You are here: / / INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY...
, ,

INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY, DEPOSITION TESTIMONY IN WHICH NON-PARTIES INVOKED THE FIFTH AMENDMENT SHOULD NOT HAVE BEEN READ TO THE JURY.

The Second Department, in a full-fledged opinion by Justice Duffy, determined defendant insurance company was entitled to the fraudulent incorporation defense in support of its refusal to pay no-fault benefits to plaintiff corporation for MRI’s administered by plaintiff corporation. The Business Corporation Law required that plaintiff corporation be run by physicians. There was substantial evidence the corporation was being run by two non-physicians with a physician as a cover. The Second Department found that the jury instructions explaining the criteria for the fraudulent incorporation defense were proper. The Second Department noted that the deposition testimony in which the two non-physician operators of plaintiff corporation refused to answer questions (invoking the Fifth Amendment) should not have been read to the jury because they were non-party witnesses. However, the error was deemed harmless. With respect to the fraudulent incorporation defense, the court wrote:

​

… [T]he jury charge, read as a whole, adequately conveyed the correct legal principles on “fraudulent incorporation” … . The instructions asked the jury to consider whether, under the totality of the circumstances, the plaintiff was operating as a proper professional medical corporation in compliance with state regulations or whether, in order to obtain money that insurers were otherwise entitled to deny, the plaintiff was organized under the facially valid cover of [a physician] but was, in actuality, operated and controlled by [two non-physicians] to funnel profits to themselves. Carothers v Progressive Ins. Co., 2017 NY Slip Op 02614. 2nd Dept 4-5-17

INSURANCE LAW (INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY)/CORPORATION LAW (INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY)/EVIDENCE (DEPOSITION TESTIMONY IN WHICH NON-PARTIES INVOKED THE FIFTH AMENDMENT SHOULD NOT HAVE BEEN READ TO THE JURY)/FRAUDULENT INCORPORATION DEFENSE  (INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY)

You might also like
DEFENDANT PROPERTY OWNERS BORROWED A LIFT FROM DEFENDANT MIS, PLAINTIFF WAS INJURED USING THE LIFT, THE LABOR LAW 200 CAUSE OF ACTION AGAINST MIS WAS PROPERLY DISMISSED AS INAPPLICABLE, BUT THE NEGLIGENCE ACTION AGAINST MIS SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).
DEFICIENCIES IN THE BANK’S PROOF OF DEFAULT, STANDING AND THE AMOUNT OWED COULD NOT BE CURED BY SUBMITTING ADDITIONAL PROOF IN THE REPLY PAPERS IN THIS FORECLOSURE ACTION (SECOND DEPT).
REMOVING PORTABLE LIGHTING EQUIPMENT IS NOT ‘ALTERING’ A STRUCTURE WITHIN THE MEANING OF LABOR LAW 240(1), DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT).
QUESTIONS OF FACT WHETHER THE WORK ON A BOILER WAS ROUTINE MAINTENANCE (NOT COVERED BY LABOR LAW 240 (1)) AND WHETHER A SAFETY DEVICE WAS REQUIRED, CONTRACTOR’S DEFAULT CONSTITUTED AN ADMISSION TO THE ALLEGATIONS IN THE COMPLAINT, INCLUDING THAT PLAINTIFF SUFFERED A GRAVE INJURY (TAKING THE INJURY OUT FROM UNDER THE WORKERS’ COMPENSATION LAW) (SECOND DEPT).
County (Nassau) Must Indemnify Special Districts for Ad Valorem Tax Refunds Paid by the Special Districts
PLAINTIFF BANK DID NOT PRESENT SUFFICIENT EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION; BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT). ​
THE MOTION TO AMEND THE COMPLAINT TO CORRECT A TYPO SHOULD HAVE BEEN GRANTED (LABOR LAW 241 AND 241(B) RATHER THAN 240(1)); SUMMARY JUDGMENT CAN BE GRANTED ON AN UNPLEADED CAUSE OF ACTION; HERE THERE WAS A QUESTION OF FACT WHETHER THE FOUR-INCH ELEVATION DIFFERENTIAL WAS DE MINIMIS (SECOND DEPT).
VACATING THE NOTE OF ISSUE RETURNS THE CASE TO THE PRE-NOTE OF ISSUE DISCOVERY STAGE, NO NEED TO MAKE A MOTION TO RESTORE THE ACTION TO THE TRIAL CALENDAR; THE MOTION TO EXTEND THE TIME TO FILE A NOTICE OF ISSUE, CITING LAW OFFICE FAILURE, SHOULD HAVE BEEN GRANTED (SECOND DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

EVIDENCE A SIDEWALK DEFECT DEVELOPED OVER TIME DID NOT RAISE A QUESTION OF FACT... AFTER TERMINATION OF BANKRUPTCY PROCEEDINGS PLAINTIFF CANNOT SUE ON INVOICES...