Civil Court of the City of New York, Queens County, July 15, 2019

The Rybak Firm, PLLC, Brooklyn (Oleg Rybak of counsel), for plaintiff.

Lawrence N. Rogak, LLC, Oceanside (Lawrence N. Rogak of counsel), and Jaime Gangemi, New York City, for defendant.

Plaintiff commenced this action against defendant to recover first party no-fault benefits on November 20, 2013, and issue was joined on December 6, 2013. The parties appeared for trial on June 13, 2019, and as this court is constrained to follow the order of the Honorable Jodi Orlow^[FN*] dated December 16, 2014, the parties were directed to submit memoranda of law on the sole issue of whether the timing of defendant's examination under oath requests was reasonable. The parties submitted memoranda of law on July 1, 2019, and upon review of the parties' submissions, I render the following decision.

The parties stipulated to the following facts. This action stems from plaintiff providing no-fault medical benefits to assignor Heather Thomas, for personal injuries sustained in a motor vehicle accident. Plaintiff submitted two bills to defendant, one submitted in the amount of[*2]$677.60 and received by defendant on October 12, 2011, and a second bill in the amount of $246.40, received by defendant on November 11, 2011. Defendant sent to plaintiff's assignor requests for an examination under oath mailed on December 9, 2013, and January 2014.{**64 Misc 3d at 990}

Plaintiff argues that defendant's examination under oath requests were untimely as a matter of law, and therefore it is entitled to judgment for both bills. It argues that the case law supports the conclusion that defendant's failure to timely request plaintiff's assignor appear for an examination under oath precludes defendant from asserting this defense. Plaintiff claims that the no-fault regulations require defendant to make a request for an examination under oath within 15 business days of receipt of the bills, and since defendant's requests were over two years later, they are untimely. Further, plaintiff argues that since the requests were untimely, defendant is precluded from asserting a defense of failure to appear at the examination under oath. Finally, as defendant failed to pay or timely deny plaintiff's bills, plaintiff argues it is entitled to judgment in the amount of $924, with statutory interest and fees.

Defendant argues that plaintiff is not entitled to judgment because plaintiff's assignor failed to appear at an examination under oath, requested by defendant because there was evidence that plaintiff's assignor was not a qualified person under Insurance Law article 52. It argues that while under the no-fault regulations a request for an examination under oath must be sent within 15 days from the date of receipt of the bill, there is an exception for defenses premised on lack of coverage. Defendant argues that a similar exception exists where defendant believes that the applicant for MVAIC coverage is not a qualified person and therefore would not be covered under MVAIC guidelines, and that this defense can be raised at any time. Defendant admits that the requests for examinations under oath were made in excess of two years from receiving the bills but argues that it is irrelevant because its requests were based upon the MVAIC qualification process, and not the no-fault verification procedures. Therefore, defendant argues that since plaintiff's assignor failed to appear for the examinations under oath, the requests for which were properly mailed to her, judgment must be awarded for defendant and dismissal of plaintiff's complaint is warranted.

Article 51 of the Insurance Law, commonly referred to as the No-Fault Law, was enacted by the legislature to correct certain maladies recognized under the common-law tort system of compensating automobile accident victims. (Licari v Elliott, 57 {**64 Misc 3d at 991}NY2d 230 [1982].) The purpose of the No-Fault Law is to assure claimants of expeditious compensation for injuries sustained in a motor vehicle accident by ensuring prompt payment of first party benefits regardless of fault. (Dermatossian v New York City Tr. Auth., 67 NY2d 219 [1986]; see also Matter of American Ind. Ins. Co. v Nova Acupuncture, P.C., 137 AD3d 1270 [2d Dept 2016].) Under the strict time frames of the no-fault regulations which emphasize the great convenience of "prompt uncontested, first-party insurance benefits," an insurer may be precluded from untimely raising a defense, resulting in payment by the insurer of a no-fault claim it might not have had to honor if the claim had been timely denied. (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 506 [2015].)

Insurance Law § 5106 states that payment of no-fault benefits shall be made as the loss is incurred, and such benefits are overdue if not paid within 30 days from the date the claimant supplies proof of the fact and the loss sustained. Pursuant to 11 NYCRR 65-3.5, an insurer shall forward verification forms to the claimant within 10 days from the date of receipt of the application for no-fault benefits, and any additional verification forms must be [*3]sent to the claimant within 15 days of receiving the initial verification forms.

Insurance Law § 5221 (b) states that defendant MVAIC shall provide for the payment of first party benefits to a qualified person for basic economic loss arising out of the use or operation of an uninsured motor vehicle. Further, Insurance Law § 5221 (b) (6) states that "[i]f a controversy arises between the corporation and an insurer concerning the obligation to pay first party benefits, payment of first party benefits by the corporation shall not be stayed pending resolution of the controversy."

It is undisputed that defendant's requests for examinations under oath were made outside of the 15-day time frame requirement of the No-Fault Law. (See 11 NYCRR 65-3.5 [b].) Therefore, the issues presented are whether defendant MVAIC is subject to the no-fault requirements, and if so, whether there is an exception to the 15-day rule when MVAIC asserted a defense of no coverage due to the injured party not being a "qualified person."

The legislature has made it clear that MVAIC is subject to the same requirements under the no-fault regulations as insurers. (Insurance Law § 5221 [b] [3].) While it is true at the commencement{**64 Misc 3d at 992} of the No-Fault Law, MVAIC was not subject to its requirements, this created an imbalance and unfairness to injured parties, and therefore the legislature amended the Insurance Law to specifically hold MVAIC subject to the same guidelines as other insurance companies. (See Canty v Motor Veh. Acc. Indem. Corp., 95 AD2d 509 [2d Dept 1983].) The Appellate Division has further determined that defendant MVAIC maintains the same rights and obligations which are applicable to an insurer subject to Insurance Law article 51. (New York Hosp. Med. Ctr. of Queens v Motor Veh. Acc. Indem. Corp., 12 AD3d 429 [2d Dept 2004], lv denied 4 NY3d 705 [2005].)

