dept.2006] )” (Primary Psychiatric Health, P.C. v. State Farm Mutual Auto Ins. Co., 15 Misc.3d 1111(A), 2007 WL 914536 [Civil Court, City of New York, Kings CO.2007] ).

Finally, in a very recent case, Andrew Carothers, M.D., P.C. v. Geico Indemnity Company, 18 Misc.3d 1147(A), 2008 WL 650280 [Civil Court, City of New York, Kings CO.2008], the court, also citing Cross Continental P.C., supra, actually permitted the Plaintiff's medical records, which at least in part formed the basis of its peer review, to be admitted into evidence through its Claims Examiner as Defendant's business records.   That court rejected Plaintiff's argument that their admission was inappropriate since the Claims Examiner was incompetent to testify as to the reliability of the records as she had testified that they were received by the defendant from the treating physicians and she had no knowledge of how these doctors created or maintained their records in the regular course of business.   While this court may not have extended the business records exception to the hearsay rule to such an extent, the holding is consistent with the holdings in the other cases referred to above.

As for the Hambsch, supra, requirement that the material be generally accepted in the profession as reliable and that there be evidence establishing its reliability, the cases referred to above clearly indicate that the Plaintiff cannot be heard to challenge the reliability of the particular documents.   As for the professional acceptability of these items, Dr. Corcoran testified that they were sufficient to form the basis of a peer review and her expertise was stipulated to by both parties.   Without any testimony to the contrary, this court finds that the out-of-court documents relied upon by Dr. Corcoran in preparing her peer review and her testimony are of the type accepted in the profession as reliable.

As such, this court finds that the defendant has presented sufficient evidence to establish a defense based upon a lack of medical necessity, thus shifting the burden to the Plaintiff to present its own evidence of medical necessity (see West Tremont Medical Diagnostic, P.C. v. Geico Ins. Co., 13 Misc.3d 131(A), 2006 WL 2829826 [App. Term, 2nd & 11th Jud. Dists.2006] ).   Plaintiff presented no evidence or testimony in this matter, choosing instead to rely upon its argument made above and its cross examination of Dr. Corcoran.   Without more, this court finds that Plaintiff has failed to refute Defendant's expert witness testimony and has failed to produce rebuttal evidence to prove the medical necessity of the medical supplies provided to its Assignor.

Accordingly, judgment is hereby rendered for the Defendant and Plaintiff's complaint is dismissed.

The foregoing constitutes the decision and order of this court.

WILLIAM A. VISCOVICH, J.