Motion-Secondary: Allstate Insurance Company v. Gianni Persich, Dpm, A/A/O Tito Reyes

On January 29, 2014 a Motion-Secondary was filed involving a dispute between Allstate Insurance Company, and Gianni Persich, Dpm, A A O Tito Reyes, for Commercial (General) in the District Court of New York County.

Preview
(FILED: NEW YORK COUNTY CLERK 0472372015 04:24 PM INDEX NO. 650307/2014
NYSCEF DOC. NO. 20 RECEIVED NYSCEF: 04/23/2015

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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ALLSTATE INSURANCE COMPANY,
Index No.: 650307/14
Plaintiff,
-against- ASSIGNED JUSTICE
Carol Edmead
Return Date: April 30, 2015
GIANNI PERSICH, DPM A/A/O TITO REYES,
Defendant.
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MEMORANDUM OF LAW IN OPPOSITION
TO MOTION FOR SUMMARY JUDGMENT

RUBIN & LICATESI, P.C.
Attorneys for Defendant
Gianni Persich, DPM
591 Stewart Avenue, Suite 110
Garden City, New York 11530
(516) 227-2662
PRELIMINARY STATEMENT
y judgment
The Plaintiff, Alistate Insurance Company (Allstate) moves for summar
had not been
arguing that the policy is exhausted. By Allstate’s own admission, the policy
As per the No-
exhausted when it received the claim by the Defendant Gianni Persich, DPM.
a defense when the
Fault regulations, and appellate case law, exhaustion of benefits is not
receiving the claim at
exhaustion is caused by the payment of claims the insurer received after

issue. Allstate cites no cases on point.

STATEMENT OF FACTS
the patient, Tito
As fully set forth in the Affirmation of Alan M. Elis (Elis Affirmation),
1, 2011 (see Elis Affirmation,
Reyes, was injured in a motor vehicle accident on December
y on his right foot, performed
Exhibit 1 at 2). As part of his treatment, Mr. Reyes received surger
Dr. Persich’s claim was for
by Dr. Persich on May 8, 2012 (see Elis Affirmation, Exh. } at 2).
the Fee Schedule (see Elis
$21,500.00, of which $14,035.00 is the amount reduced to

Affirmation, Exh. 1 at 3). Allstate received Dr. Persich’s claim on
May 14, 2012 (see Moving

Exh. D, Affidavit of Robert C.
Affirmation of Brian Kratenstein [Kratenstein Affirmation],

Holcombe [Holcombe Affidavit] 14). On June 7, 2012, Allstate denied Dr. Persich’s claim

admits that the policy was not
based on a peer review (see Holcombe Affidavit | 19). Allstate

exhausted until August 2, 2014 (see Holcombe Affidavit J 19).
for claims received
Allstate’s payment ledger states that Alistate paid only $26,998.05
stein Affirmation, Exh. C).
before it received Dr. Persich’ s claim for May 8, 2012 (see Kraten
it received Dr Persich’s claim for
Allstate admittedly paid $4,024.35 for claims it received after
ation 7). For $25,589.21 of
May 8, 2012 (see Kratenstein Affirmation Exh. C, Elis Affirm
(se Kratenstein
pay men ts, the jed ger doe s not state the date of recei pt by Allstate
Allstate’s
not explain the failure tospecify
the
i mat ion { 8). Alls tate doe s
Affirmation Exh. C, Elis Aff
(see Kratenstein Affirmation;
Holcomb Affidavit).
dates thes e cla ims wer e rec eiv ed
Persi ich’s
ws, the poli cy was not exh aus ted when Allstate received Dr.
As the ledger sho

claim.

ARGUMENT
NT
SL TA TE IS NOT E NT IT LE D TO SUMMARY JUDGME
1. AL
THAT THE POLICY WAS
BECAUSE IT DID NOT SHOW . CLAIM
TE D AS OF TH E DA TE IT REC EIVED DR. PERSICH’S
EXHA US
t of
the sub seq uen t exh aus tio n of benefits caused by the paymen
As setforth below,
a single case
cla ims at issu e is not a val lid defense. Allstate did not cite
claims received after the
on).
cau sed pay ing lat er- rec eiv ed cla ims (see Kratenstein Affirmati
concerning exhaustio! n

