American Tr. Ins. Co. v Nexray Med. Imaging P.C. (2023 NY Slip Op 51311(U))

The following numbered papers were read on this special proceeding: NYSCEF Document Numbers 1-22.

Upon the foregoing papers and a determination being made on submission,^[FN1] the within motion of Respondent to reargue, renew, and resettle the order and judgment dated July 20, 2023 (entered July 26, 2023) is determined as follows.

Although the order and judgment incorporated by reference the arbitration award and the master arbitration award, which should have sufficed in terms of setting forth a provision for interest, this Court adds the following sentence for purposes of clarification: “The interest shall accrue from August 31, 2020, which is the arbitration filing date (see 11 NYCRR 65-4.5 [s] [3], 65-3.9 [c]; Canarsie Med. Health, P.C. v National Grange Mut. Ins. Co., 21 Misc 3d 791, 797 [Sup Ct, NY County 2008]), at the rate of two percent per month, simple, calculated on a pro-rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]).”

Insofar as the motion sought to increase the attorney’s fee to $3,300.00 from the $195.00 awarded by this Court, it is noted that an evidentiary hearing is not necessary (see Webb v Greater NY Auto. Dealers Assn., Inc., 144 AD3d 1134, 1135 [2d Dept 2016] [“defendant is directed to submit an affirmation or affidavit as to the amount of such fees and expenses”]). Nonetheless, a reasonable opportunity to be heard is required and the form of a hearing is dependent upon the nature of the conduct and the circumstances of the case (see Strauss v Strauss, 171 AD3d 596, 597 [1st Dept 2019]; Martinez v Estate of Carney, 129 AD3d 607, 609 [1st Dept 2015]). Affidavits submitted provide an opportunity to be heard (see Martinez, 129 AD3d at 609). Here, Respondent failed to submit an affirmation when it interposed its cross-petition. It is not uncommon that when an attorney’s fee is sought, an affirmation detailing the work performed is submitted along with the substantive papers.

In any event, this Court observes that Attorney Roman Kravchenko submitted an affirmation as NYSCEF Doc No. 18, in which it is asserted that he spent six hours on this matter and a paralegal spent one and a half hours. Attorney Kravchenko seeks to be paid at $500.00 per hour for his work and $200.00 per hour for the paralegal’s.

“In determining what is reasonable compensation for an attorney, the court may consider a number of factors, including, inter alia, the time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented, the lawyer’s experience, ability, and reputation, the customary fee charged for similar services, and the results obtained (see RMP Capital Corp. v Victory Jet, LLC, 139 AD3d at 839; Diaz v Audi of Am., Inc., 57 AD3d 828, 830 [2008]). The determination of reasonable attorney’s fees is generally left to the discretion of the trial court, which is often in the best position to determine those factors integral to the fixing of a reasonable fee (see RMP Capital Corp. v Victory Jet, LLC, 139 AD3d at 840; Miller Realty Assoc. v Amendola, 51 AD3d at 990).” (Diggs v Oscar De La Renta, LLC, 169 AD3d 1003, 1004-1005 [2d Dept 2019]; accord Matter of Freeman, 34 NY2d 1 [1974]; Lancer Indem. Co. v JKH Realty Group, LLC, 127 AD3d 1035, 1035-1036 [2d Dept 2015].)

There should be evidence as to the amount “charged for similar services by lawyers in the community with like experience and of comparable reputation to those by whom the prevailing party was represented” (Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d 1008 [2d Dept 2010], quoting Getty Petroleum Corp. v G.M. Triple S. Corp., 187 AD2d 483, 483-484 [2d Dept 1992]). However, name partners in the New York City suburbs were found to have reasonably charged $415.00 and $410.00 respectively in a case for breach of [*3]a factoring and security agreement, such amounts “reflect[ing] the prevailing hourly rate of attorneys in the community with their experience” (RMP Capital Corp. v Victory Jet, LLC, 139 AD3d 836, 840 [2d Dept 2016], citing Leser v U.S. Bank N.A., 2013 WL 1952306, 2013 US Dist LEXIS 33168 [ED NY, May 10, 2013, No. 09-CV-2362 (KAM/MDG)]). In M.F. v Amida Care, Inc. (75 Misc 3d 1209[A], 2022 NY Slip Op 50426[U] [Sup Ct, Kings County 2022]), in a class action lawsuit, the court reduced the hourly rate of $800.00 for a New York City law firm’s founding partners from $800.00 to $450.00, another partner’s $600.00 rate to $300.00, and associates’ $450.00 rate to $300.00.

