One of the ways that a creditor can establish liability against a customer in court is based upon a cause of action in a complaint known as an Account Stated. What that cause of action means is that a customer has been billed for a reasonable period of time, and they have received and retained, without objection, the invoices that the creditor has sent to them seeking payment such that as a matter of law, liability on an Account Stated cause of action arises.
After an initial invoice is sent to a customer, and thirty days, or whatever the terms of payment are, expire without payment having been made, the creditor must take a further step. It is then very important for creditors to follow up at least once per month, with an additional invoice, or a statement of account before the unpaid debt is referred to an attorney for collections. It is important in court to be able to establish that at least three or four months of invoices or statements of account were sent to the customer without any objection having arisen. There is ample case law in New York law establishing the principle that liability arises as a matter of law from a failure to object to invoices that have been received and retained.
Sometimes when a corporation is being sued, the creditor that eventually wants to collect money from that defendant is concerned that the defendant will be out of business by the time a judgment is obtained. It’s very easy under the laws of the State of New York, and of the United States, to incorporate businesses, close those businesses down, and start new corporations with different names. This can lead to claims against defendants regarding the fraudulent conveyance of assets from the old corporation to the new corporation.
One means of protecting the creditor, when the creditor is starting a lawsuit, is to attempt to pierce the corporate veil and obtain a judgment against the individual principal of the corporate defendant. Piercing the corporate veil is not a simple result to achieve because the whole objective of forming corporations is to provide individuals with protection against personal liability. Therefore, an important justification must be demonstrated to the court to allow the corporate veil to be pierced and impose liability on the individuals who ran the corporation.
I recently was successful on a motion for summary judgment in a case where my client was suing a corporation and its corporate officer. The court was convinced that the veil of the corporation should be pierced when it was proved that when the defendant corporation was conducting business with my client corporation, the business was being conducted using fictitious names. Continue reading
One of my best clients is an electrophysiologist, who is a cardiologist who went for an additional three years of training after his cardiology residency to learn about the electrical system that operates the heart. He uses very sophisticated equipment in order to analyze the electrical conduction in a patient’s heart, which includes electrophysiological studies of the heart. A typical bill may be $4,500, and if the patient’s insurance does not include the physician in its network, the physician is out of network and the services are treated as an out of network expense by the patient’s insurance company. In that case the patient is issued a payment for the amount the insurance company deems appropriate.
For example, if the bill is $4,500, and the patient’s insurance company pays $2,000, because the doctor is out of network, the funds for the procedure will be sent to the patient directly. Most patients, of course, are responsible citizens, and will turn the full amount over to the physician immediately. He then has to decide if he’ll be billing the patient for the remaining $2,500, or if he’s satisfied with the amount that has been paid by the patient’s insurance company. That is the physician’s decision entirely. Just because the insurance company considers a certain amount as “usual and customary” does not mean that the physician is bound by the insurance company’s evaluation, specifically for out of network services. Continue reading