vry Later-Received Claims
A. The Exhaustion of a Policy
lier-Received Claim
IsNi ot a Valid De: fense for an. Ear
t exh: austion of benefits cau
sed by the
ly rule that the sub seq uen
The courts continual
p. v
afte r the cla ims at iss ue is not a valid defense (Nyack Hos
payment of claims received
;
07] ; A sta te Ins,. Co.
t
-0. a Del
Vv it Mou
oee ra, 30 Misc 3d 145[A][table
-30 1 [20 l l anss
GMAC, 8 NY3d 294, 300
A
Med. Center v Auto
LEX IS ! i 74, *2] [Ap p Ter m, 1st Dept]; Westchester
text at 2011 NY Mise
Nassau
Slip Op 335 95[ U], 200 7 NY Misc Lexi $9141, *4-5 [Sup Ct,
One Ins. Co,, 2007
8, 2004, at 2! 0, col. 3, *1
ior e Med . Cen ter v Far m. Family Cas. Ins., NYLJ Jan.
County}; Montef
Sup Ct,
ste r Coun ty Med . Cen! ter v Merchants Mut. Ins. Co.,
estche
[Sup Ct, Nassau County];
vs. fe
SerVo.
A .M. Med.. Set P.C.v
, Mar . 31, 199: 8, ind ex No. 18069/97, Winslow, J.;ALM, Med
‘Nassau County
App Term,
144[ A I[t abl e; text at 200 6 NY Misc LEXIS 1998, *2-S][
Allstate Ins. Co., 12 Mise 3d

2
are
2d Dept]). A copy of Westchester County v Merchants and two briefs from the case

annexed to the Elis Affirmation as Exhibit 3.
and the
‘As the above cases show, both the Court of Appeals, the Appellate Term
8 NY3d at 300-301;
Supreme Court have ordered insurers to pay above policy limits (see Nyack,

er Med. v Auto One, 2007 NY Misc Lexis 9141, ¥4-5; Montefiore, NYLI Jan. 8 2004,
Wi estchest
Wwe ste nes
vied. VOLter ae

at 20, col. 3, *1 Westchester County Med. Mar, 31, 1998, Sup Ct, Nassau County, Index No.

Second Department have
18069/97). The Appellate Terms of both the First Department and the
lt regulations and have
ruled that denied claims retain their priority of payment under the No-Fau
(see A.M. Med., 2006
either granted previously denied claims despite a subsequent exhaustion
priority of payment of denied
NY Misc LEXIS 1998, *2-5), or remanded the cases to determine
NY Misc LEXIS 1998,
claims (see DeMoura, 2011 NY Misc LEXIS 1174, *2; A.M. Med., 2006
pays claim received
*2-5), Therefore, the policy limits are not “paramount” when the insurer

after the claim at issue (see Elis Affirmation § 6).
must be paid in
Under the No-Fault regulations, claims aggregating more than $50,000
to the insurer prior to the
the order that they are rendered, provided that “the claims were made
d to the Elis Affirmation as
exhaustion” (11 NYCRR § 65-3.15). A copy of § 65-3.15 is annexe
the policy is exhausted by
Exhibit 2). The defense of exhaustion of benefits only applies when
[claim at issue]” (St.
the payment of “legitimate claims made prior to the delivery of the

Allstate
Center Vv Sie
Med. Venter eeCo., 294 AD2d 425, 425 [2d
Ins. Dept 2002]). An
Vv. incent
Nince nt’s Hosp. Med.
’s Hosp.
to take refuge in the
insurer must “show more than mere exhaustion of benefits in order
Misc Lexis 9141, *5). It must
regulatory safe harbor” (Westchester Med. v Auto One., 2007 NY
provider] submitted its claims”
show that “the policy limits had been exhausted at the time [the
Co,, 16 Misc 3d 130{A][table;
(Pelham Parkway Neuro & Diagnostic, P.C. v Liberty Mut. Ins.
3
text at 2007 NY Misc LEXIS 4777, *1][App Term, Ist Dept]).
exhausting the
In Nyack, GMAC paid Nyack Hospital $19,325.67 on December 9, 2003,
receipt of Nyack
policy, when $20,188.88 remained on the policy as of the October 20, 2003
of Appeals ruled that
Hospital’s verification response (seg id., 8 NY3d at 297-298). The Court
claims for services
GMAC “should have paid the hospital ahead of any other unpaid verified
at 300-301). Because the
rendered ... later than the service billed by the hospital” (id., 8 NY3d
s the completed
issue of exhaustion is to be determined as of the date that an insurer receive
additional $863.21
claim, including requested verification, Nyack Hospital was entitled to an

over the policy limit (see Nyack, 8 NY3d at 300-301). If exhaustion is determined at any other

have ruled as it did. The
time than the receipt of the claim then the Court of Appeals would not
infra re Alistate’s
ruling in NNyackk contradicts the arguments in the Kratenstein Affirmation (set

specific arguments).

