American Tr. Ins. Co. v U.S. Med Supply Corp. (2023 NY Slip Op 50560(U))

Index No. 502532/2023

Larkin Farrell LLC, New York City (David Fair of counsel), for petitioner.

The following numbered papers were read on this petition:

Issue Presented

Must a health service provider seeking No-Fault insurance compensation for providing post-surgery services establish that a prior arbitration award was affirmed by a master arbitrator, confirmed by a court, and not subject to de novo review as a prerequisite to arguing that the award constituted collateral estoppel on the issue of medical necessity for the surgery?

Background

Petitioner American Transit Insurance Company (“ATIC”) commenced this CPLR Article 75 proceeding by notice of petition, seeking an order and judgment vacating a No-Fault insurance master arbitration award of Richard B. Ancowitz, Esq. (dated November 7, 2022), which affirmed the arbitration award of Jan Chow, Esq. (dated July 24, 2022) granting Respondent U.S. Med Supply Corp.’s (“U.S. Med”) claim for No-Fault insurance compensation for post-surgery medical supplies provided or rented.^[FN1] , ^[FN2] Arbitrator Chow awarded $4,000.00 to U.S. Med as compensation for (a) the rental of a non-knee continuous passive motion (“CPM”) exercise device (HCPCS Code E0936, $2,700.00) from October 7, 2020-November 4, 2020; (b) the provision of a synthetic sheepskin pad (HCPCS Code E0188, $100.00) on October 7, 2020; (c) the provision of a fluid circulating cold pad with pump (HCPCS Code E0218, $1,000.00); and (d) an unknown miscellaneous service (HCPCS Code E1399; $200.00). These services were provided to Mahendra Singh, who claimed to have been injured in a motor vehicle accident on June 21, 2019. He assigned his No-Fault insurance benefits to U.S. Med, and is denoted as “Assignor.”^[FN3] (NYSCEF Doc No. 2, Notice of Petition; NYSCEF Doc No. 1, Petition ¶¶ 2-3, 16, 23; NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief at 17.)^[FN4]

Respondent U.S. Med has not filed any papers in opposition to ATIC’s petition herein. The petition came before the undersigned for oral argument on June 2, 2023. At that time, ATIC [*2]appeared by counsel.

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association (“AAA”), which assigned Case No. 17-21-1197-7083 ^[FN5] to it. The AAA has been designated by the New York State Department of Financial Services to coordinate the mandatory arbitration provisions of Insurance Law § 5106 [b], which provides:

Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party [“No-Fault insurance”] benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.

Insurance Law Article 51 provides for the payment of basic economic loss incurred by persons injured in motor vehicle accidents. Included within basic economic loss are first-party benefits for medical and other professional health services.^[FN6] First-party benefits are more commonly known as “No-Fault benefits.”^[FN7]

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations were promulgated by the Superintendent of Insurance (presently Superintendent of Financial Services). They are contained at 11 NYCRR Part 65. Said part is subdivided into five subparts which encompass the following topics: prescribed insurance policy endorsements, rights and liabilities of self-insurers, claims for benefits, arbitration, and unauthorized providers of health services. Part 65 is also known as Insurance Regulation 68.

Generally, the claims process for health service bills ^[FN8] for No-Fault insurance compensation begins with the submission by a health service provider of a claim form (usually, but not always, a Form NF-3 verification of treatment by attending physician or other provider [*3]of health service).^[FN9] Besides providing information regarding the injured person, the accident, the subject insurance policy, the billing health service provider, diagnoses, and projected treatment, the claim form includes a bill for services performed. The claim form can be submitted directly by the injured person to the No-Fault insurer but over many decades a practice developed by which the health service providers submit the claim forms. As noted in footnote 3, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN10] ,^[FN11]

The insurer must then either pay or deny the bill within 30 days, or seek additional verification within 15 business days. If it denies payment, it must issue a Form NF-10 denial of claim ^[FN12] explaining why the bill was not paid. (See Insurance Law § 5106 [a]; Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 505 [2015].)

The record evidence submitted in this Article 75 proceeding revealed that the underlying arbitration involved one claim form in the amount of $4,000.00 ^[FN13] submitted to ATIC for payment. This was in accordance with the procedure for the submission of claims for No-Fault compensation, as summarized above. The Form NF-10 denial of claim by ATIC was timely inasmuch as it was issued within 30 days after the receipt of requested additional verification (see Liberty Queens Med., P.C. v Tri-State Consumer Ins., 188 Misc 2d 835, 839 [Dist Ct, Nassau Co. 2001] [once verification has been received, an insurer has 30 days within which to make a determination on the claim]. The denial of claim was dated December 31, 2020. The denial of claim was predicated on a four-page peer review dated December 28, 2020 (“four-page peer review”), prepared by Dr. Raghava Polavarapu, who opined that the subject supplies were not medically necessary. (NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief at 4-7, 12-15, 17.)

Arbitrator Jan Chow’s Award

The record evidence reveals further that on July 22, 2002, Arbitrator Jan Chow, Esq., conducted a hearing at which Kevin Griffiths, Esq., from Odierno Law Firm P.C., appeared for U.S. Med, and Michelle Rozenblyum, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).

In her award, Arbitrator Chow noted that the subject medical supplies were provided [*4]following right shoulder surgery performed on Assignor on October 6, 2020. The parties stipulated to U.S. Med’s prima facie case and the burden shifted to ATIC to substantiate its defense of lack of medical necessity. Citing to Healing Hands Chiropractic, P.C. v Nationwide Assur. Co. (5 Misc 3d 975 [Civ Ct, NY County 2004]), Arbitrator Chow stated, “In the event an insurer relies on a peer review report to support its lack of medical necessity defense, the peer reviewer’s opinion must set forth a factual basis and medical rationale for denying the claim” (NYSCEF Doc No. 3, Arbitration Award at numbered p 2). She then wrote that the burden of production fell on ATIC as the insurer and, if it was established, the burden shifted to U.S. Med, citing to Bronx Expert Radiology, P.C. v Travelers Ins. Co. (13 Misc 3d 136[A], 2006 NY Slip Op 52116[U] [App Term 1st Dept 2006]) (id.).

