American Transit Insurance Company, Petitioner, against Nexray Medical Imaging PC d/b/a Soul Radiology, a/a/o Carlos Colon, Respondent.

Index No. 531377/2022

Larkin Farrell LLC, New York City (Anthony Troise of counsel), for Petitioner.

Roman A. Kravchenko, Garden City, for Respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition:

Submitted by Petitioner
NYSCEF Doc No. 1: Petition
NYSCEF Doc No. 2: Notice of Petition
NYSCEF Doc No. 3: Exhibit A — Arbitration Award
NYSCEF Doc No. 4: Exhibit B — Master Arbitration Award
NYSCEF Doc No. 5: Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission
NYSCEF Doc No. 6: Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Appeal
NYSCEF Doc No. 7: Statement of Authorization for Electronic Filing
NYSCEF Doc No. 8: Request for Judicial Intervention
NYSCEF Doc No. 9: Proof of Service
NYSCEF Doc No. 10: Statement of Authorization for Electronic Filing
NYSCEF Doc No. 11: Affidavit of Service
NYSCEF Doc No. 12: Statement of Authorization for Electronic Filing

Submitted by Respondent
NYSCEF Doc No. 13: Notice of Cross-Petition
NYSCEF Doc No. 14: Cross-Petition

Submitted by Petitioner
NYSCEF Doc No. 15: Affirmation in Opposition to Cross-Motion and in Reply in Support of Petition
NYSCEF Doc No. 16: Exhibit A — Order & Judgment in Kings Co. Index No. 530086/22

Respondent’s reply affirmation in support of the cross-petition (NYSCEF Doc No. 17) filed on September 7, 2023 (19 days after oral argument while the matter was sub judice, is not considered inasmuch as it was not timely filed and no application to accept it or proffer explaining its untimeliness was submitted to this Court (see CPLR 402, 2214, 3012; 22 NYCRR 202.8, 202.9; Aneke v Parks, 197 AD3d 601 [2d Dept 2021]; Garner v Rosa Coplon Jewish Home & Infirmary, 189 AD3d 2105 [4th Dept 2020]; Evans v Perl, 19 Misc 3d 1119[A], 2008 NY Slip Op 50775[U], *5 n 2 [Sup Ct, NY County 2008]; cf. Wilcox v Newark Valley Cent. School Dist., 107 AD3d 1127 [3d Dept 2013]).

Introduction

Petitioner American Transit Insurance Company (“ATIC”) submitted a notice of petition and petition via an Article 75 proceeding under the CPLR. ATIC requests the Court to vacate the Master Arbitrator’s award in a No-Fault insurance arbitration in favor of the Respondent herein, Nexray Medical Imaging PC (“Nexray”). (See NYSCEF Doc No. 1, Petition; NYSCEF Doc No. 2, Notice of Petition.)

Background

ATIC seeks to vacate the $1,790.67 award rendered by Master Arbitrator A. Jeffrey Grob, Esq., in American Arbitration Association (“AAA”) Case No. 99-20-1166-0711, in favor of Nexray (see NYSCEF Doc No. 1, Petition ¶ 3; NYSCEF Doc No. 2, Notice of Petition at 1). Nexray had performed MRIs (lumbar spine on July 13, 2019, and left shoulder on July 19, 2019) on policyholder Carlos Colon (“Assignor”) to diagnose any injuries resulting from a motor vehicle accident on May 2, 2019 (see NYSCEF Doc No. 5, Nexray’s Arbitration Request Form and Arbitration Submission at 12-15 [Form NF-3 claim form re lumbar spine MRI], 16-19 [Form NF-3 claim form re left shoulder MRI]). ATIC denied payment of the No-Fault insurance medical bills for the said services (see NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Appeal at 3-4 [Form NF-10 denial of claim re lumbar spine MRI], 5-6 [Form NF-10 denial of claim re left shoulder MRI]).

Nexray initiated arbitration, claiming entitlement to $1,790.67 for the medical care rendered to Assignor (see NYSCEF Doc No. 5, Nexray’s Arbitration Request Form and Arbitration Submission at 1-1422). ATIC submitted its papers in opposition for the arbitration (see NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Appeal at 1-192).

Bernadette Connor, Esq. was assigned to arbitrate the matter by the AAA. She awarded Nexray the $1,790.67 at issue in its billing. She noted that each of the two bills was denied on several grounds by ATIC: (1) Assignor was eligible for Workers’ Compensation, having been in the course of employment; (2) Assignor failed to appear at scheduled IMEs (independent medical examinations); and (3) lack of medical necessity based on a peer review by Dr. Peter Chiu. Arbitrator Connor reasoned that the Form NF-10 denials of claim were untimely, i.e., past Insurance Law § 5106 (a)’s 30-day deadline based on deficiencies in ATIC’s evidence regarding [*2]seeking additional verification to toll said deadline. With the denials of claim being late, the defenses of Assignor being injured in the course of employment and having missed IMEs were precluded. An IME no-show defense could be maintained even when there is a late denial of claim, she wrote, citing to Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011]). However, ATIC failed to prove that Assignor did not attend the IMEs, she found. Besides the principal sum of $1,790.67 as No-Fault medical benefits, Arbitrator O’Connor awarded Nexray interest, attorney’s fees, and return of the arbitration filing fee. (See NYSCEF Doc No. 3, Arbitration Award at 1-6.)

ATIC filed with the AAA for a master arbitrator to review the issues, and Master Arbitrator A. Jeffrey Grob, Esq. upheld Arbitrator Connor’s arbitration award (see NYSCEF Doc No. 1, Petition ¶¶ 3, 83).

After ATIC commenced this Article 75 proceeding, Nexray filed a cross-petition in support of Master Arbitrator Grob’s award (see NYSCEF Doc No. 13, Notice of Cross-Petition; NYSCEF Doc No. 14, Cross-Petition). Nexray sought confirmation of the arbitration award and attorney’s fees, costs, and disbursements with respect to this proceeding.

Petitioner ATIC’s Arguments

Petitioner ATIC argues that the master arbitrator’s award should be vacated as a matter of law. ATIC states the award issued to Nexray by Arbitrator Connor and later upheld by Master Arbitrator Grob is faulty, and relies upon Matter of Petrofsky [Allstate Ins. Co.] (54 NY2d 207 [1977]) for the argument that an arbitration award should be overturned when it is arbitrary and capricious, irrational or without a plausible basis (see NYSCEF Doc No. 1, notice of petition ¶ 34). It cited to various other court decisions ruling on the standard of review of No-Fault arbitration awards (see generally NYSCEF Doc No. 1, Petition).

ATIC asserts the award should be vacated as Nexray’s claims (both bills) were properly denied. ATIC argues that the arbitrator and master arbitrator issued awards that conflicted with well-settled law. The denials of claim were appropriate as ATIC had reason to believe Assignor was working when the accident occurred. As such, Worker’s Compensation became primary. (See NYSCEF Doc No. 1, Petition ¶¶ 42-59.) Furthermore, “The Worker’s Compensation Board has exclusive jurisdiction to determine whether workmen’s [sic] compensation benefits are available to the claimant, and it is inappropriate for the arbitrators to express an opinion. . . .” (id. ¶ 55). The Appellate Term recognizes that the Worker’s Compensation Board must determine workers’ eligibility, and a No-Fault insurer must show evidence of “potential merit” that a Workers’ Compensation defense exists (see id. ¶ 56, citing A.B. Med. Servs. v American Tr. Ins. Co., 8 Misc 3d 127[A], 2005 NY Slip Op 50959[U] [App Term, 2d & 11th Dists 2005]). Here, ATIC argues there were reasons to believe that the claimant was employed when the injury occurred (see NYSCEF Doc No. 1, Petition ¶ 43). “The arbitrator’s decision was arbitrary and capricious, without rational basis and incorrect as a matter of law because the arbitrator ignored Petitioner’s evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant” (NYSCEF Doc No. 1, Petition ¶ 57).

Additionally, ATIC argues that they have met their burden of proving that medical necessity for the MRIs was not present through the peer review conducted by Dr. Peter Chiu, M.D. As such, the burden shifted to Nexray, who had to prove by a preponderance of the evidence that the services were medically necessary and reasonable. ATIC alleges that Nexray failed to meet its burden as it did not rebut the findings and conclusions set forth in Dr. Chiu’s peer review report. Nexray’s failure to refute said findings and conclusions went against well-[*3]settled law which requires a health service provider to affirmatively prove medical necessity. As the fact finder, the arbitrator did not have evidence to weigh when determining if the services were medically necessary; and due to the absence of evidence from Nexray, the arbitrator should have found in ATIC’s favor. ATIC argues that both arbitrators went against well-settled law in favoring Nexray, resulting in an arbitrary and capricious decision, being without rational basis and incorrect. (See id. ¶¶ 60-82.)

Finally, ATIC argued also that it was arbitrary and capricious, irrational, and without plausible basis to reject its defense to the subject bills relying on Assignor’s failure to attend IMEs (see id. ¶¶ 35-41). Arbitrator Connor had found that ATIC “did not provide any evidence to establish that the Assignor failed to appear for the examinations” (id. ¶ 37, citing NYSCEF Doc No. 3, Arbitration Award at 4). Yet there was evidence, maintained ATIC. It was in the form of an affidavit from Tracy Simpson. Although it was hearsay it should have been accepted since strict conformity to the rules of evidence is not necessary in arbitration. (See id. ¶¶ 37-38.)

Respondent Nexray’s Arguments

Here, Respondent Nexray asserts that the arbitration award should be confirmed as “the ‘[s]tandard of review of decisions in mandatory arbitration proceedings is whether the decision lacks rationality” (NYSCEF Doc No. 14, Cross-Petition, citing Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]). Referencing an arbitrator acting inapposite to settled law when there is a defense that benefits should come from Workers’ Compensation, Nexray disagrees with the arbitration outcome, as ATIC failed to provide evidence that Assignor was on duty or carrying a passenger at the time of the incident. Also, the denials of claim were late. Therefore, Workers’ Compensation is not an appropriate defense, and ATIC must pay the award. (See NYSCEF Doc No. 14, Cross-Petition ¶¶ 18, 40-45.)

Additionally, it was not within the scope of Nexray’s burden to rebut ATIC’s peer review of Dr. Chiu because the defense was nullified. Nexray mailed bills for dates of service July 13, 2019 and July 19, 2019; these bills were received by ATIC on August 5, 2019 and August 2, 2019 respectively. ATIC failed to respond with its IME requests within the 30-day window thereafter, as mandated per Neptune Med. Care, P.C. v Ameriprise Auto & Home Ins. (48 Misc 3d 139[A], 2015 NY Slip Op 51220[U] [App Term, 2d, 11th & 13th Dists 2015]), thereby nullifying the defense of lack of medical necessity. (See NYSCEF Doc No. 14, Cross-Petition ¶¶ 13-16, 18, 35, 49-51.) Also, there is a presumption of medical necessity that attaches to a claim form. ATIC is mistaken in averring that the evidence proved the MRIs were not medically necessary. (See id. ¶¶ 36-39, 49-51.)

As for the IME no-show defense, it too was nullified by the late issuance of ATIC’s denials of claim, argued Nexray (see id. ¶¶ 48-51). And moreover the arbitrator found that ATIC failed to prove that Assignor failed to appear (see id. ¶¶ 18, 57).

According to Nexray, the arbitrator’s award, followed by the affirmance of the master arbitrator, was rational and based on well-settled law. ATIC failed to meet its burden in this proceeding of proving otherwise.

Should the Court find for Nexray, it asks for a reasonable attorney’s fee to be awarded pursuant to 11 NYCRR 65-4.10 (j) (4).

Discussion

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but [*4]the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.)

In Matter of FIA Card Servs. v Thompson (18 Misc 3d 1146[A], 2008 NY Slip Op 50450[U] [Dist Ct, Nassau County 2008], the court discussed a petitioner’s burden when commencing a special proceeding to confirm an arbitration award. The court’s analysis would likewise apply to special proceedings to vacate an arbitration award. “In evaluating the proof offered by a petitioner in support of the foregoing, it must be kept in mind that ‘the standards governing motions for summary judgment are applicable to special proceedings generally (Matter of Port of New York Auth. [62 Cortlandt St. Realty Co.], 18 NY2d 250, 255, cert denied sub nom. McInnes v. Port of New York Auth., 385 U.S. 1006)[.]’ Brusco v. Braun, 199 AD2d 27, 31 (1st Dept. 1993) aff’d84 NY2d 674 (1994); See also: CPLR 409(b); Friends World College v. Nicklin, 249 AD2d 393 (2nd Dept. 1998); Bahar v. Schwartzreich, 204 AD2d 441 (2nd Dept. 1994). Accordingly, to prevail, a petitioner must submit proof in evidentiary form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065 (1979)[.] A petitioner’s failure to do so will result in the denial of the petition, regardless of the sufficiency of any papers in opposition. Winegrad v. New York University Medical Center, 64 NY2d 851 (1985); Delgado v. Butt, [48] AD3d [735] (2nd Dept. 2008) Martinez v. 123-16 Liberty Ave. Realty Corp., 47 AD3d 901 (2nd Dept. 2008)[.]” (Matter of FIA Card Servs., 18 Misc 3d 1146[A], 2008 NY Slip Op 50450[U], *5 [parallel citations omitted].)

In the instant Article 75 proceeding, Nexray did not raise an issue as to the sufficiency of ATIC’s papers, i.e., the notice of petition, petition, and supporting exhibits. This Court, however, did at oral argument. Returning to the relief sought in ATIC’s Notice of Petition, this Court notes that ATIC sought an order and judgment “VACATING the arbitration award issued by Arbitrator Bernadette Connor, Esq. and/or Master Arbitrator A. Jeffrey Grob, Esq. under Article 75 of the CPLR” (NYSCEF Doc No. 2, Notice of Petition at 1). That A. Jeffrey Grob was the master arbitrator who issued the master arbitration award sought to be vacated was indicated in ATIC’s petition (see NYSCEF Doc No. 1, Petition ¶¶ 3, 31, 83).

In order to assess ATIC’s arguments in support of the petition herein this Court needed to be presented with a copy of Master Arbitrator Grob’s award. ATIC did not include same as an exhibit. Rather, it included the master arbitration award in Matter of Arbitration of Rutland Med., PC v American Tr. Ins. Co. a/a/o “SC” (AAA Case No. 99-20-1175-4211 [July 25, 2022]), which coincidentally was the subject of this Court’s decision, order, and judgment in American Tr. Ins. Co. v Rutland Med, PC (79 Misc 3d 1236[A], 2023 NY Slip Op 50814[U] [Sup Ct, Kings County 2023]). Clearly the wrong master arbitration award was submitted in ATIC’s papers herein.

“[A]s a general matter, a court should not examine the admissibility of evidence submitted in support of a motion for summary judgment unless the nonmoving party has specifically raised that issue in its opposition to the motion (see Rosenblatt v St. George Health & Racquetball Assoc., LLC, 119 AD3d at 55), for “[w]e are not in the business of blindsiding litigants, who expect us to decide their appeals on rationales advanced by the parties, not arguments their adversaries never made” (Misicki v Caradonna, 12 NY3d 511, 519 [2009]).

ATIC was not blindsided by this Court’s observation at oral argument that it failed to include a copy of Master Arbitrator Grob’s award. During argument, ATIC proceeded to offer its arguments as to why its petition to vacate should be granted, going into the details of the [*5]issues in the arbitration, but, after this Court raised the issue of the wrong master arbitration award being submitted, conceded that it was aware of the error since earlier in the morning. For its part, Nexray was not aware of the error when it submitted its notice of cross-petition and cross-petition.

A court must always review a motion for summary judgment to determine if the movant has made out a prima facie case in the first instance. “A motion for summary judgment shall be supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions. The affidavit shall be by a person having knowledge of the facts; it shall recite all the material facts; and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit.” (CPLR 3212 [b].) The party moving for summary judgment must present a prima facie case of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact, and the failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see CPLR 3212 [b]; Smalls v AJI Industries, Inc., 10 NY3d 733 [2008]; Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). “[I]nconsistencies which appear on the face of plaintiff’s own papers prohibit the granting of summary judgment, despite the inadequacy of the opposing papers” (Bank of NY v McLean, 116 AD2d 546, 547 [2d Dept 1986], citing to Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

Article 75 proceedings have evidentiary and substantive requirements similar to summary judgment motions (see Worldwide Asset Purch., LLC v Karafotias, 9 Misc 3d 390, 394 [Civ Ct, Kings County 2005], citing Brusco v Braun, 199 AD2d 27, 31-32 [1st Dept 1993], affd on other grounds 84 NY2d 674 [1994]; accord Matter of Port of NY Auth. (62 Cortlandt St. Realty Co.),18 NY2d 250, 255 [1966], cert denied sub nom. McInnes v Port of NY Auth., 385 US 1006 [1967] [condemnation proceeding]).

Therefore, a court determining an Article 75 special proceeding seeking vacatur of an arbitration award must review it in order to assess whether the petitioner made out a prima facie case in support of the requested relief, just as it would do the same when presented with a summary judgment motion.

Even if ATIC was not aware of its error, this Court, in the absence of Master Arbitrator Grob’s award being in the record, would not be able to determine whether he erred as a matter of law and, if so, whether it was so irrational as to require vacatur (see Matter of Smith [Firemen’s Ins. Co.], 55 NY2d 224, 232 [1982]; Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]), or whether he exceeded his powers (see Matter of Allstate Ins. Co. v Keegan, 201 AD2d 724 [2d Dept 1994]).

Failing to attach a copy of the arbitration award in an Article 75 proceeding denudes the petition of a prima facie case (see Amica Mut. Ins. Co. v City of NY, 2019 WL 4274334 [Sup Ct, NY County, Sept. 5, 2019, No. 652663/2019]). “As an initial matter, petitioner fails to attach the arbitration award as an exhibit to its petition, which necessitates denial on that ground alone” (Countrywide Ins. Co. v American Tr. Ins. Co., 2021 WL 939010 [Sup Ct, NY County, Mar. 9, 2021, No. 654011/20]).

This Court denies ATIC’s petition to vacate Master Arbitrator A. Jeffrey Grob’s award as ATIC failed to make a prima facie showing. It failed to attach the master arbitration award as an exhibit to its October 17, 2022 petition, and the master arbitration award which was submitted was inconsistent with ATIC’s notice of petition and petition.

Attorney’s Fee

As mentioned supra at 5, Nexray sought an attorney’s fee in the event it prevailed in having the master arbitration award of A. Jeffrey Grob confirmed.

11 NYCRR 65-4.10 [j] [4] in the New York No-Fault Insurance Regulations provides, “The attorney’s fee for services rendered . . . in a court appeal from a master arbitration award and any further appeals, shall be fixed by the court adjudicating the matter” (see also Global Liberty Ins. Co. of NY v North Shore Family Chiropractic, PC, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

While technically Nexray has prevailed in the within Article 75 proceeding, it did not do so on any ground it advanced. Nexray overlooked ATIC’s error in not submitting Master Arbitrator Grob’s award. Not only that, its boilerplate nature cross-petition — significant components of it have been used in past Article 75 proceedings — misdescribed the arbitration award as being dated March 10, 2022, instead of April 11, 2022 (see NYSCEF Doc No. 14, Cross-Petition ¶ 3; NYSCEF Doc No. 3, Arbitration Award at 6). Nexray referred to the master arbitration award in this case as being dated July 25, 2022, when that was the date of the erroneously submitted master arbitration award in Matter of Arbitration of Rutland Med., PC v American Tr. Ins. Co. a/a/o “SC” (see NYSCEF Doc No. 14, Cross-Petition ¶ 4; NYSCEF Doc No. 4, Master Arbitration Award at 4). The same dates of March 10, 2022 and July 25, 2022 were erroneously set forth respectively for the arbitration award and the master arbitration award, in Nexray’s Notice of Petition (see NYSCEF Doc No. 13, Notice of Petition at 1).

“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]).

Nexray’s counsel has not attested to how much time was involved in preparing the papers opposing ATIC’s petition. The issues presented in the petition were neither difficult nor novel. This Court recalls that Nexray’s counsel has dealt with medical necessity on various occasions (e.g. American Tr. Ins. Co. v Rutland Med., PC, 79 Misc 3d 1236[A], 2023 NY Slip Op 50814[U] [Sup Ct, Kings County 2023]). He dealt with a Workers’ Compensation defense too (see American Tr. Ins. Co. v Nexray Med. Imaging PC, 79 Misc 3d 1206[A], 2023 NY Slip Op 50538[U] [Sup Ct, Kings County 2023]. Counsel did not submit anything to elaborate on his experience, ability, and reputation, or to establish the customary fee charged for similar services.

Most significantly, with respect to results obtained, the last factor in determining an attorney’s fee, Nexray’s counsel failed to notice that ATIC did not attach a copy of the master arbitration award of A. Jeffrey Grob, Esq., which was sought to be vacated. Hence, Nexray’s counsel’s work did not provide the basis underpinning the reasoning utilized by this Court in denying the petition.

Even had Nexray not filed a cross-petition, ATIC’s petition would have been denied and the master arbitration award confirmed. Nonetheless it did go through the formality of making a [*6]cross-motion for purposes of confirming Master Arbitrator Grob’s award, so a nominal attorney’s fee of $100.00 is awarded.

Conclusion

Accordingly, it is hereby ORDERED, ADJUDGED, and DECREED that:

(1) ATIC’s petition to vacate the master arbitration award of A. Jeffrey Grob in AAA Case No. 99-20-1166-0711 is denied and this proceeding is dismissed.

(2) Nexray’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed.

(4) Nexray is awarded the principal amount of $1,790.67 as No-Fault insurance medical benefits.

(5) Nexray is awarded simple interest (i.e., not compounded) on the said principal amount at two per cent per month on a pro rate basis using a 30-day month, computed in accordance with the provisions of Insurance Law § 5106 (a) and 11 NYCRR 65-3.9 and 65-4.5 (s) (3).^[FN1]

(6) After calculating the sum total of the said principal amount plus the interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00, in accordance with Insurance Law § 5106 (a) and 11 NYCRR 65-3.10 and 65-4.5 (s) (2).

(7) ATIC shall pay Nexray the $40.00 arbitration filing fee.

(8) ATIC shall pay Nexray an attorney’s fee in connection with the master arbitration if one was awarded by the master arbitrator.^[FN2]

(9) ATIC shall pay Nexray an attorney’s fee of $100.00 for work performed by counsel in this Article 75 proceeding.

(10) Nexray shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

Dated: September 8, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York

Footnotes

Footnote 1:“Pursuant to Insurance Law §5106(a), interest accrues on overdue no-fault insurance claims at a rate of 2% per month. A claim is overdue when it is not paid within 30 days after a proper demand is made for its payment [citations omitted].” (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217 [2009].) If an applicant prevails in whole or in part on its claim, the arbitrator shall direct the insurer to “in an award of interest, compute the amount due for each element of first-party benefits in dispute, commencing 30 days after proof of claim therefor was received by the insurer and ending with the date of payment of the award, subject to the provisions of section 65-3.9(c) of this Part (stay of interest)” (11 NYCRR 65-4.5 [s] [3]). “If an applicant does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken” (11 NYCRR 65-3.9 [c]). This provision of the No-Fault Regulations applies to untimely-issued denials as well as to timely ones, and results in interest being tolled until arbitration is requested (see LMK Psychological Services, P.C., 12 NY3d 217; see also East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202 [2d Dept 2009]).

In the case at bar, Nexray did not request arbitration within 30 days after receipt of ATIC’s two denials appurtenant to the bills for which compensation was awarded. Hence, there are actually two periods of interest, the first of which commences 30 days from when the insurer received proof of claim and ends on the date it issued its denial, and the second of which commences on the date arbitration was commenced and ends on the date of payment of the claim. (See State Farm Mut. Auto Ins. Co. v Pfeiffer, 95 AD2d 806 [2d Dept 1983].) In calculating interest, the date of accrual in both periods shall be excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurs after April 5, 2002, interest shall be calculated 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); Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]).

The $912.00 claim awarded for date of service July 13, 2019 was denied on September 19, 2019, following ATIC’s receipt of proof of claim on August 5, 2019 (see NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Appeal at 4). The denial of claim was found late by the arbitrator. Therefore, payment became overdue 30 days after receipt of proof of claim. The 30th day thereafter (“overdue date”) was September 4, 2019. Issuance of the late denial of claim tolled interest until arbitration was commenced on May 22, 2020 (see NYSCEF Doc No. 5, Nexray’s Arbitration Request Form and Arbitration Submission at 1). With respect to this claim, therefore, ATIC shall pay Nexray interest computed from September 4, 2019 to September 19, 2019, but excluding September 4, 2019 from being counted within the period of interest; and from May 22, 2020 to the date of payment of the award, but excluding May 22, 2020 from being counted within the period of interest.

The $878.67 claim awarded for date of service July 19, 2019 was denied on September 19, 2019, following ATIC’s receipt of proof of claim on August 5, 2019 (see NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Appeal at 6). The denial of claim was found late by the arbitrator. Therefore, payment became overdue 30 days after receipt of proof of claim. The 30th day thereafter (“overdue date”) was September 4, 2019. Issuance of the late denial of claim tolled interest until arbitration was commenced on May 22, 2020 (see NYSCEF Doc No. 5, Nexray’s Arbitration Request Form and Arbitration Submission at 1). With respect to this claim, therefore, ATIC shall pay Nexray interest computed from September 4, 2019 to September 19, 2019, but excluding September 4, 2019 from being counted within the period of interest; and from May 22, 2020 to the date of payment of the award, but excluding May 22, 2020 from being counted within the period of interest.

