Healthcare Radiology & Diagnostic Sys., PLLC v. Goldman
| Decision Date | 20 November 2020 |
| Docket Number | 53234/2019 |
| Citation | 70 Misc.3d 581,136 N.Y.S.3d 672 |
| Parties | HEALTHCARE RADIOLOGY AND DIAGNOSTIC SYSTEMS, PLLC, Plaintiff, v. Jeffrey GOLDMAN, M.D., Defendant. |
| Court | New York Supreme Court |
70 Misc.3d 581
136 N.Y.S.3d 672
HEALTHCARE RADIOLOGY AND DIAGNOSTIC SYSTEMS, PLLC, Plaintiff,
v.
Jeffrey GOLDMAN, M.D., Defendant.
53234/2019
Supreme Court, Westchester County, New York.
Decided November 20, 2020
All parties appearing via NYSCEF.
Lawrence H. Ecker, J.
In accordance with CPLR 2219 (a), the decision herein is made upon considering all papers filed in NYSCEF as submitted relative to the motion of plaintiff HEALTHCARE RADIOLOGY and DIAGNOSTIC SYSTEMS, PLLC (Mot. Seq. 2), made pursuant to CPLR 3001 and 3212, for an order granting summary judgment on the complaint as to its first cause of action and dismissing all counterclaims of defendant JEFFREY GOLDMAN, M.D.; and the cross motion of defendant JEFFREY GOLDMAN, M.D. (Mot. Seq. 3), made pursuant to 3001 and 3212, for an order granting summary judgment with respect to defendant's second counterclaim and dismissing plaintiff's causes of action.
Plaintiff, a medical practice specializing in medical imaging and radiology services, is the former employee of defendant, a radiologist. The parties entered into an employment agreement dated May 1, 2010. Plaintiff's practice was a radiology practice operating in Westchester County and defendant
was employed by plaintiff as a full-time physician.
Paragraph 2.4.1 of the employment agreement, titled "Liability Insurance," required defendant to secure medical malpractice insurance naming plaintiff as an additional insured, with minimum coverage equal to the coverage maintained by the shareholders and other employees of plaintiff. Paragraph 2.4.1 further states that defendant "will provide [plaintiff] with a certificate of insurance evidencing such coverage by the Effective Date and at such other times during the term of this [Employment] Agreement as [plaintiff] shall request"; that "[s]uch certificates of insurance shall require the insurer to notify [plaintiff] of any changes made to or termination of such insurance; and that plaintiff "shall pay all premiums associated with the malpractice insurance." Exhibit A to the employment agreement, titled "Benefits," states that defendant "shall be entitled to ... (benefits to be prorated accordingly): [r]eimbursement for the cost of ... medical malpractice premiums for an occurrence policy that satisfies the requirements of the [Employment] Agreement, all subject to [plaintiff's] general policies with respect to such reimbursement." In accordance with Exhibit C to the employment agreement titled "Compensation," defendant was to be paid an annual salary of
$420,000 per year, together with "[p]articipation in any bonus plans or programs provided by [plaintiff] to its physicians," subject to "withholding taxes and other employment taxes as required to compensation paid by an employer to an employee."
The medical malpractice policy in effect for defendant was maintained through Medical Liability Mutual Insurance Company (MLMIC) until 2016 (under policy number 3191806), when MLMIC was purchased by National Indemnity Insurance Company (NICO) pursuant to a demutualization plan overseen by the New York State Department of Insurance and the Superintendent of the Department of Financial Services (hereinafter DFS). Insurance Law § 7307 governs a conversion plan (and proposed conversions) such as the one at issue here,1 which includes, inter alia, a determination as to how much of a refund, if any, a policyholder is to receive when there is a refund of premiums (plus investment) due to the mutual owners resulting from the consideration paid by the purchasing insurer from the selling insurer, equal to 1.9 times the sum of the premiums that were paid on the policy, and are applicable to a three-year period (see Insurance Law § 7307 [e] [3] ). In this case, that period ranged from July 15, 2013 through July 14, 2016, during which time defendant was employed by plaintiff.
