State Farm Mut. Auto. Ins. Co. v. Mallela
| Citation | 372 F.3d 500 |
| Decision Date | 18 June 2004 |
| Docket Number | No. 02-9407.,02-9407. |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Plaintiff-Appellant, v. Robert MALLELA, Tatiana Rybuk, Paul Schneider, Advance Physical Medicine and Rehabilitation, P.C., d/b/a Mill Basin Physical Medicine, Ridgewood Medical Specialist and Hempstead Village Medical, Allied Medical Health Care, P.C., Astoria Physical Medicine and Rehabilitation, P.C., Atlantic Medical Practice, P.C., Avenue U Medical Services, P.C., Bay Medical Health Care & Diagnostic, P.C., Bettercare Health Pain and Management, P.C., d/b/a Firstcare of Bettercare Healthcare, Canarsie Medical Services, P.C., Central Medical Rehabilitation, P.C., Central Suffolk Medical Services, P.C., Citywide Medical Practice, P.C., Daka Medical, P.C., d/b/a Island Health Professionals, Farragut Medical Care, P.C., First Queens Physical Med. and Rehabilitation, P.C., Flatbush Medical Services, P.C., Fordham Medical Pain and Treatment, P.C., Franklin Medical Rehab., P.C., Grand Central Healthcare and Physical Medicine, P.C., Health First Medical Practice, P.C., Mallela Medical Services, P.C., Medical Services of Bayside, P.C., Mid-Island Medical Healthcare, P.C., Mid-Queens Medical Services, P.C., Millenium Medical Diagnostics, P.C., N.Y. Alea Medical, P.C., N.Y. Pro Care Medical & Rehabilitation, P.C., Oceanview Medical Care, P.C., Patients Choice Medical Services, P.C., Pelham Physical Medicine and Rehabilitation, P.C., Sterling Medical Diagnostic, P.C., Triborough Medical Diagnostic, P.C., Valley Physical Medicine & Rehabilitation, P.C., Valley Rehabilitation and Medical Offices, P.C., Victory Medical, P.C., Yonkers Medical Services, P.C., d/b/a Injury Relief Medical Care, Urban Medical Diagnostics, P.C., Frank Gomez, Lewis Bazokas, Olga Gazonas, Douglas Spiel, Dr., David Bass, Lawrence Lefcourt, George Bonetti, Igor Brodsky, Gerard Fusaro, Glenn Gallo, Roger Kaplan, Kevin McPortland, Donald Musaffi, Joseph Mills, Jack Camarda, Alan Cohen, William Battaile, Injury Relief Medical Care, Dipak Nandi, Steven Nissenbaum, Harold Orr, Alan Perlmutter, Ruth Rodgers, Peter Swerz, Health care Management, Inc., Babylon Health Care Management, Inc., Bonis Management Corp., Camelot Management, Carle Place Health Management Corp., Criscay Management Corp., Franklin Healthcare Management Corp., GBI Management Corp., Jeffsam Corp., Niagara Diagnostics Inc., Office Master, Inc., Omega Management Corporation, Omega Management Corp., RMK Management Corp., Inc., Triborough Healthcare Management, Inc., Universal Express and Swapnadip Lahiri, Defendants-Appellees. Allstate Insurance Company, GEICO Insurance Company, Progressive Insurance, New York Central Mutual Fire Insurance Company, Encompass Insurance Company, Movants. |
| Court | U.S. Court of Appeals — Second Circuit |
Appeal from the dismissal of plaintiff's declaratory judgment, fraud, and unjust enrichment claims. Question Certified to the New York Court of Appeals.
Evan H. Krinick, Rivkin Radler LLP (Cheryl F. Korman, Stuart M. Bodoff, on the brief), Uniondale, NY; Ross O. Silverman, KMZ Rosenman LLP (Gil M. Soffer, on the brief), Chicago, IL, for Plaintiff-Appellant.
