Maidstone Ins. Co. v Medical Records Retrieval, Inc. (2018 NY Slip Op 50556(U))

27526/2017E

Counsel for Petitioner: Jason Tenenbaum, Esq.

The following papers numbered 1 to _2_ Read on this motion, VACATE ARBITRATION AWARD Noticed on September 14, 2017 and duly submitted on the Motion Calendar of September 14, 2017:

PAPERS NUMBERED

Notice of Motion- Exhibits and Affidavits Annexed 1,2

Upon the foregoing papers, the petitioner Maidstone Insurance Company (“Petitioner”) seeks an order (1) pursuant to CPLR 7511, vacating the award of the master arbitrator that affirmed an award of the lower arbitrator finding that the respondent Medical Records Retrieval Inc., d/b/a Kamara Medical Supplies, a/a/o Sandra Pereira (“Respondent”) was entitled to compensation for services performed (a) from March 12, 2016 through April 22, 2016, in the sum of $3,750.00; (b) from March 12, 2016 until April 1, 2016, in the sum of $1,323.00; and (c) from March 12, 2016 in the sum of $19.50 and $34.22, and entering judgment in favor of Petitioner vacating the award, and remanding the matter to a different arbitrator to compute the amount due and owing under the Medicaid fee schedule, which would be 1/6 times the wholesale price of the CPM and CTU, divided by 30, times the amount of days the items were rented, or $1031.27; (2) such other and further relief as this Court may deem just, proper, and equitable, and (3) costs and disbursements as taxed by the clerk, including Petitioner’s $325 master arbitration fee. The petition is unopposed.

In cases of compulsory arbitration, judicial review of a master arbitrator’s award is restricted to the grounds set forth in Article 75 of the CPLR (see Matter of Petrofsky, 54 NY2d [*2]207, 210-11 [1981]). The “governing consideration is ‘whether the decision was rational or had a plausible basis'” (Curley v. State Farm Ins. Co., 269 AD2d 240, 242 [1st Dept. 2000], citing Petrofsky at 211). “Vacatur of an arbitrator’s award is statutorily limited to occasions involving fraud, corruption or bias… or occasions where the arbitrator exceeded his or her power, or so imperfectly executed it so that a final and definite award was not made” (id., citing CPLR 7511[b]; Lopez 375 v. New York City Health and Hospitals Corp., 257 AD2d 530 [1st Dept. 1999]). The party seeking vacatur must prove that the award was irrational, in violation of public policy, or in excess of the arbitrator’s powers (id., citing In re Travelers Insurance Company v. Job, 239 AD2d 289 [1st Dept. 1997]). Furthermore, “‘an arbitrator’s award will not be set side even though the arbitrator misconstrues or disregards [the proof] or misapplies substantive rules of law, unless it violates strong public policy or is totally irrational'” (id., quoting Sims v. Siegelson, 246 AD2d 374, 376 [1st Dept. 1998]). While an arbitration award may be deemed arbitrary and capricious where it does not follow “clear precedent,” (Matter of State Ins. Fund [Country-Wide Ins. Co.], 276 AD2d 432, [1st Dept. 2000]), vacatur should not be granted if the decision had a reasonable hypothesis and the controlling issue is “unsettled and subject to conflicting court decisions” (see Motor Vehicle Accident Indemnification Corp. v. Aetna Casualty and Surety Co., 89 NY2d 214, 224 [1996]).

In this matter, although the petition is unopposed, it must be denied because Petitioner has failed to carry its initial burden of demonstrating that vacatur of the arbitration awards is warranted. Petitioner received billing for a CPM knee machine (Code E0935) in the sum of $3,570.00, representing 42 days of usage (March 12, 2016 – April 22, 2016), at the billed rate of $85.00 per day, and billing for a water circulating pump (Code E0236) in the sum of $1,323.00, representing 21 days of usage (March 12, 2016 – April 1, 2016), billed at a rate of $125.00 per day. Petitioner was billed for other services as well, but it only disputes the billing rate for the aforementioned two items. Petitioner asserted that this billing was in excess of the applicable fee schedule. At the arbitration hearing, and in the instant petition, Petitioner argued that the applicable fee schedule for the above-referenced durable medical equipment (DME) is limited to 1/6th of the acquisition cost of the equipment on a monthly basis. In support of this position, Petitioner relied primarily on what it characterizes are “opinion letters” from the New York State Department of Health (“DOH”) and the Workers’ Compensation Board (“WCB”), as well as a 2016 Queens County Supreme Court decision. Petitioner also submits “frequently asked questions” the were published on the WCB website which states that the reimbursement rate of CPM (E0935) rental shall not exceed the amount specified in the Durable Medical Equipment Manual – Policy Guidelines – see section on “Rental of Durable Medical Equipment.” Those policy guidelines state – “for DME items that have been assigned a Maximum Reimbursement Amount (MRA), the rental fee is 10%^[FN1] of the listed MRA. For DME items that do not have a MRA, the rental fee is calculated at 10% of the equipment provider’s acquisition cost.” Petitioner argued that its documentation established that where, as here, the DME items have not been assigned a Maximum Reimbursement Amount (“MRA”), the rental fee is calculated at 1/6th of the equipment provider’s acquisition cost.