As a result of the plan of conversion that was adopted by the Board of Directors on May 31, 2018 and revised by MLMIC on June 15, 2018, disputes arose as to which party, the employer practice or the employee physician (the parties herein), was entitled to the share of the refund allocated to the particular physician. By statute, MLMIC, upon receiving notice that there was a dispute, is required to hold the disputed amount in escrow, pending further direction from the parties or by court order. Definitions alone, such as to who is the plan administrator — i.e., the party presumably entitled to the refund — is not wholly determinative of the issue, as the issue of which party is entitled to the refund may depend upon the facts and circumstances of the case. Pursuant to the
controlling valuation formula, the cash consideration to be paid with respect to the subject policy was $254,263.70. Although that sum was maintained by and for the benefit of defendant, it now remains deposited in escrow with MLMIC, the entitlement of which is at issue here.
This action ensued in February 2019 when plaintiff filed a summons with notice. In June 2019, plaintiff filed a complaint seeking, among other things, a declaratory judgment pursuant to CPLR 3001, claiming that it is entitled to the MLMIC funds and that defendant would be unjustly enriched from receipt thereof. Plaintiff's second cause of action is predicated on unjust enrichment, alleging that it, not defendant, made full payments of the insurance premiums for the MLMIC policy, in addition to defendant's salary and benefits in connection with his employment, and that plaintiff solely controlled and administered the insurance policy for defendant's benefits.
In July 2019, defendant answered, asserting seven affirmative defenses and two counterclaims. His second counterclaim seeks a declaratory judgment for entitlement to all proceeds of the MLMIC insurance policy as the policyholder with a membership interest in MLMIC, while plaintiff should not be entitled to receive any portion of the demutualization proceeds. Prior to the close of discovery, the parties now make competing summary judgment motions as set forth above.
Plaintiff argues that it is entitled to the full refund because it paid the insurance premiums while defendant made no contributions whatsoever and, so, defendant would be unjustly enriched by a refund. In response, defendant contends that there is an inherent dispute as to which party paid the insurance premiums for the MLMIC policy. More specifically, he asserts that the MLMIC policy was initially purchased by him before he entered into the employment agreement with plaintiff; that the premium expenses for the policy were deducted from his compensation; and that the expense of the MLMIC policy was actually paid by the hospitals serviced by plaintiff, as a cost included in plaintiff's charges for services rendered under its exclusive services contracts with the hospitals it serviced, such that it was not an out-of-pocket cost for the MLMIC premium expenses. Defendant claims that it was not plaintiff, but rather affiliates of plaintiff's principal who paid those premiums.
Defendant avers that in 2013, plaintiff reduced his compensation package by 10% to account for increases in malpractice insurance premiums, while plaintiff refutes there was any deduction from defendant's salary for the expense of the MLMIC premiums. Plaintiff maintains that the payment of the premiums was merely a benefit of employment and not a measure of compensation.
It is well settled that the proponent of the summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact (see CPLR 3212 [b] ; Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ; Winegrad v. New York Univ. Med. Center , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 [1985] ; Zuckerman v. City of New York , 49 N.Y.2d 557, 560, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ; De Souza v. Empire Tr. Mix, Inc. , 155 A.D.3d 605, 606, 63 N.Y.S.3d 473 [2d Dept. 2017] ). Importantly, "[o]nce this showing has been made, the burden then shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (
Alvarez v. Prospect Hosp. , 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; see De Souza v. Empire Tr. Mix, Inc. , 155 A.D.3d at 606, 63 N.Y.S.3d 473 ). "[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" to create a material issue of fact" ( Zuckerman v. City of New York, 49 N.Y.2d at 562, 427...
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Maple Med., LLP v. Scott
...of the First Department, rather than the view of the Third and Fourth Departments (see Healthcare Radiology & Diagnostic Sys., PLLC v. Goldman, 70 Misc.3d 581, 136 N.Y.S.3d 672, 2020 WL 6859513 [Sup. Ct., Westchester County] ). The First Department's view was also followed, and the view of ......