The interest rate shall be two percent per month, simple (i.e., not compounded), on a pro rata basis using a 30-day month.

Footnote 2:In the absence of Master Arbitrator Grob’s award being submitted, this Court has no information whether he awarded an arbitration appeal attorney’s fee.

American Transit Insurance Company, Petitioner, against PDA NY Chiropractic, P.C., A/A/O Leonidis Rodriguez, Respondent.

Index No.: 504957/2023

Larkin Farrell LLC, New York City, for Petitioner.

Aaron D. Maslow, J.

The following numbered papers (submitted by Petitioner) were read on this petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A — Arbitration Award (NYSCEF Doc No. 3)
Exhibit B — Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (“PDA’s Arbitration Request Form & Submission”) (NYSCEF Doc No. 5)
Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Appeal (“ATIC’s Arbitration Submission and Master Arbitration Brief”) (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)

Issue Presented

Is it incorrect as a matter of law and irrational for a No-Fault insurance master arbitrator [*2]to affirm a hearing arbitrator’s ^[FN1] award determining that (1) a health service provider met its obligation to submit additional verification requested by the insurer under a standard of “substantial compliance,” (2) an insurer’s seeking sign-in sheets was not reasonable when “medical documentation” was submitted, and (3) an insurer’s seeking information as to whether Workers’ Compensation benefits were available was not necessary when the assignor testified that he was not working and the insurer did not issue denials of claim based on a Workers’ Compensation defense?

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 Victor J. Hershdorfer, Esq. (dated December 21, 2022), which affirmed the arbitration award of John Kannengieser, Esq. (dated September 26, 2022) granting Respondent PDA NY Chiropractic P.C.’s (“PDA”) claim for No-Fault insurance compensation in the amount of $4,150.27 for chiropractic treatment reflected in a total of eight bills.^[FN2] ,^[FN3] The services at issue were provided to Leonidis Rodriguez, who claimed to have been injured in a motor vehicle accident on February 2, 2020. He assigned his No-Fault insurance benefits to PDA, and is denoted as “Assignor.”^[FN4] (See NYSCEF Doc No. 1, Petition ¶¶ 1-3, 16-[*3]24.)

Respondent PDA did not submit any papers in opposition. The petition came before the undersigned for oral argument on July 20, 2023. At that time, neither party appeared. This Court has considered the petition on the papers submitted (see Buckley v Zoning Bd. of Appeals of City of Geneva, 189 AD3d 2080, 2081 [4th Dept 2020]; Matter of Dandomar Co., LLC v Town of Pleasant Val. Town Bd., 86 AD3d 83 [2d Dept 2011]; Matter of Javarone, 76 Misc 2d 20, 21 [Fulton County Ct 1973] [“special proceeding “may be summarily determined by the court solely on the pleadings and other papers submitted”], affd 49 AD2d 788 [3d Dept 1975]). A court should review an Article 75 petition to vacate an arbitration award even in the absence of opposing papers (see American Tr. Ins. Co. v NextStep Healing, Inc., 79 Misc 3d 1203[A], 2023 NY Slip Op 50521[U] [Sup Ct, Kings County 2023]).

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association (“AAA”), which assigned Case No. 17-21-1198-7980 ^[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):

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] or “personal injury protection (PIP) benefits.”^[FN8]

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations was 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 [*4]which encompass the following topics: prescribed policy endorsements (11 NYCRR Subpart 65-1), rights and liabilities of self-insurers (11 NYCRR Subpart 65-2), claims for personal injury protection benefits (11 NYCRR Subpart 65-3), arbitration (11 NYCRR Subpart 65-4), and unauthorized providers of health services (11 NYCRR Subpart 65-5). Part 65 is also known as Insurance Regulation 68.

Generally, the claims process for health service bills ^[FN9] 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 of health service).^[FN10] 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 whereby the health service providers submit the claim forms. As noted in footnote 4, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN11] ,^[FN12] 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 ^[FN13] 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 eight claim forms covering services for a period of February 19, 2020-September 29, 2020, as per the Form AR Arbitration Request Form (see NYSCEF Doc No. 5, PDA’s Arbitration Request Form & Submission at 6).^[FN14] The following chart provides pertinent information concerning the eight bills and how Respondent dealt with them:

Dates of Service	Amount	Respondent’s Actions
2/19/20-2/28/20	$285.94	Issued additional verification requests 4/1/20 & 5/6/20, seeking examination under oath (“EUO”) of Assignor, sign-in sheets from dates of service, and letter of medical necessity. Reminder of non-provision of requested additional verification 7/20/20. No denial of claim issued.
3/2/20-3/23/20	$739.84	Issued additional verification requests 4/15/20 & 5/20/20, seeking EUO of Assignor, sign-in sheets from dates of service, and letter of medical necessity. Reminder of non-provision of requested additional verification 5/27/20 & 7/20/20. No denial of claim issued.
4/7/20	$26.41	Denial of claim asserted untimely proof of claim (“45-day rule”).
[*5]5/4/20-5/28/20	$647.36	Issued additional verification requests 6/16/20 & 7/21/20, seeking EUO of Assignor, information from Assignor to determine eligibility for Workers’ Compensation independent livery fund coverage,[FN15] sign-in sheets from dates of service, chiropractic re-evaluation report, and letter of medical necessity. No denial of claim issued.
6/1/20-6/30/20	$1017.28	Issued additional verification requests 7/20/20 & 8/24/20, seeking EUO of Assignor, information from Assignor to determine eligibility for Workers’ Compensation independent livery fund coverage, sign-in sheets from dates of service, chiropractic re-evaluation report, and letter of medical necessity. Reminder of non-provision of requested additional verification 9/24/20. No denial of claim issued.
[*6]7/1/20-7/30/20	$739.84	Issued additional verification requests 8/17/20 & 9/21/20, seeking EUO of Assignor, information from Assignor to determine eligibility for Workers’ Compensation independent livery fund coverage, sign-in sheets from dates of service, chiropractic re-evaluation report, and letter of medical necessity. No denial of claim issued.
8/3/20-8/31/20	$462.40	Denial of claim asserted lack of medical necessity based on Dr. John Iozzio’s independent medical examination (“IME”) report.
9/3/20-9/29/20	$231.20	Denial of claim asserted lack of medical necessity based on Dr. John Iozzio’s IME report.

(See NYSCEF Doc No. 5, PDA’s Arbitration Request Form & Submission at 6, 8-33; NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 19-38, 40-43.)

Hearing Arbitrator’s Award

The record evidence reveals further that on August 26, 2022, Arbitrator John Kannengieser, Esq. (“hearing arbitrator”), conducted a hearing at which George T. Lewis Jr., Esq., from George T. Lewis, Jr., P.C., appeared for PDA, and Megan Harris appeared for ATIC (see NYSCEF Doc No. 3, Arbitration Award at numbered p 1).

The American Arbitration Association maintains an online platform for documents filed by parties to No-Fault insurance arbitrations. It is called Modria.^[FN16] The submissions for the arbitration at issue are contained in NYSCEF Doc Nos. 5 and 6 submitted by ATIC.

With respect to the bill for date of service April 7, 2020, which was denied on the asserted ground of late proof of claim, the hearing arbitrator found credible PDA’s claim that the [*7]bill was timely mailed (see NYSCEF Doc No. 3, Arbitration Award at numbered p 2). This determination has not been challenged by ATIC.

With respect to the bills for dates of service August 3, 2020-August 31, 2020 and September 3, 2020-September 29, 2020, the hearing arbitrator found that Dr. John Iozzio’s IME report made out a prima facie case of lack of medical necessity for further treatment, but that PDA’s medical records and reports documenting continued pain, reduced range of motion, muscle spasm, and subluxations were sufficiently credible enough to prove medical necessity. Therefore he awarded compensation as billed. (See id. at numbered pp 2-3.)

Finally, with respect to the five remaining bills — covering dates of service February 19, 2020-February 28, 2020; March 2, 2020-March 23, 2020; May 4, 2020-May 28, 2020; June 1, 2020-June 30, 2020; and July 1, 2020-July 30, 2020 — the hearing arbitrator noted that no denials of claim were issued. Rather, ATIC delayed the bills in order to seek additional verification. He took note that an EUO of Assignor was sought, as well as certain medical documentation, information pertaining to livery fund coverage (as potential Workers’ Compensation benefits), and PDA’s dates of service sign-in sheets. (See id. at numbered p 2.)

Responses to the requests for medical documentation were acknowledged by ATIC, wrote the hearing arbitrator. The EUO of Assignor was conducted. Since Assignor “clearly testified” at his EUO that he was not working at the time of the accident, there was no need for the information pertaining to Workers’ Compensation through the livery fund. “[ATIC]’s request for sign-in sheets is not a reasonable request, as medical documentation for each of the [dates of service] at issue has been provided.” (Id.) For the affected five bills pended for additional verification, the amounts billed were awarded, as the hearing arbitrator denied ATIC’s defense that the bill claims were premature in the absence of additional verification being provided (see id.).

Altogether the hearing arbitrator awarded $4,150.27 as No-Fault insurance benefits to PDA. He also awarded interest of 2% per month, an attorney’s fee, and return of the $40.00 filing fee (see id. at numbered pp 4-5; Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s]).

Master Arbitrator’s Award

ATIC filed for master arbitration to appeal the hearing arbitrator’s award. It presented two arguments.

(A) Rebutting the IME Report

The first contention on appeal by ATIC was that the hearing arbitrator erred as a matter of law and his award was irrational because when he assessed ATIC’s defense of lack of medical necessity with respect to the two bills denied on that ground, he did not take into account well settled case law concerning the need for a medical claimant to meaningfully rebut and discuss the conclusions of the insurer’s expert (citing Innovative Chiropractic, P.C. v Mercury Ins. Co., 25 Misc 3d 137[A], 2009 NY Slip Op 52321 [2d, 11th & 13th Dists 2009]), and other decisions (see NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 138-140).

Master Arbitrator Victor J. Hershdorfer, Esq. (“master arbitrator”) summarized this first issue in dispute as follows: “Was the arbitrator’s determination that the applicant met its burden as to medical necessity irrational and/or incorrect as a matter of law?” (NYSCEF Doc No. 4, Master Arbitration Award at 1.)

The master arbitrator noted that the medical necessity issue was determined in PDA’s favor by the hearing arbitrator. The latter had “found that the IME by Dr. Iozzio shifted the [*8]burden,” and that while PDA “submitted no direct rebuttal to the IME but relied upon medical records and reports,” PDA’s evidence was “sufficient . . . to meet its burden of proving the medical necessity of the health services at issue” (id. at 2).

Having summarized the hearing arbitrator’s analysis, the master arbitrator concluded with his own:

Insurance Law §5102 provides for reimbursement for all medically necessary expenses on account of personal injuries arising out of the use or operation of a motor vehicle.

Unfortunately, neither the statute nor the regulations interpreting the stature define what is “necessary”. That determination is almost ultimately one of fact to be determined by the arbitrator or a court on a case-by-case basis. See opinion of the Office of General Counsel of the Superintendent of Insurance, www.ins.ny.us/rg000111.htm (January 11, 2000).

The role of the master arbitrator is to review the determination of the no-fault arbitrator to be sure that the arbitrator reached a decision in a rational manner and that the decision was not irrational, arbitrary or capricious. Petrofsky v. Allstate Insurance Co., 54 NY2d 207 (1981).

A master arbitrator exceeds his statutory power by making his own factual determination, by reviewing factual and procedural errors committed during the course of the arbitration, by weighing the evidence, or by resolving issues such as the credibility of witnesses. Matter of Allstate Insurance Co. v. Keegan, 201 AD2d 724 (2d Dept., 1994); Mott v. State Farm Insurance Co., 55 NY2d 224 (1982). See also Metro Pain Specialist, P.C., Matter of Country-Wide Ins. Co., 2020 NY Slip Op. 50014 (App. Term, 2nd Dept., 9th, 10th Jud. Dists. 1/2/2020.)

The arbitrator is free to choose between the experts’ testimony and evaluate the evidence. Bilotta v. Chevrolet-Tonawanda Division GMC, 81 AD2d 718 (3d Dept., 1981).

. . .

The determination as to medical necessity is not irrational or incorrect as a matter of law.

(B) ATIC’s Additional Verification Requests

ATIC’s second contention on appeal was that the hearing arbitrator erred as a matter of law in rejecting ATIC’s arguments with respect to the five bills pended for additional verification. In pertinent part, ATIC argued:

The 30 day period under 11 NYCRR § 65-3.3 in which a no-fault insurer must either pay or deny a claim for first party benefits may be extended by the insurer’s timely requests for verification of the claim, and, until the insurer receives verification of the claim, the 30-day period is tolled and the insurer need not pay or deny the claim. See, New York Hosp. v. Country-Wide, 295 AD2d 583, 744 N.Y.S.2d 201 (2d Dep’t 2002); Westchester County Medical Center v. New York Central Mut. Fire Ins. Co., 262 AD2d 553, 692 N.Y.S.2d 665 (2d Dep’t 1999).

. . .

Where a plaintiff has not provided verification of all the relevant information requested by the insurer, a no-fault action will be dismissed as premature. See, Infinity Health Products, Ltd. v Eveready Ins. Co., 67 AD3d 862, 865, 890 N.Y.S.2d 545 (2d Dep’t 2009); New York Hosp. v Country-Wide, supra.

. . .

Since to this day, the Respondent has not received the records it needs to take a position [*9]on the claim, this matter should have been dismissed.

The NFA’s conclusion that since the Applicant stated at his EUO that he was not injured in the course of his employment no response was required, lacks a rational basis. . . .

In any event, the claimant’s self-certified conclusion that he is entitled to PIP and not Workers’ Compensation is obviously not dispositive of the issue.

Accordingly, the order appealed from should be reversed.

(See NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 135-137.)

This second issue was summarized by the master arbitrator as follows: “Should the arbitrator’s determination that the applicant had substantially complied with the verification requests be reversed” (NYSCEF Doc No. 4, Master Arbitration Award at 1)?

The master arbitrator’s analysis of the hearing arbitrator’s consideration of the additional verification issue was as follows:

The argument was that the verification sought, if provided, would have allowed the appellant to take a position as to whether the claim was covered by the no-fault policy or by Workers’ Compensation Insurance.

. . .

The arbitrator found that the testimony of the EIP clearly established that he was not working at the time of the accident and that after reviewing the various requests for verification and the responses provided that the applicant has substantially complied with the verification requests and that the claims at issue are overdue.

The arbitrator is the judge of the relevance and materiality of the evidence offered. 11 NYCRR 65-4.5(o)(1).

The question as to whether the applicant’s obligations to provide verification have been met is almost always one of fact. 11 NYCRR §65-3.5(o) requires an applicant to submit “. . . all such verification under the applicant’s control or possession providing reasonable justification for the failure to comply . . .” .

It is then up to the arbitrator to determine whether the applicant has met the test set forth in the regulation.

In this case, the arbitrator found for the applicant.

. . .

The arbitrator’s determination that the applicant had substantially complied with the verification requests is not incorrect as a matter of law.

(NYSCEF Doc No. 4, Master Arbitration Award at 3-4 [emphasis added].)

(c) Master Arbitration Outcome

The master arbitrator affirmed the hearing arbitrator’s award in its entirety.

(NYSCEF Doc No. 4, Master Arbitration Award at 3.)

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 John Kannengieser, Esq. failed to follow well settled law” (id. ¶ 37). “An arbitration award must be vacated by the Master Arbitrator if the decision was incorrect as a matter of law. (id. ¶ 36). It also made reference to the grounds set forth in CPLR 7511 (b) (1) for vacating an arbitration award:

The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the rights of that party were prejudiced by:

(i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

(See NYSCEF Doc No. 1, Petition ¶ 33.)

(B) Rebutting the IME Report

The petition argued that the hearing arbitrator “failed to follow well settled law with respect to the medical necessity issue” (id. ¶ 62). Two bills at issue “for dates of service August 3, 2020-September 29, 2020 were properly and timely denied for lack of medical necessity” (id. ¶ 63). ATIC’s evidence submitted to the hearing arbitrator (Dr. Iozzio’s IME report) “clearly satisfied its burden” (id. ¶ 65). Ultimately the health service provider—PDA in this instance—had to prove by a preponderance of the evidence that its services were medically necessary, claimed ATIC; the petition to vacate cited to Dayan v Allstate Ins. Co. (49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]), and Park Slope Med. and Surgical Supply, Inc. v Travelers Ins. Co. (37 Misc 3d 19, 22 n [App Term, 2d Dept, 2d, 11th & 13th Dists 2012]) (see NYSCEF Doc No. 1, Petition ¶ 66). “In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer review,” maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2009]) (NYSCEF Doc No. 1, Petition ¶ 67). PDA failed to offer any rebuttal at all, and certainly did not meaningfully refer to the IME report, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (see id. ¶ 68).

ATIC reiterated in several paragraphs of its petition that a health service provider seeking No-Fault medical expense compensation must meaningfully refer to and rebut an insurer’s peer reviewer’s and IME doctor’s conclusions (id. ¶¶ 72-76). “This proposition is widely accepted as ‘well settled’ law in the industry” (id. ¶ 76). “In this case the arbitrator also ruled for Respondent [PDA] despite the fact that there was no rebuttal. In doing so the arbitrator failed to follow well settled law. As such, this Court should vacate the arbitration award for the same reasons the Appellate Term reversed the trial courts in Pan Chiropractic, Eastern Star Acupuncture, Jaga Med. Servs., P.C. and High Quality Medical.” (Id. ¶ 79)

“This decision was arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 81). The petition concluded by asserting that the hearing arbitrator ignored ATIC’s “evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant [PDA]” (id. ¶ 83).

(C) ATIC’s Additional Verification Requests

With respect to the additional verification issue, ATIC argued that claims “for dates of service February 19, 2020-July 30, 2020 [were] not paid because [ATIC] timely and properly [*10]requested verification and [PDA] failed to comply with [ATIC]’s request”^[FN17] (id. ¶ 42). The No-Fault Regulations at 11 NYCRR 65-3.5 (b) and 3.6 (b) permit a health service provider to request additional verification (see id. ¶ 43). ATIC took issue with the hearing arbitrator’s having awarded compensation “despite the fact that [PDA] failed to provide the requested verification” (id. ¶ 49). The hearing arbitrator “even acknowledged that items were not provided, disregarded the request for sign in sheets and failed to apply the well settled law to justify an award in favor of [PDA]” (id.). No-Fault benefits are not payable “until all verification is received pursuant to 11 NYCRR 65-3.8(a)(1)” (id. ¶ 50), and “the 30 days in which to pay or deny the claim is tolled and does not begin to run” (id. ¶ 51). Since PDA did not provide all that was sought its claim was premature (see id.).

ATIC insisted that it

“was not required to pay or deny the claim after its receipt of a partial response. See New Horizon Surgical Ctr., LLC v Travelers Ins. Co., 2019 NY Slip Op 51690(U) (App. Term, 2d Dept., 2019) (holding, ‘Contrary to plaintiff’s contention, defendant was not required to pay or deny plaintiff’s claims upon receipt of a ‘partial response’ to defendant’s verification requests . . .; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004] [‘A claim need not be paid or denied until all demanded verification is provided’]).’ (See also, Compas Med., P.C. v Travelers Ins. Co., 2016 NY Slip Op 51441(U), (App. Term, 2d Dept., 2016) (holding, ‘Contrary to plaintiff’s contention, defendant was not required to pay or deny plaintiff’s claims upon receipt of a ‘partial response’ to defendant’s verification requests’).

(Id. ¶ 53.) Moreover, the requested additional verification may be sought from someone other than the health service provider, ATIC citing to several decisions. “The need for sign in sheets is obvious, to confirm that the claimant actually showed up for the alleged services. . . . It is outside the scope of the arbitrator’s authority to simply disregard a timely request.” (Id. ¶ 55.)

Therefore, ATIC’s rights were prejudiced by the arbitrator’s partiality “and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated” (id. ¶ 84). The relief sought was vacatur of the arbitration awards that they “have no force or effect” (id. ¶ 85).

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.^[FN18] 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 [*11]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.^[FN19]

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 [*12]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).^[FN20] 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]).^[FN21]

The proper standard of review by a No-Fault insurance master arbitrator is whether the hearing arbitrator’s determination was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various [*13]medical reports, or making independent findings of fact (Matter of Petrofsky (Allstate Ins. Co.), 54 NY2d 207 [1981]).

The standard for Article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law is whether it was so irrational as to require vacatur (see Matter of Smith (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 869 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). The master arbitrator’s determination of the law need not be correct, and mere errors of law are insufficient to set aside the master arbitrator’s award; on questions of substantive law, the master arbitrator’s determination must be upheld if there is a rational basis for his determination; if the master arbitrator’s errors on a matter of law are irrational, his award may be set aside (see Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]).

Judicial review of a master arbitrator’s factual determination in an arbitration appeal is limited to whether the master arbitrator exceeded his or her power, for instance by impermissibly weighing the credibility of a witness, by reviewing the hearing arbitrator’s factual determination, or by reviewing medical reports de novo (see Matter of Allstate Ins. Co. v Keegan (201 AD2d 724 [2d Dept 1994].

It is important to again state that arbitration of No-Fault compensation claims is compulsory against insurers (see n 19, supra). A health service provider who possesses standing via an assignment of benefits makes the election of whether to litigate its claim in court or in arbitration, which is binding upon the insurer (see Insurance Law § 5106 [b]). Such compulsory arbitration awards are held to higher level of scrutiny (see Matter of Motor Veh. Acc. Indemn. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214 [1996]; Matter of Smith, 55 NY2d 224; Matter of Petrofsky, 54 NY2d 207; Mount St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 NY2d 493 [1970]; Matter of GEICO Gen. Ins. Co. v Wesco Ins. Co., 211 AD3d 729 [2d Dept 2022]).

(B) Rebutting the IME Report

As noted above, ATIC’s petition to vacate the master arbitrator’s award is predicated on two grounds. The first is that the hearing arbitrator failed to follow well settled law that a health service provider applicant in arbitration must meaningfully refer to, or rebut, the conclusions set forth in the health service provider’s medical expert’s report and, therefore, the master arbitrator’s affirmance was erroneous.

This Court has previously discussed the issue raised by ATIC—whether a health service provider applicant in No-Fault insurance arbitration must submit expert medical opinion evidence which specifically refers to and either discusses or rebuts the insurer’s expert medical opinion evidence. This Court held that it need not, because the case law ATIC relied upon governs summary judgment motions in court, not No-Fault arbitrations. (See American Tr. Ins. Co. v Right Choice Supply, 78 Misc 3d 890 [Sup Ct, Kings County 2023].) Assessment of medical necessity entails a factual review of evidence and this is committed to the arbitrator’s discretion (id.). As this Court wrote,

In part, this Court’s present determination is based on the additional provision in 11 NYCRR 65-4.10 (a) (4) which provides that “procedural or factual errors committed in the arbitration below are not encompassed within this ground.” The reference to “factual errors” conveys impliedly that when it comes to assessing evidence for the purpose of fact-finding, an arbitrator has wider latitude and should not be required to comply with [*14]settled or established law concerning what specific evidence suffices to refute the opposing party’s evidence. This Court also takes into account the general proposition that the admissibility of evidence and the determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award. . . .”]; Central Square Teachers Association v Board of Education of the Central Square Central School District, 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny.”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept. 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software International, Inc., 232 AD2d 336, 338 [1st Dept. 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis.”]). In light of this case law with respect to the admissibility of evidence and the determination of issues of fact in arbitration, 11 NYCRR 65-4.10 (a) (4)’s “matter of law” should be limited in its breadth.

(78 Misc 3d at 909-910.)

Therefore, this Court holds that the hearing arbitrator did not err when he did not require a formal rebuttal from PDA which would have specifically referred to and either discussed or rebutted ATIC’s IME report. It was within the arbitrator’s discretion to find that PDA’s treatment notes finding reduced range of motion, muscle spasm, and subluxations overcame the IME report and proved medical necessity. Further, when the master arbitrator conducted his review, he adhered to Matter of Petrofsky (54 NY2d 207), which restricted it to whether the hearing arbitrator’s determination was arbitrary, capricious, irrational, or without a plausible basis, or incorrect as a matter of law, as the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, or making independent findings of fact.

As an Article 75 court, this Court finds that the master arbitrator correctly affirmed the factual findings as to medical necessity especially because PDA did not have to meaningfully refer to and either discuss or rebut the IME report. Whether services were medically necessary entails a factual determination, the hearing arbitrator assessed the facts appropriately, and the master arbitrator conducted a proper appellate review; this master arbitration review was neither irrational nor erroneous as a matter of law (see Matter of Smith, 55 NY2d 224, 232; Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828). This Court sustains this component of the master arbitrator’s award, which concerned bills for dates of service August 3, 2020-August 31, 2020 and September 3, 2020-September 29, 2020.

(C) ATIC’s Additional Verification Requests

This Court concludes otherwise with regard to the additional verification issue, which impacted five bills, the dates of service being February 19, 2020-February 28, 2020; March 2, 2020-March 23, 2020; May 4, 2020-May 28, 2020; June 1, 2020-June 30, 2020; and July 1, 2020-July 30, 2020.

