WEBSTER DIAGNOSTIC MEDICINE HRSAN v. STATE FARM INS CO

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Supreme Court, Appellate Term, New York.

WEBSTER DIAGNOSTIC MEDICINE, P.C. as assignee of HRSAN Webster, Respondent, v. STATE FARM INS. CO., Appellant.

Decided: March 28, 2007

PRESENT:  McCABE, J.P., TANENBAUM and LIPPMAN, JJ. Bruno, Gerbino & Soriano, LLP, Melville (Charles W. Benton of counsel), for appellant.

Appeal by defendant from an order of the District Court of Nassau County, First District (Erica L. Prager, J.), entered March 9, 2005.   The order granted plaintiff's motion for summary judgment.

Order affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment predicated on the lack of coverage, i.e., that the assignor's injuries, if any, did not arise from the underlying traffic incident, and if they did, the incident was staged to defraud defendant.   After the court (Norman Janowitz, J.) denied defendant's motion, plaintiff then moved for summary judgment, which defendant opposed essentially on the same proof of fraud submitted in support of its own motion.   The court (Erica L. Prager, J.) declined to review defendant's proof of fraud on the ground that the prior determination, that the proof did not support defendant's motion, was the law of the case.   The court granted plaintiff's motion and this appeal ensued.

 Contrary to the determination of the court below, the prior order which denied defendant's motion for summary judgment did not bar reconsideration of defendant's proof of fraud in opposition to plaintiff's motion, since the quantum of proof needed to obtain summary judgment is higher than that necessary to establish a triable issue of material fact in opposition to such a motion (e.g. Friends of Animals v. Associated Fur Mfrs., 46 N.Y.2d 1065, 1068, 416 N.Y.S.2d 790, 390 N.E.2d 298 [1979];  Stone v. Goodson, 8 N.Y.2d 8, 12, 200 N.Y.S.2d 627, 167 N.E.2d 328 [1960];  Kwi Bong Yi v. JNJ Supply Corp., 274 A.D.2d 453, 711 N.Y.S.2d 906 [2000] ).

 To interpose a defense of staged-accident fraud sufficient to raise a triable issue of fact, defendant must establish “the fact or founded belief that the alleged injur[ies] do[ ] not arise out of an insured incident” (Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 N.Y.2d 195, 199, 659 N.Y.S.2d 246, 681 N.E.2d 413 [1997];  Ocean Diagnostic Imaging P.C. v. Allstate Ins. Co., 6 Misc.3d 134(A), 2005 N.Y. Slip Op. 50189[U], 2005 WL 416116 [App.Term, 9th & 10th Jud. Dists.] ).   Mere “unsubstantiated assertions or speculations” are insufficient (Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 327, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ).   The affidavit of defendant's special investigator and the attached exhibits failed to substantiate the investigator's conclusory allegations of the insured's participation in a “ring” that stages traffic incidents to defraud insurers (see Comprehensive Mental v. Allstate Ins. Co., 14 Misc.3d 130(A), 2007 N.Y. Slip Op. 50017[U], 2007 WL 29057 [App.Term, 9th & 10th Jud. Dists.];  Ocean Diagnostic Imaging, P.C. v. Allstate Ins. Co., 6 Misc.3d 134(A), 2005 N.Y. Slip Op. 50189[U], supra ).   In addition, the discrepancies in the testimony given by two passengers during their examinations under oath were insufficient to establish a founded belief that the alleged injuries did not arise out of a covered accident (see A.B. Med. Servs. PLLC v. State Farm Mut. Auto. Ins. Co., 12 Misc.3d 129(A), 2006 N.Y. Slip Op. 51033[U], 2006 WL 1540354 [App.Term, 2d & 11th Jud. Dists.] ).

 We note that the insured had no obligation to appear for an examination under oath because “at the applicable time, the insurance regulations contained no authorization for examinations under oath” (Amstel Chiropractic v. Omni Indem. Co., 2 Misc.3d 129(A), 2004 N.Y. Slip Op. 50088[U], 2004 WL 419778 [App.Term, 2d & 11th Jud. Dists.] ).   In such circumstances, the mere failure to appear for such an examination does not support an inference of “the fact or founded belief” that the underlying incident was staged to defraud.