With respect to the difficulty of the questions involved and the skill required to handle the problems presented, this Court will not deprecate those who labor in the field of motor vehicle accident No-Fault insurance law — this Court served as a No-Fault insurance arbitrator prior to ascending to the bench — but nonetheless finds that the difficulties encountered and skills necessary to preserve arbitration awards in Article 75 proceedings are not comparable to other areas of the law where attorney’s fees are usually awarded, such as civil rights actions, corporate contract litigation, and class action lawsuits. Much of the cited case law is repetitive in No-Fault Article 75 litigation, and it is volume litigation.^[FN2] Here, the context for Attorney Kravchenko’s work was an Article 75 proceeding to vacate a master arbitration award affirming an arbitration award in favor his client in the amount of $1,537.67. By the time the file reached him, the issues had been resolved through the arbitration process. All that remained was for him to argue that the master arbitration award was neither arbitrary, capricious, nor incorrect as a matter of law (see Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224, 232 [1982]; Matter of Acuhealth Acupuncture, PC v Country-Wide Ins. Co., 170 AD3d 1168 [2d Dept 2019]; Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]).

As for the underlying issue in the arbitration, the matter was determined by Arbitrator Anne Lorraine Russo on the basis that Petitioner’s peer review from Dr. Peter Chiu regarding left shoulder and left knee MRIs performed on the assignor on November 5, 2019 (injured on October 15, 2019), “did not sufficiently utilize the medical documentation and apply general medical standards and principals to the specific patient and circumstances in this case in support of the denial. . .” (NYSCEF Doc No. 3 at 3). Petitioner had denied payment on the ground of lack of medical necessity. This defense to payment was rejected by Arbitrator Russo, and she was sustained by Master Arbitrator Skelton, who determined that Arbitrator Russo’s award “was neither incorrect as matter of law nor arbitrary and capricious nor so irrational as to warrant vacatur” (NYSCEF Doc No. 4 at 4). Frankly, a health service provider’s retention of an attorney [*4]to preserve factual determinations made by No-Fault insurance arbitrators on mere issues of medical necessity once the case is in the Article 75 posture, does not implicate rocket science. Notably, nowhere did Attorney Kravchenko go into detail in his affirmation accompanying the cross-petition, in order to discuss the peer review and the medical records; there is no analysis of the MRI findings and the assignor’s condition which led to the MRIs being performed. Attorney Kravchenko merely relied upon his usual string of case law. Without a detailed factual analysis of the evidence, this Court ascribes little value to his work.

Assuming that seven and a half hours were spent inside Attorney Kravchenko’s law firm, this Court finds said time and labor excessive and disproportionate, considering that much of the contents of his papers (NYSCEF Doc Nos. 12 and 13), which consumed 11 pages, were boilerplate. This Court has reviewed Attorney Kravchenko’s papers submitted in various other Article 75 proceedings and they cite the usual cases concerning Article 75 review of No-Fault awards. All that changes are some details. This template fashion of submitting respondent papers in Article 75 proceedings is an efficient means of opposing them but there is no legal research needed; it has been done already. It certainly does not warrant charging $500.00 and $200.00 per hour for the respective work of an attorney and a paralegal. Those amounts are disproportionate to the amounts awarded in the above-cited cases where the litigation involved a factoring and security agreement and a class action claim.

While a lawyer’s experience, ability, and reputation are to be considered, this Court finds these factors to be of minimal significance in the overall calculation of fees. Hence, while Attorney Kravchenko appears to have a good reputation considering that he has many clients (evidenced in his recitation of prior fees awarded), these facts are found to be subordinate to the ease and lessened skill required to preserve an arbitration win in an Article 75 proceeding. His nine years of practice are not significant enough in this Court’s view to merit an increase in what was awarded. The comparables he submitted were only for his work, not for others; thus, the evidence is deficient as to similar services by lawyers in the community with like experience and of comparable reputation.

Finally, with respect to the results obtained, this Court finds that to award $450.00 or $500.00 per hour, as Attorney Kravchenko has previously obtained, is disproportionate to the ultimate value of the result achieved here. His client, Respondent, was awarded $1,537.67 in the arbitration process. To award the sought $3,300.00 to preserve $1,537.67 defies economic logic.