Westchester
In wwe stc Med.
nes
Med. v AutoOn
ter
Vee e, AutoOne received two bills from the facility, but paid
exhaustion (see id., 2007
the second bill it received and later denied the first bill based on policy
that the payments which
NY Misc Lexis 9141, *1-2). Because AutoOne failed to “demonstrate
NYCRR § 65-3.15, ” the court
led to the depletion of policy benefits were in compliance with 11
914, *3-4). Asin
granted summary judgment to the plaintiff (see 2007 NY Misc Lexis
exhausted at the time
Westchester Med. v AutoOne, the policy limits admittedly were not
Med. v AutoOne, 2007 NY Misc
Allstate received Dr. Persich’s claim (compare Westchester

Lexis 9141, *4 with Holcombe Affidavit { 19).
A.M. Medical’s claims
In A.M. Med., the Appellate Term Second Department granted
exhausted (see id., 2006
denied on a peer review, despite the policy having been subsequently
NY Misc LEXIS 1998, *2-5]).! Therefore, the Appellate Term, Second Department was

ordering Allstate to pay over the policy limit (see id.). Dr. Persich situation is identical to the

claims in A.M. Med. that were denied on the peer review. Even the denial of one claim for

exhaustion was not sufficient to grant summary judgment to Allstate (see id., 2006 NY Misc

LEXIS, *4). The Appellate Term, Second Department remanded that claim in order to

determine whether the policy was “previously exhausted” before receiving the claim (see id.,

2006 NY Misc LEXIS, *4).

In DeMoura, the underlying arbitration award shows that Allstate partially denied the

claim based on the fee schedule (see DeMoura and Allstate Ins. Co., AAA Case No.

412007052461, at 2 [Mar. 25, 2008, Schuchmann, Arb.]). A copy of Arbitrator Schuchmann’s

award in DeMoura is annexed to the Elis Affirmation as Exhibit 4. The Appellate Term, First

Department remanded the case for a framed issue hearing to determine whether the policy was

exhausted before Allstate became obligated to pay (see Allstate vy DeMoura, 2011 NY Misc

LEXIS 1174, *2). DeMoura shows that even in arbitrations, the exhaustion of a policy by the

payment of subsequently received claims is not a valid defense.

The Appellate Division continually frames the issue of exhaustion based on the date the

claims were received. In St. Vincent’s v Allstate, Allstate denied the claim based on exhaustion

(see id., 294 AD2d at 425). The Second Department denied the hospital’s summary judgment

motion because it did not show that the exhaustion was caused by the payments received after

Allstate received St. Vincent’s claim (see id.). But despite the policy being exhausted, the

Second Department did not grant summary judgment to Allstate either (see id.). In Westchester

1 The ruling in A.M. Med, regarding whether a denial must include a copy of a peer report was implicitly overruled
by A.B. Med. Servs. v Geico Cas. Ins. Co. (39 AD3d 778 [2d Dept 2007)). But, the ruling in A.M. Med, regarding
the post-exhaustion payment of previously denied claims has not been overruled.

5
0.5 Hartford “established that the
Ins. Co., policy limits had been partially
Cir, vv Hartf
Me ed _Cir.
Med, arGor e ©Cas.
ord aS. 20s.

» (see id., 58 AD3d 832, 833 [2d Dept
exhausted through the payment of claims for prior services
, it was an issue of fact “whether the
2009]). In Mount Sinai Hosp. v Coun try. Wide Ins, Co..
nt of claims for prior services” during
limits of the policy .. _ were exhausted through the payme
1137 [24 Dept 2011]). The
the pendency of a verification request (se id., 85 AD3d 1 136,
Country-Wide despite the exhaustion
Second Department did not grant summary judgment to

(see id.).
was whether the payments
In Mount Sinai Hosp. v Zurich Am, Ins. Co., the issue
65.15 (n),” the predecessor
exhausting the policy “were in compliance with 11 NYCRR §
Sinai Vv 4Zurich, 15 AD3d 550, 551 [2d Dept
Mountt oingl
regulation to 11 NYCRR § 65-3.15 (see Moun
judgment to Zurich, despite the
1995]). The Second Department did not grant summary
for Joint Diseases v State
exhaustion (see Mount Sinai v Zurich, 15 AD3d at 551). In Hosp.
the policy was “exhausted by prio: claims” (see
Farm Mut. Auto. Ins, Co., the iss’ ue was whether
between NY and Presbyterian Ho: spital and
id., 8 AD3d 533, 535 [2d Dept 20041). In two cases
nized that the exhaustion must be in complian
ce with §
Allstate, the Second Department recog
NY and Presbyt. Hosp. v Allstate Ins. Co.,
65-3.15 or the predecessor regulation, § 65.15 {n] (gee
yi. Has! Hosp. v Allstate In: s. Co. 12 AD3d 579, 580
28 AD3d 528, 528 [2d Dept 2006]; NY and Presbyt,