Regarding Dr. Polavarapu’s four-page peer review, Arbitrator Chow wrote that he “first asserted that the underlying right shoulder surgery was not medically necessary rendering all derivative services including these post-operative supplies to be not medically necessary. He then discussed the issue of medical necessity regarding the CTU, DVT and shoulder orthosis devices.”^[FN14] (Id.)

At the hearing, U.S. Med argued as follows in opposition to Dr. Polavarapu’s four-page peer review, per Arbitrator Chow’s award: “Applicant asserted that collateral estoppel applies to the peer reviewer’s assertion regarding the medical necessity of the underlying right shoulder surgery. He noted that Arbitrator Mitchell Lustig did not uphold this same peer report in Surgicore Surgical Center LLC v. American Transit, AAANo.: 17-21-1194-7180 when addressing the facility fee for this right shoulder surgery. Applicant also argued that the peer report did not address the disputed CPM involved in this case.” (Id.)

Arbitrator Chow determined the issue presented as follows:

After careful consideration and weighing of both parties’ evidence and arguments, the undersigned finds for the Applicant.

Regarding Applicant’s collateral estoppel argument, the doctrine of collateral estoppel precludes a party from re-litigating an issue that was clearly decided in a prior action against that party. This doctrine applies when two requirements are met. The first, that both cases involve identical issues, and second, that the party against whom the estoppel is being asserted had a full and fair opportunity to contest the issue in the prior action. Schwartz v Pub. Adm’r of County of Bronx, 24 NY2d 65 (1969).

In this case, this matter involved the same Respondent and the same issue as the previous case. With both cases involving identical issues and Respondent having had a full and fair opportunity to contest the same issue in the prior action, I find that the doctrine of collateral estoppel applies to the peer reviewer’s contention regarding the medical necessity of the underlying right shoulder surgery.

Furthermore, Applicant correctly noted that the peer report did not address the disputed CPM, water circulating pump and synthetic sheepskin pad. [Dr. Polavarapu] only specifically addressed the CTU, DVT and shoulder orthosis, none of which are involved in this matter.

Arbitrator Chow awarded the $4,000.00 principal billed. She also awarded interest of 2% per month, an attorney’s fee, and return of the $40.00 filing fee (id.; see Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s]).

Master Arbitrator Richard B. Ancowitz’s Award

ATIC filed for master arbitration to appeal Arbitrator Chow’s award. It challenged the arbitrator’s determination to apply collateral estoppel from the award of another arbitrator. In its master arbitration appeal, ATIC noted that the peer review relied upon by Arbitrator Lustig in finding a lack of medical necessity for the October 6, 2020 right shoulder surgery was not the same peer review upon which ATIC denied payment of the subject medical supplies. (Dr. Raghava Polavarapu also wrote the peer review relied upon by Arbitrator Lustig. It too was dated December 28, 2020, and it was three pages in length (“three-page peer review”)). The surgery was not medically necessary, argued ATIC. Arbitrator Chow’s award was incorrect as a matter of law and irrational, it maintained. (NYSCEF Doc. No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief at 158-165, 174-176.)

Master Arbitrator Richard B. Ancowitz’s award dated November 7, 2022 noted that Arbitrator Chow rejected ATIC’s defense of lack of medical necessity. While ATIC focused on Arbitrator Chow’s application of collateral estoppel, U.S. Med pointed out that there was not just that issue (as the hearing arbitrator also mentioned that Dr. Polavarapu did not specifically address the supplies at issue in the four-page peer review). (NYSCEF Doc No. 4, Master Arbitration Award.)

Master Arbitrator Ancowitz found as follows:

Upon review of the matter before me, I do not find that the award is incorrect as a matter of law, irrational, or otherwise infirm.

In reviewing the award, I see no infirmity in the arbitrator having not credited respondent’s peer review report. Apparently, both matters evaluated the medical necessity of the same surgery, and the arbitrator’s authority to weigh and consider the evidence is quite broad per applicable regulation. 11 NYCRR 65-4.5 (o)(1).

As is well settled, it is not the function of a master arbitrator to perform a de novo review of the facts, e.g. the evidence before the arbitrator. Matter of Jasser v. Allstate Ins. Co., 77 AD3d 751 (2nd Dept 2010); Allstate Ins. Co. v. Keegan, 201 AD2d 724 (2nd Dept 1994).

I see no basis to disturb the arbitrator’s finding of facts. The award is clearly not irrational and indeed has a plausible basis. See, Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 (2nd Dept 2017).

In sum, I see no legal infirmity in the award which would warrant granting the relief sought by respondent.

The award is affirmed.

ATIC’s Petition to Vacate

ATIC’s petition to vacate asserted that “The arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (NYSCEF Doc No. 1, petition, ¶ 35), in that “Arbitrator Jan Chow failed to follow well settled law” (id. ¶ 37). The petition proceeded to argue that the claims at issue were properly and timely denied for lack of medical necessity as per the peer review of Dr. Polavarapu (id. ¶ 41).