The lower arbitrator considered these arguments, and specifically found that the DME at issue – the CPM and the CTU – were not listed in the Medicaid DME fee schedule, and no specific amount had been set by the DOH for the monthly rental of those items. While the arbitrator understood the calculations made by Petitioners’ professional coder, he noted that coder’s methodology was flawed because the DOH had indicated in a letter dated June 8, 2016, that according to 12 NYCRR section 442.2(g), the Medicaid Policy Guidelines and Medical Policy Manual are not to be included in the Medicaid DME fee schedule except to the extent that such documents contain the Medicaid DME fee schedule. The lower arbitrator thus rejected Petitioner’s fee schedule defense, and found that the billing was proper in accordance with 12 NYCRR 442.2. The master arbitrator affirmed these findings, holding that the arbitration interpretation of the evidence and applicable law pertaining to this fee schedule dispute was not arbitrary, capricious, or contrary to law.

After review of the instant petition, this Court finds that the arbitration awards were supported by a rational and plausible basis and were not contrary to clear precedent. 12 NYCRR 442.2(b) provides that “[t]he maximum permissible monthly charge for such equipment, supplies and services provided on a rental basis shall not exceed the lower of the monthly rental charge to the general public or the price determined by the New York State Department of Health area office. The total accumulated monthly rental charges shall not exceed the fee amount allowed under the Medicaid fee schedule” (emphasis added). Petitioner’s submissions fail to establish that the New York DOH area office has set or determined a price for the DME at issue. The June 8, 2016 letter from the DOH senior attorney established that the earlier July 2014 letter was clearly not an instance where DOH made such a determination. Furthermore, the correspondence from the WCB employee did not constitute an official “interpretation of a regulation” or an “informal opinion” of the agency’s regulations (compare Matter of Elcor Health Servs. v. Novello, 100 NY2d 273, 280 [2003]; A.M. Medical Services, P.C. v. Progressive Cas. Ins. Co., 101 AD3d 53, 64 [2nd Dept. 2012]). Contrary to Petitioners’ contentions, the arbitrator also had a rational basis for determining that the Medicaid policy guidelines are inapplicable to these facts (see 12 NYCRR 442.2[g]). Even if the Medicaid guidelines are applicable here, as noted in the WCB “FAQ,” they only state that the “1/6th” (10% as of July 1, 2016) calculation of rental fee applies where the DME items “do not have a MRA.” It is rational to conclude that this calculation only applies to DME items that are listed in the fee schedule but are not assigned a MRA value. Where, as here, the DME items are not listed at all on the Medicaid fee schedule, the Department of Health has not determined a monthly rental charge. Under these circumstances, the applicable monthly rental charge will be the rate charged to the general public (12 NYCRR §442.2[b]). Petitioner argues that its contentions further the cost containment policies behind the no-fault system, however, engaging in such an analysis goes beyond the narrow issue that is before this Court (see Curley v. State Farm Ins. Co., 269 AD2d 240, 242).

Accordingly, it is hereby

ORDERED, that the petition is denied, and the Master Arbitration Award is confirmed (CPLR 7511[e]).

This constitutes the Decision and Order of this Court.

Dated: April 4, 2018
Hon. Mary Ann Brigantti, J.S.C.

Footnotes

Footnote 1:According to Petitioners’ professional coder, the Medicaid Policy Guidelines changed the reimbursement formula from 1/6th to 10% of the acquisition cost on July 1, 2016.