The New York No-Fault Insurance Regulations prescribe attorney fees for applicants who prevail in arbitration. Usually the amount is set at 20% of the sum total of the arbitration award plus interest thereon (see 11 NYCRR 65-4.6 [d]). At the time the master arbitrator considers the appeal from the arbitration award, a prevailing applicant will be awarded $65.00 per hour up to $650.00 (see 11 NYCRR 65-4.10 [j] [2]). The Regulations provide for the court to fix an applicant’s attorney’s fee in connection with an appeal from a master arbitration award, i.e., an Article 75 proceeding (see 11 NYCRR 65-4.10 [j] [4]).

Here, Respondent (the applicant in the arbitration) will receive an attorney’s fee of approximately $557.01 for the arbitration, assuming that the principal and interest are paid on [*5]December 31, 2023. This is derived from a series of calculations. One applies a 2%-per-month interest rate on $1,537.67, from August 31, 2020.^[FN3] Dividing 1,217 days by 30-day months yields a quotient of 40.56. The product of 40.56 months multiplied by 2% per month is 81.12%. 81.12% of $1,537.67 is $1,247.36. Therefore, Respondent is entitled to approximately $1,247.36 in interest on the $1,537.67 principal. The sum of those two figures is $2,785.03. The 20% arbitration legal fee on $2,785.03 equals $557.01. Respondent was awarded $195.00 as a master arbitration attorney’s fee (see NYSCEF Doc No. 4 at 6). Thus, for services in connection just with arbitration, Respondent will receive approximately $750.00. Considering the prescribed attorney’s fees per the No-Fault Regulations, awarding $3,300.00 for the Article 75 work, as brief as it was and as boilerplate as were the papers, would be an unwarranted windfall.

In awarding $195.00 in the July 20, 2023 order and judgment, this Court applied the $65.00-per-hour attorney’s fee for preparatory services in connection with a master arbitration appeal (see 11 NYCRR 65-4.10 [j] [2]. This Court applied the rationale described more fully hereinabove to what it presumed were three hours of legal work. While Attorney Kravchenko avers that he spent six hours and his paralegal spent one and a half hours, this Court finds that someone as experienced as him, laboring in mundane volume No-Fault Article 75 litigation, could have achieved the same work product in three hours. It is noted that there were no court appearances when this Court issued the July 20, 2023 order and judgment. It is noted in the amendment of the order and judgment that there was no admissible and credible evidence regarding the attorney’s fee submitted with the cross-petition.

Accordingly, that part of the within motion of Respondent to reargue, renew, and resettle the order and judgment dated July 20, 2023 is GRANTED, but the determination of July 20, 2023 is adhered to in all respects except that the decretal paragraphs of said order and judgment are amended to read as follows:

It is hereby ORDERED and ADJUDGED that the within special proceeding is determined as follows:

The within petition of Petitioner herein is DENIED, and the special proceeding is DISMISSED.

The cross-petition commenced by Respondent herein is granted.

The master arbitration award in American Arbitration Association Case No. 99-20-1177-2271 of Master Arbitrator James J. Skelton, which affirmed the award of Arbitrator Anne Lorraine Russo, is confirmed in its entirety.

Respondent herein is awarded the principal amount, interest, attorney’s fees, and return of filing fee as determined in the arbitration (see the arbitration award and the master arbitration award). The interest shall accrue from August 31, 2020, which is the arbitration filing date (see 11 NYCRR 65-4.5 [s] [3], 65-3.9 [c]; Canarsie Med. Health, P.C. v National Grange Mut. Ins. Co., 21 Misc 3d 791, 797 [Sup Ct, NY County 2008]), [*6]at the rate of two percent per month, simple, calculated on a pro-rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]).

Petitioner herein shall pay Respondent herein an attorney’s fee of $195.00 for work performed by counsel on this Article 75 proceeding, in the absence of admissible and credible evidence from Respondent herein as to the dates and hours during which work was performed (see 11 NYCRR 65-4.10 [j] [4]), submitted with the cross-petition.

Respondent herein shall recover from Petitioner herein the costs and disbursements as allowed by law to be taxed by the Clerk.

The awards are neither arbitrary, capricious, nor incorrect as a matter of law (see Matter of American Tr. Ins. Co. v Right Choice Supply, Inc., 78 Misc 3d 890 [2023]).