ATIC asserted that Arbitrator Chow mistakenly relied on collateral estoppel as a matter of law. Citing case law, ATIC maintained that there are four conditions which must be met in order for collateral estoppel to apply and not all were present in the instant case: (1) The issues in both proceedings must be identical. (2) The issue in the prior proceeding must have been actually litigated and decided. (3) There had to have been a full and fair opportunity to litigate in the prior proceeding. (4) The issue previously litigated must have been necessary to support a valid and final judgment on the merits. (Id. ¶ 43.) Arbitrator Chow did not discuss the “4th prong; whether the issue previously litigated was necessary to ‘support a valid and final judgment on the merits’ as required by the Court of Appeals in” Conason v Megan Holding LLC (25 NY3d 1 [2015]), maintained ATIC (id. ¶ 44).

More specifically, ATIC argued that “The underlying decision does not discuss whether the decision [of Arbitrator Mitchell Lustig] relied upon by the Arbitrator was appealed to a Master or whether a de novo action[^[FN15] ] or petition to vacate was filed. Applicant did not offer any evidence to establish that the decision that the Arbitrator relied upon was confirmed in Court and, therefore, necessary to ‘support a valid and final judgment on the merits’ as required by the Court of Appeals in the Conason decision. There is no evidence before the arbitrator showing that Respondent filed a Petition to Confirm the award or that the prior award was converted to a judgment. There is also no evidence that the Petitioner did not file a de novo action which would render the prior award a nullity. (see Matter of Greenberg v. Ryder Truck Rental, Inc., 70 NY2d 573 [1987]; see also Allstate Insurance Company v. Matthew Nalbandian, a/a/o Darlene Torchi, 89 AD3d 648).” (Id. ¶ 45.)

The petition concluded by asserting that Arbitrator Chow’s decision was “arbitrary and capricious, without rational basis and incorrect as a matter of law because the arbitrator ignored [ATIC]’s evidence and/or well settled legal precedent in order to justify a determination in favor of [U.S. Med]” (id. ¶ 49). “As a result, [ATIC]’s rights were prejudiced by the partiality of the arbitrator and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated” (id. ¶ 50). ATIC was “entitled to a declaration that the arbitration decisions of Jan. Chow, Esq. and Richard B. Ancowitz, Esq. in the matter designated AAA number 99-21-1197-7083 have no force or effect” (id. ¶ 51).

No-Fault Insurance Arbitration

When the No-Fault Law was first enacted by the Legislature in Chapter 13 of the Laws of 1973 to take effect February 1, 1974, § 675 of the Insurance Law was added. In subdivision 2 thereof, insurers were required to provide claimants with an arbitration option for disputes involving liability for first-party benefits. This provision was amended in Chapter 892 of the Laws of 1977, when several changes were made to the 1973 version.^[FN16] The provision regarding arbitration in § 675 was amended to add the following language:

An award by an arbitrator may be vacated or modified by a master arbitrator in [*5]accordance with simplified procedures to be promulgated or approved by the superintendent [of insurance]. The grounds for vacating or modifying an arbitrator’s decision by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The decision of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute an action in a court of competent jurisdiction to adjudicate the dispute de novo.^[FN17]

The provisions regarding No-Fault insurance arbitration remained in the recodification of the Insurance Law enacted in Chapters 367 and 805 of the Laws of 1984. The arbitration provisions were set forth in § 5106, and subdivisions (b) and (c) now read as follows:

(b) Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent. Such simplified procedures shall include an expedited eligibility hearing option, when required, to designate the insurer for first party benefits pursuant to subsection (d) of this section. The expedited eligibility hearing option shall be a forum for eligibility disputes only, and shall not include the submission of any particular bill, payment or claim for any specific benefit for adjudication, nor shall it consider any other defense to payment.

(c) An award by an arbitrator shall be binding except where vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent. The grounds for vacating or modifying an arbitrator’s award by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.

Insofar as is here relevant, the No-Fault Insurance Regulations promulgated by the [*6]Superintendent of Insurance provided that a master arbitrator may vacate or modify a hearing arbitrator’s award where it “was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65.18 [a] [4]). This regulatory language was carried over into the revised Regulations promulgated in 2002, in 11 NYCRR 65-4.10 (a) (4).^[FN18] A master arbitrator may also vacate or modify a hearing arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN19]

Discussion

Although U.S. Med has not filed opposition papers to ATIC’s petition, this Court has [*7]previously held that in an Article 75 proceeding to vacate the award of a No-Fault insurance arbitration, where the respondent health service provider failed to submit opposition to the verified petition, the court should review the verified petition to determine whether it makes out a prima facie case in support of the relief requested (see American Tr. Ins. Co. v Ortho City Services Inc., — Misc 3d —[A], 2023 NY Slip Op 50527[U] [Sup Ct, Kings County 2023].

The provision that a master arbitrator may vacate or modify a hearing arbitrator’s award due to an error of law is one of several grounds but is the main gravamen of ATIC’s objection to the arbitration outcome here.^[FN20] ATIC contends that Arbitrator Chow failed to adhere to the law on collateral estoppel.

ATIC principally relies on Conason v Megan Holding, LLC (25 NY3d 1 [2015]), for the proposition that a requirement for collateral estoppel to apply is that the previous litigation concluded in a final and valid judgment. ATIC construes “final and valid judgment” to mean that a prerequisite to affording collateral estoppel effect to a No-Fault arbitration award is that it was affirmed by a master arbitrator, confirmed by a court into a judgment, and not subjected to de novo review (NYSCEF Doc. No. 1, petition ¶¶ 42-48).