(1) No-Fault Insurance Law Lacks Concept of Substantial Compliance With Verification Requests

This Court again takes cognizance of the hearing arbitrator’s finding that PDA “substantially complied” with ATIC’s additional verification requests — that Assignor’s EUO [*15]testimony that he was not working when the accident occurred and there were no denials premised on a Worker’s Compensation defense obviated the need for livery fund information, and that requesting sign-in sheets was unreasonable because medical documentation for the dates of service was provided.

“Upon receipt of one or more of the prescribed verification forms used to establish proof of claim, . . . an insurer has 15 business days within which to request any additional verification required by the insurer to establish proof of claim (11 NYCRR 65-3.5 [b]). . . . Significantly, an insurance company must pay or deny the claim within 30 calendar days after receipt of the proof of claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). If an insurer seeks additional verification, however, the 30-day window is tolled until it receives the relevant information requested (see 11 NYCRR 65-3.8 [a] [1]).” (Viviane Etienne Med. Care, P.C., 25 NY3d 498, 505 [2015] [internal quotation marks and citations omitted].)

The No-Fault program “stresses the justifying of claims” (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]). Information sought as additional verification is not necessarily that which can be found on the prescribed verification forms “but any information that the carrier finds necessary to properly review and process the claim” (Westchester Med. Ctr. v Travelers Prop. & Cas. Ins. Co., 2001 NY Slip Op. 50082 [U] *3 [Sup Ct, Nassau County 2001]).

“The insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested” (11 NYCRR 3.5 [c] [emphasis added]). “A claim need not be paid or denied until all demanded verification is provided” (Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553, 554 [2d Dept 1999] [emphasis added]); accord New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]).

Case law has been consistently to the effect that a partial response to an additional verification request is insufficient. For example, in D & R Med. Supply, Inc. v Clarendon Nat. Ins. Co. (22 Misc 3d 1127[A], 2009 NY Slip Op 50306[U] [Civ Ct, Kings County 2009]), the court held that where an insurer issues a verification request seeking from the claimant an invoice, CPT codes, and medical records but only an invoice was provided and the insurer followed this up twice, seeking the CPT codes and medical records, the claimant’s complaint had to be dismissed as the action was commenced prematurely.

It is manifest that an insurer is not required to pay or deny a claim upon receipt of a partial response to a verification request (see Chapa Products Corp. v MVAIC, 66 Misc 3d 16 [App Term, 2d, 11th & 13th Dists 2019]; New Horizon Surgical Ctr., LLC v Travelers Ins. Co., 65 Misc 3d 139[A], 2019 NY Slip Op 51690[U] [App Term, 2d, 11th & 13th Dists 2019]; Compas Med., P.C. v Travelers Ins. Co., 53 Misc 3d 136[A], 2016 NY Slip Op 51441[U] [App Term, 2d, 11th & 13th Dists 2016]).

“Even accepting plaintiff’s assertion that it submitted certain verification documents to defendant, the record establishes that plaintiff did not fully respond to defendant’s requests for additional verification, which were properly mailed to plaintiff’s attorney as authorized by counsel’s prior correspondence to defendant (see St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338 [2002]; GNK Med. Supply, Inc. v Tri-State Consumer Ins. Co., 37 Misc 3d 138[A], 2012 NY Slip Op 52195[U] [App Term, 1st Dept 2012]). Since verification remained outstanding, the then-applicable thirty-day period to pay or deny the claims did not begin to run, the claims were not overdue, and plaintiff’s action is premature (see St. Vincent [*16]Med. Care, P.C. v Country Wide Ins. Co., 80 AD3d 599, 600 [2011]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]).” (Orthoplus Prods., Inc. v Global Liberty Ins. Co. of NY, 64 Misc 3d 128[A], 2019 NY Slip Op 51003[U] *1 [App Term, 1st Dept 2019].)

Therefore, it is contrary to law to hold that a health service provider need only “substantially comply” with additional verification requests. The hearing arbitrator’s determination was contrary to established law — as provided in the No-Fault Regulations at 11 NYCRR 3.5 [c] and in case law recited herein, rendering it arbitrary, capricious, and irrational (see Matter of Petrofsky, 54 NY2d 207). In No-Fault insurance law, there is no concept of “substantial compliance” with an insurer’s additional verification requests; partial compliance simply does not suffice. PDA was required by law to provide the sign-in sheets and ATIC was also entitled to await Assignor’s provision of information as to whether he was eligible for the livery fund’s Workers’ Compensation benefits instead of No-Fault insurance.

When the master arbitrator wrote, “The arbitrator’s determination that the applicant had substantially complied with the verification requests is not incorrect as a matter of law” (NYSCEF Doc No. 4, Master Arbitration Award at 3), this confirmed an erroneous standard of compliance with additional verification requests. This master arbitration finding was erroneous as a matter of law — contrary to the No-Fault Regulations at 11 NYCRR 3.5 [c] and the case law recited herein — and rose to the level of being so irrational as to require vacatur (see Matter of Smith, 55 NY2d 224, 232 (“the courts are limited in their further review of the master arbitrator’s resolution of that error of law, since we generally will not vacate an arbitrator’s award where the error claimed is the incorrect application of a rule of substantive law . . . unless is it so irrational as to require vacatur”); Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828; Matter of Health & Endurance Med., P.C. v Deerbrook Ins. Co., 44 AD3d 857 [2d Dept 2007]).^[FN22]

(2) An Assignor’s EUO Testimony of Not Working Does Not Vitiate Seeking Livery Fund Information to Determine If Workers’ Compensation Benefits Are Available

The hearing arbitrator excused PDA’s provision of livery fund information because the Assignor “clearly testified that he was not working at the time of this accident” (NYSCEF Doc [*17]No. 3, Arbitration Award at 2). Again, this was arbitrary and capricious.

The livery fund information had been sought by ATIC from Assignor in order to determine whether he was eligible for Workers’ Compensation benefits instead of No-Fault insurance. In seeking additional verification, an insurer is not limited to seeking it from the applicant (see Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 9th & 10th Dists 2007]). “Regulation § 65-3.5(c) provides that an insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification is requested. This latter section does not confine or require the insurer to seek information solely from the provider but rather contemplates that verification information may be sought from any source.” (Westchester Med. Ctr. v One Beacon Ins. Co., 22 Misc 3d 1102[A], 2008 NY Slip Op 52580[U] *2 [Sup Ct, Nassau County 2008]). Verification requests to the injured person will pend bills from a medical provider who treated him (see Liberty Mut. Ins. Co. v Brutus, 76 Misc 3d 1201[A], 2022 NY Slip Op 50799[U] [Sup Ct, NY County 2022]). It was more than appropriate for ATIC, as the No-Fault insurer, to seek information from Assignor to determine his possible eligibility for Workers’ Compensation insurance as an alternative.

Workers’ Compensation benefits are primary to those injured as a result of a motor vehicle accident while in the course of their employment (see Insurance Law § 5102 [b] [2]). It is settled law that the determination of whether someone was injured in the course of employment is more suitably made by the Workers’ Compensation Board (e.g. Arvatz v Empire Mut. Ins. Co., 171 AD2d 262 [1st Dept 1991]; Dunn v American Tr. Ins. Co., 71 AD3d 629 [2d Dept 2010]; LMK Psychological Servs., P.C. v American Tr. Ins. Co., 64 AD3d 752 [2d Dept 2009]).

While a determination by an arbitrator that a No-Fault insurer failed to submit prima facie evidence that one was injured in the course of employment is a factual issue which should not be disturbed by an Article 75 court (see American Tr. Ins. Co. v North Shore Family Chiropractic PC, 78 Misc 3d 1212[A], 2023 NY Slip Op 50208[U] [Sup Ct, Kings County 2023]), here ATIC was not afforded the opportunity to deny PDA’s claims with a course-of-employment defense because the hearing arbitrator would not even permit it to assemble documentation to perform the preliminary inquiry as to Assignor’s status. To accept an injured person’s word without permitting the No-Fault insurer to seek pertinent evidence on the issue was arbitrary and capricious.

The master arbitrator wrote, “The arbitrator found that the testimony of the EIP clearly established that he was not working at the time of the accident. . . .” (NYSCEF Doc No. 4, Master Arbitration Award at 3.) This was incorrect. The hearing arbitrator wrote, “[T]he EIP clearly testified that he was not working at the time of the accident” (NYSCEF Doc No. 3, Arbitration Award at 2). The hearing arbitrator did not make a credibility finding regarding Assignor’s testimony. Testifying does not necessarily equate to establishing.

Moreover, the hearing arbitrator referenced that ATIC had not denied bills based on a Workers’ Compensation defense (see NYSCEF Doc No. 3, Arbitration Award at 2). This is an arbitrary reason to deny ATIC’s request for documents which might establish coverage under Workers’ Compensation. A request for additional verification precedes issuance of a denial of claim — not follows it (see 11 NYCRR 65-3.8 [b] [3] [insurer shall not issue denial of claim prior to receipt of all requested verification]). An insurer is not permitted to issue a denial of claim first and then seek additional verification; doing so puts the cart before the horse.

(3) Medical Documentation is Not a Substitute for Sign-In Sheets

The hearing arbitrator found that “medical documentation” having been provided, it was “unreasonable” to request sign-in sheets (NYSCEF Doc No. 3, Arbitration Award at 2). This Court finds this to be arbitrary and capricious in light of the well established case law holding that all additional verification sought by a No-Fault insurer must be provided; incomplete responses are not acceptable (see supra at 16-18).

A heath service provider may not avoid replying to a No-Fault insurer’s additional verification request seeking a specific form or document by providing something else or answering with an excuse which declines to provide what was sought. For example, a medical report stating that the assignor had signed a “separate, comprehensive Informed Consent Form which has been made a portion of the patient’s chart” does not suffice to comply with an additional verification request for a signed informed consent form from the assignor (see New Horizon Surgical Ctr., L.L.C. v Travelers Ins., 62 Misc 3d 150[A], 2019 NY Slip Op 50281[U] [App Term, 2d, 11th & 13th Dists 2019]).

A medical equipment supplier fails to provide requested additional verification when, in response to a request for an initial report and letter of medical necessity from the referring physician, it merely states that the supplies at issue had been provided pursuant to a doctor’s prescription and does not advise the insurer of the doctor’s name or where he is located (see D & R Medical Supply v American Tr. Ins. Co., 32 Misc 3d 144[A], 2011 NY Slip Op 51727[U] [App Term, 2d, 11th & 13th Dists 2011]). In another instance of a health service provider’s response being insufficient, it was held that a response of “Be further advised that this response constitutes full compliance with any purported requests and constitutes the provider’s submission of all relevant documents in the provider’s possession. Any further requests should be directed to the party that possesses such other information. Therefore any further requests to this provider are deemed unnecessary and in violation of 11 NYCRR §65-3.2 (c),” in response to the insurer’s verification request for a “manufacturers invoice documenting the cost of the medical equipment or supplies” and “proof of payment for the medical equipment or supplies” hardly constitutes good faith; the failure to provide the additional verification warrants dismissal of the claim as premature (see Custom Orthotics, Ltd. v Government Employees Ins. Co., 25 Misc 3d 545 [Civ Ct, Queens County 2009]).

A response by a health service provider to additional verification requests which states that it is an ambulatory surgery facility and, as such, “does not possess all the medical records,” and that the insurer should “request any additional information directly from the treating provider,” constitutes an insufficient response, and the 30-day period to pay or deny the claim has not yet begun to run (see Excel Surgery Ctr., L.L.C. v Fiduciary Ins. Co. of Am., 55 Misc 3d 131[A], 2017 NY Slip Op. 50408[U] [App Term, 2d, 11th & 13th Dists 2017]).

Just as the foregoing cited cases establish that a response from a health service provider other than one furnishing that which was requested is insufficient, so too was “medical documentation”^[FN23] in place of sign-in sheets.

If courts have sustained additional verification requests seeking wholesale invoices for furnished medical supplies and equipment (see CPM Med Supply, Inc. v State Farm Fire and [*18]Cas. Ins. Co., 63 Misc 3d 140[A], 2019 NY Slip Op 50576[U] [App Term, 2d, 11th & 13th Dists 2019] [provider’s excuse that fee could be determined without wholesale invoice constitutes failure to comply]); MRI films (see Radiology Today, P.C. v New York Cent. Mut. Fire Ins. Co., 34 Misc 3d 139(A), 2011 NY Slip Op 52452[U] [App Term, 2d, 11th & 13th Dists 2011]; session notes (see Boro Medical & Psych Treatment Servs., P.C. v Country Wide Ins. Co., 2002 NY Slip Op 50538[U] [App Term, 2nd & 11th Dists 2002]); and an assignor’s Social Security number (see Olympic Chiropractic, P.C. v American Tr. Ins. Co., 14 Misc 3d 129[A], 2007 NY Slip Op 50011[U] [App Term, 2d & 11th Dists 2007]), it is certainly reasonable to request sign-in sheets for the dates of service.

Verification of the authenticity of claims is consistent with one of the purposes underlying the adoption of new No-Fault insurance regulations which took effect in 2002 — to rein in fraud in the form of “medical mills [generating] stacks of medical bills for each passenger, detailing treatments and tests that were unnecessary or never performed” (Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854, 861 [2003] [emphasis added]). A No-Fault insurer’s seeking as additional verification copies of No-Fault forms containing signatures helps insure that compensation is not paid for services not performed (see Doshi Diagnostic Imaging Servs. v Progressive Ins. Co., 12 Misc 3d 144[A], 2006 NY Slip Op 51430[U] (App Term, 9th & 10th Dists 2006); DWP Pain Free Med. P.C. v Progressive Northeastern Ins. Co., 14 Misc 3d 800 [Dist Ct, Suffolk County 2006]).

“Plaintiff’s objection to the reasonableness of the request for the MRI films is unavailing. It is readily apparent that copies of any MRI films (or lack of such films) would substantiate whether the billed MRIs were, in fact, actually performed.” (Lenox Hill Radiology & MIA, P.C. v Hereford Ins. Co., 72 Misc 3d 702, 712 [Civ Ct, NY County 2021].) Likewise, seeking PDA’s sign-in sheets is reasonable as their provision would substantiate Assignor’s actually being present for treatment.

(4) Reasonableness of Additional Verification Requests

This Article 75 Court’s determination concerning the subject hearing and master arbitration awards is not to be construed as holding that an additional verification request can never be unreasonable. This Court’s determination must be construed in light of the eminent reasonableness of ATIC having sought provider sign-in sheets and information as to whether Assignor might be eligible for alternative (Workers’ Compensation) benefits.

While there has been case law finding certain additional verification requests unreasonable, usually these holdings concern instances of procedural abuse by No-Fault insurers as compared to the substance of the requests.

For instance, “A provider should not have to repeatedly provide documentation it has already provided unless the insurer can establish a reasonable basis and rational need for demanding this material anew” (Brownsville Advance Med., P.C. v Country-Wide Ins. Co., 33 Misc 3d 1236[A], 2011 NY Slip Op 52255[U] *3 [Dist Ct, Nassau County 2011). Moreover, an applicant provides reasonable justification for the failure to comply with an insurer’s verification requests identical to each of four bills and containing 34 unnumbered and unlettered bullet point demands by showing that its objection letters challenged the requests as “unduly burdensome and abusive” and seeking further clarification, and that the insurer rebuffed the objection letters by stating that it was entitled to each item as a matter of law. “The court notes that if plaintiff wished to respond to specific verification requests, it had no method by which to refer to a specific request, since the voluminous requests were not numbered or lettered or presented in [*19]any cogent way with specificity.” (Pro-Align Chiropractic, P.C. v Travelers Prop. Cas. Ins. Co., 58 Misc 3d 857, 862 [Dist Ct, Suffolk County 2017].)

However, “[J]ust as an insurer must have ‘good cause’ to demand verification, so too must a provider have a ‘reasonable justification’ for refusal to provide a response” (HKP Physical Therapy, P.C. v Government Employees Ins. Co., 67 Misc 3d 282, 300-301 [Sup Ct, NY County 2019], citing 11 NYCRR 65-3.8 [b] [3], [o]). A strong showing of good cause requires an equally compelling justification for withholding any responsive items, and responses categorizing the requests as irrelevant, unduly burdensome, or moot because they were already substantially complied with cannot prevail (see id. at 301).

In the instance of a No-Fault insurance arbitrator finding that an additional verification request was unreasonable, such determination must be assessed at first by a master arbitrator to determine whether the hearing arbitrator reached her decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law (see Matter of Petrofsky, 54 NY2d 207). Then the master arbitrator’s award must be assessed by the Article 75 court in terms of whether there was an error of law which was so irrational as to require vacatur or whether the master arbitrator exceeded her power (see Matter of Smith, 55 NY2d 224, 232; Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828; Matter of Health & Endurance Med., P.C., 44 AD3d 857; Matter of Liberty Mut. Ins. Co., 294 AD2d 574; Matter of Allstate Ins. Co. v Keegan (201 AD2d 724 [2d Dept 1994]).

However, even if an arbitrator’s award finds that an additional verification request was unreasonable, such an assessment must be conducted without application of a doctrine of substantial compliance — as was the situation here — because nothing in the No-Fault Regulations or in case law construing such Regulations suggests that such a standard exists.

(5) Instant Claim Was Premature in Terms of Bills Not Denied

An insurer may deny a claim where requested additional verification has not been provided within 120 days of the initial request (see 11 NYCRR 65-3.5 [o], 65-3.8 [b] [3]). Issuance of such a “120-day denial of claim” for failure to provide requested additional verification is optional (see Island Life Chiropractic Pain Care, PLLC v Zipcar, 72 Misc 3d 141[A], 2021 NY Slip Op 50844[U] *2 [App Term, 2d, 11th & 13th Dists 2021]).

If an insurer demonstrates that it did not receive requested verification and no 120-day denial of claim was issued on that basis, and the claimant does not show that the verification had been provided to the insurer prior to the commencement of the action, the 30-day period within which the insurer was required to pay or deny the claim did not begin to run and, thus, the action is premature and should be dismissed without prejudice (see AOM Med. Supply, Inc. v Hereford Ins. Co., 69 Misc 3d 142[A], 2020 NY Slip Op 51366[U] [App Term, 2d, 11th & 13th Dists 2020]; Daily Med. Equip. Distrib. Ctr., Inc. v Interboro Ins. Co., 56 Misc 3d 135[A], 2017 NY Slip Op. 50958[U] [App Term, 2d, 11th & 13th Dists 2017]).

Here, there was no 120-day denial of claim. In the absence of ATIC having received the sign-in sheets and livery fund (possible eligibility for Workers’ Compensation benefits) information, that part of PDA’s claim for payment of pended bills should have been dismissed without prejudice by the hearing arbitrator as being premature. The hearing arbitrator having awarded No-Fault compensation and the award having been affirmed by the master arbitrator, the latter’s award must be vacated insofar as the pended bills are concerned.

Conclusion

ATIC has successfully established herein that insofar as the master arbitration award affirmed the hearing arbitration award with respect to the bills pended for additional verification, it was arbitrary, capricious, and irrational because it contravened well settled law (see 11 NYCRR 65-4.10 [a] [4]). In that respect the master arbitrator “exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made” (CPLR 7511 [b] [1] [iii]; see Matter of Kowaleski (New York State Dept. of Correctional Servs.), 16 NY3d 85 [2010]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 799 [2d Dept 2019]; Matter of Global Liberty Ins. Co. v McMahon, 172 AD3d 500 [1st Dept 2019]; Matter of Liberty Mut. Ins. Co., 294 AD2d 574; Allstate Ins. Co. v Natural Healing Acupuncture, P.C., 39 Misc 3d 1217[A], 2013 NY Slip Op 50645[U] [Civ Ct, Kings County 2013]).

On the other hand, ATIC has not successfully established herein that insofar as the master arbitration award affirmed the hearing arbitration award with respect to the bills denied on the basis of Dr. John Iozzio’s IME report (lack of medical necessity), it was arbitrary, capricious, and irrational because it contravened well settled law (see 11 NYCRR 65-4.10 [a] [4]). Contrary to ATIC’s assertions, in that respect none of the grounds it cited from CPLR 7511 [b] [1] for vacating the master arbitration award apply.

Since none of the grounds for modifying an arbitration award pursuant to CPLR 7511 [c]^[FN24] apply and this Court may not partially confirm and partially vacate the master arbitration award (see Zunzurovski v Jacaranda Club, LLC, 2022 NY Slip Op. 33984[U] [Sup Ct, NY County 2022]), this Court must vacate the master arbitration award (see CPLR 7511 [b] [1] [iii]). A remand is necessary (see CPLR 7511 [d]).

It is hereby ORDERED, ADJUDGED, and DECREED that the master arbitration award of Victor Hershdorfer, Esq., dated December 21, 2022, in AAA Case No. 99-21-1198-7980, is hereby VACATED, and the within arbitration claim of Respondent PDA NY Chiropractic, P.C. is remanded in its entirety to the American Arbitration Association for a rehearing, with the within decision constituting the law of the case (see Allcity Ins. Co. v Eagle Ins. Co., 1 Misc 3d 41 [App Term, 2d & 11th Dists 2003]).

Dated: September 1, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York

Footnotes

Footnote 1:The term “hearing arbitrator,” referring to the arbitrator who initially conducted the hearing, is used to distinguish him from the master arbitrator, who determined the appellate arbitration.

Footnote 2:The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator John Kannengieser, Esq. and/or Master Arbitrator Victor J. Hershdorfer, 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]; see also Insurance Law § 5106 [c]). 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]). It follows that if the hearing arbitrator’s award is imperfect, this can affect judicial review of a master arbitration award affirming it.

Footnote 3:Rather than denote the parties here as “Petitioner” and “Respondent” in discussion, the parties’ names are used henceforward. 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, PDA, was not the respondent in the arbitration, but was the applicant.

Footnote 4: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 5:Paragraph 28 of the petition describes the AAA Case No. as 99-21-1198-7980, which was assigned to the master arbitration appeal (see NYSCEF Doc No. 4, Master Arbitration Award at 1). The original arbitration was assigned AAA Case No. 17-21-1198-7980 (see NYSCEF Doc No. 3, Arbitration Award at numbered p 1).

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:The term “personal injury protection benefits” is a creature of the No-Fault Regulations (see 11 NYCRR Subpart 65-3) and does not appear in the statute.

Footnote 9: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 at issue were chiropractic office visits and treatment.

Footnote 10: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). Not every No-Fault insurance provider uses the prescribed forms; some utilize a HICF (Health Insurance Claim Form) or a UB-04 form more commonly used for inpatient and outpatient claims billed by hospitals, healthcare facilities, and surgical facilities.

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

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

Footnote 14:References to page numbers in NYSCEF filings lacking specified page numbers are to the PDF page numbers.

Footnote 15:The information specifically sought from Assignor regarding potential eligibility for Workers’ Compensation independent livery fund coverage as additional verification concerning this bill and the next two was as follows:
(1) “Submit the name of the Base or Car Service at the time of accident.”
(2) “List any smart phone applications or other radio bases the claimant received dispatched calls from.”
(3) “Confirmation the named Base paid into the Livery Fund.”
(4) “If claimant worked during period of treatment, please submit an affidavit of the date returned to work.”
(5) “Please provide us with notarized copy of your social security card.”
(NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 24, 27, 29, 31, 33, 35, 37, 40, 42.)

Footnote 16: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%3Fp=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 17:PDA’s bill for date of service April 7, 2020 was denied on the asserted defense of untimely proof of claim and, therefore would not be encompassed within the February 19, 2020-July 30, 2020 period applicable to bills for which additional verification was requested.

Footnote 18: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 noneconomic loss, i.e., pain and suffering.

Footnote 19: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 20: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.

Footnote 21:11 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 22:While substantial compliance may be acceptable in other areas of insurance law, it is not always the appropriate standard of compliance; strict compliance is sometimes required (e.g. Argo Corp. v Greater NY Mut. Ins. Co., 4 NY3d 332 [2005] [no notice of claim submitted]; Barile v Kavanaugh, 67 NY2d 392 [1986] [failure to advise insured that insurance must be maintained continuously vitiates cancellation notice]; GEICO Indem. v Roth, 56 AD3d 1244 [2d Dept 2008] [cancellation procedure]; Matter of Rue v Northeast Timber Erectors, 289 AD2d 787 [3d Dept 2001] [attempt to cancel Workers’ Compensation insurance coverage ineffective since carrier failed to establish that it requested return receipt when notice of cancellation sent by certified mail]; Home Indem. Co. v de Martinez, 240 AD2d 580 [2d Dept 1997] [billing notice to policyholder failed to include advices that insured has option of remitting premium payment either through producer or directly to company so subsequent cancellation invalid]; Cohn v Royal Globe Ins. Co., 67 AD2d 993 [2d Dept 1979], affd 49 NY2d 942 [1980] [cancellation notice invalid due to type face smaller than 12 points].)

Footnote 23:The hearing arbitrator did not describe the “medical documentation.” Presumably it was the reports for the dates of service.

Footnote 24:CPLR 7511 (c) provides:

Grounds for modifying. The court shall modify the award if:

1. there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or

2. the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or

3. the award is imperfect in a matter of form, not affecting the merits of the controversy.