[2d Dept 2004]). In the earlier case, the Second
Department did not grant summary judgment to

yt. v Allstate, 12 AD3d at 580). In the later
Allstate, despite the exhaustion (see NY_and Presb
that the exhaustion was caused by prior-
case, the lower court decision by Justice Bucaria shows
12702/04 at 2). A
received claims i d., Sup Ct, Nassau County, May 1,7 2005, index No.
(see ig.
Elis Affirmation as Ex’ hibit 5
copy of Justice Bucaria’s decision is annexed to the
the issue of exhaustion based on
The Appellate Term and trial k level courts also frame
6
when the claims were received. In Pelham, the Appellate Tem First Department found that there

were “triable issues exist as to whether the policy limits had been exhausted at the time plaintiff

submitted its claims” (see id., 2007 NY Mise LEXIS 4777, *1). The Appellate Term, First

Department ordered the parties to comply with discovery on the exhaustion issue (see id., 2007

NY Misc LEXIS, *1-2). In St. Vincent’s Hosp. & Med. Ctr. v G.E.LCO., it was an issue of fact

as to whether St. Vincent’s bill was fully received before the bills that Geico paid (see id., 2008

NY Slip Op 33319[U], 2008 NY Misc LEXIS 9842, *3-5 [Sup Ct, Nassau County]). In

Montefiore, Farm Family received a $21,766.00 claim on December 4, 2002 and paid $1,893.33

on January 9, 2003 (see id., NYLJ Jan 8, 2004, at 20, col. 3, *1). Justice Bucaria precluded Farm

Family’s defense and granted summary judgment to Montefiore (see id. at *2). Although

Montefiore does not state when the benefits were exhausted (see id. at *1-2), the exhaustion

would have been from later received claims in order for Montefiore to have a valid cause of

action and for Farm Family’s defense to be precluded (see infra re preclusion).

In Long Beach Med. Ctr. v Landmark Ins. Co., the claim was received on January 28,

2010, the claim denied on February 25, 2010 and the policy was exhausted on April 22, 2010

(see id., 2012 NY Slip Op 33546[U], 2012 NY Mise LEXIS 6521, *1-2 [Nassau County Dist

Ct). Judge Ciaffa denied Landmark’s motion to dismiss because there were “unanswered
its
questions as to whether the policy benefits were exhausted at the time plaintiff submitted

claim to defendant in late January 2010” (id., 2012 NY Misc LEXIS 6521, *4). Most recently,
nce
the Appellate Term, First Department recognized that payments must be “made in complia

with the priority of payment regulation” (se Harmonic Phys. Therapy . P.C. v Praetorian Ins.

one of the
Co., 2015 NY Slip Op 50525[U] at 1 [App Term, ist Dept]). Justice Hunter who was
e 2015
justices deciding Harmonic was also one of the justices who decided DeMoura (compar
7
that
NY Slip Op 50525[U] at 1, with 2011 NY Mise LEXIS 1174, *1). Therefore, the panel
to overrule
decided Harmonic was fully aware of the decision in DeMoura and chose not

DeMoura (see Harmonic, 2015 NY Slip Op 50525[U] at 1).
received Dr.
Here, the policy was not exhausted as of May 14, 2012, the date Allstate

d $25,269.69 in
Persich’s claim. As its own payment ledger shows, Allstate had only receive
As in Landmark, there is an
claims as of May 14, 2012, the date it received Dr. Persich’s claim.
received before or
issue of fact as to whether $25,589.21 of Allstate’s payments were for claims

NY Misc LEXIS 6521, *4
after Allstate received Dr. Persich’s claim (compare Landmark, 2012
re, as per the Court of
with Kratenstein Affirmation Exh. C, Elis Affirmation {[ 8). $25 Therefo
Sinai v Country
Appeals’s decision in Nyack and the Appellate Division’s decisions in Mount
579, and St. Vincent’s v
Wide, Mount Sinai v Zurich, NY & Presbyt. v Allstate, 12 AD3d

Allstate, Allstate’s motion for summary judgment must be denied.