In Conason, Supreme Court granted summary judgment based in part on a Housing Court determination regarding the base date for determining a stabilized rent amount and finding that there was fraud in the rent amount claimed by the landlord. Supreme Court was affirmed by the Appellate Division. In reviewing the case law regarding collateral estoppel, the Court of Appeals wrote at page 17:

Collateral estoppel comes into play when four conditions are fulfilled:

“(1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits” (Alamo v. McDaniel, 44 AD3d 149, 153 [1st Dept. 2007], citing Ryan v. New York Tel. Co., 62 NY2d 494 [1984], and Gramatan Home Invs. Corp. v. Lopez, 46 NY2d 481 [1979]).^[FN21]

The Court of Appeals held that in the case before it, two of the four prerequisites were unmet. First, the issues were not identical. A claimed breach of warranty of habitability was the issue in the Housing Court whereas the issue in the Supreme Court action was evidence of fraud sufficient to render the render the base date unreliable. Further although the Housing Court found fraud on the part of the landlord such a finding was not necessary for its order which awarded the tenants a rent abatement on account of a breach of a warranty of habitability. The focus by the Court of Appeals was on whether the issue was necessary to support a final and valid judgment on the merits; the focus was not on the finality of a judgment, which ATIC is [*8]emphasizing with respect to Arbitrator Mitchell Lustig’s prior award.

In Ryan v New York Tel. Co. (62 NY2d 494 [1984]) [quasi-judicial determination held to constitute collateral estoppel], a case mentioned in Conason, the Court of Appeals wrote:

The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or preceding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same. (Ripley v Storer, 309 NY 506, 517; see, also, Restatement, Judgments 2d, § 27; 46 Am Jur 2d, Judgments, § 415; 9 Carmody-Wait 2d, NY Prac, Judgments, § 63:205.) We have recently reaffirmed that collateral estoppel allows “the determination of an issue of fact or law raised in a subsequent action by reference to a previous judgment on a different cause of action in which the same issue was necessarily raised and decided.” (Gramatan Home Investors Corp. v Lopez, 46 NY2d 481, 485.) What is controlling is the identity of the issue which has necessarily been decided in the prior action or proceeding.

Of course, the issue must have been material to the first action or proceeding and essential to the decision rendered therein (Silberstein v Silberstein, 218 NY 525, 528; see, also, Hinchey v Sellers, supra.; Ripley v Storer, supra.; Ward v Boyce, 152 NY 191), and it must be the point actually to be determined in the second action or proceeding such that “a different judgment in the second would destroy or impair rights or interests established by the first” (Schuylkill Fuel Corp. v Nieberg Realty Corp., supra, at p 307 [Cardozo, Ch. J.]; see, also, S. T. Grand, Inc. v City of New York, 32 NY2d 300, 304-305).

Matter of Greenberg (Ryder Truck Rental) (70 NY2d 573 [1987]) was cited by ATIC for the proposition that since there was no evidence to show that it (ATIC) sought de novo review in court of Arbitrator Lustig’s award, the findings by Arbitrator Lustig concerning lack of medical necessity could not be asserted against it by U.S. Med. Matter of Greenberg does not so hold. All it held was that Insurance Law § 5106 (c) provided the parties to a No-Fault arbitration with an option of de novo consideration of claim if the master arbitrator’s award was $5,000.00 or greater. As the Court of Appeals noted, the de novo review is statutory and, therefore, an arbitration determination was of course not binding as collateral estoppel. This decision has no applicability to the instant one. A review of Arbitrator Lustig’s award on the AAA’s Modria ^[FN22] platform for No-Fault arbitration awards (Matter of Arbitration of Surgicore Surgical Center LLC a/a/o Mahendra Singh v American Tr. Ins. Co., AAA Case No. 17-21-1194-7180 [Dec. 3, 2021] [last accessed at https://aaa-nyn f.modria.com/awardsearchcontroller/searchawards on June 4, 2023]) reveals that he awarded $4,890.65, which is less than the threshold amount for a de novo action in court of the claim determined therein. In any event, the issue in Matter of [*9]Greenberg was the collateral effect of the arbitration award in court—not the collateral effect of an arbitration award in a subsequent arbitration.

Confirming the nature of a de novo action in the context of No-Fault insurance claims, the court in Allstate Ins. Co. v Nalbandian (89 AD3d 648 [2d Dept 2011]), cited by ATIC, reaffirmed the principle that a de novo action has no relation to a review of a master arbitration award. Supreme Court improperly considered the arbitration award and did not allow the No-Fault insurer to argue against the claim anew; the Appellate Division reversed. Contrary to ATIC’s position, this case does not stand for the proposition that a claimant must prove that no de novo action was filed as a prerequisite for using an arbitration award as collateral estoppel against the insurer.

A leading case on the preclusive effect of an arbitration award is American Ins. Co. v Messinger (43 NY2d 184 [1977]). The Court of Appeals held that a determination made in a property damage arbitration between two insurance carriers disallowing a disclaimer of coverage is binding between the same carriers in a subsequent personal injury action arising out of the same accident. This decision was controversial because the arbitration whose outcome was binding was quite informal and summary in nature; the two insurers submitted their files to the arbitrators and there was no testimony or oral argument. The arbitrator’s award was brief. The insurers did not treat the arbitration with any real significance (until the award became binding in the subsequent action). While writing that “The consequences of issue preclusion between the same parties are not to be vitiated by lack of enthusiasm or effort on the part of the loser” (43 NY2d at 192), the Court of Appeals emphasized that “Fundamental to our consideration of the present appeal is recognition that in general the doctrines of claim preclusion and issue preclusion between the same parties (more familiarly referred to as res judicata or direct estoppel)[ ] apply as well to awards in arbitration as they do to adjudications in judicial proceedings” (id. at 189-190).