A review of the relevant law leads to the ultimate conclusion that MVAIC's defense that the injured party is not a "qualified person" is subject to preclusion if not presented in a timely denial or if not investigated through timely verification requests, including requests for an examination under oath. (See T & S Med. Supply Corp. v MVAIC, 63 Misc 3d 150[A], 2019 NY Slip Op 50737[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists, May 10, 2019]; Complete Med. Servs., P.C. v MVAIC, 20 Misc 3d 85 [App Term, 2d Dept, 2d & 11th Jud Dists 2008].) Contrary to defendant's position, the Appellate Division rejected the premise that the 30-day claim determination does not begin to run until after MVAIC is satisfied the assignor is a qualified covered person. (See id.) Pursuant to New York Hosp. Med. Ctr., the appellate courts have consistently found that defendant's obligations under the No-Fault Law do not begin only upon the qualification of the injured party as a covered person. (See Daily Med. Equip. Distrib. Ctr., Inc. v MVAIC, 53 Misc 3d 148[A], 2016 NY Slip Op 51622[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]; Kings Highway Diagnostic Imaging, P.C. v MVAIC, 19 Misc 3d 69 [App Term, 2d Dept, 2d & 11th Jud Dists 2008].)

As a result of New York Hosp. Med. Ctr. and its progeny, it can be held that a determination that the injured party is not a qualified person is a defense subject to preclusion, and not a condition precedent to establishing a valid claim. (See T & S.) Unlike the defense of no coverage, determining whether the injured party is a "qualified person" is not a condition precedent to coverage, and must be presented as an affirmative defense and is subject to preclusion. While defendant correctly points out that lack of coverage can be based upon failure of the injured party to file an accident report within 24 hours of the occurrence, the lack of coverage exception to the no-fault{**64 Misc 3d at 993} time frames cannot be based upon MVAIC's investigation as to whether an individual is a "qualified person." (See Meridian Health Acupuncture, P.C. v MVAIC, 22 Misc 3d 141[A], 2009 NY Slip Op 50440[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]; Ocean Diagnostic Imaging v Motor Veh. Acc. Indem. Corp., 8 Misc 3d 137[A], 2005 NY Slip Op 51271[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2005].) This time frame exception for failure to timely file [*4]an accident report is consistent with Insurance Law § 5208, which clearly states that filing an accident report is a condition precedent to the right to apply for payment from MVAIC. However, even an expansive reading of the no-fault regulations and MVAIC guidelines cannot lead one to determine that the issue of "qualified persons" is not subject to preclusion under the relevant statutory and case law.

It is instructive to review the Court of Appeals decision in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]) in analyzing when a defendant insurance company can deny a claim outside of the strict no-fault timelines. In Chubb, the Court of Appeals held that an insurer may assert a lack of coverage defense at any time premised on the fact or founded belief that the alleged injury does not arise out of an insured incident, but a defense based on a breach of a policy condition must be timely asserted or can be subject to preclusion. (Chubb at 199.)

Here, defendant MVAIC is not asserting that the injuries claimed did not arise out of a covered accident, but that the injured party may not be a "qualified person" under MVAIC guidelines. This defense is based upon a breach of a policy condition, and therefore is outside the strict exception permitted under Chubb and is subject to preclusion if not timely asserted. Since it is undisputed that the requests for examinations under oath were made over two years after receipt of the bills, defendant is precluded from asserting a lack of coverage based upon the injured party not being a qualified person. (See Acupuncture Now, P.C. v American Commerce Ins. Co., 61 Misc 3d 151[A], 2018 NY Slip Op 51768[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]; Great Health Care Chiropractic, P.C. v Travelers Ins. Co., 49 Misc 3d 145[A], 2015 NY Slip Op 51665[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015].)

Defendant's reliance on Canty v Motor Veh. Acc. Indem. Corp. (95 AD2d 509 [2d Dept 1983]) to support its claim that it is not subject to the time frames when determining if an injured party{**64 Misc 3d at 994} is a qualified person is misplaced. In Canty, the Appellate Division discussed the statutory requirements to determine whether an injured party is a "qualified person" but did not discuss whether MVAIC's investigation is an exception to the no-fault time frame. Rather, the Court in Canty clearly stated that MVAIC is under the same obligation to pay no-fault benefits to qualified persons to the same extent as if an insurance policy providing no-fault benefits was in effect. (Id. at 511.) Therefore, it is illogical to assume that MVAIC's investigation into determining whether a party is a "qualified person" is a unique exception to the no-fault statutory time frames, but the same investigation performed by insurance carriers to determine if an individual was a "qualified person" is subject to the time frames. There are numerous cases, many cited by plaintiff, in which the courts have precluded insurance carriers from asserting a defense based upon the failure to timely seek verification or requests for examinations under oath. (See LMS Acupuncture, P.C. v Titan Ins. Co., 57 Misc 3d 132[A], 2017 NY Slip Op 51229[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]; A.C. Med., P.C. v Ameriprise Ins. Co., 54 Misc 3d 127[A], 2016 NY Slip Op 51787[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016].) Therefore, it is only logical and proper to assume that MVAIC is not given greater latitude in determining whether an injured party is a "qualified person" than other insurance carriers and would thereby be required to comport with the time frames demanded under the no-fault statutory regulations.

Accordingly, I find that defendant failed to pay or timely deny plaintiff's claims, and therefore plaintiff is entitled to judgment in its favor in the amount of $924 with statutory interest and fees.