B. Strict Construction Requires Exhaustion to be
D etermi
Determ ined the Wate
ned asas ofof the the Widlin
Date ine is Received
Claim Se

(Presbyt. Hosp. in
No Fault is in derogation of the common law and is strictly construed

the City of New York v Atlanta Cas. Co., 210 AD2d 210, 211
[2d Dept 1994]). The regulations

claim is received (see 11
explicitly state that the priority of No-Fault claims is based on date the
d by the insurer, or granted by an
NYCRR § 65-3.15), and not on the date the claims are allowe
by date “received,” it
arbitrator or judge. When the regulation says that priority is determined
ions priority of payment on
means by date “received.” There is nothing in § 65-3.15 that condit
ment meant that claims are to be
the allowance of the claim (see id.). Had the Insurance Depart
order that they are
paid in the order that they are allowed or adjudicated, instead of in the
received, it would have used such language in the regulation (se! Normile v Allstate Ins. Co., 87

AD2d 721, 722 [3d Dept 1982], affd 60 NY2d 1003 [1983]{noting that “fiJf the Legislature had

so intended,” they would have used different language in the statute]).

A claim is fully “received” when all requested verification is received by the insurer (11

NYCRR §§ 65-3.8 [a] [1]; [b] [3]; Nyack, 8 NY3d at 299. A denial by an insurer does not

render a claim to be “received” at a later date, such as when an arbitrator or judge rejects the

denial (see 11 NYCRR § 65-3.15). The Nyack decision gave a strict construction to § 65-3.15

when it ordered GMAC to pay over its policy limit.

Under separation of powers, courts and arbitrators may not rewrite regulations (; Stearns v

Perales, 163 AD2d 392, 392 [2d Dept 1990], app denied 77 NY2d 803 [1991]; Transamerica Ins,
3d
Co, v Weinberg, 78 AD2d 859, 860 [2d Dept 1980]; 724 Realty Assocs. v Kutno, 15 Misc
the guise of
100, 102 [App Term, 1st Dept 2007]). Nor may a court rewrite a regulation “under
does
interpretation” (724 Realty, 15 Misc 3d at 102). The courts may not add a distinction that
Ins. Co., 35
not appear in the regulations (Stephen Fogel Psychological, P.C. v Progressive Cas.
that of the
AD3d 720, 722 [2d Dept 2006}). “[T]his Court may not substitute its judgment for
the State of NY v
Superintendent” of insurance as to the content of the regulations (Med. Soc. of
meaning of
Serio, 100 NY2d 854, 867 [2003]). Therefore, a court may not change or expand the

§ 65-3.15).
on
Justice Edmead recognized the rule of strict construction when a statute is in derogati

of common law. In Bojanovich v Woitach, Justice Edmead found that a “proposed”
39 Mise 3d
administrator is not an “appointed” fiduciary under EPTL § 5-4.1 (see Bojanovich,
says
1237 [Aj[table; text at 2013 NY Misc LEXIS 2366, *5-7). When EPTL § 5-4.1
“appointed,” it means “appointed” and not “proposed” (see Bojanovich, 39 Misc 3d 1237[A]

[table; text at 2013 NY Misc LEXIS 2366, *6-7). The reasoning of Bojanovich applies to 11

NYCRR § 65-3.15 as well. Justice Edmead’s decision in Allstate Ins. Co. v Country-Wide Ins.

Co. is distinguished because that case did not involve the issue of exhaustion caused by later-

received claims (see id., 2013 NY Slip Op 33179[U}, 2013 NY Misc LEXIS 5945). There,

Alistate paid $75,000 to the patient, exhausting its policy (se id., 2013 NY Misc LEXIS 5945,

*2.3). Country-Wide then sought reimbursement from Allstate for benefits that Country-Wide

paid (see id.). Country-Wide made no allegation that the claims it paid were received before the

claims that Allstate paid (see id., 2013 NY Misc LEXIS 5945, *2-4, 7-8). Instead, it argued that

the arbitrator did not have evidence of Allstate exhausting its policy (see id., 2013 NY Mise

LEXIS 5945, *7-8).

“tt is well settled that an insurer declines coverage at its own risk” (City of New York v

Zurich-American Ins. Group, 5 Misc 3d 1008[A]{table, text at 2004 NY Misc LEXIS 1940, *7\

[Sup Ct, Kings County}, afd 27 AD3d 609 [2d Dept 2006]; accord Gordon v Nationwide Mut.

