The New York Court of Appeals answered the following certified question in State Farm Mutual Auto. Ins. Co. v. Mallela: whether a medical corporation that was fraudulently incorporated under NY Business CorporationLaw §§ 1507, 1508, and NY Education Law§ 6507(4)(c) [is] entitled to be reimbursed (see prior post). The Court answered the certified question in the negative.
The Court held that accepting State Farm's allegations as true, the defendant companies undisputedly failed to meet the applicable state licensing requirements, which prohibit non-physicians from owning or controlling medical service corporations. Notably, the Court rejected the defendants' argument that insurers would abuse their ability to look behind the medical providers licenses in their investigations of reimbursement claims under the No-Fault law.