American Transit Insurance Company, Petitioner, against Rutland Medical, PC, A/A/O SHANIA M PESSOA CRAIG, Respondent.

Index No. 531225/2022

Larkin Farrell LLC, New York City (Anthony R. Troise of counsel), for Petitioner.

Roman A. Kravchenko, Garden City, for Respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A — Arbitration Award (NYSCEF Doc No. 3)
Exhibit B — Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5) (“Rutland’s Arbitration Request Form & Submission”)
Exhibit D-1 — Petitioner’s Arbitration Submission and Master Arbitration Appeal (NYSCEF Doc No. 6) (“ATIC’s Arbitration Submission and Master Arbitration Brief”)
Exhibit D-2 — Petitioner’s Arbitration Submission (NYSCEF Doc No. 7)
Exhibit D-3 — Petitioner’s Arbitration Submission (NYSCEF Doc No. 8)
Exhibit D-4 — Petitioner’s Arbitration Submission (NYSCEF Doc No. 9)
Exhibit D-5 — Petitioner’s Arbitration Submission (NYSCEF Doc No. 10)
Exhibit D-6 — Petitioner’s Arbitration Submission (NYSCEF Doc No. 11)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 12)
Request for Judicial Intervention (NYSCEF Doc No. 13)
Affidavit of Service (NYSCEF Doc No. 14)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 15)
Affidavit of Service (NYSCEF Doc No. 16)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 17)
Notice of Cross-Petition (NYSCEF Doc No. 18)
Cross-Petition (NYSCEF Doc No. 19)
Stipulation to Adjourn (NYSCEF Doc No. 20)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 21)
Affirmation in Opposition to Cross-Petition and Reply in Support of Petition (NYSCEF Doc No. 22)
Reply Affirmation in Support of Cross-Petition (NYSCEF Doc No. 23)

Issue Presented

In a No-Fault insurance master arbitration, where the master arbitrator failed to address the issue of law asserted by the insurer, but the issue of law was previously decided by the court in a different Article 75 proceeding, must the master arbitration award be vacated?

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 July 25, 2022), which affirmed the arbitration award of Wendy Bishop, Esq. (dated April 8, 2022) granting Respondent Rutland Medical, PC’s (“Rutland”) claim for No-Fault insurance compensation for range of motion testing, muscle testing, physical performance testing, outcome assessment testing, trigger point injections, and chiropractic treatment reflected in a total of 25 bills.^[FN1] , ^[FN2] Arbitrator Bishop [*2]awarded $2,713.58 to Rutland as compensation.^[FN3] The services at issue were provided to Shania M. Pessoa Craig, who claimed to have been injured in a motor vehicle accident on April 18, 2019. She assigned her No-Fault insurance benefits to Rutland, and is denoted as “Assignor.” ^[FN4] (See NYSCEF Doc No. 1, Petition ¶¶ 2, 16-22; NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 145 ^[FN5] .)

Respondent Rutland has opposed ATIC’s petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $2,713.58 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements (see NYSCEF Doc No. 18, Notice of Cross-Petition; NYSCEF Doc No. 19, Cross-Petition).

The petition and cross-petition came before the undersigned for oral argument on June 23, 2023. At that time, both parties 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. 17-20-1175-4211 ^[FN6] to it. [*3]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.^[FN7] First-party benefits are more commonly known as “No-Fault benefits.”^[FN8]

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations was 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 ^[FN9] 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 [*4]of health service).^[FN10] 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 whereby the health service providers submit the claim forms. As noted in footnote 4, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN11] , ^[FN12] 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 ^[FN13] 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 25 claim forms covering services for a period of April 30, 2019-December 16, 2019, as per the Form AR Arbitration Request Form (see NYSCEF Doc No. 5, Rutland’s Arbitration Request Form & Submission at 14). Apparently, one claim form was neither paid nor denied and there is no evidence that it was pended for additional verification. The other claim forms (bills) were timely denied, either on the basis of respective peer reviews from Dr. Peter Chiu, M.D. (dated July 16, 2019; September 23, 2019; and December 6, 2019) or an IME (independent medical examination) report of Dr. Glenn Berman, D.C. Dr. Chiu had opined that the services were not medically necessary. Dr. Berman opined that further chiropractic was not medically necessary. (See NYSCEF Doc No. 3, Arbitration Award at numbered pp 1-2.)

Arbitrator Wendy Bishop’s Award

The record evidence reveals further that on April 7, 2002, Arbitrator Wendy Bishop, Esq., conducted a hearing at which Ryan Woodworth, Esq., from Russell Friedman & Associates LLP, appeared for Rutland, and nobody appeared for ATIC (see id. at numbered p 1).

In her award, Arbitrator Bishop noted that the hearing documents were contained in Modria ^[FN14] . With respect to the bill for which there was no appurtenant denial of claim, she noted that Rutland provided proof of its mailing and she awarded compensation. (See id. at numbered p 2.) Regarding the denials premised on a peer review of Chiu, she found them insufficient as lacking a standard of care and/or a medical rationale; ATIC therefore failed to satisfy an initial burden of establishing lack of medical necessity (see id.).

With regard to bills denied on the basis of Dr. Berman’s IME report, she found that ATIC did meet its initial burden of establishing lack of medical necessity; Dr. Berman’s conclusion that Assignor’s injuries had resolved was supported by negative range of motion and neurological testing. The burden therefore shifted to Rutland to demonstrate the medical necessity of the respective services. “[Rutland] submits the reports of its clinical examinations of the Assignor performed on July 15, 2019 and August 19, 2019. Range of motion in the Assignor’s cervical spine and lumbar spine was restricted. There were muscle spasms in the areas of the Assignor’s cervical spine and lumbar spine. Applicant has thus rebutted Dr. Berman’s IME report, and demonstrated the medical necessity of further treatment.” (Id. at numbered p 3.)

Arbitrator Bishop awarded $2,713.58 as principal. She also awarded interest of 2% per month, an attorney’s fee, and return of the $40.00 filing fee (see id. at numbered pp 4-5; Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s]).

Master Arbitrator Richard Ancowitz’s Award

ATIC filed for master arbitration to appeal Arbitrator Bishop’s award. It presented two arguments. The first was that Rutland was an entity formed by a No-Fault insurance fraud ring, as evidenced by an attached indictment. The second was that Arbitrator Bishop erred as a matter of law and her award was irrational because when she assessed medical necessity, she did not take into account well settled case law concerning the need for a medical claimant to meaningfully rebut and discuss the conclusions of the insurer’s expert (citing Innovative Chiropractic, P.C. v Mercury Ins. Co., 25 Misc 3d 137[A], 2009 NY Slip Op 52321[U] [2d, 11th & 13th Dists 2009]). (See NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 148-153.)

Master Arbitrator Ancowitz summarized the issues in dispute as follows: “Did the arbitrator err in finding that respondent’s lack of medical necessity defense was insufficiently stated? Was the award irrational or incorrect as a matter of law?” (NYSCEF Doc No. 4, Master Arbitration Award at 2.)

His findings and conclusions were as follows:

The award indicates that $2,713.58 was in dispute, relating to billing submitted to respondent by applicant for various medical and chiropractic services rendered to the Eligible Injured Person (EIP). The arbitrator rejected respondent’s physical examination and peer review-based defense of lack of medical necessity, and rendered an award for applicant.

Specifically, the arbitrator found that applicant had rebutted respondent’s physical examination report, and also found that respondent’s peer review report failed to adequately support the assertion of lack of medical necessity with a standard of care and/or medical rationale.

Respondent has submitted a brief which contends that the arbitrator erred in rejecting their defense. Respondent further contends in conclusory fashion that the award was irrational and should be vacated. Respondent contends that their proof was sufficient to sustain their defense.

Applicant has submitted a brief which contends that the award was rational and should not be disturbed.

Upon review of the contentions of the respondent, I see no reason to disturb the arbitrator’s weighing of the evidence, and in particular, the arbitrator’s determination that respondent’s peer review report was insufficient to support their lack of medical necessity defense. I also find no error in the arbitrator’s factual determination that applicant had rebutted respondent’s physical examination report.

Clearly, a no-fault arbitrator has wide latitude in deciding whether to credit and how to weigh such evidence. 11 NYCRR 65-4.5 (o)(1). See also, Matter of Bay Needle Acupuncture v. Country-Wide Ins. Co., 176 AD3d 806 (2nd Dept 2019); Matter of Jasser v. Allstate Ins. Co., 77 AD3d 751 (2nd Dept 2010); Allstate Ins. Co. v. Keegan, 201 AD2d 724 (2nd Dept 1994).

As per these cases, the weighing of evidence is generally not the function of a master arbitrator. In any event, in this case I find that the award here clearly was not irrational or otherwise infirm.

The award must be affirmed. Matter of Petrofsky v. Allstate Insurance Co., 54 NY2d 207 (1981).

(Id. at 2-3.)

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 Wendy Bishop, Esq. failed to follow well settled law” (id. ¶ 37). It also made reference to the grounds set forth in CPLR 7511 (b) (1) for vacating an arbitration award (see id. ¶ 33):

The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the [*5]rights of that party were prejudiced by:

(i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

The petition proceeded to argue that the claims at issue were properly and timely denied for lack of medical necessity as per the attached peer review and IME report (see id. ¶ 39). ATIC’s evidence submitted to the hearing arbitrator “clearly satisfied its burden” (id. ¶ 40). Ultimately the medical provider — Rutland in this instance — had to prove by a preponderance of the evidence that its services were medically necessary, claimed ATIC; the petition to vacate cited to Dayan v Allstate Ins. Co. (49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]), and Park Slope Medical and Surgical Supply, Inc. v Travelers Ins. Co. (37 Misc 3d 19, 22 n. [App Term, 2d Dept, 2d, 11th & 13th Dists 2012]) (see id. ¶ 41). “In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer review,” maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2009]) (id. ¶ 42). Rutland failed to offer any rebuttal at all, and certainly did not meaningfully refer to the peer review and the IME report, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (see id. ¶ 43).

ATIC reiterated in several paragraphs of its petition that a health service provider seeking No-Fault medical expense compensation must meaningfully refer to and rebut an insurer’s peer reviewer’s and IME doctor’s conclusions (see id. ¶¶ 47-51). “This proposition is widely accepted as ‘well settled’ law in the industry” (id. ¶ 51). “In this case the arbitrator also ruled for Respondent [Rutland] despite the fact that there was no rebuttal. In doing so the arbitrator failed to follow well settled law. As such, this Court should vacate the arbitration award for the same reasons the Appellate Term reversed the trial courts in Pan Chiropractic, Eastern Star Acupuncture, Jaga Med. Servs., P.C. and High Quality Medical.” (Id. ¶ 54.)

“This decision was arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 57). The petition concluded by asserting that Arbitrator Bishop ignored ATIC’s “evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant [Rutland]” (id. ¶ 58). Therefore, ATIC’s rights were prejudiced by the arbitrator’s partiality “and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated” (id. ¶ 59). The relief sought was vacatur of the awards of both Arbitrator Bishop and Master Arbitrator Ancowitz — that they “have no force or effect” (id. ¶ 60).

Rutland’s Cross-Petition to Confirm

Rutland argued in its cross-petition most significantly that the arbitration awards had to be confirmed if they were supported by evidence or other basis in reason (citing Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]); rational (citing Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]); and not inapposite to settled law (citing Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 148 AD3d 502 [1st Dept 2017]). ATIC did not meet its burden of establishing that the master arbitration award did not meet these criteria. (See NYSCEF Doc No. 19, Cross-Petition.)

Rutland did not submit any calculation of an attorney’s fee for its opposition to the petition and maintenance of the cross-petition.

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.^[FN15] 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 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.^[FN16]

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 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).^[FN17] A master arbitrator may also vacate or modify a hearing [*6]arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN18]

Discussion

ATIC’s contention in its master arbitration appeal that Rutland was an entity formed by a No-Fault insurance fraud ring has not been pursued in this Article 75 proceeding and, therefore, is not before this Court. Remaining is ATIC’s contention that Arbitrator Bishop failed to follow well settled law that a medical provider applicant in arbitration must meaningfully refer to, or rebut, the conclusions set forth in the peer review and/or IME report and, therefore, Master Arbitrator Ancowitz’s affirmance was erroneous.

The proper standard of review by a No-Fault insurance master arbitrator is whether he or she reached their decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law; the master arbitrator may [*7]not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).

The standard for Article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law is whether it is 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 869 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). The master arbitrator’s determination of the law need not be correct, and mere errors of law are insufficient to set aside the master arbitrator’s award; on questions of substantive law, the master arbitrator’s determination must be upheld if there is a rational basis for his determination; if the master arbitrator’s errors on a matter of law are irrational, his award may be set aside (see Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]).

This Court has previously discussed the issue raised by ATIC — whether a medical provider applicant in No-Fault insurance arbitration must submit expert medical opinion evidence which specifically refers to and either discusses or rebuts the insurer’s expert medical opinion evidence. This Court held that it need not, because the case law ATIC relied upon governs summary judgment motions in court, not No-Fault arbitrations. (See American Tr. Ins. Co. v Right Choice Supply, 78 Misc 3d 890 [Sup Ct, Kings County 2023].) Assessment of medical necessity entails a factual review of evidence and this is committed to the arbitrator’s discretion (id.). As this Court wrote,

In part, this Court’s present determination is based on the additional provision in 11 NYCRR 65-4.10 (a) (4) which provides that “procedural or factual errors committed in the arbitration below are not encompassed within this ground.” The reference to “factual errors” conveys impliedly that when it comes to assessing evidence for the purpose of fact-finding, an arbitrator has wider latitude and should not be required to comply with settled or established law concerning what specific evidence suffices to refute the opposing party’s evidence. This Court also takes into account the general proposition that the admissibility of evidence and the determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award. . . .”]; Central Square Teachers Association v Board of Education of the Central Square Central School District, 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny.”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept. 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software International, Inc., 232 AD2d 336, 338 [1st Dept. 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis.”]). In light of this case law with respect to the admissibility of evidence and the determination of issues of fact in arbitration, 11 NYCRR 65-4.10 (a) (4)’s “matter of law” should be limited in its breadth.

(78 Misc 3d at 909-910.)

Therefore, this Court holds that Arbitrator Bishop did not err when she did not require a formal rebuttal from Rutland which would have specifically referred to and either discussed or rebutted ATIC’s peer reviews and IME report. In point of fact, according to Arbitrator Bishop, Dr. Chiu’s peer reviews did not even rise to the level of a prima facie case of lack of medical necessity. It was within the arbitrator’s discretion to find that Dr. Chiu did not adequately support his conclusions. Ergo, the burden of proof did not shift to Rutland to rebut them.

The situation is a bit different with regard to Dr. Berman’s IME report. Arbitrator Bishop held that ATIC did meet its initial burden of proof and the burden of proof then shifted to Rutland to prove medical necessity, which it did with examination report findings. Based on this Court’s decision in American Tr. Ins. Co. v Right Choice Supply, however, a formal rebuttal was not necessary. It was within the arbitrator’s discretion to find that the IME report was overcome by evidence which was not a formal rebuttal (clinical examination results).

This Court notes that Master Arbitrator Ancowitz did not consider the legal issue he was presented with in the master arbitration appeal. In the segment of his award reserved for a summary of the issues, he wrote, “Was the award irrational or incorrect as a matter of law?” (NYSCEF Doc No. 4, Master Arbitration Award at 2). This court’s scrutiny of his master arbitration award reveals that he never discussed the issue posed by ATIC — that Rutland failed to submit a rebuttal meaningfully referring to and either discussing or rebutting ATIC’s medical evidence (peer reviews and IME report). Master Arbitrator Ancowitz found no error in Arbitrator Bishop’s analysis of the factual issue of medical necessity; it was neither arbitrary nor otherwise inform. Yet he did not mention the asserted error of law! In essence, his master arbitration award was incomplete. Despite that, however, this Court is constrained to uphold his award because the ultimate determination affirming Arbitrator Bishop was not irrational (see Matter of Smith, 55 NY2d 224; Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828; Matter of Liberty Mut. Ins. Co., 294 AD2d 574). The reason Master Arbitrator Ancowitz’s award was not irrational is because Arbitrator Bishop was not required to apply the case law cited by ATIC regarding meaningfully referring to the insurer’s peer reviews and IME reports, as this Court held in American Tr. Ins. Co. v Right Choice Supply. Even if Master Arbitrator Ancowitz ignored this legal issue, it was academic; Arbitrator Bishop was within her rights to ignore the absence of a formal rebuttal referring to ATIC’s expert evidence.^[FN19]

“An arbitration award is indefinite or nonfinal for purposes of CPLR 7511 and subject to vacatur ‘only if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted or if it creates a new controversy’ [citations omitted]” (Westchester County Corr. Officers Benevolent Assn., Inc. v Cheverko, 112 AD3d 842 [2d Dept [*8]2013]). While Master Arbitrator Ancowitz did not rule on the asserted error of law, it is inconsequential inasmuch as did not find that there was an error of law. Arbitrator Bishop’s award determined the rights and obligations of the parties and resolved the submitted controversy, and her determination was sustained by Master Arbitrator Ancowitz. There has been a final and definite resolution of the parties’ dispute (see Civil Serv. Empls. Assn. v County of Nassau, 305 AD2d 498 [2d Dept 2003]; Matter of Paul v Insurance Co. of N. Am., 81 AD2d 671 [2d Dept 1981]; cf. Papapietro v Pollack v Kotler, 9 AD3d 419 [2d Dept 2004]; Matter of Teamsters Local Union 693 [Coverall Serv. & Supply Co.], 84 AD2d 609 [3d Dept 1981]).

“This Court has recognized the authority of a court, before which there is a petition to confirm or to vacate an arbitration award, to remand the matter to the arbitration panel when the panel’s award does not dispose of a particular issue raised by the parties or indicate the panel’s intention with respect to it (see, Matter of Ritchie Bldg. Co. [Rosenthal], 9 AD2d 880), or when the award is ambiguous and not sufficiently explicit, since a court may not impose its own interpretation of the award (see, Matter of Jolson [Forest Labs.], 15 AD2d 901). Here, the award is not only ambiguous as to the intent of the panel, but also fails to address and dispose of the issues raised by the parties or to make any specific findings of fact or credibility. Given the diametrically opposed positions of the parties, the award, which apparently denied both sets of claims on the merits, cannot be harmonized or interpreted without speculation as to the panel’s intent.” (Hamilton Partners v Singer, 290 AD2d 316, 316-317 [2d Dept 2002].) Master Arbitrator Ancowitz’s award is not ambiguous. His intent to affirm Arbitrator Bishop is quite manifest. His approval of her analysis is evident. There is nothing to speculate about how the master arbitrator treated the hearing arbitration award. Although he did not explicitly deal with the issue raised by ATIC asserting an error of law, Master Arbitrator Ancowitz was sufficiently explicit to enable this Court to review it without having to speculate about his intent.

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, her decision was neither arbitrary nor capricious, it had a rational basis, and she did not render a nonfinal award.

None of the CPLR 7511 (b) (1) grounds cited by ATIC for vacating an arbitration award have been proved by ATIC. There was no corruption, fraud or misconduct in the arbitration process. There was no partiality. Neither arbitrator exceeded his or her power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made. There was no failure to follow the procedure of Article 75.

Cross-Petition;
Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, Rutland sought in its cross-petition to confirm the arbitration determinations. Having found that no grounds exist to vacate them, the master arbitration award must be confirmed. Rutland is entitled to No-Fault compensation for health services in the principal amount of $2,713.58.

Rutland also sought additional payments in the nature of interest, attorney’s fees, return [*9]of the arbitration filing fee, costs, and disbursements.

Interest:

Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 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] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action. Rutland’s arbitration request was received by the AAA on August 14, 2020 (see NYSCEF Doc No. 5, Rutland’s Arbitration Request Form & Submission at 1), which was more than 30 days after ATIC’s last denial of claim. Thus, interest on all of the claims herein accrued from August 14, 2020, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest is calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term 2d Dept, 2d, 11th & 13th Dists 2022]).

Attorney’s Fees:

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay Rutland an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $130.00 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [i].

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, Rutland is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of NY v Nexray Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Rutland’s counsel did not submit an affirmation specifying details with regard to work performed in this Article 75 special proceeding. It is not known whether an attorney or support staff performed the work. The cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The same boierplate allegations have been submitted by Rutland’s counsel in past Article 75 proceedings. The cross-petition asserted that Rutland “should be granted leave to serve an afirmation in order to set forth its resonable attroneys’ fees in defending this action” (NYSCEF Doc No. 19, Cross-Petition ¶ 61).

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.) Counsel should have included an affirmation containing details describing the work performed (see Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695 [2d Dept 2019] [claim for hourly fee for prevailing on policy issue not substantiated with any time records]). It behooved counsel to do so considering the expedited nature of special proceedings.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issue in the case at bar was neither novel nor unique, especially since the preclusion rule for untimely assertions of lack of medical necessity is established law.

Consdering the factors delineated herein, this Court awards $375.00 for work performed by Rutland’s counsel on this Article 75 proceeding. This Court considered the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level, increased it to $125.00 per hour, and assumed that there was attorney involvement for two hours at the most in preparation of Rutland’s papers. In addition, a $125.00 for a personal appearance in court is awarded. (See 11 NYCRR 65-4.6 [c].)

Return of Arbitration Filing Fee:

ATIC shall also pay Rutland $40.00 as reimbursement for the fee paid to the AAA (see 11 NYCRR 65-4.5 [s] [1]).

Costs and Disbursements:

As the prevailing party in this special proceeding, Rutland shall recover its costs and disbursements, to be taxed by the Clerk.

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:

(1) ATIC’s petition to vacate the master arbitration award of Richard Ancowitz in AAA Case No. 99-20-1175-4211 is denied and this special proceeding is dismissed.

(2) Rutland’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) Rutland is awarded the principal amount of $2,713.58 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent per month on a pro rate basis using a 30-day month, computed from August 14, 2020 to the date of payment of the principal amount, but excluding August 14, 2020 from being counted within the period of interest.

(5) After calculating the sum total of the principal amount of $2,713.58 plus the interest thereon, ATIC shall pay Rutland an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay Rutland an attorney’s fee of $130.00 in connection with the master arbitration.

(7) ATIC shall pay Rutland an attorney’s fee of $375.00 for work performed by counsel on this Article 75 proceeding.

(8) Rutland shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

E N T E R
Brooklyn, New York
August 4, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the
State of New York

Footnotes

Footnote 1:The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Wendy Bishop, Esq. and/or Master Arbitrator Richard Ancowitz, Esq. under Article 75 of the CPLR” (NYSCEF Doc No. 2, Notice of Petition at 1), 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]). It follows that if the hearing arbitrator’s award is imperfect, this can affect 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, Rutland, was not the respondent in the arbitration, but was the applicant.

Footnote 3:Arbitrator Bishop wrote that the claimed amount in the arbitration request form was $2,713.58, which conflicts with the Form AR Arbitration Request Form (compare NYSCEF Doc No. 3 (Arbitration Award at numbered p 1) with NYSCEF Doc No. 5 (Rutland’s Arbitration Request Form & Submission at 15).

Footnote 4: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 5:References to page numbers in NYSCEF filings lacking specified page numbers are to the PDF page numbers.

Footnote 6:Paragraph 28 of the petition describes the AAA Case No. as 99-20-1175-4211, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-20-1175-4211 (see NYSCEF Doc No. 3, Arbitration Award at numbered p 1).

Footnote 7: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 8: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 9: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 at issue encompassed diagnostic testing, therapeutic injections, and chiropractic.

Footnote 10: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). Not every No-Fault insurance provider uses the prescribed forms; some utilize a HICF (Health Insurance Claim Form) or a UB-04 form more commonly used for inpatient outpatient claims billed by hospitals, healthcare facilities, and surgical facilities.

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

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

Footnote 14: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 15: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 noneconomic loss, i.e., pain and suffering.

Footnote 16: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 17: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 18:11 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 19:One bill dealt with by Arbitrator Bishop had no corresponding denial of claim. Her determination with respect to this bill was not referred to in ATIC’s master arbitration appeal or in this Article 75 petition.

American Transit Insurance Company, Petitioner, against U.S. Med Supply Corp., A/A/O Mahendra Singh, Respondent.

Index No. 502532/2023

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

Aaron D. Maslow, J.

The following numbered papers were read on this petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A — Arbitration Award (NYSCEF Doc No. 3)
Exhibit B — Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Email (NYSCEF Doc No. 9)
Affidavit of Service (NYSCEF Doc No. 10)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 11)

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.

(Id. at numbered p 3.)

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.

(Id. at numbered pp 2-3.)

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).

(62 NY2d at 500-501.)

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.

Dated: June 9, 2023
Brooklyn, New York
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York

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 20: The provision in 11 NYCRR 65-4.10 (a) (4) that a No-Fault insurance arbitration award may be vacated where it was incorrect as a matter of law refers to substantive issues—not issues of fact (see American Transit Ins. Co. v Right Choice Supply, Inc., 78 Misc 3d 890 [Sup Ct, Kings County 2023]).

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]).

American Transit Insurance Company, Petitioner, against Nexray Medical Imaging PC D/B/A Soul Radiology, A/A/O Ronald Simpson, Respondent.

