Reprinted from New York Law Journal

REPRINTED FROM NEW YORK LAW JOURNAL

Use of Notice to Admit in No-Fault Insurance Litigation

By David M. Barshay and David M. Gottlieb

August 6, 2007

The use of the Notice to Admit in no-fault insurance litigation has become both increasingly popular and controversial. The controversy arises from a general misunderstanding of the Notice to Admit, its application and responsorial requirements.
This commentary endeavors to provide the practitioner with guidance on the issue, while dispelling popular myths, misunderstandings and misapplications of law concerning this underused litigation tool.
Purpose, Technical Requirements
The Notice to Admit is "a vehicle for resolving and eliminating from contention matters which, though factually relevant, are not really in dispute. It is designed to remove from the case those uncontested matters which would merely present a time-consuming burden at trial." Villa v. N.Y.C.H.A., 107 AD2d 619 (1st Dept. 1985). Moreover, a Notice to Admit may be used even if the admission sought concerns a contested fact, if the contested fact is "easily provable." See, Elrac, Inc. v. McDonald, 186 Misc2d 830 (N.Y. Sup. 2001); Meadowbrook-Richman, Inc. v. Cicchiello, 273 AD2d 6 (1st Dept. 2000); Marigliano v. State Farm Mut. Auto Ins. Co., 12 Misc3d 1180(A)(N.Y. City Civ. Ct. 2006).
Finally, a Notice to Admit is proper if "the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which [facts] are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry." See, CPLR §3123(a); See also, Wonforo Assoc. v. Maloof, 2002 N.Y. Slip Op. 50316(U)(N.Y. City Civ. Ct. 2002); Berg v. Flower Fifth Avenue Hospital, 102 AD2d 760 (1st Dept. 1984) (concurring opinion).
Conversely, a Notice to Admit may not be used to compel admissions as to issues that are the "heart of the matter." See generally, Taylor v. Blair, 116 AD2d 204 (1st Dept. 1986).
CPLR §3123, the Notice to Admit's enabling statute, dictates a Notice to Admit can be responded to in five ways: (1) a sworn to admission; (2) a sworn to denial; (3) a sworn to statement setting forth in detail the reasons why the demand cannot be truthfully admitted or denied; (4) a sworn to statement admitting the matters with a qualification or explanation; or (5) a motion for a protective order under CPLR §3103.
To constitute a valid response, the response must be "sworn to" by the party served, not that party's attorney. See, Elrac, Inc. v. McDonald, supra. 1 A response based upon "information and belief" is equally improper. See, Rosenfeld v. Vorsanger, 5 AD3d 462 (2nd Dept. 2004). CPLR §3123 does not allow for creative responses. Any response other than those prescribed, including no response at all, is improper and is deemed a de facto admission. 2
Finally, unlike other disclosure devices, CPLR §3122 objections may not be raised in response to a Notice to Admit. See, Webb v. Tire & Brake Distrib Inc., 13 AD3d 385 (3rd Dept. 2004); Seaside Medical, P.C. v. General Assur. Co., 2007 N.Y. Slip Op. 27258 (N.Y. Dist. Ct. 2007).
'Heart of the Matter' Myth
The most common argument - and the largest misconception - is that a Notice to Admit bearing directly on plaintiff's prima facie case goes to the "heart of the matter" and is, therefore, per se improper. However, whether the allegations of the Notice to Admit, examined individually or when considered in their entirety, if admitted, establish plaintiff's prima facie case is completely immaterial to a "heart of the matter" analysis.