Ins. Co., 30 NY2d 427, 447 [1972][Breitel, J. dissenting]; Inst. for Shipboard Edue. v Cigna

Worldwide Ins. Co., 22 F3d 414, 419 (2d Cir 1992]). A denial of a claim is still a “denial of

coverage” for that claim, even if there is no “lack of coverage” defense (see State Farm Ins. Co.

v Domotor, 266 AD2d 219, 220 [2d Dept 1999}[concerning claims denied after a medical

examination}; Kingsbrook Jewish Med. Center _v Allstate Ins. Co., 61 AD3d 13, 18 [2d Dept

2009] {citing “excessive treatment as a basis for denying overage”]).

“[A though [the insurer’s] position may not have been entirely groundless, if the denial
for all
is found to be wrongful it is liable for the full amount which will compensate the insured
of the
the detriment caused by the insurer’s breach of the express and implied obligations
10
contract” (Gordon, 30 NY2d at 447-448; Inst, for Shipboard Educ., 22 F3d at 419), Here,

although Allstate’s denial was not entirely groundless, Allstate still incurred the risk of denying

Dr, Persich’s claim.

Because No-Fault was enacted to benefit the patients and their healthcare providers,

“[ejhe Legislature and the Superintendent surely did not intend to afford insurers greater rights in

this particular respect with regard to no-fault insurance” (see Presbyt. Hosp. in the City of New

York v Maryland Cas. Co., 90 NY2d 274, 283 [1997]). While Presbyt. v Maryland does not

concern exhaustion, it shows that when courts interpret No-Fault insurance they must apply the

same general principles that they use to interpret liability insurance (see id.). As with any other

type of insurance claim, an insurer denies a No-Fault claim “at its own risk.”

Here, Allstate denied Dr. Persich’s claim at its own risk. Unlike Harmonic Physical

Therapy, Dr. Persich is not arguing that Allstate must delay payments to other providers or is

precluded from making such payments (see Harmonic, 2015 NY Slip Op 50525[U] at 1). Dr.

Perisch’s position is that by denying Dr. Perisch’s claim, Alistate took the risk that it may have

to pay over its policy limit, as in Nyack. Allstate bore no such risk for claims it received before

Dr. Persich’s claim, but paid after its denial to Dr. Persich.

C. Allstate’s Cases Are Distinguishable

The cases that Allstate cites are distinguishable. Allstate’s first set of cases either 1)

concern an exhaustion that was explicitly caused by prior received claims (se Nyack Hosp. v

8 AD3d at
GMAG, 27 AD3d 96, 101-02 [2d Dept 2005; Hosp. for Joint Diseases v State Farm,

534; Presbyt. Hosp. in the City of NY v Liberty Mut. Ins. Co., 216 AD2d 448 [2d Dept 1995];
an
Presbyt. Hosp. in the City of NY v Empire Ins. Co,, 220 AD2d 733 [2d Dept 1995}); 2) raise

121
issue of fact as to whether the exhaustion was by prior-received claims (see NY & Presbyt. v

Allstate, 12 AD3d 579); or 3) did not specify whether the exhaustion was by prior-received

claims (see Hosp. For Joint Diseases v Hertz, 22 AD3d 724, 725 [2d Dept 2013]; St. Barnabas

Hosp. v Country-Wide Ins. Co., 79 AD3d 732 [2d Dept 2010]; Country Wide Ins, Co. v Sawh.

272 AD2d 245, 245 [1st Dept 2000]). Allstate principally relies on Presbyt. v Liberty and

included a copy in its moving papers (see Kratenstein Affirmation). But, in Presbyt. v Liberty,

the exhaustion of the policy was “some six months before the hospitalization at issue” (see id.,

216 AD2d at 448).

There were two Presbyt. Hosp. v Empire cases for the same patient that have the same

official citation of 220 AD2d 733, but have separate unofficial citations: 633 NYS2d 339 and

633 NYS2d 340. Allstate cited the decision that did not specify how the exhaustion occurred

(see Presbyt. Hosp. v Empire, 633 NYS2d 340; Kratenstein Affirmation at 2-5). But in the

companion case, the Second Department noted that the patient had exhausted $47,793.21 of his

policy “[p]rior to the hospitalization at issue” (see Presbyt. Hosp. vy Empire, 633 NYS2d 339). In

Hosp. for Joint Diseases, an earlier decision by Justice Dunne shows that the hospitalization at

issue was two years after the accident (see id., Sup Ct, Nassau County, Jan. 24, 2005, index No.