While the parties were identical in American Ins. Co. v Messinger, arbitration awards do have estoppel effect against a No-Fault insurer even if the health service provider is different in the subsequent arbitration (see Country-Wide Ins. Co. v Empire State Ambulatory Surgery Ctr., 2021 NY Slip Op 32194[U] [Sup Ct NY County 2021]). This is consistent with Schwartz v Public Adm’r of County of Bronx (24 NY2d 65, 70 [1969] [not an arbitration case]), where the Court of Appeals noted that the doctrine of mutuality is a dead letter. “Where a full opportunity has been afforded to a party to the prior action and he has failed to prove his freedom from liability, or to establish liability or culpability on the part of another, there is no reason for permitting him to retry these issues” (id., quoting Good Health Dairy Prods. Corp v Emery, 275 NY 14, 18 [1937]). “New York Law has now reached the point where there are but two necessary requirements for the invocation of the doctrine of collateral estoppel. There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and, second, there must have been a full and fair opportunity to contest the decision now said to be controlling.” (Id. at 71.) This quotation actually confirms all—not just two of the conditions referred to by ATIC in its petition to vacate (see Gramatan Home Investors Corp. v Lopez, 46 NY2d 481 [1979]). That there be a valid and final judgment on the merits, as contended by ATIC, is confirmed in Ryan, 62 NY2d at 499.

Therefore, ATIC is correct that in order for collateral estoppel to apply in arbitration, the issues in both proceedings must be identical, the issue in the prior proceeding must have been actually litigated and decided, there must have been a full and fair opportunity to litigate in the [*10]prior proceeding, and the issue previously litigated must have been necessary to support a valid and final judgment on the merits. But does the proponent of the applicability of collateral estoppel from a No-Fault insurance arbitration award have to establish that the award was affirmed by a master arbitrator, confirmed by a court, and not subject to de novo review, as ATIC contends?

This Court answers the question in the negative. It is well established that if the deadline for appealing a judgment has not passed or that an appeal from a judgment has actually been taken but not yet decided, these factors do not divest a judgment of finality for the purposes of collateral estoppel (see Samhammer v Home Mut. Ins. Co. of Binghamton, 120 AD2d 59 [3d Dept 1986], citing Parkhurst v Berdell, 110 NY 386 [1888] [collateral estoppel applies to final administrative determinations which otherwise would meet criteria to invoke collateral estoppel]). The pendency of an appeal does not affect the use of an order as an estoppel (see Beard v Town of Newburgh, 259 AD2d 613 [2d Dept 1999] [undetermined appeal from criminal judgment not a bar to applicability of determination in arbitration but subsequent reversal of judgment considered by court reviewing arbitration).

Apparently the issue of the preclusive effect of No-Fault arbitration determinations has been sanctioned by appellate courts in New York effect ever since the issuance of the decision in Kilduff v Donna Oil Corp., 74 AD2d 562 [2d Dept 1980]. Whereas an arbitrator’s denial of a part of a claim without prejudice to renewal was not a final determination, that part of the claim which was denied in its entirety was “final” and constituted a bar to a court action (id.). The Court of Appeals considered the issue preclusive effect of a No-Fault arbitration for the first time in Clemens v Apple (65 NY2d 746 [1985]), where it was held that a factual finding made in an arbitration award constituted collateral estoppel in court against the party who commenced the arbitration where that party had a full and fair opportunity to litigate the factual issue determined. The Court cited to Ryan v New York Tel. Co., mentioned above.

It is within the arbitrator’s authority to determine the preclusive effect of a prior arbitration (see Matter of Falzone v. New York Central Mutual Fire Ins. Co., 15 NY3d 530 [2010], affg, 64 AD3d 1149 [4th Dept. 2009]). In that case, a supplementary uninsured/underinsured motorist (SUM) arbitrator failed to accord preclusive effect to a prior award by a No-Fault arbitrator. “In this appeal, we are merely applying this State’s well-established rule that an arbitrator’s rulings, unlike a trial court’s, are largely unreviewable. . . . Thus, if a court makes an error and fails to properly apply collateral estoppel, the issue can be reviewed and corrected on appeal. By contrast, if an arbitrator erred in not applying collateral estoppel, the general limitation on judicial review of arbitral awards precludes a court from disturbing the decision unless the resulting arbitral award violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power.” (Id. at 534-535.)

Where an arbitrator has determined that the insurer failed to demonstrate that the injured person breached a condition precedent to coverage by failing to appear for an EUO, the insurer is barred by the doctrine of collateral estoppel from seeking a declaration that it does not have to provide coverage to the injured person on this ground; collateral estoppel is applicable to No-Fault arbitration awards, even if the awards are not judicially confirmed (see Country-Wide Ins. Co. v Ospina, 2019 NY Slip Op. 30444[U] [Sup Ct, NY County 2019]). This decision confirms that if a No-Fault insurance arbitrator decides to apply collateral estoppel to a prior arbitration award the prior award need not have been judicially confirmed into a judgment, contrary to [*11]ATIC’s position herein.

A post-arbitration judicial determination concerning an insurer’s liability is not one of the limited grounds for vacating an arbitration award (see Country-Wide Ins. Co. v Epione Med. P.C., 2020 NY Slip Op. 32945[U] [Sup Ct, NY County 2020] [arbitrator held that insurer was collaterally estopped from submitting evidence not before her in prior arbitration wherein she rejected IME no-show defense; judicial declaratory judgment later held that insurer owed no duty to health care provider].

An argument by a party in No-Fault arbitration that the arbitrator’s application of collateral estoppel to the issue of medical necessity is arbitrary, capricious, and incorrect as a matter of law, since he did not address all of the evidence presented in the arbitration misapprehends the law of collateral estoppel, because its specific purpose is to prevent a party from relitigating issues previously decided against it and necessarily forecloses that party from successive opportunities to present new evidence without justification (see Country-Wide Ins. Co. v Progressive-Hudson Anesthesia LLC, 2021 NY Slip Op. 31587[U] *3 [Sup Ct, NY County 2021]). This decision is very close on point since the first arbitrator determined that surgery was necessary and the second arbitrator applied the decision to the claim for the anesthesia. In the case at bar, the first arbitrator (Lustig) determined that the right shoulder surgery was medically necessary in the context of the claim by the surgical facility, and Arbitrator Chow applied the finding of medical necessity to the claim by the post-surgery medical supply company.