Index No. 530898/2022

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

Roman A. Kravchenko, Garden City, for respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition and cross-petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A — Arbitration Award (NYSCEF Doc No. 3)
Exhibit B — Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)
Notice of Cross-Petition (NYSCEF Doc No. 12)
Cross-Petition (NYSCEF Doc No. 13)
Stipulation of Adjournment (NYSCEF Doc No. 14)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 15)
Affirmation in Opposition to Cross-Petition and Reply in Support of Petition (NYSCEF Doc No. [*2]16)^[FN1]

Issue Presented

Where a No-Fault insurer initially denies payment of bills on the grounds that the injured person was acting in the course of employment while driving and, therefore, the bills should be submitted to the Workers’ Compensation insurer instead, and thereafter the Workers’ Compensation Board finds that the injured person was not working while employed, should a defense of lack of medical necessity asserted in a second, subsequent denial of claim be considered?

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 Joseph J. O’Brien, Esq. (dated July 23, 2022), which affirmed the arbitration award of Matthew K. Viverito, Esq. (dated March 26, 2022) granting Respondent Nexray Medical Imaging PC’s (“Nexray”) claim for No-Fault insurance compensation for health service expenses.^[FN2] , ^[FN3] Arbitrator Viverito awarded $2,450.73 to Nexray as compensation for performing left shoulder, cervical, and lumbar MRIs on Ronald Simpson, its assignor ^[FN4] (“Assignor”), who claimed to have been injured in a motor vehicle accident on August [*3]6, 2019. (NYSCEF Doc Nos. 2, Notice of Petition; 1, Petition.)

Respondent Nexray has opposed ATIC’s petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $2,450.73 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements (NYSCEF Doc Nos. 12, Notice of Cross-Petition; 13, Cross-Petition).

The petition and cross-petition came before the undersigned for oral argument on May 12, 2023. At that time, both parties 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. 17-21-1191-9817 ^[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] Notably, and relevant in the instant case, is that first-party benefits are reduced by, among other things, Workers’ Compensation benefits where an injured person in a motor vehicle accident was acting in the course of employment (see Insurance Law § 5102 [b] [2]).

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 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 of health service).^[FN9] Besides providing information regarding the injured person, diagnoses, projected treatment, etc., 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 4, 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 three Form NF-3 claim forms (bills) submitted by Nexray to ATIC for payment. This was in accordance with the procedure for the submission of claims for No-Fault compensation, as summarized above. ATIC received two bills for date of service September 6, 2019 (right shoulder and cervical MRIs) on September 26, 2019, and one bill for date of service October 11, 2019 (lumbar MRI). After requesting additional verification, and receiving it on January 30, 2020, ATIC issued Form NF-10 denials of claim on February 24, 2020. These claim denials were timely inasmuch as they were issued within 30 days after the receipt of the 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 February 24, 2020 Form NF-10 denials of claim all asserted: “Claimant is eligible for Workers’ Compensation as he/she was in the course of employment at the time of accident, [and] as a result, all medicals should be submitted to the Workers’ Compensation carrier. ATIC is requesting that we be placed on notice regarding any Workers’ Compensation hearing” [*4](NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief, at 6, 14, 22).^[FN13] A fee defense was also asserted in them but it was never pursued in arbitration.

Thereafter, an application was made to the Workers’ Compensation Board for coverage of medical expenses under Workers’ Compensation. On September 4, 2020, the Workers’ Compensation Board issued a Notice of Decision, which determined the issue as follows: “Per claimant’s testimony, he was not working at time of accident. He was not logged in to any ride-sharing application. I find he did not have a compensable accident. Claimant can pursue no fault claim. No further action is planned by the Board at this time.” (Id. at 38.)

ATIC then submitted Assignor’s medical records to Dr. Edward Weiland, who issued a peer review on October 5, 2020, in which he opined that the subject MRIs were not medically necessary (id. at 50-54).

Thereafter, a second, subsequent denial of claim was issued by ATIC appurtenant to each of the three bills. They were all dated October 9, 2020, and asserted, “This service was denied based on a peer review by a reviewer/physician. . . . Peer review by Dr. Edward M. Weiland, M.D. attached.”^[FN14] (Id. at 10-13, 18-21, 26-29.)

Arbitrator Matthew K. Viverito’s Award

The record evidence reveals further that on March 26, 2002, Arbitrator Viverito conducted a hearing at which Andrew Ciccaroni, Esq., from Russell Friedman & Associates LLP, appeared for Nexray, and Dianne Galluzzo, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).

In his award, Arbitrator Viverito stated that the hearing documents were contained in Modria ^[FN15] . ATIC related that it was withdrawing its defense that Workers’ Compensation benefits were primary. (NYSCEF Doc No. 3, Arbitration Award, at numbered p 2.) It offered two arguments to the arbitrator as to why its October 9, 2020 denials of claim should be sustained (id.).

First, ATIC argued that the owner of Nexray was indicted by the federal government for allegedly participating in a criminal scheme to exploit insurance companies. Arbitrator Viverito rejected this argument since no documentation was presented that there was a guilty plea or a conviction.

Second, and more particularly relevant, ATIC argued that the MRIs were not medically necessary; it relied upon Dr. Weiland’s peer review. The pertinent findings by Arbitrator Viverito were as follows:

Having reviewed the evidence, I find that respondent’s subsequent denials of claim based on lack of medical necessity are fatally untimely as they were issued more than 30 days [*5]after receipt of claim, in violation of the No-fault Regulations. I further find that respondent may not rescind its original denial based on workers’ compensation and re-start the processing of the within claim.

Respondent argued that its subsequent denials of claim based on lack of medical necessity should be permitted and the within matter should move forward on the merits of such defense.

However, there is nothing in the No-fault Regulations which permits respondent to re-start the processing of claim and therefore I find that respondent is bound to the four corners of its original denials. Respondent has not presented persuasive support for its position that it may withdraw or retract denials based on workers’ compensation and re-start the time to pay or deny a claim.

Accordingly, I find that respondent’s subsequent denials of claim based on lack of medical necessity are unsustainable.

(Id. at numbered pp 2-3).

Arbitrator Viverito awarded the $2,450.73 principal billed. He also awarded statutory interest of 2% per month and an attorneys’ fee (see Insurance Law § 5106 [a]) and return of the $40 filing fee (see 11 NYCRR 65-4.5 [s]).

Master Arbitrator Joseph J. O’Briens’s Award

ATIC filed for master arbitration to appeal Arbitrator Viverito’s award. It challenged the arbitrator’s determination concerning the issue raised as to the true ownership of Nexray. It suffices to say—because this issue is not raised in the Article 75 petition—that Master Arbitrator O’Brien sustained the arbitrator’s determination because “an indictment . . . is not a conviction, and [ATIC] has not submitted evidence that that a conviction was obtained following the indictment [ATIC] relies on” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 3).

In its master arbitration brief, ATIC argued that Arbitrator Viverito’s treatment of the issue of medical necessity was irrational. There was citation to various court decisions on the issue of medical necessity. (NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief, at 107-109). Master Arbitrator O’Brien concurred in the position of Nexray “that there is nothing in the No-fault Regulations which permits respondent to re-start the processing of claim and therefore I find that respondent is bound to the four corners of its original denials. Respondent has not presented persuasive support for its position that it may withdraw or retract denials based on workers’ compensation and re-start the time to pay or deny a claim.” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered pp 2-3.)

In his conclusion, Master Arbitrator O’Brien wrote, “For the foregoing reasons, we find that the award appealed from was detailed, well-reasoned and, therefore, was neither arbitrary nor capricious and was not in error as a matter of law.” He affirmed the arbitration award and also awarded $227.50 as a master arbitration attorney’s fee for Nexray.

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 Matthew K. Viverito 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 (id. ¶ 38). ATIC had offered the opinion of a medical expert to establish that the services were not medically necessary (id. ¶ 39). ATIC’s burden of proof was satisfied and Nexray had to prove medical necessity through the submission of a rebuttal which meaningfully [*6]referred to or rebutted the peer reviewer’s conclusions (id. ¶¶ 40-42). Nexray failed to do so, contended ATIC, and this was contrary to well settled law (id. ¶¶ 44-45, 48-55).

The petition concluded by asserting that Arbitrator Viverito’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 [Nexray]” (id. ¶ 59). “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. ¶ 60). ATIC was “entitled to a declaration that the arbitration decisions of Matthew K. Viverito, Esq. and Joseph J. O’Brien, Esq. in the matter designated AAA number 99-21-1191-9817 have no force or effect” (id. ¶ 61).

Nexray’s Cross-Petition to Confirm

Nexray argued in its cross-petition most significantly that the arbitration awards had to be confirmed if they were supported by evidence or other basis in reason (citing Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]); rational (citing Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]); and not inapposite to settled law (citing Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 148 AD3d 502 [1st Dept 2017]). ATIC did not meet its burden of establishing that the master arbitration award did not meet this criteria.

Nexray did not submit any calculation of an attorney’s fee for its opposition to the petition and maintenance of the cross-petition.

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 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 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 [*7]arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN19]

Discussion

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, considering the numerous paragraphs in its Article 75 petition discussing case law concerning the applicability of settled law.

The provision in 11 NYCRR 65-4.10 [a] [4] that a No-Fault insurance arbitration award may be vacated where it was incorrect as a matter of law refers to substantive issues not issues of fact (see American Transit Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039, *11 [Sup Ct, Kings County 2023]).

Master Arbitrator O’Brien sustained Arbitrator Viverito, describing the latter’s award as detailed, well-reasoned, neither arbitrary nor capricious, and not being in error as a matter of law (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 3).

This Court must next determine whether to sustain Master Arbitrator O’Brien’s review of Arbitrator’s Viverito award for an error of law.

“A presumption of medical necessity attaches to a defendant’s admission of the plaintiff’s timely submission of proper claim forms, and the burden then switches to the defendant to demonstrate the lack of medical necessity. Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins., 2007 NY Slip Op. 52273U, 2007 NY Misc. LEXIS 7860 (Dist. Ct., Nassau Co. 12/3/2007); A.B. Medical Services, PLLC v. NY Central Mutual Fire Ins. Co., 7 Misc 3d 1018(A), 801 N.Y.S.2d 229 (Civil Ct. Kings. Co. 2005); Citywide Social Work & Psychological Services v. Travelers Indemnity, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004).” (Millennium Radiology, P.C. v New York Cent. Mut. Fire Ins. Co., 23 Misc 3d 1121[A], 2009 NY Slip Op 50877[U], *2 [Civ Ct, Richmond County 2009]; accord Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d Dept, 2d & 11th Dists 2004], mod on other grounds 35 AD3d 720 [2d Dept 2006]; Harvey Family Chiro PT & Acup, PLLC v Ameriprise Ins. Co., 68 Misc 3d 556 [Civ Ct, Bronx County 2020]).

“Pursuant to the statutory and regulatory framework governing the payment of no-fault automobile benefits, insurance companies are required to either pay or deny a claim for benefits within 30 days of receipt of the claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). However, the 30-day period may be extended where the insurer makes a request for additional information within 15 business days of its receipt of the claim (see 11 NYCRR 65-3.5 [b]; Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96, 100 [2005]; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432, 434 [2004]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 569-570), and an insurer is not obligated to pay or deny a claim until all demanded verification is provided (see Nyack Hosp. v General Motors Acceptance Corp., supra at 100-101; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492, 493 [2005], lv denied 7 NY3d 704 [2006]).” (New York and Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512, 513 [2d Dept 2006].)

“When an insurance company fails to comply with its duty to act expeditiously in processing no-fault claims, it will be precluded from raising most defenses (see, e.g., Presbyterian Hosp. v Maryland Cas. Co., 226 AD2d 613; LaHendro v Travelers Ins. Co., 220 AD2d 971; Presbyterian Hosp. v Atlanta Cas. Co., 210 AD2d 210; Loudermilk v Allstate Ins. Co., 178 AD2d 897; Bennett v State Farm Ins. Co., 147 AD2d 779). This is because the very purpose of the no-fault law was to ensure the ‘swift reimbursement of accident victims . . . who had serious injuries’ (Pavone v Aetna Cas. & Sur. Co., 91 Misc 2d 658, 663), with ‘as little litigation as possible’ (Matter of Furstenburg [Aetna Cas. & Sur. Co.], 67 AD2d 580, 583, rev’d on other grounds 49 NY2d 757).” (Presbyterian Hosp. in City of NY v Aetna Cas. & Sur. Co., 233 AD2d 431, 432 [2d Dept 1996].)

If an insurer asserts a lack of coverage defense defense, it will be permitted to assert said defense despite the lack of a timely-issue denial (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). The lack-of-coverage defense is an exception to the 30-day “pay-or-deny” rule enunciated in Presbyterian Hosp. v Maryland Cas. Co. (90 NY2d 274 [1997], which is considered the leading decision in No-Fault insurance law regarding the preclusion of defenses asserted in denials of claim where the denials are not timely issued (the deadline being 30 days after receipt of the claim form (bill) or 30 days after receipt of requested additional verification) or the denials are timely but the defense is not asserted therein. Lack of medical necessity is obviously not a lack of coverage defense.

“This Court has recognized that preclusion may require an insurer to pay a no-fault claim it might not have had to honor if it had timely denied the claim (see Presbyterian Hosp., 90 [*8]NY2d at 285). Nonetheless, we emphasized that the great convenience of ‘prompt uncontested, first-party insurance benefits’ is ‘part of the price paid to eliminate common-law contested lawsuits’ (id.; see Fair Price, 10 NY3d at 565-566).” (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d at 506.)

Therefore, it is well settled No-Fault insurance law that an untimely denial of claim issued by an insurer results in preclusion of the defense of lack of medical necessity in litigation. The case law is abundant. (See, e.g., A & S Med. P.C. v Allstate Ins. Co., 15 AD3d 170 [1st Dept 2005]; Country-Wide Ins. Co. v Zablozki, 257 AD2d 506 [1st Dept 1999]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999]; Gotham Acupuncture, P.C. v Country Wide Ins. Co., 20 Misc 3d 141[A], 2008 NY Slip Op 51615[U] [App Term, 1st Dept 2008]; Response Med. Equip. v General Assur. Co., 13 Misc 3d 129[A], 2006 NY Slip Op 51765[U] [App Term, 1st Dept 2006]; Diagnostic Rehab. Medicine Serv., P.C. v Farm Family Cas. Ins. Co., 7 Misc 3d 137[A], 2005 NY Slip Op 50826[U] [App Term, 1st Dept 2005].)

In the instant case, ATIC received Nexray’s additional verification regarding all three bills on January 30, 2020. When it issued Form NF-10 denials of claim on February 24, 2020, it asserted a fee defense and that Assignor was injured in the course of employment and should submit bills to the Workers’ Compensation carrier. It did not assert a defense of lack of medical necessity. ATIC’s 30-day deadline to assert lack of medical necessity as a defense expired on March 2, 2020 (February 29, 2020, the 30th day thereafter, being a Saturday).

The denials of claim issued on October 9, 2020, which asserted the peer review (lack of medical necessity) defense, contained a date of receipt of final verification of September 11, 2020. However, September 11, 2020 was not the date of receipt of final verification. Perhaps ATIC received the September 4, 2020 Workers’ Compensation Board Notice of Decision that day. However, said Notice of Decision did not constitute additional verification, as such term is referred to in the No-Fault Regulations (see 11 NYCRR 65-3.5 [b]). A decision of the Workers’ Compensation Board was not sought by ATIC.

“No-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to section 65-3.5 of this Subpart” (11 NYCRR 65-3.8 [a] [1]). Proof of claim was complete on January 30, 2020, for purposes of the bills at issue herein. The three Form NF-10 denials of claim issued on October 9, 2020 were more than eight months late. As such, the peer review (lack of medical necessity) defense asserted therein was a nullity.

Arbitrator Viverito correctly applied settled law when precluding the lack of medical necessity defense. He was correct in stating that “there is nothing in the No-[F]ault Regulations which permits [ATIC] to re-start the processing of claim and therefore I find that [ATIC] is bound to the four corners of its original denials” (NYSCEF Doc No. 3, Arbitration Award, at numbered pp 2-3). The No-Fault Regulations do not provide anywhere that the claim processing function begins anew if the Workers’ Compensation Board issues a determination that an injured person is entitled to No-Fault benefits. This is consistent with the fact that Workers’ Compensation benefits are to be harmonized with basic economic loss (expenses for health service treatment, lost earnings, and other reasonable and necessary expenses as a result of being injured in a motor vehicle accident) (see Insurance Law § 5102 [a], [b] [2]; Normile v Allstate Ins. Co., 60 NY2d 1003 [1983], affg 87 AD2d 721 [3d Dept 1982]); Ryder Truck Lines v Maiorano, 44 NY2d 364 [1978]; Carriers Ins. Co. v Burakowski, 93 Misc 3d 100 [Sup Ct, Erie County 1978]).

Had ATIC wished to assert a defense of lack of medical necessity it should have done so in the original denials of claim issued on February 24, 2020. Having failed to assert such defense within the 30-day period following receipt of complete proof of claim, including requested additional verification, said defense could not be considered. The presumption of medical necessity arising from the submission of the bills to ATIC survived.

An insurer must stand or fall upon the defense upon which it based its refusal to pay and cannot create new grounds (see Todaro v GEICO General Ins. Co., 46 AD3d 1086 [3d Dept. 2007]; Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219, 220-221 [2d Dept 1999]). ATIC was relegated to the defenses asserted in the February 24, 2020 denials of claim.

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]).

Not only was Master Arbitrator O’Brien correct when he found that Arbitrator Viverito’s award was detailed, well-reasoned, neither arbitrary nor capricious, and not being in error as a matter of law, it bears saying that the latter accurately stated the law concerning the untimely assertion of a defense of lack of medical necessity. Therefore, Master Arbitrator O’Brien’s affirmance was absolutely not irrational; it was legally correct.

The only issue before the arbitrators was one of law—whether the defense of lack of medical necessity being precluded was proper. There were no issues of fact. In sustaining the arbitrators, this Court holds as follows: Where a No-Fault insurer initially denies payment of bills on the grounds that the injured person was acting in the course of employment while driving and, therefore, the bills should be submitted to the Workers’ Compensation insurer instead, and later on the Workers’ Compensation Board finds that the injured person was not working while employed, a defense of lack of medical necessity asserted in a second, subsequent denial of claim—issued after the 30-day deadline past receipt of proof of claim—is precluded.

Judicial review of a master arbitrator’s authority to vacate a hearing arbitrator’s award derives from § 675 (presently § 5106 [c]) of the Insurance Law and involves the question of whether the master arbitrator exceeded his power (Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224 at 231). Master Arbitrator O’Brien did not exceed his power because he affirmed the award of Arbitrator Viverito, whose determination was consistent with well settled law (see 11 NYCRR 65-4.10 [a] [4]; cf. Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).

Accordingly, this Court rejects ATIC’s contentions in its petition that Arbitrator Viverito’s award was arbitrary and capricious, without rational basis, and incorrect as a matter of law (cf. NYSCEF Doc No. 1, Petition, ¶ 59). ATIC’s rights were not prejudiced, the arbitrator was not partial, he did not exceed his powers, and he did not fail to make a final and definite award” (cf. id. ¶ 60).

Cross-Petition;
Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, Nexray sought in its cross-petition to confirm the arbitration [*9]determinations. Having found that no grounds exist to vacate them, the master arbitration award must be confirmed. Nexray is entitled to No-Fault compensation for health services in the principal amount of $2,450.73.

Nexray also sought additional payments in the nature of interest, attorney’s fees, return of the arbitration filing fee, costs, and disbursements.

Interest:

Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 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] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action. Nexray presumptively received ATIC’s timely-issued denials a few days after February 24, 2020, when they were issued. Applicant’s arbitration request was received by the AAA on January 25, 2021 (NYSCEF Doc No. 5, Respondent’s Arbitration Request Form and Arbitration Submission, at 1), which was clearly more than 30 days later. Thus, interest on all of the claims herein accrued from that date, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest is calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term 2d Dept, 2d, 11th & 13th Dists 2022]).

Attorney’s Fees:

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $227.50 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [i].

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, Nexray is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of NY v Nexray Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Nexray’s counsel did not submit an affirmation specifying details with regard to work [*10]performed in this Article 75 special proceeding. It is not known whether an attorney or support staff performed the work. The cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The cross-petition asserted that Nexray “should be granted leave to serve an afirmation in order to set forth its resonable attroneys’ fees in defending this action.”

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.) Counsel should have included an affirmation containing details describing the work performed (see Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695 [2d Dept 2019] [claim for hourly fee for prevailing on policy issue not substantiated with any time records]). It behooved counsel to do so considering the expedited nature of special proceedings.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issue in the case at bar was neither novel nor unique, especially since the preclusion rule for untimely assertions of lack of medical necessity is established law.

Consdering the factors delineated herein, this Court awards $220.00 for work performed by Nexray’s counsel on this Article 75 proceeding. This Court applied the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level, and assumed that there was attorney involvement for two hours at the most. In addition, the $80.00 per hour personal appearance fee is awarded. (See 11 NYCRR 65-4.6 [c].)

Return of Arbitration Filing Fee:

ATIC shall also pay Nexray $40.00 as reimbursement for the fee paid to the AAA (see 11 NYCRR 65-4.5 [s] [1]).

Costs and Disbursements:

As the prevailing party, Nexray shall recover its costs and disbursements, to be taxed by the Clerk.

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:

(1) ATIC’s petition to vacate the master arbitration award of Joseph J. O’Brien in AAA Case No. 99-21-1191-9817 is denied and this special proceeding is dismissed.

(2) Nexray’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) Nexray is awarded the principal amount of $2,450.73 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent per month on a pro rate basis using a 30-day month, computed from January 25, 2021 to the date of payment of the principal amount, but excluding January 25, 2021 from being counted within the [*11]period of interest.

(5) After calculating the sum total of the principal amount of $2,450.73 plus the interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay Nexray an attorney’s fee of $227.50 in connection with the master arbitration.

(7) ATIC shall pay Nexray an attorney’s fee of $220.00 for work performed by counsel on this Article 75 proceeding.

(8) Nexray shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

Dated: May 28, 2023
Brooklyn, New York
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York

Footnotes

Footnote 1: Respondent’s reply affirmation in support of the cross-petition, filed on May 13, 2023 (day after oral argument), is not considered inasmuch as it was not timely filed and no application to accept it was made to this Court (see CPLR 402, 2214, 3012; 22 NYCRR 202.8, 202.9).

Footnote 2: The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Matthew K. Viverito, Esq. and/or Master Arbitrator Joseph J. O’Brien, Jr., Esq.” (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 an arbitration award without first seeking master arbitration (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 3: 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, Nexray, was not the respondent in the arbitration, but was the applicant.

Footnote 4: 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 5: Paragraph 28 of the petition describes the AAA Case No. as 99-21-1191-9817, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1191-9817.

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 MRIs.

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: References to NYSCEF filings lacking page numbers are to the PDF page numbers.

Footnote 14: Again, a fee defense was also asserted but this was of no consequence since excessive fees was not an issue in arbitration.

Footnote 15: 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 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 to be able to sue 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., revd on other grounds 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.

American Transit Insurance Company, Petitioner, against Ortho City Services Inc., A/A/O CARMEN LOPEZ, Respondent.

Index No. 530474/2022

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

Aaron D. Maslow, J.

The following numbered papers were read on this petition:

In an Article 75 proceeding commenced by an insurance company to vacate the awards of a No-Fault insurance hearing arbitrator and a master arbitrator in favor of a health service provider, where the latter failed to submit opposition to the insurance company’s verified petition, should the court review the verified petition to determine whether it makes out a prima facie case in support of the relief requested?

Does a No-Fault insurer make out a prima facie case in support of vacatur of an arbitration award on the asserted ground that the arbitrator erred with respect to an issue of medical necessity when no defense of lack of medical necessity was asserted in its Form NF-10 denials of claim?

Background

This is a special proceeding — pursuant to CPLR Article 75 — commenced by American Transit Insurance Company (“ATIC”) seeking an order and judgment vacating a No-Fault Insurance master arbitration award of Toby Susan DeSimone, Esq. (dated July 21, 2022), which affirmed the arbitration award of Mitchell Lustig, Esq. (dated April 2, 2022) granting Respondent Ortho City Services Inc.’s (“Ortho”) claim for $2,021.74 in No-Fault insurance compensation for the rental to Assignor Carmen Lopez ^[FN1] of a continuous passive motion unit and a cold water therapy unit from February 18, 2021 to March 3, 2021.^[FN2] ,^[FN3] Assignor had allegedly [*2]been injured in an October 16, 2020 motor vehicle accident. The medical supplies were prescribed by Dr. Laxmidhar Diwan following his right shoulder arthroscopic surgery performed on Assignor on February 3, 2021.

The arbitration was organized by the American Arbitration Association (“AAA”), which 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.

The arbitration was assigned Case No. 17-21-1214-9074 ^[FN4] by the AAA. At oral argument before this Court on May 12, 2023, Petitioner ATIC appeared and argued that the above-referenced arbitration awards should be vacated. Respondent Ortho has neither submitted opposition nor appeared in this special proceeding.

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 Lustig failed to follow well settled law” (id. ¶ 37). “As a result, Petitioner’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. ¶ 59).