Indeed, all four judicial departments have held - and the Court of Appeals has affirmed - a Notice to Admit may be used to establish plaintiff's prima facie case. See, Villa v. N.Y.C.H.A., 107 AD2d 619 (1st Dept. 1985); Risucci v. Homayoon, 122 AD2d 260 (2nd Dept. 1986); Kowalski v. Knox, 293 AD2d 892 (3rd Dept. 2002); Marine Midland Bank, N.A. v. Custer, 97 AD2d 974 aff'd. 62 N.Y.2d 7321 (1984).3
In Risucci v. Homayoon, supra, defendant argued plaintiff's Notice to Admit was improper because it was being used by plaintiff "in an attempt to make out a prima facie case on paper." Id. at 261. The Second Department found the argument "without merit," as the admissions sought involved clear-cut factual matters, the resolution of which would help to expedite the trial. Id.
In Villa v. N.Y.C.H.A., supra, part of plaintiff's prima facie case - as in an action to recover no-fault benefits - was to prove it submitted a claim to defendant and defendant failed to indicate any defects in that claim. Plaintiff included such allegations in its Notice to Admit. Defendant moved for a protective order, alleging the Notice to Admit was improper because it went to the "heart of the matter," to wit, plaintiff's prima facie case.
The First Department held: "[T]here was nothing improper in asking defendant to confirm its written acknowledgement of the filing of that claim and its subsequent failure to indicate any defects in that notice." Id. at 620-621. See also, Kowalski v. Knox, supra (Plaintiff's prima facie case established through defendant's failure to respond to plaintiff's Notice to Admit); Great American Ins. Co., v. Matzen Const., Inc., 114 AD2d 625 (3rd Dept. 1985); Marine Midland Bank, N.A. v. Custer, supra; Beneficial Finance Co. of New York, Inc. v. Youngman, 57 AD2d 727 (4th Dept. 1977); Krugman v. Bd. of Assessors of Vil. of Atlantic Beach, 141 AD2d 175 (2nd Dept. 1988).
Moreover, Professor Siegel writes that a party refusing to answer a Notice to Admit runs the risk that the fact admitted may prove dispositive of the entire claim. Siegel, N.Y. Practice 3d. Ed. §364 at pg. 574. See also, Seaside Medical, supra; Marine Midland Bank v. Bryce, 70 AD2d 754 (3rd Dept. 1979).
Finally, as set forth in the Practice Commentary to CPLR §3123, that a party serving a Notice to Admit ultimately bears the burden of proof as part of its prima facie case of the items sought in the demand, has no bearing on the propriety of the Notice. 4
Accordingly, without merit is the argument that a Notice to Admit that seeks admissions as to the elements of plaintiff's prima facie case goes to the "heart of the matter" and is, therefore, per se improper. What, then, is the "heart of the matter"?
Case law defines the "heart of the matter" as issues "really in dispute" and those "hotly contested" throughout the litigation. See, DeSilva v. Rosenberg, 236 AD2d 508 (2nd Dept. 1997) (Notice to Admit that sought admission that defendant's doctor authored an entry in medical chart improper as defendant "hotly contested" that doctor made the subject entry); The Hawthorne Group v. RRE Ventures, 7 AD3d 320 (1st Dept. 2004); Nat. Union Fire Ins. Co. of Pittsburgh, Pa., v. Allen, 232 AD2d 80 (1st Dept. 1998); Villa v. N.Y.C.H.A., supra; Rosenfeld v. Vorsanger, supra.
In the context of No-Fault litigation, the typical Notice to Admit seeks admissions to two simple factual allegations: (1) The subject claim forms were received by defendant; and (2) they were not paid within thirty days of receipt. 5
Under a "heart of the matter" analysis, the inquiry must focus on whether the insurer actually disputes these factual allegations, and does so with more than "merely a bald conclusory allegation that plaintiff's [factual allegations] are incorrect." Marine Midland Bank v. Bryce, supra. If the insurer comes forward with such proof, the Notice to Admit is improper, unless the disputed facts are "easily provable" at trial. See, Elrac, Inc. v. McDonald, supra; Wonforo Assoc. v. Maloof, supra.
