Plaintiff-lender’s loan servicing company had a sufficient relationship with plaintiff to authenticate plaintiff’s business records.

The affidavit from an officer of plaintiff-lender’s loan servicing company established that plaintiff had acquired legal and physical possession of the promissory note before commencing the subject foreclosure proceeding. The original lender had assigned the note and mortgage to plaintiff, but the note had been endorsed in blank with not date. The note therefore did not establish the date that it was assigned to plaintiff. The affidavit of the loan servicing company’s officer stated that before the foreclosure action was commenced, plaintiff had sent the loan documents including the note to the loan servicing company which had scanned the documentation into its own records system and then returned the documents to plaintiff. Based on the dates of these events, the senior VP of the loan servicing company averred that the note had been assigned to plaintiff before plaintiff commenced the foreclosure action.

The Third Department that the loan servicing company’s status as servicer of the loan for plaintiff-assignee of a note and mortgage qualified the loan servicing company’s records as business records of plaintiff. The Third Department rejected defendant’s objection that the records were neither made in the loan servicing company’s regular course of business nor within the officer’s personal knowledge. The Third Department stated that while “the mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records”, such records are nonetheless admissible if the recipient can establish personal knowledge of the maker’s business practices and procedures, or that the records provided by the maker were incorporated into the recipient’s own records or routinely relied upon the recipient in its business. To be admissible, these documents should carry the indicia of reliability ordinarily associated with business records.

Given the loan servicing company’s status as servicer of the loan for plaintiff, the loan servicing company’s records qualified as business records.

Deutsche Bank Natl. Trust Co. v Monica, 2015 Slip Op 06453, 3rd Dept 8-6-15

Chinese national whose return visa to the US was denied can present his videotaped trial testimony and be examined in China by defendants’ doctor.

Plaintiff Chinese citizen was injured while he was a passenger on a bus. Plaintiff appeared for his deposition which was not completed on that date and was adjourned to be completed at a later date. Plaintiff moved back to China before the deposition was completed. Plaintiff had been living in the United States by himself and moved back to China to be with his wife and child lived, allegedly due to his inability to care for himself.

Defendants moved pursuant to CPLR 3126 to dismiss plaintiff’s complaint for failure to continue his deposition or to appear for an IME, or alternatively to compel plaintiff to appear or be precluded from testifying at trial. Plaintiff cross-moved for a protective order directing that his deposition be conducted by remote electronic means and for leave to employ a video transcription of his deposition testimony at trial in lieu of appearing in person due to his inability to obtain a visa to enter the United States.
Held: Because plaintiff’s applications for a visa to return to the United States had been denied, plaintiff demonstrated that traveling from China to the United States for his deposition or independent medical examination would cause undue hardship. Plaintiff would therefore be permitted to present a video transcription of his deposition testimony at trial in lieu of appearing at trial to testify. Plaintiff met the criteria set forth in CPLR 3117(a)(3)(ii), (iv), and (v), to wit, that the witness (plaintiff himself) is more than 100 miles from the place of trial, that plaintiff is unable to procure his attendance at trial, and that such exceptional circumstances exist as to make the use of plaintiff’s videotaped testimony desirable in the interest of justice and with due regard to the importance of presenting his testimony orally in open court.
Although plaintiff would not be required to pay business class airfare and accommodations for defendants’ examining doctor to travel to China, plaintiff had consented to pay the reasonable cost of airfare and accommodations for the defendants’ doctor to conduct the independent medical examination in China. Feng Wang v A & W Travel, Inc., 2015 NY Slip Op 06312 (2d Dept July 29, 2015).

Fidelity bond covering “a fraudulent entry of Electronic Data or Computer Program” covers fraudulent entry into the system, not fraudulent data.