As a predicate to its contentions in the petition that that both arbitration awards should be vacated, ATIC asserted that “The claims totaling $2,021.74 for dates of service 02/18/2021 – 03/03/2021 were denied because the services were not medically necessary as per the peer [*3]review of Dr. Raghava Polavarapu, a medical expert. (id. ¶¶ 26, 39). ATIC’s evidence submitted to the hearing arbitrator ^[FN5] “clearly satisfied its burden” (id. ¶ 40). Ultimately the medical provider had to prove by a preponderance of the evidence that its services were reasonable and necessary, claimed ATIC; the petition to vacate cited to Dayan v Allstate Ins. Co. (49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]), and Park Slope Med. and Surgical Supply, Inc. v. Travelers Ins. Co. (37 Misc 3d 19, 22 n [App Term, 2d Dept, 2d, 11th & 13th Dists 2012]) (id. ¶ 41). “In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer review,” maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2009]) (id. ¶ 42). Ortho failed to offer any rebuttal at all, never mind one that meaningfully referred to Dr. Polavarapu’s peer review, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (id. ¶ 43).

Further, claimed ATIC, “Petitioner’s peer review and or IME report ^[FN6] exposed the Respondent and claimant for providing and receiving unnecessary medical treatment for the purpose of over-billing the carrier and bolstering the claimant’s personal injury claim” (id. ¶ 46). “The arbitrator, as finder of fact, is required to weigh the evidence when making a determination whether services were medically necessary. [Ortho] did not submit a rebuttal to the peer review and/or IME report. As such, the arbitrator did not have any evidence to suggest that the services were medically necessary” (id. ¶ 55).

Discussion

As noted above, Respondent Ortho has not appeared in this special proceeding, either with written opposition or oral argument. The question arises whether Petitioner ATIC’s petition to vacate the master arbitration award should be granted solely on default — on the nonappearance of Respondent Ortho. This Court answers the question in the negative.

“[T]he announced policy of this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties. One way to encourage the use of the arbitration forum we recently noted would be to prevent parties to such agreements from using the courts as a vehicle to protract litigation. This conduct has the effect of frustrating both the initial intent of the parties as well as legislative policy [citation & internal quotation marks omitted].” (Nationwide Gen. Ins. Co. v Investors Ins. Co. of Am., 37 NY2d 91, 95 [1975].) “Judicial review of an arbitrator’s award is extremely limited” (Pearlman v Pearlman, 169 AD2d 825 [2d Dept 1991]). This is especially true with respect to No-Fault [*4]insurance arbitrations. The standard for Article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law ^[FN7] is whether it is 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]). Similarly, with respect to factual issues reviewed by a master arbitrator, the proper standard of his review was whether the latter reached his decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).^[FN8]

Were this Court to vacate a No-Fault insurance master arbitration award merely because a verified petition to vacate has been filed within the context of an Article 75 proceeding and the respondent failed to appear in opposition, the policy preference for the adjudication of such disputes through arbitration would be significantly frustrated. It is quite possible that a health service provider who prevailed in arbitration and was awarded a relatively low sum of money simply finds it not financially or logistically worthwhile to retain legal counsel to interpose opposition. Merely because one side had the resources to challenge the arbitration award in court and the other declined to undertake the effort to retain counsel should not impel the court to ipso facto rubber-stamp the unopposed petition commencing the special proceeding.

Rather, the court should treat this situation as the functional equivalent of when a plaintiff moves for a default judgment. As part of its application for a judgment by default, the plaintiff must submit “proof of the facts constituting the claim. . .” (CPLR 3215 [f]). The affidavit of merit must provide enough facts to enable the court to determine that a viable cause of action exists against the party in default (Roy v 81 E 98th KH Gym, LLC, 142 AD3d 985 [2d Dept 2016]).

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.)

In Matter of FIA Card Servs. v Thompson (18 Misc 3d 1146[A], 2008 NY Slip Op 50450[U] [Dist Ct, Nassau County 2008], the court discussed a petitioner’s burden when commencing a special proceeding to confirm an arbitration award. The court’s analysis would likewise apply to special proceedings to vacate an arbitration award. “In evaluating the proof offered by a petitioner in support of the foregoing, it must be kept in mind that ‘the standards governing motions for summary judgment are applicable to special proceedings generally (Matter of Port of New York Auth. [62 Cortlandt St. Realty Co.], 18 NY2d 250, 255, cert denied sub nom. McInnes v. Port of New York Auth., 385 U.S. 1006)[.]’ Brusco v. Braun, 199 AD2d 27, 31 (1st Dept. 1993) aff’d 84 NY2d 674 (1994); See also: CPLR 409(b); Friends World College v. Nicklin, 249 AD2d 393 (2nd Dept. 1998); Bahar v. Schwartzreich, 204 AD2d 441 (2nd Dept. 1994). Accordingly, to prevail, a petitioner must submit proof in evidentiary form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065 (1979)[.] A petitioner’s failure to do so will result in the denial of the petition, regardless of the sufficiency of any papers in opposition. Winegrad v. New York University Medical Center, 64 NY2d 851 (1985); Delgado v. Butt, [48] AD3d [735] (2nd Dept. 2008); Martinez v. 123-16 Liberty Ave. Realty Corp., 47 AD3d 901 (2nd Dept. 2008)[.]” (Id. at *5 [parallel citations omitted].)

In a special proceeding to stay arbitration, the petitioner must make out a prima facie [*5]case (Matter of Empire Ins. Co. v Milioner, 187 AD2d 277 [2d Dept 1992]). A court may determine that a claim is not properly before it in an Article 78 special proceeding (see Matter of McCoy v Annucci, 199 AD3d 1143 [3d Dept 2021]). A special proceeding seeking pre-action discovery must provide the facts and the law which supports the relief sought (Matter of Accetta, 39 Misc 3d 1218[A], 2013 NY Slip Op 50657[U] [Sup Ct, Kings County 2013]).

Taking into account this case law, this Court holds 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.

Determination

The instant arbitration concerned two bills submitted by Ortho to ATIC for payment. One bill, in the amount of $1,400.70 was for the rental of a continuous passive motion machine for the right shoulder (NYSCEF Doc No. 5, Ortho’s arbitration submission, at 10-12). The other bill, in the amount of $621.04, was for the rental of a cold water therapy unit (id. at 20-22). Both bills were denied on two grounds: (1) fees were not in accordance with fee schedule, and (2) surgery and surgically related services to the right shoulder were not causally related to the accident of record, based on the attached peer review of Dr. Raghava Polavarapu (id. at 15-18, 25-28).

Hearing Arbitrator Lustig found that no evidence was submitted in support of a defense relating to fees charged (NYSCEF Doc No. 3, Arbitrator Lustig’s Award, at numbered p 2.) He found that Dr. Polavarapu’s peer review was not sufficient for ATIC to satisfy its burden of proof that the medical supplies at issue were not medically necessary and/or causally related to the February 3, 2021 accident. “Dr. Polavarapu’s peer review only discusses the medical necessity and/or causal relationship to the accident of the underlying right shoulder surgery performed by Dr. Diwan on February 3, 2021. At no time in his peer review report does Dr. Polavarapu discuss or opine on the medical necessity and/or causal relationship to the accident of the rental of the CPM Machine and CTU specifically in dispute herein. . . . Consequently, I find that Dr. Polavarapu’s peer review report dated June 28, 2021 fails to set forth a sufficient factual basis and medical rationale for the denial of the rental of the CPM and CTU in dispute in this matter.” (Id. at numbered p 4.)

Arbitrator Lustig also wrote: “Finally, to the extent that Dr. Polavarapu suggested that the assignor’s injuries were unrelated to the accident, it is the Respondent’s burden to demonstrate that the Assignor’s condition or injury was not caused or exacerbated to any degree by the underlying automobile accident but was, rather, pre-existing. I find that Dr. Polavarapu’s peer review report is not sufficient to meet this heavy burden. Indeed, as specifically noted by Dr. Diwan on page 3 of his examination report of the Assignor on December 14, 2020: ‘Within a reasonable degree of medical certainty [the Assignor’s right shoulder injuries] were [a] direct result of 10/16/2020 motor vehicle accident.’ ” (Id. at numbered p 5.)

Master Arbitrator DeSimone affirmed Hearing Arbitrator Lustig. “I find the lower [*6]arbitrator decided this claim based upon his review and evaluation of the record, as well as case law. I find the award below was clearly articulated and had a rational and plausible basis in the evidence. The lower arbitrator was persuaded by Applicant/Appellee’s submissions. There was no evidence presented which would establish any valid ground to set aside the award of the lower arbitrator. I see no reason [to] disturb the arbitrator’s decision. The award is therefore affirmed in its entirety.” (NYSCEF Doc No. 4, Master Arbitrator DeSimone’s Award, at 5.)

In determining whether ATIC’s verified petition made out a prima facie case in support of its cause of action to vacate it, this Court notes that ATIC claimed that Arbitrator Lustig erred with respect to his finding concerning an asserted issue of medical necessity. The factual averment in the verified petition that Ortho’s claims (bills) “were denied because the services were not medically necessary” (NYSCEF Doc No. 1, petition, ¶ 26) — and throughout its verified petition, ATIC continued to refer to lack of medical necessity as a defense supporting its nonpayment of Ortho’s bills (id. ¶¶ 38-42, 46, 55) — is contradicted by ATIC’s Form NF-10 denials of claim it submitted into the record (NYSCEF Doc No. 5, Ortho’s arbitration submission, at 15-18, 25-28). Said denials of claim asserted as a defense for nonpayment that the surgery and surgically related services to the right shoulder were not causally related to the accident of record (id.).

Nowhere in the verified petition to vacate the arbitration determination was there any reference to a defense of lack of a causal relationship between the rental of the medical supplies and the subject motor vehicle accident.

In essence what ATIC claimed for its prima facie case in this special proceeding is that Arbitrator Lustig erred regarding lack of medical necessity. This Court concludes as a matter of law that an alleged arbitrator’s error concerning the issue of lack of medical necessity fails to make out a prima facie case in support of vacatur of the arbitrator’s award in an Article 75 proceeding when lack of medical necessity was not the original basis for denying payment of the bills. An insurer must stand or fall upon the defense upon which it based its refusal to pay and cannot create new grounds (see Todaro v GEICO General Ins. Co., 46 AD3d 1086 [3d Dept. 2007]; Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219, 220-221 [2d Dept 1999]). An insurer is not permitted to assert a defense in litigation which was not preserved in the denial of claim form (see Metropolitan Radiological Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 675, 678 [Civ Ct, Queens Co. 2005]).

If a No-Fault insurer is contesting an arbitration award with a verified petition which fails to discuss the arbitrator’s analysis of the defense asserted in the respective denials of claim issued in response to the bills submitted, then the insurer has clearly failed to establish a prima facie case to vacate the arbitration award.

Accordingly, although Arbitrator Lustig did discuss an issue of lack of medical necessity in his award, this Court deems it surplusage inasmuch as ATIC’s denials of claim did not assert lack of medical necessity as a defense. That portion of his award which determined the issue of an asserted lack of causal relationship between the services and the accident could have been challenged in this proceeding — as it was a stated defense in the denials of claim — but ATIC [*7]failed to raise it in its verified petition.

There being a lack of a prima facie case in the verified petition for vacating the arbitration awards, this Court rejects ATIC’s contentions that Arbitrator Lustig’s award “was arbitrary and capricious, irrational and without a plausible basis” (NYSCEF Doc No. 1, petition, ¶ 35), that its “rights were prejudiced by the partiality of the arbitrator, and that the arbitrator exceeded his/her power and failed to make a final and definite award” (id. ¶ 59). ATIC failed to make out a prima facie case in support of any of the grounds listed in CPLR 7511 (b) (1) for vacating an arbitration award: that the rights of a party were prejudiced by (i) corruption, fraud or misconduct in procuring the award; (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; (iii) an arbitrator, or agency or person making the award, exceeding his power or so imperfectly executing it that a final and definite award upon the subject matter submitted was not made; or (iv) a failure to follow the procedure of Article 75.

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 Toby Susan DeSimone, Esq., which affirmed the arbitration award of Mitchell Lustig, Esq., is confirmed in its entirety.

E N T E R
Brooklyn, New York
May 28, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York

Footnotes

Footnote 1: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 an “assignor.”

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, NextStep, was not the respondent in the arbitration, but was the applicant.

Footnote 3:The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Mitchell Lustig, Esq. and/or Master Arbitrator Toby Susan DeSimone, Esq.” (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 an arbitration award without first seeking master arbitration (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 4:Paragraph 28 of the petition describes the AAA Case No. as 99-21-1214-9074, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1214-9074.

Footnote 5:The term “hearing arbitrator” is used herein instead of “arbitrator” to avoid confusion with the term “master arbitrator.”

Footnote 6:The reference to an “IME report” in paragraphs 39, 43, 46, 47, and 55 are inapropos. There was no IME report upon which ATIC relied in denying compensation. There was only a peer review and, as we shall see, it did not even refer to lack of medical necessity.

Footnote 7:“In No-Fault insurance arbitration, an error of law is a ground for reversal by a master arbitrator of a hearing arbitrator’s award (11 NYCRR 65-4.10 [a] [4]). This is an exception to the principle generally applicable to arbitration that errors of law do not warrant vacatur of an arbitrator’s award (see, e.g., Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471,479 [2006]). This Court has held that the error-of-law ground for reversal applies only to substantive law, and not to the means by which factual issues are assessed (see Matter of American Tr. Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039 [Sup Ct, Kings County 2023]).

Footnote 8:11 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.

American Transit Insurance Company, Petitioner, against NextStep Healing, Inc., A/A/O YULEE VELEZ, Respondent.

Index No. 500216/2023

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

Aaron D. Maslow, J.

The following numbered papers were read on this petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A – Arbitration Award (NYSCEF Doc No. 3)
Exhibit B – Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C – Respondent NextStep Healing, Inc.’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D – Petitioner American Transit Insurance Company’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)

Issue Presented

In an Article 75 proceeding commenced by an insurance company to vacate the awards of a No-Fault insurance hearing arbitrator and a master arbitrator in favor of a health service provider, does the insurance company make out a prima facie case of entitlement to vacatur where the bases for relief were not presented to either the hearing arbitrator or the master arbitrator?

Background

This is a special proceeding — pursuant to CPLR Article 75 — commenced by American Transit Insurance Company (“ATIC”) seeking an order and judgment vacating a No-Fault insurance master arbitration award of Steven Rickman, Esq. (dated October 30, 2022), which affirmed the arbitration award of Teresa Girolamo, Esq. (dated July 12, 2022) granting Respondent NextStep Healing, Inc.’s (“NextStep”) claim for $4,124.54 in No-Fault insurance compensation for the rental to Assignor Yulee Velez ^[FN1] of medical supplies from September 2, 2020 to September 28, 2020.^[FN2] ,^[FN3] Assignor had allegedly been injured in a February 23, 2020 [*2]motor vehicle accident. The medical supplies were prescribed by Dr. Andrew Miller following his left knee arthroscopic surgery performed on Assignor on August 28, 2020.

The arbitration was organized by the American Arbitration Association (“AAA”), which 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.

The master arbitration was assigned Case No. 99-21-1190-9729 ^[FN4] by the AAA (NYSCEF Doc No. 4, Master Arbitration Award). At oral argument before this Court on May 12, 2023, Petitioner ATIC appeared and argued that the above-referenced arbitration awards should be vacated. Respondent NextStep has neither submitted opposition nor appeared in this special proceeding.

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 Teresa Girolamo, Esq. failed to follow well settled law” (id. ¶ 41). “As a result, Petitioner’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. ¶ 68).

As a predicate to its contentions in the petition that that both arbitration awards should be vacated, ATIC asserted that the claims totaling $4,124.54 were denied by it because the services were not medically necessary as per the peer review of Dr. Douglas Petroski, a medical expert (id. ¶¶ 25-26, 42, 48). ATIC contended that the claims at issue were originally delayed for verification, including an examination under oath (“EUO”), but Arbitrator Girolamo precluded ATIC and refused to consider the peer review or decide the medical necessity defense; instead, the arbitrator based her decision on the fact that there was a large gap between the scheduling of the first and second EUOs. The arbitrator found the requests to be untimely and precluded Petitioner as a result. (Id. ¶¶ 43-45.) “The arbitrator’s decision failed to consider that the EUO was scheduled in the heart of Covid and that the Governor’s Executive Order 202.8 and the series of subsequent orders stayed all time frames provided for by the regulations (id. ¶ 46).” ATIC’s evidence submitted to the hearing arbitrator ^[FN5] “clearly satisfied its burden” (id. ¶ 49).

Ultimately the medical provider had to prove by a preponderance of the evidence that its services were reasonable and necessary, claimed ATIC; the petition to vacate cited to Dayan v Allstate Ins. Co. (49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]), and Park Slope Med. and Surgical Supply, Inc. v. Travelers Ins. Co. (37 Misc 3d 19, 22 n [App Term, 2d Dept, 2d, 11th & 13th Dists 2012]) (id. ¶ 50). “In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer review,” maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2009]) (id. ¶ 51). NextStep failed to offer any rebuttal at all, never mind one that meaningfully referred to Dr. Petroski’s peer review, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (id. ¶ 52).

Further, claimed ATIC, “Petitioner’s peer review and or IME report ^[FN6] exposed the Respondent and claimant for providing and receiving unnecessary medical treatment for the purpose of over-billing the carrier and bolstering the claimant’s personal injury claim” (id. ¶ 55). “The arbitrator, as finder of fact, is required to weigh the evidence when making a determination whether services were medically necessary. [NextStep] did not submit a rebuttal to the peer review and/or IME report. As such, the arbitrator did not have any evidence to suggest that the services were medically necessary” (id. ¶ 64).

Discussion

As noted above, Respondent NextStep has not appeared in this special proceeding, either with written opposition or oral argument. The question arises whether Petitioner ATIC’s petition to vacate the master arbitration award should be granted solely on default — on the nonappearance of Respondent NextStep. This Court answers the question in the negative.

“[T]he announced policy of this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties. One way to encourage the use of the arbitration forum we recently noted would be to prevent parties to such agreements from using the courts as a vehicle to protract litigation. This conduct has the effect of frustrating both the initial intent of the parties as well as legislative policy [citation & internal quotation marks omitted].” (Nationwide Gen. Ins. Co. v Investors Ins. Co. of Am., 37 NY2d 91, 95 [1975].) “Judicial review of an arbitrator’s award is extremely limited” (Pearlman v Pearlman, 169 AD2d 825 [2d Dept 1991]). This is especially true with respect to No-Fault insurance arbitrations. The standard for Article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law ^[FN7] is whether it is so [*3]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]). Similarly, with respect to factual issues reviewed by a master arbitrator, the proper standard of his review was whether the latter reached his decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).^[FN8]

Were this Court to vacate a No-Fault insurance master arbitration award merely because a verified petition to vacate has been filed within the context of an Article 75 proceeding and the respondent failed to appear in opposition, the policy preference for the adjudication of such disputes through arbitration would be significantly frustrated. It is quite possible that a health service provider who prevailed in arbitration and was awarded a relatively low sum of money simply finds it not financially or logistically worthwhile to retain legal counsel to interpose opposition. Merely because one side had the resources to challenge the arbitration award in court and the other declined to undertake the effort to retain counsel should not impel the court to ipso facto rubber-stamp the unopposed petition commencing the special proceeding.

Rather, the court should treat this situation as the functional equivalent of when a plaintiff moves for a default judgment. As part of its application for a judgment by default, the plaintiff must submit “proof of the facts constituting the claim. . .” (CPLR 3215 [f]). The affidavit of merit must provide enough facts to enable the court to determine that a viable cause of action exists against the party in default (Roy v 81 E 98th KH Gym, LLC, 142 AD3d 985 [2d Dept 2016]).

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.)

In Matter of FIA Card Servs. v Thompson (18 Misc 3d 1146[A], 2008 NY Slip Op 50450[U] [Dist Ct, Nassau County 2008], the court discussed a petitioner’s burden when commencing a special proceeding to confirm an arbitration award. The court’s analysis would likewise apply to special proceedings to vacate an arbitration award. “In evaluating the proof offered by a petitioner in support of the foregoing, it must be kept in mind that ‘the standards governing motions for summary judgment are applicable to special proceedings generally (Matter of Port of New York Auth. [62 Cortlandt St. Realty Co.], 18 NY2d 250, 255, cert denied sub nom. McInnes v. Port of New York Auth., 385 U.S. 1006)[.]’ Brusco v. Braun, 199 AD2d 27, 31 (1st Dept. 1993) aff’d 84 NY2d 674 (1994); See also: CPLR 409(b); Friends World College v. Nicklin, 249 AD2d 393 (2nd Dept. 1998); Bahar v. Schwartzreich, 204 AD2d 441 (2nd Dept. 1994). Accordingly, to prevail, a petitioner must submit proof in evidentiary form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065 (1979)[.] A petitioner’s failure to do so will result in the denial of the petition, regardless of the sufficiency of any papers in opposition. Winegrad v. New York University Medical Center, 64 NY2d 851 (1985); Delgado v. Butt, [48] AD3d [735] (2nd Dept. 2008); Martinez v. 123-16 Liberty Ave. Realty Corp., 47 AD3d 901 (2nd Dept. 2008)[.]” (Id. at *5 [parallel citations omitted].)

In a special proceeding to stay arbitration, the petitioner must make out a prima facie case (Matter of Empire Ins. Co. v Milioner, 187 AD2d 277 [2d Dept 1992]). A court may determine that a claim is not properly before it in an Article 78 special proceeding (see Matter of McCoy v Annucci, 199 AD3d 1143 [3d Dept 2021]). A special proceeding seeking pre-action discovery must provide the facts and the law which supports the relief sought (Matter of Accetta, 39 Misc 3d 1218[A], 2013 NY Slip Op 50657[U] [Sup Ct, Kings County 2013]).

Taking into account this case law, this Court holds that in an Article 75 proceeding to vacate the award of a No-Fault insurance arbitration, where the respondent health service [*4]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.

Determination

The instant arbitration concerned several bills submitted by NextStep to ATIC for payment. Arbitrator Girolamo described the issue in dispute as “[W]hether this arbitration is premature due to outstanding verification.” Timely verification requests were issued by ATIC, noted Arbitrator Girolamo, but in each instance it informed NextStep that an EUO of Assignor was still outstanding. “The first EUO letter was issued on 6/15/2020 for an EUO of 7/22/2020. This was rescheduled on 11/13/2020 to 2/17/2021. No explanation was provided for this gap in scheduling.” (NYSCEF Doc No. 3, Hearing Arbitration Award, at numbered pp 2-3.) Arbitrator Girolamo concluded: “The issue in this case turns on the handling of the scheduling of the EUO. The first date was 7/22/2020 and the second date was 2/17/2021. Respondent did not provide any claims adjuster affidavit or attorney affidavit regarding the scheduling of same and the huge gap. As such I find that based upon the claims handling of this case, the delay in scheduling is unacceptable. Therefore Applicant’s claim is granted.”

Master Arbitrator Rickman affirmed Arbitrator Girolamo. He noted that ATIC defended against payment of NextSetp’s claims in the hearing arbitration on the basis that there was verification outstanding, i.e., an EUO of Assignor. He reviewed Arbitrator Girolamo’s findings. Master Arbitrator Rickman then noted that ATIC’s brief submitted to him did not contest Arbitrator Girolamo’s determination regarding Assignor’s failure to attend an EUO.^[FN9] (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2.) ATIC’s master arbitration brief argued that ” ‘At the time the defense package was due the claim was neither paid nor denied as there remained outstanding verification. As a result, the defense package presented concerned the verification requests. Since then, the claims were denied based on peer review. The matter should be remanded for a determination on the merits.’ ” (Id.)

Master Arbitrator Rickman reasoned that since the Form NF-10 denials of claim issued by ATIC, citing a defense predicated on Dr. Douglas Petroski’s peer review, were issued on March 15, 2021, they could have been submitted for consideration at the hearing arbitration, which took place on July 12, 2022 (id.). “Appellant offers absolutely no explanation why it did not submit the peer review denials into evidence prior to the scheduled hearing so that the NFA [No-Fault Arbitrator] could have considered the issue” (id.). Master Arbitrator Rickman took cognizance of the provision in 11 NYCRR 65-4.10 (c) (6), which permits the master arbitrator to only consider those matters which were the subject of the arbitration below or which were [*5]included in the arbitration award appealed from. “Appellant’s peer review defense was not the subject of the arbitration below nor was this defense included in the arbitration award.” (Id.)

Noting that Arbitrator Girolamo considered all the evidence before her in the AAA’s electronic case folder, Master Arbitrator Rickman was satisfied that the former’s award was rationally supported. He concluded, “I find that the arbitrator’s determination was not irrational, arbitrary, capricious or incorrect as a matter of law.” (Id. at 3.)

In determining whether ATIC’s verified petition made out a prima facie case in support of its cause of action to vacate the arbitration awards, this Court takes note that ATIC basically presented two bases for vacatur. One was that Arbitrator Girolamo erred in denying the defense that there was a failure by Assignor to attend EUOs; that she should have considered Gov. Andrew Cuomo’s Executive Orders, which allegedly stayed all time frames. The other was that its peer reviewer, Dr. Petroski proved lack of medical necessity for the medical supplies at issue.

