Allstate Ins. Co. v Natural Healing Acupuncture, P.C. (2013 NY Slip Op 50645(U))

Civil Court of the City of New York, Kings County

053664/11

Attorneys for Plaintiff:

Bruno, Gerbino & Soriano, LLP

445 Broad Hollow Road, Suite 220

Melville, New York 11747

Defendant Pro-Se:

Natural Healing Acupuncture, P.C.

P.O. Box 350-076

Brooklyn, NY 11235

Katherine A. Levine, J.

Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion

PapersNumbered

Notice of Motion and Affidavits Annexed………….. ………………………………………………1

Notice of Cross-Motion and Affidavits Annexed.. ……………………………………………….

Answering Affidavits………………………………………………………………………………………….

Replying Affidavit of defendant………………………………………………………………………….

Exhibits……………………………………………………………………………………………… …………….

Other: ………………………………………………………………………………………………………………

Upon the foregoing cited papers, the Decision/Order on this Motion is as follows:

Petitioner Allstate Insurance Company (“petitioner” or “Allstate”) moves pursuant to CPLR §7511 to vacate the master arbitrator’s award dated July 1, 2011 for $927.99. Petitioner challenges the master arbitrator’s confirmation of the original arbitrator’s decision on the grounds that it is “arbitrary, capricious and contrary to well-settled law.” [*2]

Pursuant to Insurance Law ｧ5106, entitled “Fair Claims Settlement,” the master arbitrator has the authority to review an arbitrator’s award and vacate or modify it “in accordance with simplified procedures to be promulgated or approved by the superintendent.” These procedures are contained in 11 NYCRR 65-4.10(a) and include (1) any ground provided in article 75 of the CPLR, except CPLR 7511(b)(1)(iv) and (4) that an award rendered was incorrect as a matter of law, with the exclusion of procedural or factual errors committed in the arbitration. See Petrowsky v. Allstate Ins. Co., 54 NY2d 207, 210 (1981).

CPLR ｧ7511(b) provides that an award may be vacated if the court finds that the rights of a party were prejudiced by (i) corruption, fraud or misconduct in procuring the award, (ii) the arbitrator’s partiality, or (iii) an arbitrator exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made. The master arbitrator’s power to review an arbitrator’s award is therefore broader than the parameters contained in CPLR article 75. See Petrofsky v. Allstate, supra at 210.

Arbitrations held pursuant to Insurance Law ｧ5106 are classified as compulsory because insurers are required to submit no-fault claims to binding arbitration at the option of the claimant. State Farm Mutual Automobile Ins. Co. v. Kissena Medical Imaging, PC, 2009 NY Slip Op 52094(U), 25 Misc 3d 1214(A)(Sup. Ct., Nassau Co. 2009) citing Nyack Hosp. v. GEICO., 139 AD2d 515, 516 (2nd Dept. 1988). In cases of compulsory arbitration, judicial review under CPLR article 75 is broad and imports the “arbitrary and capricious” standard included in Article 78 proceedings. Petrofsky, supra at 211.

The award must be in accord with due process and supported by adequate evidence in the record. Santer v. Bd. of Educ., East Meadow U. F. S. D, 101 AD3d 1026, 1027 (2nd Dept. 2012) citing Motor Veh. Mfrs. Assn. of U.S. v State of New York, 75 NY2d 175, 186 (1990). Due process of law requires that the arbitrator’s determination have a basis not only in his good faith, but in the law and record. Santer, supra at 1027 citing Mt. St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 NY2d 493, 507 (1970). Furthermore, the standard is whether the award was supported by a reasonable hypothesis’ and was not contrary to what could be fairly described as settled law. Mtr of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 224 (1996); Metropolitan Radiological Imaging, P.C. v. Country-Wide Ins. Co., 2008 NY Slip Op 50539(U), 19 Misc 3d 130(A)(App. Term, 2nd Dept. 2008) citing Mtr of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co., 18 AD3d 762, 763 (2nd Dept. 2005). These standards govern both a master arbitrator’s review of the original arbitration award and the court’s review of the master arbitrator’s award. Petrofsky, surpa at 211.

The issue before the original arbitrator was which fee schedule should apply in the absence of a discrete Workers’ Compensation Fee Schedule applicable to licensed acupuncturists. Petitioner contended that licensed acupuncturists are entitled to be paid at the same fee schedule rates as medical doctors certified in acupuncture. The original arbitrator looked to the proposed amendment to 11 NYCRR ｧ68, which would permit licensed acupuncturists to charge the same fee that licensed physicians certified to perform acupuncture were permitted to charge. The Regulatory Impact Statement accompanying the proposed amendment reasoned that the higher fee should govern since acupuncturists may only bill for acupuncture treatment, while [*3]chiropractors and medical doctors certified in acupuncture may bill for acupuncture along with their primary service. The arbitrator therefore found that “fairness dictates that licensed chiropractors [or acupuncturists] be reimbursed at the higher medical fee schedule rate.”

The arbitrator failed to mention, much less follow the Appellate Term’s decision in Great Wall Acupuncture v. GEICO Gen. Ins. Co., 16 Misc 3d 23 (App. Term, 2nd Dept. 2007), which addressed the issue and applied the fee schedule for licensed chiropractors to acupuncture services provided by licensed acupuncturists. In Great Wall, the Appellate Term analogized licensed chiropractors to licensed acupuncturists based on the similar training they underwent for licensure in order to perform acupuncture services, while contrasting them to physicians, who only had to obtain certification in order to perform acupuncture. The Appellate Term further noted the Department of Insurance’s lack of “specific guidance as to which particular fee schedule should be applied to a licensed acupuncturist performing acupuncture,” and urged it to do so. Great Wall, supra at 24.

Although acknowledging Great Wall, supra, and the fact that the proposed legislation to increase the reimbursement rates for both chiropractors and acupuncturists was still pending, the master arbitrator confirmed the award. The master arbitrator found that Allstate impermissibly sought to have him conduct a de novo review, and that the lower arbitrator’s award had “a plausible basis in the evidence presented” and thus conformed to applicable law.

This Court does not understand the reasoning behind the master arbitrator’s award. Allstate did not seek a de novo or a factual review, as prohibited by Petrofsky, supra. Rather, petitioner argued that the decision was arbitrary and capricious and contrary to well settled law. This Court cannot countenance an award which finds that proposed or pending legislation trumps well established precedent, i.e. Great Wall, supra. Therefore, the award is vacated and the Court directs that the arbitrator calculate the fees owed to respondent in accordance with the fee schedule for licensed chiropractors who perform acupuncture.

The foregoing constitutes the Decision and Order of the Court.

Dated: April 3, 2013__________________________

Katherine A. LevineJudge, Civil Court