An arbitrator rationally applies the doctrine of collateral estoppel against an insurer with respect to a claim by an ambulatory surgery center where the underlying surgery was previously found medically necessary in another arbitration (see Country-Wide Ins. Co. v Empire State Ambulatory Surgery Ctr., 2021 NY Slip Op 32194[U] [Sup Ct, NY County 2021]).

An arbitrator’s invocation of collateral estoppel on the issue of whether shoulder surgery and related services were medically necessary and causally related to the accident against a No-Fault insurer from a previous arbitration where the insurer had a full and fair opportunity to contest the issue is rational and neither arbitrary, capricious, nor incorrect as a matter of law (see Country-Wide Ins. Co. v Advantage Med Innovations, Inc., 2021 NY Slip Op 30418[U] [Sup Ct, NY County 2021]).

In none of the cases cited above did a court rule that a health service provider seeking to assert collateral estoppel against a No-Fault insurer from a previous arbitration award had to prove that the award was affirmed by a master arbitrator and confirmed in court. An arbitration award can be deemed final even if an appeal is pending (see Beard, 259 AD2d 613; Samhammer, 120 AD2d 59).

“The party seeking to rely on collateral estoppel has the burden of establishing that the issue actually litigated and determined in the prior action is identical to the issue on which preclusion is sought (see Forcino v Miele, 122 AD2d 191, 193 [1986]; Triboro Quality Med. Supply, Inc. v State Farm Mut. Auto. Ins. Co., 36 Misc 3d 131[A], 2012 NY Slip Op 51289[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). The party attempting to defeat the application of collateral estoppel has the burden of establishing the absence of a full and fair opportunity to litigate (see D’Arata, 76 NY2d at 664; Uptodate Med. Servs., P.C. v State Farm Mut. Auto. Ins. Co., 23 Misc 3d 42, 44 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]).” (Laga v Unitrin Auto and Home Ins. Co., 76 Misc 3d 131[A], 2022 NY Slip Op 50906[U] *2 [App Term, 2d Dept, 2d, 11th & 13th Dists 2022]). If an insurer against whom collateral estoppel is applied bears the burden of establishing the absence of a full and fair opportunity to [*12]litigate, likewise the burden of proving absence of finality or reversal or vacatur of a prior arbitration award submitted by a health service provider is properly placed on the insurer. ATIC here did not establish that Arbitrator Mitchell Lustig’s award, cited by U.S. Med and relied upon by Arbitrator Chow for the determined fact that the October 6, 2020 shoulder surgery was medically necessary, was reversed or vacated. ATIC has not established that the issue of medical necessity previously decided did support a valid and final judgment on the merits (see Conason, 25 NY3d 1).

With the shoulder surgery being found medically necessary by virtue of Arbitrator Lustig’s prior finding and there being no specific discussion of the supplies at issue in the four-page peer review, Arbitrator Chow properly awarded compensation to U.S. Med for providing the post-surgery supplies to Assignor (see Country-Wide Ins. Co. v Empire State Ambulatory Surgery Ctr., 2021 NY Slip Op 32194[U]; Country-Wide Ins. Co. v Progressive-Hudson Anesthesia LLC, 2021 NY Slip Op. 31587[U]; Country-Wide Ins. Co. v Sedation Vacation Perioperative Medicine PLLC, 2021 NY Slip Op 30512[U] [Sup. Ct, NY County]; cf. Matter of Global Liberty Ins. Co. v Medco Tech, Inc., 170 AD3d 558 [1st Dept 2019] [arbitration award sustaining compensation for derivative services vacated when evidence established surgery not necessary]; New Horizon Surgical Center, L.L.C. v Allstate Ins. Co., 52 Misc 3d 139[A], 2016 NY Slip Op 51124[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2016] [if medical service not necessary, by extension there is lack of medical necessity for surgical facility fee for the service]).

This Court notes that Arbitrator Chow’s award was dated July 24, 2022 (NYSCEF Doc No. 3, Arbitration Award at numbered p 5). Arbitrator Lustig’s, which she cited, was dated December 3, 2021 (Matter of Arbitration of Surgicore Surgical Center LLC a/a/o Mahendra Singh v American Tr. Ins. Co., at numbered p 7). A review of the AAA’s Modria platform reveals that on February 28, 2022, Master Arbitrator Richard B. Ancowitz affirmed Arbitrator Lustig (see Matter of Arbitration of Surgicore Surgical Center LLC a/a/o Mahendra Singh v American Tr. Ins. Co., AAA Case No. 17-21-1194-7180 [Dec. 3, 2021] [last accessed at https://aaa-nyn f.modria.com/awardsearchcontroller/searchawards on June 4, 2023]). With Arbitrator Lustig’s award being affirmed, there was no impediment to Arbitrator Chow’s adoption of the his factual finding regarding medical necessity. Had Arbitrator Lustig’s award not been the subject of a master arbitrator appeal, reliance on Arbitrator Lustig’s award would still have been appropriate pursuant to the cited case law, as it would have been the final determination at the time. While it would have been better practice for Arbitrator Chow to have ascertained that Arbitrator Lustig was affirmed, this Court holds that the burden of showing that an award was reversed by a master arbitrator or vacated by a court devolves on the No-Fault insurer. Certainly, based on the case law cited above, there is no requirement that an award be confirmed by a court. And Matter of Falzone (15 NY3d 530), affords wide latitude to arbitrators in terms of the application of collateral estoppel.^[FN23]

Based on the foregoing analysis, this Court rejects ATIC contention that Arbitrator Chow failed to adhere to the law on collateral estoppel.