A party cannot raise in court an issue which should have been raised in arbitration (see Rochester City Sch. Dist. v Rochester Teachers Assn., 41 NY2d 578 [1977]). The purpose of No-Fault insurance master arbitration is clearly so that the unsuccessful party in the original arbitration may appeal without having to proceed straight to court with an Article 75 proceeding. This is evident from a review of the grounds for reversal by a master arbitrator set forth at 11 NYCRR 65-4.10(a) (quoted in n 8 supra). However, just as it would be inappropriate to commence an Article 75 proceeding without first having sought master arbitration (see Matter of Staten Island 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], so too it is inappropriate to commence an Article 75 special proceeding without first having raised before a master arbitrator the defense relied on at the hearing arbitration (see Matter of Metropolitan Prop. & Liab. v Mendelsohn, 251 AD2d 666 [2d Dept 1998] [master arbitrator exceeded his powers by permitting party to return to hearing arbitration with evidence inadvertedly not submitted previously]).

In the instant case, the issue presented to Master Arbitrator Rickman was a defense of lack of medical necessity. Under “Issues Presented for Review” in its master arbitration brief, ATIC wrote, “1. Whether the DME [durable medical equipment] was medically necessary. In her award dated, 02/23/20, Arbitrator Molesso awarded the Applicant $4,124.54” (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief, at 35). (While the amount awarded by Arbitrator Girolamo was correct, ATIC mistakenly called her “Arbitrator Molesso” and set forth an incorrect award date, the correct one being July 12, 2022.) Therefore, since ATIC failed to preserve at the master arbitration level an issue regarding the failure of Assignor to attend EUOs as a defense to payment of the claims, it cannot now pursue this issue here in court review of the master arbitration award. There is a lack of a prima facie case by ATIC in this Court concerning the issue of Assignor’s nonappearance at the EUOs.

Similarly, ATIC did not assert the defense of lack of medical necessity (as opined by Dr. Petroski in his peer review) before Arbitrator Girolamo. This is abundantly clear from her award and from Master Arbitrator Rickman’s award. ATIC’s allegation in paragraph 44 of its petition (NYSCEF Doc No. 1), “The arbitrator precluded Petitioner and refused to consider the peer review or decide the medical necessity defense,” constitutes an unsupported and incorrect accusation of misconduct on the part of Arbitrator Girolamo. ATIC’s failure to raise the issue of lack of medical necessity is due to its own neglect to litigate this before her.

ATIC could have submitted the denial of claim asserting lack of medical necessity, [*6]considering that its Form NF-10 denials of claim were issued a year and four months earlier, yet it never did so.^[FN10] Not having asserted this defense before the hearing arbitrator, ATIC lacks a prima facie case in this Court. In effect, ATIC seeks de novo review of a defense never presented in the original arbitration, which is improper as CPLR 7511 review cannot be had when the issue was not preserved (see Rochester City Sch. Dist. v Rochester Teachers Assn., 41 NY2d 578).

Parenthetically, it was neither irrational nor arbitrary for Arbitrator Girolamo to reject the EUO failure-to-appear defense without ATIC explaining the gap between scheduling the initial EUO on June 15, 2020 for July 22, 2020, and the follow-up request on November 13, 2020 for February 17, 2021 (see 11 NYCRR 65-3.5 [b], 65-3.6 [b]; Restoration Chiropractic, P.C. v 21st Century Ins. Co., 65 Misc 3d 157[A], 2019 NY Slip Op 51961[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2019]).

There being a lack of a prima facie case in the verified petition for vacating the arbitration awards, this Court rejects ATIC’s contentions that “The arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (NYSCEF Doc No. 1, petition, ¶ 35). The assertion that “Arbitrator Teresa Girolamo, Esq. failed to follow well settled law” (id. ¶ 41) is without any merit. In fact, by rejecting ATIC’s failure-to-attend EUO defense, she followed well settled law governing the scheduling of EUOs, as discussed in the preceding paragraph. Arbitrator Girolamo was not partial and ATIC’s assertion that she was (id. ¶ 68) is rejected. Neither did Arbitrator Girolamo exceed her power and fail to make a final and definite award, this Court rejecting such an assertion (id.).

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 Steven Rickman, Esq., which affirmed the hearing arbitration award of Teresa Girolamo, Esq., is confirmed in its entirety.

E N T E R
Dated: Brooklyn, New York, May 28, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the
State of New York

Footnotes

Footnote 1: 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 an “assignor.”

Footnote 2: The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Teresa Girolamo, Esq. and/or Master Arbitrator Steven Rickman, Esq.” (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 an arbitration award without first seeking master arbitration (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 3: 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, NextStep, was not the respondent in the arbitration, but was the applicant.

Footnote 4: The original arbitration was assigned AAA Case No. 17-21-1190-9729 (NYSCEF Doc No. 3, Hearing Arbitration Award). For the master arbitration appeal, the AAA switched the “17” to “99.”

Footnote 5: The term “hearing arbitrator” is used herein instead of “arbitrator” to avoid confusion with the term “master arbitrator.”

Footnote 6: The references to an “IME report” in the verified petition are inapropos. There was no IME report upon which ATIC relied in denying compensation.

Footnote 7:“In No-Fault insurance arbitration, an error of law is a ground for reversal by a master arbitrator of a hearing arbitrator’s award (11 NYCRR 65-4.10 [a] [4]). This is an exception to the principle generally applicable to arbitration that errors of law do not warrant vacatur of an arbitrator’s award (see, e.g., Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471,479 [2006]). This Court has held that the error-of-law ground for reversal applies only to substantive law, and not to the means by which factual issues are assessed (see Matter of American Tr. Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039 [Sup Ct, Kings County 2023]).

Footnote 8:11 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 9: Master Arbitrator Rickman wrote, “Appellant’s brief does not contest the NFA’s determination regarding its outstanding verification [EUO] defense. Thus, the lower arbitration award is affirmed on this issue (defense).” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2.) One could argue that he should not have even written that he was affirming Arbitrator Girolamo on this defense since it was not raised in ATIC’s master arbitration brief (see Matter of Bamond v Nationwide Mut. Ins. Co., 75 AD2d 812, 813 [2d Dept 1980] [Article 75 court should not consider question not raised in No-Fault insurer’s application]).

Footnote 10: It is true that the denial of claim forms would have constituted late evidence past the filing of ATIC’s hearing arbitration submission (see 11 NYCRR 65-4.2 [b] [3] [i]-[iii]), but it could have sought leave from Arbitrator Girolamo to submit them into the record (see 11 NYCRR 65-4.2 [b] [3] [iv]).

American Transit Insurance Company, Petitioner, against Nexray Medical Imaging PC D/B/A Soul Radiology, A/A/O Ronald Simpson, Respondent.

Index No. 530898/2022

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

Roman A. Kravchenko, Garden City, for respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition and cross-petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A — Arbitration Award (NYSCEF Doc No. 3)
Exhibit B — Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)
Notice of Cross-Petition (NYSCEF Doc No. 12)
Cross-Petition (NYSCEF Doc No. 13)
Stipulation of Adjournment (NYSCEF Doc No. 14)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 15)
Affirmation in Opposition to Cross-Petition and Reply in Support of Petition (NYSCEF Doc No. [*2]16)^[FN1]

Issue Presented

Where a No-Fault insurer initially denies payment of bills on the grounds that the injured person was acting in the course of employment while driving and, therefore, the bills should be submitted to the Workers’ Compensation insurer instead, and thereafter the Workers’ Compensation Board finds that the injured person was not working while employed, should a defense of lack of medical necessity asserted in a second, subsequent denial of claim be considered?

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 Joseph J. O’Brien, Esq. (dated July 23, 2022), which affirmed the arbitration award of Matthew K. Viverito, Esq. (dated March 26, 2022) granting Respondent Nexray Medical Imaging PC’s (“Nexray”) claim for No-Fault insurance compensation for health service expenses.^[FN2] , ^[FN3] Arbitrator Viverito awarded $2,450.73 to Nexray as compensation for performing left shoulder, cervical, and lumbar MRIs on Ronald Simpson, its assignor ^[FN4] (“Assignor”), who claimed to have been injured in a motor vehicle accident on August [*3]6, 2019. (NYSCEF Doc Nos. 2, Notice of Petition; 1, Petition.)

Respondent Nexray has opposed ATIC’s petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $2,450.73 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements (NYSCEF Doc Nos. 12, Notice of Cross-Petition; 13, Cross-Petition).

The petition and cross-petition came before the undersigned for oral argument on May 12, 2023. At that time, both parties 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. 17-21-1191-9817 ^[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] Notably, and relevant in the instant case, is that first-party benefits are reduced by, among other things, Workers’ Compensation benefits where an injured person in a motor vehicle accident was acting in the course of employment (see Insurance Law § 5102 [b] [2]).

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 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 of health service).^[FN9] Besides providing information regarding the injured person, diagnoses, projected treatment, etc., 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 4, 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 three Form NF-3 claim forms (bills) submitted by Nexray to ATIC for payment. This was in accordance with the procedure for the submission of claims for No-Fault compensation, as summarized above. ATIC received two bills for date of service September 6, 2019 (right shoulder and cervical MRIs) on September 26, 2019, and one bill for date of service October 11, 2019 (lumbar MRI). After requesting additional verification, and receiving it on January 30, 2020, ATIC issued Form NF-10 denials of claim on February 24, 2020. These claim denials were timely inasmuch as they were issued within 30 days after the receipt of the 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 February 24, 2020 Form NF-10 denials of claim all asserted: “Claimant is eligible for Workers’ Compensation as he/she was in the course of employment at the time of accident, [and] as a result, all medicals should be submitted to the Workers’ Compensation carrier. ATIC is requesting that we be placed on notice regarding any Workers’ Compensation hearing” [*4](NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief, at 6, 14, 22).^[FN13] A fee defense was also asserted in them but it was never pursued in arbitration.

Thereafter, an application was made to the Workers’ Compensation Board for coverage of medical expenses under Workers’ Compensation. On September 4, 2020, the Workers’ Compensation Board issued a Notice of Decision, which determined the issue as follows: “Per claimant’s testimony, he was not working at time of accident. He was not logged in to any ride-sharing application. I find he did not have a compensable accident. Claimant can pursue no fault claim. No further action is planned by the Board at this time.” (Id. at 38.)

ATIC then submitted Assignor’s medical records to Dr. Edward Weiland, who issued a peer review on October 5, 2020, in which he opined that the subject MRIs were not medically necessary (id. at 50-54).

Thereafter, a second, subsequent denial of claim was issued by ATIC appurtenant to each of the three bills. They were all dated October 9, 2020, and asserted, “This service was denied based on a peer review by a reviewer/physician. . . . Peer review by Dr. Edward M. Weiland, M.D. attached.”^[FN14] (Id. at 10-13, 18-21, 26-29.)

Arbitrator Matthew K. Viverito’s Award

The record evidence reveals further that on March 26, 2002, Arbitrator Viverito conducted a hearing at which Andrew Ciccaroni, Esq., from Russell Friedman & Associates LLP, appeared for Nexray, and Dianne Galluzzo, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).

In his award, Arbitrator Viverito stated that the hearing documents were contained in Modria ^[FN15] . ATIC related that it was withdrawing its defense that Workers’ Compensation benefits were primary. (NYSCEF Doc No. 3, Arbitration Award, at numbered p 2.) It offered two arguments to the arbitrator as to why its October 9, 2020 denials of claim should be sustained (id.).

First, ATIC argued that the owner of Nexray was indicted by the federal government for allegedly participating in a criminal scheme to exploit insurance companies. Arbitrator Viverito rejected this argument since no documentation was presented that there was a guilty plea or a conviction.

Second, and more particularly relevant, ATIC argued that the MRIs were not medically necessary; it relied upon Dr. Weiland’s peer review. The pertinent findings by Arbitrator Viverito were as follows:

Having reviewed the evidence, I find that respondent’s subsequent denials of claim based on lack of medical necessity are fatally untimely as they were issued more than 30 days [*5]after receipt of claim, in violation of the No-fault Regulations. I further find that respondent may not rescind its original denial based on workers’ compensation and re-start the processing of the within claim.

Respondent argued that its subsequent denials of claim based on lack of medical necessity should be permitted and the within matter should move forward on the merits of such defense.

However, there is nothing in the No-fault Regulations which permits respondent to re-start the processing of claim and therefore I find that respondent is bound to the four corners of its original denials. Respondent has not presented persuasive support for its position that it may withdraw or retract denials based on workers’ compensation and re-start the time to pay or deny a claim.

Accordingly, I find that respondent’s subsequent denials of claim based on lack of medical necessity are unsustainable.

(Id. at numbered pp 2-3).

Arbitrator Viverito awarded the $2,450.73 principal billed. He also awarded statutory interest of 2% per month and an attorneys’ fee (see Insurance Law § 5106 [a]) and return of the $40 filing fee (see 11 NYCRR 65-4.5 [s]).

Master Arbitrator Joseph J. O’Briens’s Award

ATIC filed for master arbitration to appeal Arbitrator Viverito’s award. It challenged the arbitrator’s determination concerning the issue raised as to the true ownership of Nexray. It suffices to say—because this issue is not raised in the Article 75 petition—that Master Arbitrator O’Brien sustained the arbitrator’s determination because “an indictment . . . is not a conviction, and [ATIC] has not submitted evidence that that a conviction was obtained following the indictment [ATIC] relies on” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 3).

In its master arbitration brief, ATIC argued that Arbitrator Viverito’s treatment of the issue of medical necessity was irrational. There was citation to various court decisions on the issue of medical necessity. (NYSCEF Doc No. 6, Petitioner’s Arbitration Submission and Master Arbitration Brief, at 107-109). Master Arbitrator O’Brien concurred in the position of Nexray “that there is nothing in the No-fault Regulations which permits respondent to re-start the processing of claim and therefore I find that respondent is bound to the four corners of its original denials. Respondent has not presented persuasive support for its position that it may withdraw or retract denials based on workers’ compensation and re-start the time to pay or deny a claim.” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered pp 2-3.)

In his conclusion, Master Arbitrator O’Brien wrote, “For the foregoing reasons, we find that the award appealed from was detailed, well-reasoned and, therefore, was neither arbitrary nor capricious and was not in error as a matter of law.” He affirmed the arbitration award and also awarded $227.50 as a master arbitration attorney’s fee for Nexray.

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 Matthew K. Viverito 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 (id. ¶ 38). ATIC had offered the opinion of a medical expert to establish that the services were not medically necessary (id. ¶ 39). ATIC’s burden of proof was satisfied and Nexray had to prove medical necessity through the submission of a rebuttal which meaningfully [*6]referred to or rebutted the peer reviewer’s conclusions (id. ¶¶ 40-42). Nexray failed to do so, contended ATIC, and this was contrary to well settled law (id. ¶¶ 44-45, 48-55).

The petition concluded by asserting that Arbitrator Viverito’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 [Nexray]” (id. ¶ 59). “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. ¶ 60). ATIC was “entitled to a declaration that the arbitration decisions of Matthew K. Viverito, Esq. and Joseph J. O’Brien, Esq. in the matter designated AAA number 99-21-1191-9817 have no force or effect” (id. ¶ 61).

Nexray’s Cross-Petition to Confirm

Nexray argued in its cross-petition most significantly that the arbitration awards had to be confirmed if they were supported by evidence or other basis in reason (citing Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]); rational (citing Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]); and not inapposite to settled law (citing Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 148 AD3d 502 [1st Dept 2017]). ATIC did not meet its burden of establishing that the master arbitration award did not meet this criteria.

Nexray did not submit any calculation of an attorney’s fee for its opposition to the petition and maintenance of the cross-petition.

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 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 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 [*7]arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN19]

Discussion

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, considering the numerous paragraphs in its Article 75 petition discussing case law concerning the applicability of settled law.

The provision in 11 NYCRR 65-4.10 [a] [4] that a No-Fault insurance arbitration award may be vacated where it was incorrect as a matter of law refers to substantive issues not issues of fact (see American Transit Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039, *11 [Sup Ct, Kings County 2023]).

Master Arbitrator O’Brien sustained Arbitrator Viverito, describing the latter’s award as detailed, well-reasoned, neither arbitrary nor capricious, and not being in error as a matter of law (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 3).

This Court must next determine whether to sustain Master Arbitrator O’Brien’s review of Arbitrator’s Viverito award for an error of law.

“A presumption of medical necessity attaches to a defendant’s admission of the plaintiff’s timely submission of proper claim forms, and the burden then switches to the defendant to demonstrate the lack of medical necessity. Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins., 2007 NY Slip Op. 52273U, 2007 NY Misc. LEXIS 7860 (Dist. Ct., Nassau Co. 12/3/2007); A.B. Medical Services, PLLC v. NY Central Mutual Fire Ins. Co., 7 Misc 3d 1018(A), 801 N.Y.S.2d 229 (Civil Ct. Kings. Co. 2005); Citywide Social Work & Psychological Services v. Travelers Indemnity, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004).” (Millennium Radiology, P.C. v New York Cent. Mut. Fire Ins. Co., 23 Misc 3d 1121[A], 2009 NY Slip Op 50877[U], *2 [Civ Ct, Richmond County 2009]; accord Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18 [App Term, 2d Dept, 2d & 11th Dists 2004], mod on other grounds 35 AD3d 720 [2d Dept 2006]; Harvey Family Chiro PT & Acup, PLLC v Ameriprise Ins. Co., 68 Misc 3d 556 [Civ Ct, Bronx County 2020]).

“Pursuant to the statutory and regulatory framework governing the payment of no-fault automobile benefits, insurance companies are required to either pay or deny a claim for benefits within 30 days of receipt of the claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). However, the 30-day period may be extended where the insurer makes a request for additional information within 15 business days of its receipt of the claim (see 11 NYCRR 65-3.5 [b]; Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96, 100 [2005]; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432, 434 [2004]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 569-570), and an insurer is not obligated to pay or deny a claim until all demanded verification is provided (see Nyack Hosp. v General Motors Acceptance Corp., supra at 100-101; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492, 493 [2005], lv denied 7 NY3d 704 [2006]).” (New York and Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512, 513 [2d Dept 2006].)

“When an insurance company fails to comply with its duty to act expeditiously in processing no-fault claims, it will be precluded from raising most defenses (see, e.g., Presbyterian Hosp. v Maryland Cas. Co., 226 AD2d 613; LaHendro v Travelers Ins. Co., 220 AD2d 971; Presbyterian Hosp. v Atlanta Cas. Co., 210 AD2d 210; Loudermilk v Allstate Ins. Co., 178 AD2d 897; Bennett v State Farm Ins. Co., 147 AD2d 779). This is because the very purpose of the no-fault law was to ensure the ‘swift reimbursement of accident victims . . . who had serious injuries’ (Pavone v Aetna Cas. & Sur. Co., 91 Misc 2d 658, 663), with ‘as little litigation as possible’ (Matter of Furstenburg [Aetna Cas. & Sur. Co.], 67 AD2d 580, 583, rev’d on other grounds 49 NY2d 757).” (Presbyterian Hosp. in City of NY v Aetna Cas. & Sur. Co., 233 AD2d 431, 432 [2d Dept 1996].)

If an insurer asserts a lack of coverage defense defense, it will be permitted to assert said defense despite the lack of a timely-issue denial (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). The lack-of-coverage defense is an exception to the 30-day “pay-or-deny” rule enunciated in Presbyterian Hosp. v Maryland Cas. Co. (90 NY2d 274 [1997], which is considered the leading decision in No-Fault insurance law regarding the preclusion of defenses asserted in denials of claim where the denials are not timely issued (the deadline being 30 days after receipt of the claim form (bill) or 30 days after receipt of requested additional verification) or the denials are timely but the defense is not asserted therein. Lack of medical necessity is obviously not a lack of coverage defense.

“This Court has recognized that preclusion may require an insurer to pay a no-fault claim it might not have had to honor if it had timely denied the claim (see Presbyterian Hosp., 90 [*8]NY2d at 285). Nonetheless, we emphasized that the great convenience of ‘prompt uncontested, first-party insurance benefits’ is ‘part of the price paid to eliminate common-law contested lawsuits’ (id.; see Fair Price, 10 NY3d at 565-566).” (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d at 506.)

Therefore, it is well settled No-Fault insurance law that an untimely denial of claim issued by an insurer results in preclusion of the defense of lack of medical necessity in litigation. The case law is abundant. (See, e.g., A & S Med. P.C. v Allstate Ins. Co., 15 AD3d 170 [1st Dept 2005]; Country-Wide Ins. Co. v Zablozki, 257 AD2d 506 [1st Dept 1999]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [2d Dept 1999]; Gotham Acupuncture, P.C. v Country Wide Ins. Co., 20 Misc 3d 141[A], 2008 NY Slip Op 51615[U] [App Term, 1st Dept 2008]; Response Med. Equip. v General Assur. Co., 13 Misc 3d 129[A], 2006 NY Slip Op 51765[U] [App Term, 1st Dept 2006]; Diagnostic Rehab. Medicine Serv., P.C. v Farm Family Cas. Ins. Co., 7 Misc 3d 137[A], 2005 NY Slip Op 50826[U] [App Term, 1st Dept 2005].)

In the instant case, ATIC received Nexray’s additional verification regarding all three bills on January 30, 2020. When it issued Form NF-10 denials of claim on February 24, 2020, it asserted a fee defense and that Assignor was injured in the course of employment and should submit bills to the Workers’ Compensation carrier. It did not assert a defense of lack of medical necessity. ATIC’s 30-day deadline to assert lack of medical necessity as a defense expired on March 2, 2020 (February 29, 2020, the 30th day thereafter, being a Saturday).

The denials of claim issued on October 9, 2020, which asserted the peer review (lack of medical necessity) defense, contained a date of receipt of final verification of September 11, 2020. However, September 11, 2020 was not the date of receipt of final verification. Perhaps ATIC received the September 4, 2020 Workers’ Compensation Board Notice of Decision that day. However, said Notice of Decision did not constitute additional verification, as such term is referred to in the No-Fault Regulations (see 11 NYCRR 65-3.5 [b]). A decision of the Workers’ Compensation Board was not sought by ATIC.

“No-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to section 65-3.5 of this Subpart” (11 NYCRR 65-3.8 [a] [1]). Proof of claim was complete on January 30, 2020, for purposes of the bills at issue herein. The three Form NF-10 denials of claim issued on October 9, 2020 were more than eight months late. As such, the peer review (lack of medical necessity) defense asserted therein was a nullity.

Arbitrator Viverito correctly applied settled law when precluding the lack of medical necessity defense. He was correct in stating that “there is nothing in the No-[F]ault Regulations which permits [ATIC] to re-start the processing of claim and therefore I find that [ATIC] is bound to the four corners of its original denials” (NYSCEF Doc No. 3, Arbitration Award, at numbered pp 2-3). The No-Fault Regulations do not provide anywhere that the claim processing function begins anew if the Workers’ Compensation Board issues a determination that an injured person is entitled to No-Fault benefits. This is consistent with the fact that Workers’ Compensation benefits are to be harmonized with basic economic loss (expenses for health service treatment, lost earnings, and other reasonable and necessary expenses as a result of being injured in a motor vehicle accident) (see Insurance Law § 5102 [a], [b] [2]; Normile v Allstate Ins. Co., 60 NY2d 1003 [1983], affg 87 AD2d 721 [3d Dept 1982]); Ryder Truck Lines v Maiorano, 44 NY2d 364 [1978]; Carriers Ins. Co. v Burakowski, 93 Misc 3d 100 [Sup Ct, Erie County 1978]).

Had ATIC wished to assert a defense of lack of medical necessity it should have done so in the original denials of claim issued on February 24, 2020. Having failed to assert such defense within the 30-day period following receipt of complete proof of claim, including requested additional verification, said defense could not be considered. The presumption of medical necessity arising from the submission of the bills to ATIC survived.

An insurer must stand or fall upon the defense upon which it based its refusal to pay and cannot create new grounds (see Todaro v GEICO General Ins. Co., 46 AD3d 1086 [3d Dept. 2007]; Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219, 220-221 [2d Dept 1999]). ATIC was relegated to the defenses asserted in the February 24, 2020 denials of claim.

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]).

Not only was Master Arbitrator O’Brien correct when he found that Arbitrator Viverito’s award was detailed, well-reasoned, neither arbitrary nor capricious, and not being in error as a matter of law, it bears saying that the latter accurately stated the law concerning the untimely assertion of a defense of lack of medical necessity. Therefore, Master Arbitrator O’Brien’s affirmance was absolutely not irrational; it was legally correct.

The only issue before the arbitrators was one of law—whether the defense of lack of medical necessity being precluded was proper. There were no issues of fact. In sustaining the arbitrators, this Court holds as follows: Where a No-Fault insurer initially denies payment of bills on the grounds that the injured person was acting in the course of employment while driving and, therefore, the bills should be submitted to the Workers’ Compensation insurer instead, and later on the Workers’ Compensation Board finds that the injured person was not working while employed, a defense of lack of medical necessity asserted in a second, subsequent denial of claim—issued after the 30-day deadline past receipt of proof of claim—is precluded.

Judicial review of a master arbitrator’s authority to vacate a hearing arbitrator’s award derives from § 675 (presently § 5106 [c]) of the Insurance Law and involves the question of whether the master arbitrator exceeded his power (Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224 at 231). Master Arbitrator O’Brien did not exceed his power because he affirmed the award of Arbitrator Viverito, whose determination was consistent with well settled law (see 11 NYCRR 65-4.10 [a] [4]; cf. Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).