It is important to note that if the defendant does in fact claim that the admissions sought are in dispute they must make a motion for a protective order under CPLR §3103. Seaside Medical, P.C. v. General Assur. Co., supra.
Generally, the "heart of the matter" in an action to recover no-fault benefits is the actual basis for the insurance company's denial, i.e., medical necessity, fee schedule, etc.6
The "heart of the matter" must be something that is actually disputed by the parties. How, in good faith, can an insurer allege it disputes the factual elements of plaintiff's prima facie case and at the same time allege it denied the claim and has a viable defense thereto? The plaintiff's prima facie case is not the "heart of the matter" merely because the defendant lacks a witness, or because the defendant wants to "put plaintiff to its proof." Rather, defendant must affirmatively and actually dispute the factual allegations alleged.
If it were otherwise, it would defeat the purpose of a Notice to Admit: "A Notice to Admit is a vehicle for resolving and eliminating from contention matters which, though factually relevant, are not really in dispute. It is designed to remove from the case those uncontested matters which would merely present a time-consuming burden at trial" and for "disposing of uncontroverted questions of fact or those that are easily provable." The Hawthorne Group v. RRE Ventures, supra; Villa v. N.Y.C.H.A., supra.
Admissions
• Can the Admissions Establish a Prima Facie Case? After the "heart of the matter" myth is dispelled, the next inquiry is whether the factual allegations - whether admitted to, or deemed admitted to for failure to properly respond to the Notice to Admit - establish plaintiff's prima facie case. 7 It is well-settled that plaintiff's prima facie case in an action for no-fault benefits is proof that its claim forms were sent to the insurer and are overdue. See generally, Montefiore Medical Center v. New York Cent. Mut. Fire Ins. Co., 9 AD3d 354 (2nd Dept. 2004).8
In sum, must the claim forms be admitted into evidence even though there is an admission as to the factual elements of plaintiff's prima facie case? Two cases have addressed this question, with divergent results, apparently raising a rift between the First and Second judicial departments. See, Fair Price Medical Supply, Inc. v. St. Paul Travelers Ins. Co., 16 Misc3d 8 (App. Term 1st Dept. 2007), compare, Empire State Psych. Svcs. v. Travelers Ins. Co., 13 Misc3d 131(A)(App. Term 2nd Dept. 2006). However, as discussed herein, Empire State is sui generis and no true disagreement between the departments exists.
In Fair Price Medical Supply, Inc. v. St. Paul Travelers Ins. Co., supra, plaintiff called no witnesses at trial, did not submit its claim forms into evidence, but instead read into the record defendant's responses to plaintiff's demand for interrogatories, wherein defendant admitted it received plaintiff's bills and made partial payment thereof. Of note, there was no evidence concerning an assignment of benefits. 9
In affirming the lower court's granting of judgment to plaintiff, the Appellate Term determined, "Inasmuch as defendant's verified answers to the interrogatories constituted admissions of a party, which are admissible as evidence, defendant may not now be heard to argue that plaintiff failed to submit proof that the claims had been mailed and received, and that they were overdue." Id. Further, the court declined to follow, to the extent that it supported a contrary conclusion, Empire State, supra.
In Empire State, supra, plaintiff likewise called no witnesses and instead submitted into evidence defendant's responses to plaintiff's demand for interrogatories, wherein defendant admitted it received plaintiff's claim forms and denied such on given dates. The lower court granted plaintiff judgment and defendant appealed. In reversing the lower court, the Appellate Term determined plaintiff failed to establish its prima facie case as it offered no proof it submitted to defendant the "prescribed statutory billing forms or its substantial equivalent." Id. It is important to note that plaintiff in Empire State utilized defendant's admissions set forth in defendant's interrogatory responses, not admissions made pursuant to a Notice to Admit. In order to understand why this distinction is paramount, an examination of judicial admissions is necessary.