A rider in a fidelity bond for computer systems fraud that covered “a fraudulent entry of Electronic Data or Computer Program” unambiguously refers only to unauthorized access into plaintiff’s computer system and not to fraudulent content that was input by authorized users.   Universal Am. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA., 2015 NY Slip Op 05516, CtApp 6-25-15

Plaintiff Universal Am. Corp. is a health insurer who offers Medicare Advantage plans to Medicare-eligible individuals who purchase Medicare coverage from private health insurers who in turn are reimbursed by the federal Centers for Medicare and Medicaid Services for health care services that are provided to the plans’ members.  Plaintiff’s computerized billing system allowed health care providers to submit claims directly into the system.   Plaintiff automatically processed, approved, and paid most of the claims without manual review.

Plaintiff suffered more than $18 million in losses from paying fraudulent claims for services that were never actually performed under its Medicare Advantage plans.  When plaintiff sought payment from defendant bonding company for plaintiff’s post-deductible losses, defendant denied coverage on the ground that the rider did not encompass losses for Medicare fraud, i.e., losses from payment for claims submitted by health care providers.

Plaintiff sued defendant for declaratory relief and moved for partial summary judgment on the issue of coverage, and defendant cross-moved for summary judgment dismissing the complaint.

The Court of Appeals affirmed dismissal of the complaint, holding that the rider unambiguously applies to losses incurred from unauthorized access to Universal’s computer system, and not to losses resulting from fraudulent content that authorized users input into the computer system.

The Court applied the “reasonable expectations of the average insured upon reading the policy” (from Mostow, 88 NY2d at 326-27).  The Court noted that the intentional word placement of “fraudulent” before “entry” and “change” manifests the parties’ intent to provide coverage for a violation of the integrity of the computer system through deceitful and dishonest access.  The Court also relied on other language in the rider that evinced defendant’s intent to cover only fraudulent access and not fraudulent input.


Business records exception and medical provider’s burden of proof on its motion for summary judgment for payment of services rendered to no-fault claimant

The Court of Appeals held that plaintiff medical provider was entitled to summary judgment for payment of no-fault benefits by showing that the payments were overdue, and that the provider’s claim, using the statutory billing form, had been mailed to and received by the defendant insurer.  With regard to the business -records exception to the hearsay rule, the affidavit of the president of plaintiff’s third-party billing company, which stated that he relied on the statutory billing forms generated by plaintiff, satisfied the business records exception.   With regard to the facts that a medical provider must establish:  because the carrier failed to respond in any fashion to plaintiff’s claim forms, the carrier waived all objections and defenses to those claims, and plaintiff  did not need to establish prima facie that the expenses arose out of a motor vehicle accident and were medically necessary to treat the injuries.  Viviane Etienne Med. Care v. Country-Wide Ins. Co., 2015 NY Slip Op 04787, Ct App 6-10-15.    NB:  This action was commenced in September 2005, before the adoption of the April 1, 2013 amendments to 11 NYCRR 65-3.5 and 11 NYCRR 65-3.8, which can be found at

In this case, the injured claimant had assigned to his medical provider his right to receive payment for no-fault medical benefits (i.e., payments for the the medical treatments his medical provider rendered to him for injuries he received in an auto accident.)  Plaintiff medical provider submitted eight verification-of-treatment forms (statutory NF-3 forms) to defendant no-fault insurer for the services rendered.  Defendant denied payment on one claim and failed to respond to the other seven.

Plaintiff sued, asserting that it had timely submitted bills and claims for payment to defendant but that defendant had failed to pay or deny the requests or ask for further verification of the claims. Plaintiff also requested interest and attorney’s fees under the Insurance Law.  Defendant answered and asserted as an affirmative defense that payment for plaintiff’s claims was not overdue because plaintiff failed to submit “proper proof of the fact and amount of the loss” as required by the Insurance Law.

Plaintiff then moved for summary judgment on its claims, submitting in pertinent part the seven verification-of-treatment forms as proof of claim and seven mailing ledgers stamped by the United States Postal Service showing the date the forms were mailed. Plaintiff also submitted the affidavit of the president of plaintiff’s third-party billing company, who detailed the billing company’s reliance on plaintiff’s NF-3 claim forms and stated that he personally mailed the NF-3’s to defendant within the statutory 30-day time limit.

