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Policy can be rescined under PA law; proof insufficient as to particular Assignor



Delta Diagnostic Radiology, P.C. v Infinity Group, 2014 NY Slip Op 50602(U)(App. Term 2d Dept. 2014)

The EUO was sufficient to raise an issue of fact as to the fraudulent procurement issue.  Now, you need to subpoena the assignor for trial and have the Civil Court enforce a judicial subpoena.  I feel pains even thinking about how Defendant is going to win this at trial.  This is another example of how the assignment shields the EIP from being responsible for her sins.  Without the assignment, EIP has to appear and testify pursuant to subpoena; otherwise, the complaint may very well be stricken.  CPLR 2308.  The assignment blocks a 2308 penalty and, at best, can cause a matter to be stricken from the trial calendar during discovery when Assignor dodges a subpoena.  (Total Family v. Mercury)

There is no penalty for the less than innocent medical provider who knows (or should know) that all of Infinity’s insured’s/EIP’s are seemingly involved (somehow) with PA-NY rate evasion issues.  I know this just by reading every Infinity case from this Court;  it is the same issue over and over.  So I digressed.  Here is the holding:

“Pennsylvania law gives an insurer a common law right to rescind a policy of automobile insurance (see Klopp v Keystone Ins. Cos., 528 Pa 1, 595 A2d 1 [1991]). The Pennsylvania Supreme Court has held, however, that while an automobile insurance policy may be retroactively rescinded as to an insured who has made a misrepresentation material to the acceptance of risk by the insurer, the policy may not be retroactively rescinded with respect to third parties “who are innocent of trickery, and injured through no fault of their own” (see Erie [*2]Ins. Exch. v Lake, 543 Pa 363, 375, 671 A2d 681, 687 [1996]). Although defendant, in its motion papers, set forth facts tending to demonstrate that the insured was the actual perpetrator of a fraud, and that, based on that fact, it rescinded the policy in accordance with Pennsylvania law, defendant’s submissions did not conclusively establish that plaintiff’s assignor was not an innocent third party. Consequently, defendant’s cross motion failed to make a prima facie showing of defendant’s entitlement to judgment as a matter of law.”