Master Arbitrator Ancowitz sustained Arbitrator Chow, finding that her award was not incorrect as a matter of law, was not irrational, and had a plausible basis in terms of factual findings (NYSCEF Doc No. 4, Master Arbitration Award at 2-3). This Court must next determine whether to sustain Master Arbitrator Ancowitz’s review of Arbitrator’s Chow award.

Not only was Master Arbitrator Ancowitz correct in finding no error of law, and that the award was not irrational or otherwise infirm, it bears saying that he accurately stated the law on the review by a No-Fault master arbitrator. He adhered to the precepts of Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981] [master arbitrator may not engage in extensive factual review on his own and is limited to determining whether arbitrator was incorrect as matter of law, reached decision in rational manner, and was neither arbitrary nor capricious].

The standard for Article 75 court scrutiny of a No-Fault insurance arbitration is whether the master arbitration award was so irrational as to require vacatur (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 Acuhealth Acupuncture, P.C. v New York City Transit Authority, 167 AD3d 314 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). A master arbitrator’s review of a hearing arbitrator’s award where an error of a rule of substantive law is alleged must be upheld unless it is irrational (see Golden Earth Chiropractic & Acupuncture, PLLC v Global Liberty Ins. Co. of New York, 54 Misc 3d 31 [App Term, 2d Dept, 2d, 11th & 13th Dists 2016]).

This Court finds that in affirming Arbitrator Chow, who properly applied the law of collateral estoppel and did not make arbitrary, capricious, or irrational findings of fact, Arbitrator Ancowitz did not contravene the limitations on his powers. His master award conformed to the permitted standard of review of a hearing arbitrator’s award by a master arbitrator.

Accordingly, this Court rejects ATIC’s contentions in its petition. ATIC’s rights were not prejudiced, the arbitrator was not partial, she did not exceed her powers, and she did not fail to make a final and definite award, as ATIC contended in paragraph 50 of its petition).

Other Requested Relief

Any requested relief not expressly addressed herein has nonetheless been considered and is hereby expressly rejected.

Conclusion

Accordingly, it is hereby ORDERED, ADJUDGED, and DECREED that that ATIC’s petition is denied, this special proceeding is dismissed, and the master arbitration award of Richard B. Ancowitz, Esq., which affirmed the arbitration award of Jan Chow, Esq., in AAA Case No. 99-21-1197-7083 is confirmed in its entirety.

Footnotes

Footnote 1: The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Jan Chow, Esq. and/or Master Arbitrator Richard B. Ancowitz, Esq. under Article 75 of the CPLR” (NYSCEF Doc No. 2, notice of petition), but it must be deemed to seek vacatur of just the master arbitration award inasmuch as the latter is the final determination of the arbitration process. The No-Fault Regulations provide that “court review pursuant to an article 75 proceeding” is from the “decision of a master arbitrator” (11 NYCRR 65-4.10 [h] [1] [i]). In fact, a party may not appeal from a hearing arbitration award (see Matter of Staten Is. Hosp. v USAA, 103 AD2d 744 [2d Dept 1984]; Matter of Griffith v Home Indem. Co., 84 AD2d 332 [1st Dept 1982]; Matter of Lampasona v Prudential Prop. & Cas. Ins. Co., 111 Misc 2d 623 [Sup Ct, Kings County 1981]). “[T]he Legislature intended the provision of CPLR article 75 to apply only to the review of the awards of master arbitrators (see, Insurance Law § 5106[c])” (Matter of Custen v General Acc. Fire and Life Ins. Co., 126 AD2d 256 [2d Dept. 1987]). Naturally, if the hearing arbitrator’s award is imperfect, this can impact judicial review of a master arbitration award affirming it.

Footnote 2: Rather than denote the parties here as “Petitioner” and “Respondent” in discussion, the parties’ names are used. This is to facilitate the reader’s understanding of the facts, arguments, analysis, and determination. This also minimizes confusion because the respondent in the underlying arbitration (ATIC) is not the respondent herein but rather is the petitioner herein. The respondent herein, U.S. Med, was not the respondent in the arbitration, but was the applicant.

Footnote 3: Health service providers obtain standing to pursue No-Fault insurance compensation in arbitration by virtue of having received an assignment of benefits from the respective person claiming to have been injured in a covered motor vehicle accident; such person is often denoted as an “assignor.”

Footnote 4: References to page numbers in NYSCEF filings lacking specified page numbers are to the PDF page numbers.

Footnote 5: Paragraph 28 of the petition describes the AAA Case No. as 99-21-1197-7083, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1197-7083.

Footnote 6: This statutory scheme was developed by New York’s legislature in 1973, as part of a tradeoff whereby lawsuits for pain and suffering resulting from personal injuries in motor vehicle accidents were limited to instances of serious injury (see generally Insurance Law art 51; L 1973, ch 13, as amended L 1977, ch 892; John R. Dunne, New York’s No-Fault Automobile Insurance Law—A Glimpse of the Past and a Glance at the Future, 50 NY St BJ 284 [June 1978]; J. Benedict, New York Adopts No-Fault: A Summary and Analysis, 37 Albany L Rev 662 [1973]).

Footnote 7: Although Insurance Law Article 51 does not mention the term “No-Fault,” shortly after the post-motor vehicle accident economic loss compensation system was enacted in 1973, the appellation “No-Fault” was adopted in common parlance to describe it.