Joseph J. LaBarbera, P.C., The Law Offices of Joseph J. La Barbera, P.C., New York, NY, for Defendants-Appellees Astoria Physical Medicine and Rehabilitation, P.C. and Valley Rehabilitation and Medical Offices, P.C.
Mark L. Furman, Hoffman Einiger & Polland P.L.L.C., New York, NY, for Defendants-Appellees Grand Central Healthcare; Physical Medicine, P.C.; Yonkers Medical Services, P.C. d/b/a Injury Relief Medical Care; and Mid-Queens Medical Services, P.C.
David J. Sobel, Sobel & Seidell, LLP, Smithtown, NY, for Defendant-Appellee Bettercare Health Care Pain Management and Rehab, P.C. s/h/a Bettercare Healthcare Pain Management, P.C. d/b/a Firstcare of Bettercare Healthcare.
Steven J. Harfenist, Friedman, Harfenist & Langer (Neil S. Torczyner, on the brief), Lake Success, NY, for Defendants-Appellees Central Medical Rehabilitation, P.C.; Franklin Medical Rehab., P.C.; Valley Physical Medicine & Rehabilitation, P.C., Lewis Bazokas, George Bonetti; Glenn Gallo; Joseph Mills; Jack Camarda; Steven Nissenbaum; Bonis Management Corp.; Criscay Management Corp.; Franklin Healthcare Management Corp.; Universal Express, Inc.; Olga Gazonas; Astoria Physical Medicine and Rehabilitation, P.C.; and Atlantic Medical Practice, P.C.
Francis J. Serbaroli, Cadwalader, Wickersharn & Taft LLP (William J. Natbony, on the brief), New York, NY; Skip Short, Short & Billy, P.C., New York, NY, for Amici Curiae Allstate Insurance Company, Geico Insurance Company, Progressive Insurance Company, New York Central Mutual Fire Insurance Company, and Encompass Insurance Company.
Before OAKES, WINTER, and CALABRESI, Circuit Judges.
This case raises a question of state law that is unsettled, and of central importance to the functioning of New York's no-fault automobile insurance scheme. It asks whether an insurance company may refuse to compensate medical providers for healthcare services that are within the scope of the no-fault program in every way except that they are provided by health care professionals employed by medical practices that, under state education and business laws, are unlawfully incorporated. On the motion of plaintiff-appellant State Farm Mutual Automobile Insurance Co. ("State Farm"), we CERTIFY the question to the New York Court of Appeals. See 22 N.Y.C.R.R. § 500.17.
State Farm filed this diversity action in the United States District Court for the Eastern District of New York (Sifton, J.), seeking declaratory and injunctive relief and compensatory and punitive damages, against defendants, a number of individuals and corporations whom State Farm has accused of participating in insurance fraud.
The district court dismissed the first complaint without prejudice, granting the plaintiff leave to replead.1 See State Farm Mutual Automobile Ins. Co. v. Mallela, 175 F.Supp.2d 401, 423 (E.D.N.Y.2001) ("State Farm I"). State Farm amended its complaint, making much the same claims, but adding several defendants and highlighting intervening amendments to the relevant insurance regulations. Judge Sifton, acting on a motion made by some defendants, dismissed the second amended complaint, this time with prejudice. See State Farm Mutual Automobile Ins. Co. v. Mallela, 2002 WL 31946762, at *17, 2002 U.S. Dist. LEXIS 25187, at * 64 (E.D.N.Y.2002) ("State Farm II").
State Farm then brought this appeal. But because the district court dismissed the complaint only as to the "Moving Defendants," id., although other defendants had been served, the order below was neither final nor appealable. See Ruffolo v. Oppenheimer & Co., 949 F.2d 33, 36 (2d Cir.1991). We raised the issue nostra sponte, and State Farm, in order retroactively to create a final judgment and establish appellate jurisdiction, agreed to dismiss with prejudice any outstanding claims against those defendants who had not moved to dismiss. See McManus v. Gitano Group, Inc., 59 F.3d 382, 383-84 (2d Cir.1995).
