First Help Acupuncture, P.C. v Hudson Ins. Co. (2005 NY Slip Op 50565(U))

Civil Court of the City of New York, Kings County

9422KCV2005

Eileen N. Nadelson, J.

Petition to Vacate a Master Arbitrator’s Award Motion for Summary Judgment

In deciding this matter the court considered the following:

Notice of Petition and annexed Affidavits and Affirmations

Exhibits

Affirmation in Opposition

Memoranda in Support and in Opposition to the Petition

This matter involves the disputed billing of $3947.96 which was denied by the arbitrator based upon the grounds of lack of medical necessity. Petitioner, the medical provider, appealed the arbitrator’s award to a Master Arbitrator, alleging that the arbitrator’s decision was arbitrary, capricious, irrational and without a plausible basis in fact. Based on that argument, Petitioner asked the Master Arbitrator to vacate the award pursuant to CPLR section 7511(b)(1). The Master Arbitrator, however, affirmed the arbitrator’s award.

Petitioner, pursuant to CPLR 7511, now moves this court to vacate the decision of the Master Arbitrator as arbitrary and capricious.

Petitioner originally submitted a claim for $4,354.30 for acupuncture treatments it rendered to the allegedly injured assignor. Respondent insurer made partial payments in the amount of $406.34, and Petitioner filed a request for arbitration.

The initial arbitrator stated that he reviewed the documentation submitted which reflect [*2]that Respondent issued timely denials based on a lack of medical necessity, following a peer review and the assignor’s failure to appear for an Independent Medical Examination. In his conclusion, the initial arbitrator stated that the denials issued by the insurer were of no consequence, and that the crucial fact is the medical necessity of the treatments. The Master Arbitrator, in his affirmation of the initial decision, stated that the initial arbitrator’s statement that the timeliness of the denials was of no consequence was erroneous, but harmless error under the circumstances.

Petitioner alleges that the initial arbitrator required it to prove medical necessity which is an incorrect interpretation of its prima facie burden of proof. Petitioner states that, to meet its burden, it only has to prove that it provided services, mailed a claim, and that the claim was not paid or denied within thirty days. The Master Arbitrator disagreed, and confirmed the arbitration award.

In his decision, the Master Arbitrator states that the initial decision was neither arbitrary nor capricious, and that statutory requirements mandate that a medical provider establish the necessity of its medical treatments. Insurance Law sec. 5102, 11 NYCRR 65-1.1. Further, since the insurer did timely deny the claim, proving such necessity is part of the provider’s burden. Cf In re Regal Imaging aao Ginzberg v. State Farm Insurance Co., Index No. 7450/01 (Sup. Ct. Nassau County August 8, 2001).

CPLR section 7511((b)(iii) provides that an arbitrator’s award may be vacated if it is found that the arbitrator exceeded his power or imperfectly executed it. In Petrofsky v. Allstate Insurance Company, 54 NY2d 207, 445 N.Y.S. 2d 77 (1981), the Court of Appeals held that the role of a master arbitrator in insurance cases is to assure that the arbitrator reached a decision in a rational manner, that the decision was not arbitrary and capricious, incorrect as a matter of law, or in excess of policy limits or in conflict with other designated no-fault arbitration proceedings. Therefore, the question to be decided by this court is whether the decision of the arbitrator, as confirmed by the Master Arbitrator, was arbitrary, capricious, or incorrect as a matter of law.

In Park Radiology, P.C. v Allstate Insurance Company, 2 Misc 3d 621, 769 N.Y.S. 2d 870 (Richmond County 2003), a case involving the claim for first party no-fault benefits, the arbitrator, as in the instant case, found that the insurer failed to pay or deny the claim within the prescribed thirty day period. Nevertheless, the arbitrator found that the medical provider failed to establish a prima facie case that the tests performed were medically necessary and so denied the claim. In affirming the award, the master arbitrator cited the Petrofsky case as limiting his ability to vacate an award that is neither arbitrary nor capricious. However, the Civil Court vacated the master arbitrator’s decision and found for the medical provider, asserting that the arbitrator and master arbitrator misconstrued the law.

The law with respect to the burden of proof in first party no-fault claims was established by the court in Bonetti v. Integron National Insurance , 269 AD2d 413, 703 N.Y.S. 2d 217 (2d Dept. 2000). The Bonetti court stated that, with limited exception, an insurer is precluded from [*3]denying a no-fault claim if it fails to timely deny it. Further, an insurer is precluded from challenging the adequacy of a claimant’s proof of medical necessity if it fails to timely deny the claim for no-fault benefits. Vinings Spinal Diagnostic, P.C. v Liberty Mutual Insurance Company, 186 Misc 2d 287, 717 N.Y.S. 2d 466 (Nassau County 2000). This is true despite a contrary position taken by the New York Department of Insurance.

In a recent decision of this court, Kew Gardens Imaging aao Mary maynard v. Liberty Mutual Ins. Co., 2004 NY Slip Op. 51077(U) (Civ. Ct. Kings County 2004), the decision of a Master Arbitrator was overturned because it was determined that no rational basis existed for the arbitration decision. In that case the insurer failed to pay or deny the claim within thirty days, and the arbitrator based his conclusion on the fact that the provider failed to establish the medical necessity of the treatments. This court found that conclusion to be beyond the scope of judicial authority which precludes an insurer from raising any defense, other than lack of coverage, when it fails to deny a claim within thirty days. Insurance Law sec. 5106(a); New York Medical Center of Queens v. Country-Wide Insurance Co., 295 AD2d 583, 744 N.Y.S. 2d 201 (2d Dept. 2002). However, that case is distinguishable from the instant action.

In the case at bar the insurer did deny the claim within the statutory thirty day period. The Master Arbitrator asserted that the initial arbitrator’s conclusion that the timeliness of the denial was of no consequence was error, although harmless in the instant matter. Because Respondent did timely deny the claim, Petitioner must evidence, as part of its prima facie case, the medical necessity of its treatment. This the arbitrator determined it did not do.

An arbitration award will be upheld if it is supported by the evidence and is not arbitrary and capricious. Eagle Insurance Compnay v. First Cardinal Corp., 8 AD3d 483, 778 N.Y.S. 2d 309 (2d Dept. 2004). The arbitrator’s decision is supported by the record, and there is nothing to warrant the vacatur of the award. State Farm Mut. Automobile Ins. Co. v. Arabov, 2 AD3d 531, 767 N.Y.S. 2d 905 (2d Dept. 2003).

Based on the foregoing, Petitioner’s motion is denied and the Master Arbitrator’s award is affirmed.

Dated: April 18, 2005

__________________________

EILEEN N. NADELSON, J.C.C.