Formal v. Informal
• Formal v. Informal Judicial Admissions: The Conclusiveness of Admissions Made Pursuant to a Notice to Admit. Judicial admissions can be either "formal" or "informal." Prince, Richardson on Evidence, §8-215 (Farrell 11th ed.). A party's response to interrogatories is an informal judicial admission and not conclusive evidence, but rather only some evidence of the fact admitted. See generally, Saunders v. Saunders 15 Misc3d 1104(A)(N.Y. Sup. 2007); Gomez v. City of New York, 215 AD2d 353 (2nd Dept. 1995).
Conversely, a party's response, or lack thereof, to a Notice to Admit is a formal judicial admission, constituting conclusive evidence. See generally, Seaside Medical, supra; Prince, Richardson on Evidence, supra.
A formal judicial admission, unlike an informal one, "dispenses with the production of evidence at trial by conceding, for the purposes of the litigation, the truth of a fact alleged by an adversary. It is not properly classified as evidence, but, rather, takes the place of evidence." Wigmore, Evidence §1058. "Formal judicial admissions are conclusive of the facts admitted in the action in which they are made." Prince, Richardson on Evidence, supra. Furthermore, in his practice reviews, Professor Siegel writes, "An admission formally made by a party under the procedures prescribed by CPLR 3123, the notice to admit statute, concedes that there is no dispute between the parties on the fact admitted and that it can be taken as established for purposes of the pending action. This frees the party who secured the admission from the burden of preparing proof of the fact." 100 Siegel's Prac. Rev. 3 (2003) (Emphasis added.) See also, Seaside Medical, supra.
Accordingly, unlike the interrogatory response used in Empire State, a Notice to Admit response is "conclusive of the facts submitted," "dispenses with the production of evidence" and "takes the place of evidence." Therefore, in line with the First Department's holding in Fair Price, the Second Department should draw a distinction between its Empire State holding and a case where the facts making up plaintiff's prima facie case are established through formal judicial admissions made pursuant to a Notice to Admit.
Finally, the most comprehensive decision concerning the use of the Notice to Admit in No-Fault litigation is Seaside Medical, P.C. v. General Assur. Co., 2007 N.Y. Slip Op. 27258 (N.Y. Dist. Ct. 2007). In holding a Notice to Admit may be used to establish plaintiff's prima facie case in an action to recover No-Fault benefits, the Justice James P. Flanagan deftly applied many of the cases and legal principles cited herein, and crystallized the "heart of the matter" analysis, the effect of formal judicial admissions and the need, or lack thereof, for the claim forms in evidence. In the interest of brevity, a full treatment of the case will not be provided herein. However, practitioners confronted with these issues are well advised to examine Seaside thoroughly.
Conclusion
As written by the Justice Mark C. Dillon of the Appellate Division, Second Department: The Notice to Admit is the "CPLR's most dangerous discovery statute." 10 Practitioners would be well-advised to pay close attention to these demands and follow the guidelines set forth by the implementing statute and applicable case law when responding to such. Likewise, practitioners should strive to foster the underlying purpose of the Notice to Admit: To wit, to remove from the case those uncontested matters which would merely present a time-consuming burden at trial and for disposing of uncontroverted questions of fact, or those that are not really in dispute and are easily provable. Moreover, a distinction must be drawn between formal and informal judicial admissions; the former being conclusive evidence of the facts admitted, freeing the party who secured the admission from the burden of preparing proof of the fact. Finally, the "heart of the matter" myth must be permanently dispelled.
David M. Barshay is a partner at Baker, Sanders, Barshay, Grossman, Fass, Muhlstock and Neuwirth.David M. Gottlieb is an associate at the Law Office of Cohen and Jaffe. Disclosure: Both firms concentrate on the prosecution of claims for No-Fault benefits and were counsel on many of the cases cited herein.