We begin by reviewing the New York statutory and regulatory framework that governs this diversity case. In 1973, the New York State Legislature passed the precursor to today's Comprehensive Motor Vehicle Insurance Reparations Act, see N.Y. Ins. Law §§ 5101 et seq. (formerly N.Y. Ins. Law §§ 670 et seq.), supplanting the state's common law tort remedies for most injuries associated with automobile accidents with a no-fault insurance scheme. See Medical Soc'y v. Serio, 100 N.Y.2d 854, 860, 768 N.Y.S.2d 423, 800 N.E.2d 728 (2003). The purpose of the Act was to create a simple, efficient system that would provide prompt compensation to accident victims without regard to fault, and in that way reduce costs for both courts and insureds. See Serio, 100 N.Y.2d at 860, 768 N.Y.S.2d 423, 800 N.E.2d 728. The Act permits injured parties to recover benefits from insurers for "basic economic loss," including medical expenses, that arise out of the use or operation of a covered motor vehicle. See N.Y. Ins. Law § 5102. It also provides for a "Fee Schedule" which establishes permissible charges for specific services offered by particular kinds of providers. See N.Y. Ins. Law § 5108, 11 N.Y.C.R.R. § 68.
The Superintendent of Insurance promulgated regulations to implement this statute, and has amended them several times. One set of revised regulations was struck down as a violation of the New York State Administrative Procedure Act in Matter of the Medical Society of the State of New York, Inc. v. Levin, 280 A.D.2d 309, 723 N.Y.S.2d 133 (N.Y.App.Div.2001). While an appeal from that decision was pending, the Superintendent again revised the regulations. The new revised regulations were approved by the Court of Appeals in Serio, 100 N.Y.2d at 862, 768 N.Y.S.2d 423, 800 N.E.2d 728.
The regulations permit covered parties to assign their benefits to health care providers, who in turn submit claims to insurers for treatment and services given to the injured individual. See 11 N.Y.C.R.R. § 65-3.11. To guarantee that insureds are promptly compensated, the regulations also established strict, and brief, time periods for claim processing. Under these, insurers must, by forwarding the claimant certain prescribed forms, request any necessary "verification" of claims within ten days of receiving a completed claim. See 11 N.Y.C.R.R. § 65.15(d). Upon getting verification, insurers have thirty days within which to pay or deny a benefits claim. See 11 N.Y.C.R.R. § 65.15(g).
A sentence which was added to the regulations in the last revision, and came into effect in 2001, is central to plaintiff's argument in the case before us. It reads:
A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to...
To continue reading
Request your trial
-
Allstate Ins. Co. v. Elzanaty
...to accident victims without regard to fault, and in that way reduce costs for both courts and insureds.” State Farm Mut. Auto. Ins. Co. v. Mallela, 372 F.3d 500, 503 (2d Cir.2004) (citing Serio, 100 N.Y.2d at 860, 768 N.Y.S.2d 423, 800 N.E.2d 728). The Act permits injured parties to recover......
-
State Farm Mut. Auto. Ins. Co. v. Parisien
...tort remedies for most injuries associated with automobile accidents with a no-fault insurance scheme." State Farm Mut. Auto. Ins. Co. v. Mallela , 372 F.3d 500, 502 (2d Cir. 2004). Under the statute, automobile insurers must provide coverage for "basic economic loss," including medical exp......
-
Windsor v. United States
...appellate courts and trial courts, or we may certify the question to the New York Court of Appeals. See State Farm Mut. Auto. Ins. Co. v. Madella, 372 F.3d 500, 505 (2d Cir. 2004). BLAG urges that we certify this question, observing that this is an option that we have and that the district ......
-
Allstate Ins. Co. v. Lyons
...to accident victims without regard to fault, and in that way reduce costs for both courts and insureds.” State Farm Mut. Auto. Ins. Co. v. Mallela, 372 F.3d 500, 502 (2d Cir.2004). Under the law, automobile insurance providers are required to include in their policies coverage for injuries ......