2322/03). Copies of both decisions by Justice Dunne are annexed to the Elis Affirmation as

Exhibit 6).

In St. Barnabas, the issue was whether St. Barnabas had complied with verification

requests (see id., 79 AD3d at 732-733). There was no allegation of Country-Wide having paid

for claims received after the receipt of St. Barnabas’s claims (see id., 79 AD3d at 732-733; Sup

Ct, Nassau County, Sept. 2, 2009, index No. 6225/09, Brandveen, J.). A copy of Justice

Brandveen’s decision is annexed to the Elis Affirmation as Exhibit 7). Country Wide Ins. Co. v

12
Sawh, did not specify whether the exhaustion was by prior-received claims (see id., 272 AD2d

245, 245 [1st Dept 2000]). But, the First Department cited Presbyt. v Liberty and Presbyt. v

Empire as support (see Country-Wide, 272 AD2d at 245), which implies that Country-Wide

concemed exhaustion by prior-received claims.

Allstate cites the Appellate Division decision in Nyack and describes that the Appellate

Division decision was “modified” but fails to state what the modification was (see Kratenstein

Affirmation at 6-7). The Court of Appeals modified the very portion that Allstate cited by ruling

that waiting for OBEL coverage was not a valid verification request, and therefore GMAC had to

pay $20,188.88 and not $19,325.67 (compare Nyack, 8 NY3d at 300-301 with Kratenstein

Affirmation at 6-7).

Allstate’s second set of cases concerned either 1) a lack of coverage in the first instance

(see Zappone v Home Ins. Co., 55 NY2d 131, 134 [1982); 2) activity that was outside the scope

of the policy in the first instance (Albert J, Schiff Assocs. v Flack, 51 NY 2d 692, 700 [1980];

Employers Ins. Co. of Wasau v County of Nassau, 141 AD2d 496, 497 [2d Dept 1988]); 3)

awards that themselves exceed the policy amounts (see Brijmohan v State Farm, 92 NY2d 821,

822 [1998]; Meegan v Progressive Ins, Co., 43 AD3d 182, 183, 186-187 (4th Dept 2007];

Koes ics v NY Div. of Parole, 41 AD3d 1017, 1020 [3d Dept 2007]; Mendoza v Allstate Ins. Co.,

13 AD3d 594, 594 [2d Dept 2004]; Champagne v State Farm Mut, Auto. Ins., 185 AD3d 835,

837 {2d Dept 1992], overruled on other grounds Liberty Mut. Fire Ins. Co. v Natl, Cas. Co., 859,

861 [2d Dept 2011]; Liberty Mut. Ins, Co. v Aetna Casualty & Sur. Co., 168 AD2d 121, 130 [2d

Dept 1991}); or 4) granted relief that was excluded by the arbitration agreement (see Silverman v

Bi enmor Coats, Inc., 61 NY2d 299, 309 [1984]). Allstate cites the above cases to argue that there

is a lack of coverage for Dr. Persich’s claim (see Kratenstein Affirmation at 2-8).

13
But Nyack contradicts Allstate’s arguments. In both Nyack and in Dr. Persich’s case

there was coverage at the time that the insurer received the claim at issue (compare 8 NY3d at

300-301 with Kratenstein Affirmation, Exh. D). Nyack did not “create” coverage where none

previously existed (cf Zappone, 55 NY2d at 134); did not “extend “ coverage to activity not

contemplated by the policy (cf Schiff, 51 NY 2d at 700); and did not increase the coverage

amount (cf Brijmohan, 92 NY2d at 822 [1998]). Since Nyack came after the decisions in
not
Brijmohan, Schiff and Zappone, the decision in Nyack shows that the earlier decisions did
(see Nyack, 8
affect the situation where there was coverage at the time the claim was received

NY3d at 300-301).
ein
Allstate made a big argument that exhaustion is not a precluded defense (see Kratenst
issue.
Affirmation at 2, 4--6). But, Allstate argument is irrelevant because preclusion is not an

Exhaustion simply does not exist as a defense where the exhaustion is caused by the payment of

Wi & stchester Wed.
later received claims (see e.g. westchester Med. vVY Auto One, 2007 NY Misc Lexis 9141, *2,4-5
ito wk

[finding an improper denial for exhaustion to be untimely]). Allstate also cites Ins. Law 5108 as
per
being violated (see Kratenstein Affirmation at 6, 8), but § 5108 only refers to the charges

service and not to the total amount of benefits, so it is irrelevant to this motion.
it
Because only $26,301.02 of the claims were undisputedly received by Allstate before

received Dr. Persich’s claim; $4,024.35 of the claims were undisputedly received after Allstate
of the claims,
received Dr. Persich’s claim and Allstate never stated when it received $21,630.62
Persich’s
Allstate has failed to show that the policy was exhausted as of the date it received Dr.

claim.