Defendant opposed the motion, arguing that plaintiff failed to satisfy the business records exception to the hearsay rule because the affidavit of the billing company’s president merely stated that the bills were mailed but gave no details as to plaintiff’s generation of the NF-3 claim forms.

The Court of Appeals relied on no-fault regulation 11 NYCRR 65-3.5(b), which stated that within 15 days from receipt of the verification of treatment form, the insurer may seek further verification) and Insurance Law §5106, and 11 NYCRR 65-3.8(c), which stated that within 30 days after receiving the verification of treatment form, the insurer must pay or deny the claim.  As noted above, this action was commenced in September 2005, before the adoption of the April 1, 2013 amendments to 11 NYCRR 65-3.5 and 11 NYCRR 65-3.8, which can be found at

The Court of Appeals recited previous holdings to the effect that where an insurer fails to pay or deny a claim within the requisite 30 days after its receipt of the proof of claim, the insurer is precluded from asserting all defenses against payment of the claim except lack of coverage, and that although this preclusion requires carriers to pay claims that it might not have had to honor if it had timely denied the claim, the great convenience of prompt uncontested, first-party insurance benefits is part of the price paid to eliminate common-law contested lawsuits.

The Court of Appeals held that plaintiff met its prima facie burden of proving its entitlement to summary judgment because the documents submitted met the business records exception to the hearsay rule and that because plaintiff was able to demonstrate the billing and mailing practices,  the insurer was presumed to have received those claims.  And because defendant did not pay the seven claims, those claims were overdue and defendant’s failure to contest the claims waived its right to contest the claims as fraudulent.   [NB:  The amount at issue was about $6,000.  At the same time the Appellate Division certified this question to the Court of Appeals, it remanded to Supreme Court to determine whether plaintiff was entitled to attorneys’ fees and interest, which runs at two percent per month from the date the payments became “overdue”.]

Dissent: Judges Stein joined by Judge Reed dissented, stating that neither the statutory nor regulatory deadlines  obviated plaintiff’s burden to show prima facie that it was entitled to receive the benefits in the first place — i.e., that the loss arose from an automobile accident and that the expenses incurred were medically necessary.   Judge Stein noted that the State Insurance Department interpreted the interplay between summary judgment and the preclusion rule in that manner, i.e., although an insurer’s defense to payment of claim may be precluded under the preclusion cases,  the claimant must still meet the statutory requisite and make out a prima facie case of entitlement to benefits, which requires that reimbursable expenses must arise out of a motor vehicle accident and be medically necessary to treat the injuries.  Ops. Gen Counsel NY Ins Dept No. 00-01-02 [January 2000].

Moreover, Judge Stein noted that plaintiff failed to establish its claim forms as business records:  the billing company’s president had no personal knowledge of plaintiff’s procedures in creating the NF-3 claim forms, and that plaintiff should have been required to submit a proper affidavit as to the creation of the NF-3 forms.


Mexican meat-and-potato casserole

(This recipe meets all criteria for a week-night main dish: good, fast, filling, and easy on the budget.)

1 box scalloped or au gratin potatoes, made according to the stovetop directions on the box (you may substitute water for any milk that the directions may call for, and you may omit any butter that is called for, if desired)
Salsa con queso: at least ½ cup; more if desired
Garnish (optional): paprika or colorante, salsa, green onions
1-2 cups cooked meat or poultry cut into ¾-inch cubes and warmed in the microwave

As soon as the potatoes have finished their simmering per the package directions, leave the heat on under the pan and fold in the salsa con queso to blend and warm up to the same temperature as the potatoes. Then fold in the cooked meat or poultry. Place in serving bowl (the more elegant the better) and garnish as desired.

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