Footnote 8: This Court uses the term “health service bills” instead of “medical bills” because the No-Fault Law provides for reimbursement of “(i) medical, hospital . . . , surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical therapy . . . and occupational therapy and rehabilitation . . . and (iv) any other professional heath services” (Insurance Law § 5102 [b] [1]). Hence, the No-Fault insurance system encompasses not just “medical” services. In the instant case, the services were medical supplies.

Footnote 9: The prescribed claim forms are included within 11 NYCRR Part 65 (Regulation 68) Appendix 13. Besides Form NF-3 (verification of treatment by attending physician or other provider of health service), Appendix 13 contains Form NF-4 (verification of hospital treatment) and Form NF-5 (hospital facility form).

Footnote 10: There is a prescribed assignment of benefits form (Form NF-AOB) in 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 11: The process of submitting a No-Fault claim to the insurer is governed by 11 NYCRR Subpart 65-3, which contains §§ 65-3.1 et seq.

Footnote 12: Form NF-10 is also included within 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 13: Although the claim form was a HICF form (health insurance claim form developed by the National Uniform Claim Committee), and not an official No-Fault Form NF-3, ATIC did not seek a Form NF-3 as additional verification and, therefore, it waived any objection in that regard (see 11 NYCRR 65-3.5 [f]; Ortho Prods. & Equip., Inc. v Eveready Ins. Co., 39 Misc 3d 146[A], 2013 NY Slip Op 50856[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2013]).

Footnote 14: Dr. Polavarapu’s four-page peer review was intended to cover not only the supplies at issue herein but other supplies also prescribed for Assignor (NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief at 12-15).

Footnote 15: A “de novo action” is one where either party to a No-Fault insurance master arbitration resulting in an award of $5,000.00 or greater commences an action in court seeking a de novo determination of the dispute (see Insurance Law § 5106 [c], quoted infra at 8).

Footnote 16: Among the more substantial changes in the 1977 legislation were the adoption of fee schedules to limit health service expenses and modifying the threshold categories for suing for pain and suffering.

Footnote 17: Nothing in the Governor’s Bill Jacket for Chapter 13 of the Laws of 1977 or other contemporary records comments on the provision adopting master arbitration review of hearing arbitrators’ decisions, so it is not known why the master arbitration process was created (see Matter of Bamond v Nationwide Mut. Ins. Co., 75 AD2d 812, 813 [2d Dept 1980], affd 52 NY2d 957 [1981]). This Court speculates that at least one reason was that No-Fault arbitration was compulsory and the Legislature desired to permit a party to an arbitration to seek review of the hearing arbitrator’s award on the basis of an assertion of an error of law, which traditionally was not a basis for review in an Article 75 proceeding (see Mott v State Farm Ins. Co., 77 AD2d 488 [3d Dept 1980], revd sub nom. on other grounds Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224 [1982]).

Footnote 18: Most non-No-Fault insurance arbitration awards cannot be vacated due to an error of law (see Matter of Sprinzen v Nomberg, 46 NY2d 623, 629-630 [1979]). No-Fault insurance arbitrations are different; an error of law can be the basis for reversal—by a master arbitrator. In that sense, the master arbitrator’s review is broader than that of a court, since a court will not vacate an arbitration award due to an error of law (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207, 211-212 [1981]; Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 800, 802 [2d Dept 2019]).

Footnote 19: 11 NYCRR 65-4.10 (a) provides as follows:

Grounds for review. An award by an arbitrator rendered pursuant to section 5106(b) of the Insurance Law and section 65-4.4 or 65-4.5 of this Subpart may be vacated or modified solely by appeal to a master arbitrator, and only upon one or more of the following grounds:

(1) any ground for vacating or modifying an award enumerated in article 75 of the Civil Practice Law and Rules (an article 75 proceeding), except the ground enumerated in CPLR subparagraph 7511(b)(1)(iv) (failure to follow article 75 procedure);

(2) that the award required the insurer to pay amounts in excess of the policy limitations for any element of first-party benefits; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of an appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(3) that the award required the insurer to pay amounts in excess of the policy limitations for any element of additional first-party benefits (when the parties had agreed to arbitrate the dispute under the additional personal injury protection endorsement for an accident which occurred prior to January 1, 1982); provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(4) that an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground);

(5) that the attorney’s fee awarded by an arbitrator below was not rendered in accordance with the limitations prescribed in section 65-4.6 of this Subpart; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart.

Footnote 21: ATIC contends that only the fourth prong of the Conason conditions was missing in the subject arbitration. It concedes the presence of the initial three prongs: identical issue, actually litigated and decided, and full and fair opportunity to litigate in prior proceeding (NYSCEF Doc. No. 1, petition ¶ 44).

Footnote 22: This is the AAA’s electronic case management and filing platform maintained on the Internet; it is known as “Modria,” which was the name of the company which developed it for the AAA (see Liveblogging #ODR2014: The Developing Field of Online Dispute Resolution, https://civic.mit.edu/index.html%3 Fp=1452.html [last accessed Mar. 19, 2023]; Welcome to the Modria Resolution Center for the American Arbitration Association, https://aaa-nynf.modria.com/ [last accessed Mar. 19, 2023]).

Footnote 23: This Court will also go as far as holding that even if a No-Fault hearing arbitrator’s award is reversed on an issue of fact, another hearing arbitrator may rely on its findings. This is due in part to the Court of Appeals’ decision in Matter of Falzone. According to the latter, a prior arbitration decision is not necessarily binding in a subsequent one. Ergo, if a hearing arbitrator finds a colleague’s factual finding compelling and the master arbitrator’s reversal not, the discretion lies within the arbitrator to determine which one to apply. After all, No-Fault arbitration decisions are not controlling precedents on legal issues (see Matter of Garcia v. Federal Ins. Co., 46 NY2d 1040 [1979], and a No-Fault arbitrator has practically unfettered discretion in determining facts (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).