14
CONCLUSION

Wherefore Dr. Persich respectfully requests that this Court deny Allstate’s motion in its

entirety and adjudicate the case on its merits, and for such other and further relief as to this Court

may seem just, proper, and equitable.

Dated: April 23, 2015
Garden City, New York

Respectfully submitted,

‘9
Alan M. Elis
Ge
Rubin and Licatesi, P.C.
Attorneys for Defendant
591 Stewart Avenue, 4" Floor
Garden City, NY 11530
(516) 227-2662

TO: Peter J. Merani, PC
1001 Avenue of the Americas
Suite 1800
New York, New York 10018
(212) 629-9690

15
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
mene none: enema x
ALLSTATE INSURANCE COMPANY,
Index No.: 650307/14
Plaintiff,
AFFIDAVIT OF
~against- SERVICE

GIANNI PERSICH, DPM A/A/O TITO REYES,

Defendant
aoee nesses panna enna nnn wane, -X

STATE OF NEW YORK )
)ss
COUNTY OF NASSAU )
EDDIE PETROSSIAN, being duly sworn, deposes and says that I am not a party to the
action, am over 18 years of age and reside at Franklin Square, New York.

On April 23, 2015, I served a true copy of the annexed Memorandum of Law in
Opposition to Motion for Summary Judgment in the following manner:

By mailing the same in a sealed envelope, with postage prepaid thereon, in a post-office
or official depository of the U.S. Posial Service within the State Of New York, addressed to the
plaintiff's attorney as indicated below:

PETER C, MERANI, P.C
1001 Avenue of the Americas
Suite 1800
New York, New York 10018

the address designated by said party for that purpose

Ll
Lildetfetrss
Lol hei
he fltiasct
Leb, —
Eddie Petrossian.

Sworn to before me on
April 23, 2015

—arin
Ue Notary Public

iM. EUS
Notary patie Bae of New York
0.
Qualified in Neon County
Commission Expires Jan, 06, 191 8
Index No.: 6503072014

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
ALLSTATE INSURANCE CO.,

Plaintiff,
-against-

GIANNI PERSICH, DPM, A/A/O TITO REYES,

Respondent.
—~>>_ ESSE

MEMORANDUM OF LAW OPPOSITION
TO MOTION FOR SUMMARY JUDGMENT

Attorneys for Defendant, Gianni Persich, DPM

RUBIN & LICATESI, P.C.
Office and Post Office Address, Telephone
591 Stewart Avenue - 4"" Floor
GARDEN CITY, N.Y. 11530
Tel: (516) 227-2662 Fax: (516) 227-2739
Pursuant to 22 NYCRR 130-I.1, the undersigned, an attorney admitted to practice in the courts of New York State,
certifies that, upon information and belief and reasonable inquiry, the contentions contained in the annexed
document are not frivolous

Dated: April 23, 2015
Garden City, New York Signature By:

RUBIN & LICATESI, P.C.
bl
To: Peter C. Merani, P.C.
101 Avenue of the Americas
Suite 1800
New York, New York 10018

PLEASE TAKE NOTICE

NOTICE OF ENTRY
That the within is a true copy of an entered in the office of the clerk of the within named Court.

NOTICE OF SETTLEMENT
That an Order of which the within is a true copy will be presented for settlement to the Hon., one of the judges of the
within named Court, on.

Case Info

Judge

Carol Edmead Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

April 23, 2015

Case Filing Date

January 29, 2014

County

Parties

ALLSTATE INSURANCE COMPANY Plaintiff
ELIS, ALAN M. Attorney for the Defendants
GIANNI PERSICH, DPM, A/A/O TITO REYES Defendant
KRATENSTEIN, BRIAN SCOTT Attorney for the Plaintiff
LICATESI, ANTHONY J Attorney for the Defendants
PETER MERANI Attorneys for Plaintiffs
MICHAEL ACHTZIGER Attorney
JONATHAN HACK Attorney
THEODORE ECONOMOU Attorney
ADAM KASS Attorney
MARIA SCHUCHMANN Attorney
ALAN BLOCK Attorney
PETER CLAPMAN Attorneys for Plaintiffs
MICHAEL BEST Attorney

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