Endnotes:
1. The attorney may verify the Notice to Admit only if the attorney has personal knowledge of the facts alleged. See, Elrac, Inc. v. McDonald, supra; See also, Barnes v. Shul Private Car Service, Inc., 59 Misc2d 967 (N.Y. Sup. 1969)("Unlike verification of pleadings, there is no permission granted by CPLR §3123 for an attorney to make the statement. If the client or other person with knowledge is out of the county of the attorney's office or even in a foreign country, there is provision to get ample time to obtain the sworn statement from whomever it must come.")
2. See, Marine Midland Bank, N.A. v. Custer, supra; Marigliano v. State Farm Mut. Auto Ins. Co., supra.
3. Moreover, other learned practitioners have acknowledged the significance and summary result of the failure to properly respond to a Notice to Admit. See, "The Consequences of Failure to Respond to Request for Admission," 17 No.3 Prac. Litigator 23 (2006)(J. Alan Warfield); See also, Outside Counsel: "The CPLR's Most Dangerous Discovery Statute," March 28 ,2003 NYLJ 4, col. 4 (2003)(Justice Mark C. Dillon).
4. "The burden of proof is just as irrelevant to a notice to admit as it is to any other disclosure device. A party cannot refuse to respond to a demand to admit on the ground that the demanding party has the burden of proof on the issue to which the notice relates. A response relying on that ground, therefore, runs the serious risk of admitting the matters contained in the CPLR 3123 notice . . . . It may logically be said that the party seeking an admission of some fact or factual item will often be the one who has the burden of proof on it and is seeking to ease that burden by having the opposing party admit the fact. It is also possible that the technical burden of proof belongs to the recipient of the notice to admit . . . . The burden of proof is irrelevant." Practice Commentary C3123:3, Patrick M. Connors, 2004 (Emphasis added.)
5. This is usually done by attaching the claim forms and requesting an admission that the forms were received and not paid.
6. Certainly, if the insurer's position is that they never received the claim forms, a Notice to Admit concerning such would be improper. One example of a "hotly contested" issue that would be the "heart of the matter" is a case where the denial of claim was based on nonconformity of the fee schedule and the Notice to Admit requested an admission that the bills were properly fee scheduled. Such would be improper, as it clearly is a hotly contested fact and goes to the heart of the case. In that same case, one could hardly say that the receipt and nonpayment of the claim forms is the heart of the matter. See, Dental Treatment, P.C. v. Auto One Insurance Co., 38400/06 (N.Y. City Civ. Ct. 2007, J. Cruz) ("Defendant's denial of Plaintiff's claim is based on [assignor's] failure to appear for a scheduled Independent Medical Examination. Therefore, the admissions requested by plaintiff do not go to the heart of the matter.")
7. There are a plethora of lower court decisions holding a plaintiff may establish its prima facie case through a Notice to Admit. See, Psychology YM, P.C. v. Auto One Ins. Co., Index No. 36119/05 (N.Y. City Civ. Ct. 2005, J. Velasquez) (After discussing defendant's objection that the Notice to Admit went to the "heart of the matter" the court found that plaintiff established its prima facie case through defendant's failure to respond to their Notice to Admit).
8. "Despite the fact that the proof of claim submitted by Brooklyn Hospital Center . . . was incomplete, and the proof of claim submitted by Mary Immaculate Hospital . . . was untimely, both of these plaintiffs demonstrated a prima facie showing of entitlement to judgment as a matter of law with evidence that their claims were neither denied nor paid within the requisite time period." Id. at 355-356.
9. See also, Westchester Medical Center v. Safeco Ins. Co. of America, 40 AD3d 984 (2nd Dept. 2007) ("There is no evidence that [defendant] timely objected to the completeness of the claim forms, or sought verification of [the] assignment. Therefore, the defendant waived any defenses based thereon, including the plaintiff's purported lack of standing to maintain the first cause of action.")
10. "The CPLR's Most Dangerous Discovery Statute," March 28, 2003 NYLJ. 4, col. 4 (2003)(Justice Mark C. Dillon).