Accordingly, this Court rejects ATIC’s contentions in its petition that Arbitrator Viverito’s award was arbitrary and capricious, without rational basis, and incorrect as a matter of law (cf. NYSCEF Doc No. 1, Petition, ¶ 59). ATIC’s rights were not prejudiced, the arbitrator was not partial, he did not exceed his powers, and he did not fail to make a final and definite award” (cf. id. ¶ 60).

Cross-Petition;
Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, Nexray sought in its cross-petition to confirm the arbitration [*9]determinations. Having found that no grounds exist to vacate them, the master arbitration award must be confirmed. Nexray is entitled to No-Fault compensation for health services in the principal amount of $2,450.73.

Nexray also sought additional payments in the nature of interest, attorney’s fees, return of the arbitration filing fee, costs, and disbursements.

Interest:

Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 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] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action. Nexray presumptively received ATIC’s timely-issued denials a few days after February 24, 2020, when they were issued. Applicant’s arbitration request was received by the AAA on January 25, 2021 (NYSCEF Doc No. 5, Respondent’s Arbitration Request Form and Arbitration Submission, at 1), which was clearly more than 30 days later. Thus, interest on all of the claims herein accrued from that date, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest is calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term 2d Dept, 2d, 11th & 13th Dists 2022]).

Attorney’s Fees:

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $227.50 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [i].

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, Nexray is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of NY v Nexray Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Nexray’s counsel did not submit an affirmation specifying details with regard to work [*10]performed in this Article 75 special proceeding. It is not known whether an attorney or support staff performed the work. The cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The cross-petition asserted that Nexray “should be granted leave to serve an afirmation in order to set forth its resonable attroneys’ fees in defending this action.”

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.) Counsel should have included an affirmation containing details describing the work performed (see Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695 [2d Dept 2019] [claim for hourly fee for prevailing on policy issue not substantiated with any time records]). It behooved counsel to do so considering the expedited nature of special proceedings.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issue in the case at bar was neither novel nor unique, especially since the preclusion rule for untimely assertions of lack of medical necessity is established law.

Consdering the factors delineated herein, this Court awards $220.00 for work performed by Nexray’s counsel on this Article 75 proceeding. This Court applied the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level, and assumed that there was attorney involvement for two hours at the most. In addition, the $80.00 per hour personal appearance fee is awarded. (See 11 NYCRR 65-4.6 [c].)

Return of Arbitration Filing Fee:

ATIC shall also pay Nexray $40.00 as reimbursement for the fee paid to the AAA (see 11 NYCRR 65-4.5 [s] [1]).

Costs and Disbursements:

As the prevailing party, Nexray shall recover its costs and disbursements, to be taxed by the Clerk.

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:

(1) ATIC’s petition to vacate the master arbitration award of Joseph J. O’Brien in AAA Case No. 99-21-1191-9817 is denied and this special proceeding is dismissed.

(2) Nexray’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) Nexray is awarded the principal amount of $2,450.73 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent per month on a pro rate basis using a 30-day month, computed from January 25, 2021 to the date of payment of the principal amount, but excluding January 25, 2021 from being counted within the [*11]period of interest.

(5) After calculating the sum total of the principal amount of $2,450.73 plus the interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay Nexray an attorney’s fee of $227.50 in connection with the master arbitration.

(7) ATIC shall pay Nexray an attorney’s fee of $220.00 for work performed by counsel on this Article 75 proceeding.

(8) Nexray shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

Dated: May 28, 2023
Brooklyn, New York
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York

Footnotes

Footnote 1: Respondent’s reply affirmation in support of the cross-petition, filed on May 13, 2023 (day after oral argument), is not considered inasmuch as it was not timely filed and no application to accept it was made to this Court (see CPLR 402, 2214, 3012; 22 NYCRR 202.8, 202.9).

Footnote 2: The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Matthew K. Viverito, Esq. and/or Master Arbitrator Joseph J. O’Brien, Jr., Esq.” (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 an arbitration award without first seeking master arbitration (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 3: 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, Nexray, was not the respondent in the arbitration, but was the applicant.

Footnote 4: 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 5: Paragraph 28 of the petition describes the AAA Case No. as 99-21-1191-9817, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1191-9817.

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 MRIs.

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: References to NYSCEF filings lacking page numbers are to the PDF page numbers.

Footnote 14: Again, a fee defense was also asserted but this was of no consequence since excessive fees was not an issue in arbitration.

Footnote 15: 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 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 to be able to sue 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., revd on other grounds 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.

American Transit Insurance Company, Petitioner, against Nexray Medical Imaging PC D/B/A Soul Radiology, A/A/O Carlos Guzman, Respondent.

Index No. 533041/2022

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

Roman Kravchenko, Melville, for Respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition and cross-petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A – Arbitration Award (NYSCEF Doc No. 3)
Exhibit B – Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 12)
Notice of Cross-Petition (NYSCEF Doc No. 13)
Cross-Petition (NYSCEF Doc No. 14)^[FN1]

Issues Presented

Should a No-Fault arbitration award be sustained where the insurer denied payment on the ground that there was a fact or founded belief that health services were unrelated to the motor vehicle accident but the insurer failed to submit an explanatory brief, witness statements, medical records, or an expert affidavit to support its defense?

Is it the role of a No-Fault hearing arbitrator to peruse a transcript of an examination under oath for the purpose of locating testimony to support such a defense, in the absence of the insurer’s highlighting the specific substantiating testimony?

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 Victor J. D’Ammora, Esq. (dated September 8, 2022), which affirmed the arbitration award of Kihyun Kim, Esq. (dated June 4, 2022) granting Respondent Nexray Medical Imaging PC’s (“Nexray”) claim for No-Fault insurance [*2]compensation for health service expenses.^[FN2] ,^[FN3] Arbitrator Kim awarded $878.67 to Nexray as compensation for performing a left knee MRI on Carlos Guzman, its assignor ^[FN4] (“Assignor”), who claimed to have been injured in a motor vehicle accident on September 20, 2019. (NYSCEF Doc Nos. 2, Notice of Petition; 1, Petition.)

Respondent Nexray has opposed ATIC’s petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $878.67 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements (NYSCEF Doc No. 13, Notice of Cross-Petition; 14, Cross-Petition).

The petition and cross-petition were scheduled for oral argument on May 19, 2023, before this Court. Prior thereto, in accordance with IAS Part 2 Rules, the parties were notified that the matter would be determined on the submissions.

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association (“AAA”), which assigned Case No. 17-21-1191-8028 ^[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 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 of health service).^[FN9] Besides providing information regarding the injured person, diagnoses, projected treatment, etc., [*3]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 4, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN10] ,^[FN11] The insurer must 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] identifying why the bill was not paid. (See Insurance Law § 5106 [a]; 11 NYCRR 65-3.5 [b]; Viviane Etienne Medical Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 505 [2015]; New York & Presbyterian Hospital v Progressive Casualty Ins. Co., 5 AD3d 568, 569-570 [2d Dept 2004]). The 30-day deadline does not apply to situations where the insurer claims that health services were not related to the subject motor vehicle accident (see Central Gen. Hosp. v. Chubb Group, 90 NY2d 195 [1997]).

The record evidence submitted in this Article 75 proceeding revealed that the underlying arbitration involved one Form NF-3 claim form (bill) submitted by Nexray to ATIC for payment. It was in the amount of $878.67 and it covered a left knee MRI of March 6, 2020. This was in accordance with the procedure outlined in the previous paragraph for the submission of claims for No-Fault compensation. After requesting additional verification, and receiving it on June 19, 2020, ATIC issued a Form NF-10 denial of claim on July 13, 2020.

The denial of claim asserted: “Based on American Transit’s investigation and EUO [examination under oath] testimony conducted on 6/17/20, American Transit is asserting a lack of coverage, as it has established the ‘fact or founded belief’ that the claimant’s treated condition was unrelated to the motor vehicle accident. The eligible injured person failed to establish that the alleged injuries were causally related to the motor vehicle accident.” (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief, at 4 ^[FN13] ). A fee defense was also asserted but not pursued in arbitration.

Arbitrator Kihyun Kim’s Award

The record evidence reveals further that on May 5, 2002, Arbitrator Kihyun Kim conducted a hearing at which Alexander Mun, Esq., from Russell Friedman & Associates LLP, appeared for Nexray, and Helen Cohen, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).

In his award, Arbitrator Kim stated that the hearing documents were contained in the [*4]AAA’s ADR Center ^[FN14] . ATIC conceded that the fee charged by Nexray was consistent with the applicable fee schedule. (Id. at numbered p 2.) The only issue in the case was “whether [ATIC] established its lack of coverage defense” (id. at numbered p 1).

In support of its claim that it established the fact or founded belief that Assignor’s treated condition was unrelated to the subject motor vehicle accident, ATIC’s counsel maintained that Assignor’s EUO “testimony revealed that the accident was a low impact condition, and that the scope and amount of treatment was disproportionate to the nature of the accident. She noted, among other things[,] that the Assignor did not go to the hospital and was not treated at the scene. Counsel further advised that Applicant’s [Nexray] owner has been indicted for his participation in a no fault fraud scheme involving Applicant.” (Id. at numbered p 4.) In terms of evidence, ATIC relied on “a Report of Motor Vehicle Accident – MV104; the Assignor’s NF-2 [application for No-Fault benefits]; the EUO scheduling letters; and the transcript of the Examination Under Oath of the Assignor, dated June 17, 2020” (id.).

Nexray’s counsel argued that ATIC “failed to upload sufficient proof to the record to establish its defense” (id.).

Arbitrator Kim reviewed case law pertaining to No-Fault insurers’ defense that a purported accident was not a covered event because there was a fact or founded belief that a condition and/or treatment was not proximately related to it (id. at numbered pp 2-3):

• Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]: The initial burden is on the insurer to come forward with proof establishing by “fact or founded belief” that the claimed injuries have no nexus to the accident.

• Mt. Sinai Hosp. v Triboro Coach Inc., 263 AD2d 11 [2d Dept. 1999]: Causation is presumed since it would not be reasonable to insist that an applicant must prove as a threshold matter that the patient’s condition was caused by the automobile accident; when alleging a lack of coverage defense, the insurer bears the burden of coming forward with admissible evidence of the fact of lack of coverage or of the foundation for its belief that there is no coverage.

• Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13 [2d Dept. 2009]: This defense often involves a fact pattern which calls for the insurer to present evidence by a medical expert who is qualified to render an opinion on causality.

• A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 822 [Civ Ct, Kings County 2005]: When arguing fraud as a defense, the insurer bears the burden of presenting sufficient evidence of the fact of fraud or of the foundation for its belief that fraud occurred; besides medical evidence an affidavit by a special investigator can suffice; if the insurer carries its burden then the insured must rebut it or succumb.

• A.B. Med. Servs. PLLC v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept, 9th & 10th [*5]Jud Dists 2002]: An insurer’s founded belief cannot be based upon unsubstantiated hypotheses and suppositions.

Applying the law to the evidence presented to him, Arbitrator Kim made the following findings (NYSCEF Doc No. 3, Arbitration Award, at numbered p 4):

I find that Respondent failed to establish its lack of coverage/causation defense. I find that there is insufficient credible evidence in the record to support a founded belief that, “the claimant’s treated condition was unrelated to the motor vehicle accident.” Respondent did not upload any explanatory brief, any witness statements, any medical records, any expert affidavit regarding causation, any SIU affidavit discussing Respondent’s investigation or explaining how or why Respondent’s determination was made, or any other actual proof to support and substantiate its defense, other than the EUO transcript of the Assignor, and the MV-104, Report of Motor Vehicle Accident. I have carefully review[ed] the EUO transcript of the Assignor, as well as the EUO transcript of the other claimant/passenger in the linked case, and I find it unclear as to what specific testimony Respondent believes adequately supports its assertions/defense and how Respondent made the leap that the Assignor’s treated condition was unrelated to the motor vehicle accident. While counsel asserted that the accident was not significant and that the asserted injuries were disproportionate to the low impact nature of the accident, I do not[ ] believe that the testimonial evidence alone was sufficient to reach such conclusion, particularly without the presentation of some actual medical evidence and/or expert opinion. With respect to the asserted indictment of Applicant’s owner, Respondent did not present any actual evidence of any indictment nor any evidence that any such indictment related to the subject accident, the claimants and/or claims at issue in this proceeding. If Respondent’s investigation was broader than what was presented herein, then Respondent should have uploaded such supporting evidence to the record herein. In sum, only limited evidence was uploaded to the record and on this record, the evidence submitted to the record in this case does not, in my view, make out a prima facie case in support of Respondent’s asserted defense. Based on the totality of the evidence in the record, Respondent has failed to meet its initial burden and its denial cannot be sustained. Accordingly, Applicant is entitled to reimbursement in the amount of $878.67. . . .

In essence, Arbitrator Kim held that there was a lack of evidence to support ATIC’s position that it established the fact or founded belief that Assignor’s condition and treatment were unrelated to the subject accident.

Arbitrator Kim awarded the $878.67 principal billed. He also awarded statutory interest of 2% per month, an attorney’s fee, and return of the $40 filing fee (id. at numbered pp 5-6; see 11 NYCRR 65-4.5 [s]).

Master Arbitrator Victor J. D’Ammora’s Award

ATIC filed for master arbitration to appeal Arbitrator Kim’s award. It argued that the latter’s award was irrational (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master [*6]Arbitration Brief, at pp 70-79).

Master Arbitrator D’Ammora held that while a hearing arbitrator’s award can be reversed if it is incorrect as a matter of law, a master arbitrator exceeds his statutory power by making his own factual determination, reviewing factual and procedural errors committed during the course of the arbitration, weighing the evidence, or resolving credibility issues (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2, citing 11 NYCRR 65-4.10 [a] [4]) and Mott v State Farm Ins. Co., 55 NY2d 224 [1982]).

He noted that Arbitrator Kim reached his determination after reviewing the submitted evidence—that there was insufficient evidence to sustain a lack of coverage defense. “Arbitrator Kim’s conclusions and findings were in his discretion and interpretation of the evidence. It cannot be regarded as reversible error within this Master Arbitrator’s purview. This Master Arbitrator cannot conduct a de novo review and substitute my interpretation and view of the evidence for that of Arbitrator Kim. In particular, as here, Arbitrator Kim’s determination is rational and supported by the record.” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2.) The award was affirmed along with a $195.00 attorney’s fee (id. at numbered pp 3-4).

ATIC’s Petition to Vacate

ATIC’s CPLR Article 75 petition to vacate stated that the claim was denied based upon ATIC’s investigation and the EUO testimony—that there was a fact or founded belief that Assignor’s treated condition was unrelated to the motor vehicle accident and that Assignor failed to establish that the alleged injuries were causally related to the accident (NYSCEF Doc No. 1, Petition, ¶ 26). “The arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (id. ¶ 35), in that “Arbitrator Kihyun Kim failed to follow well settled law” (id. ¶ 40). The petition proceeded to argue that ATIC needed only to show a founded belief to support its defense (id. ¶ 40), and that circumstantial evidence could support it (id. ¶ 47). “[ATIC] offered evidence to establish the ‘founded belief’ of fraud. [Nexray] did not offer any evidence to rebut that showing. The arbitrator ruled for [Nexray] despite the fact that [ATIC] offered evidence of a founded belief and [Nexray] failed to offer any evidence to rebut that showing. In doing so the arbitrator failed to follow well settled law.”

The petition concluded by asserting that Arbitrator Kim’s decision was “arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 49). ATIC was “entitled to a declaration that the arbitration decisions of Kihyun Kim, Esq. and Vic D’Ammora, Esq. in the matter designated AAA number 99-21-1191-8208 have no force or effect” (id. ¶ 50).

Nexray’s Cross-Petition to Confirm

Nexray argued in its cross-petition most significantly that the arbitration awards had to be confirmed if they were supported by evidence or other basis in reason (citing Matter of Petrofksy v Allstate Ins. Co., 54 NY2d 207 [1981]); rational (citing Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]); and not inapposite to settled law (citing Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 148 AD3d 502 [1st Dept 2017]). ATIC did not meet its burden of establishing that the master arbitration award did [*7]not meet this criteria. (See generally NYSCEF Doc No. 14, Cross-Petition ¶¶ 21-29.)

Besides seeking confirmation of the hearing arbitration award which was affirmed by the master arbitrator, Nexray sought interest, attorney’s fees, return of the arbitration filing fee, and costs and disbursements (NYSCEF Doc No. 13, Notice of Cross-Petition, at numbered p 1). Notably, Nexray did not submit any calculation of an attorney’s fee for its opposition to the Article 75 petition and maintenance of the cross-petition.

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.^[FN15] 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 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.^[FN16]

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 [*8]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 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).^[FN17] 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]).^[FN18]

Discussion

The burden of proof on the issue of whether a motor vehicle accident caused a medical condition for which a person was treated and the No-Fault insurer was billed falls upon the insurer if the latter asserts a lack of nexus between the accident and the condition; the underlying purpose of the No-Fault Law would be undermined if a claimant health care provider were required to prove as a threshold matter that a patient’s condition was caused by the accident and unrelated to his or her entire medical history (see Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13, 18-19 [2d Dept 2009]). An expert’s affirmation is needed to provide a factual foundation for an insurance carrier’s good faith belief that an alleged injury did not arise out of an insured accident; speculation or wishful thinking does not suffice (see Mount Sinai Hosp. v Triboro Coach Inc., 263 AD2d 11 [2d Dept. 1999]).

The courts have also recognized that a prima facie case of lack of coverage may be established by other than a medical expert. This can include a biomechanical engineer’s report (e.g., American Tr. Ins. Co. v AAAMG Leasing Corp., 2020 NY Slip Op 31811[U] [Sup Ct, NY County 2020]); Liberty Mut. Ins. Co. v Hayes, 2018 NY Slip Op 31283[U] [Sup Ct, NY County 2018]; a special investigator’s affidavit (e.g., A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 143[A], 2004 NY Slip Op 51104[U] [App Term, 2d Dept, 2nd & 11th Dists 2004]); or a low-impact study (e.g., A.B. Med. Servs. PLLC v New York Cent. Mut. Fire Ins. Co., 12 Misc 3d 140[A], 2006 NY Slip Op 51347[U] [App Term, 2d Dept, 2d & 11th Dists 2006]).

A claimant’s [health service provider] prima facie showing establishes a presumption of coverage, and the burden of going forward on the issue of coverage falls upon the insurer; once the insurer comes forward with proof for its belief that the claimed loss was a staged accident, the burden shifts to the claimant to prove coverage by a preponderance of the evidence (see New York Massage Therapy P.C. v State Farm Mut. Ins. Co., 14 Misc 3d 1231[A], 2006 NY Slip Op 52573[U] [Civ Ct, Kings County 2006]). The insurer bears the burden of coming forward with evidence of the fact of fraud or of the foundation for its belief that fraud occurred, but the burden of persuasion is on the applicant to prove that the loss was a covered event under the policy (see A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 822 [Civ Ct, Kings County 2005]). At trial, the ultimate burden of proof on issues of causal relationship of injuries to the [*9]accident in question lies with the plaintiff (see Dayan v Allstate Ins. Co., 49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]).

The insurer must demonstrate that it has a founded basis for believing that the collision was intentionally caused but the burden of persuasion remains on the claimant, who must prove its case by a fair preponderance of the credible evidence; if the evidence weighs against the claimant or it is so evenly balanced that it is impossible to determine the matter, then judgment must be given for the insurer (see V.S. Med. Servs., P.C. v Allstate Ins. Co., 11 Misc 3d 334, 342-343 [Civ Ct, Kings County 2006], affd 25 Misc 3d 39 (App Term, 2d Dept, 2d, 11th & 13th Dists 2009]).

V.S. Med. Servs. provided an example of the evidence which demonstrated that the insurer established a founded belief that injuries did not arise from a covered accident. In that case, the insurer presented credible evidence that the subject vehicle was an older model, that the collision took place shortly after insurance was procured, that insurance on the vehicle was cancelled after the subject collision and once before after a collision, that there were several passengers in the vehicle, that no occupant underwent emergency room treatment, that there were material discrepancies in EUO testimony among the occupants as to the number and genders of people in the vehicle, where they were going, and whether the driver knew the vehicle owner, and that the vehicle sustained only a small scratch—that the collision was staged because at least one driver intended to make contact. The burden then shifted to the claimant health service provider; the latter having failed to produce the alleged injured persons or any witnesses to the collision, it failed to carry its burden of proving that the collision was a covered accident. (V.S. Med. Servs., P.C., 11 Misc 3d at 343-344 [“defendant’s proof, which plaintiff failed to rebut, established by a preponderance of the evidence its defense of lack of coverage”].)

Very rarely will a case contain a Perry Mason-like moment where there is a confession that an assignor injured person’s injuries were not the result of the claimed accident. Of necessity an insurer’s founded belief that a collision was staged will be established by circumstantial evidence. “Circumstances insignificant in themselves may acquire probative force as links in the chain of circumstantial proof.” (A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d at 827-828 [Civ Ct, Kings County 2005], quoting Van Iderstine Co. v Barnet Leather Co., 242 NY 425, 435 [1926]). For example, where a vehicle was involved in several collisions within a short period of time after the insurer issued an insurance policy, this may satisfy the need for a founded belief necessary to support a denial grounded in asserted fraud (e.g., State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490 [2d Dept 2003]). Where a driver rear ends another vehicle two days after taking out insurance, and again less than sixty days after the first collision, and his written and recorded statements contain discrepancies, this constitutes compelling circumstantial evidence that there was an intentional collision staged for the purpose of insurance fraud (e.g., National Grange Mut. Ins. Co. v Vitebskaya, 1 Misc 3d 774 [Sup Ct, Kings County 2003]).

Notwithstanding the foregoing, unsupported conclusions and suspicions, as well as unsubstantiated hypotheses and suppositions are insufficient to raise a triable issue of alleged fraud (see A.B. Medical Services PLLC v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept, 9th & 10th Dists 2002]). To create a trial issue of fraud or lack of coverage, the specific facts must be alleged with particularity (see Vital Points Acupuncture, P.C. v. New York Cent. Mut. Fire Ins. Co., 6 Misc 3d 1031[A], 2005 NY Slip Op 50267[U] [Civ Ct, Kings County 2005]).

Clearly, Arbitrator Kim did not misapply well-settled law in the arbitration at bar. As [*10]indicated above (supra at 5), he noted case law governing the adjudication of insurer defenses that there was a fact or founded belief that a condition and/or treatment was not proximately related to an alleged accident. What ATIC is challenging as a misapplication of settled law is Arbitrator Kim’s finding that its evidence did not meet the evidentiary minimum to make out its initial burden of proof. That is an issue of fact—not an issue of law.

The provision in 11 NYCRR 65-4.10 [a] [4] that a No-Fault insurance arbitration award may be vacated where it was incorrect as a matter of law refers to substantive issues—not issues of fact (see American Transit Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039, *11 [Sup Ct, Kings County 2023]).

ATIC did not submit witness statements, supporting medical records, or a medical or other expert affidavit or report. It did not submit evidence of an indictment of the owner of Nexray, which it mentioned, the argument inferentially being that the alleged accident was fraudulent and the MRI unnecessary. ATIC merely relied on conclusory assertions of counsel which focused in large part on Assignor’s EUO testimony. ATIC did not even submit a brief to Arbitrator Kim summarizing what EUO testimony supported its position. In essence, it appears that ATIC expected the arbitrator himself to peruse the transcript to locate questionable responses by Assignor which might be indicative that something was awry. This is not the role of the arbitrator.

This Court notes that most No-Fault insurance arbitrations organized by the AAA are scheduled at 15-minute intervals.^[FN19] Usually the only evidence iare the documentary submissions of the parties. In some instances where medical necessity is an issue a treating health provider or a peer review doctor may be called as a witness by the applicant or respondent respectively. In rare instances, an injured person may testify, especially if lost wages is an issue. The testimony of an SIU investigator might be offered where the respondent insurer asserts a contrived accident.

Here, it is not exactly clear whether ATIC’s defenses of lack of coverage and lack of a relationship between the accident and the treated condition were premised on a belief that the accident was staged, that Nexray performed the MRI without regard to whether Assignor actually sustained injuries in the accident, or that Assignor indeed had a condition for which an MRI was appropriate but the condition was unrelated to the accident.

At times a No-Fault arbitration respondent insurer will call the arbitrator’s attention to the fact that a transcript of the examination under oath taken of the assignor was included in its documentary submission and it alone supports the defense. Relying on this poses litigation risks for the insurer if the lack of coverage is premised upon an underlying theory that the health service was performed without regard to whether the injured person-assignor actually sustained injuries in the accident or that the injured person-assignor indeed had a condition for which the health service was appropriate but the condition was unrelated to the accident; such an underlying theory really necessitates expert medical opinion evidence and an EUO transcript likely will not suffice. Some insurers may rely on a biomechanical expert report which might be probative or not, depending on the arbitrator’s assessment of it.

Situations where the lack of coverage defense is predicated on an underlying theory that the accident was staged calls for proper advocacy by the respondent No-Fault insurer. [*11]Submitting a transcript alone without a brief, affidavit, SIU report, or counsel specifically detailing the testimony supporting its position unfairly places the hearing arbitrator in a quandary. The arbitrator has two options: (1) find that the respondent insurer failed to identify the supporting testimony, or (2) review the transcript himself and determine if any of its contents supports the fact or founded belief that there was a lack of causation due to a staged accident, i.e., that fraud took place.

The arbitrator must remain objective and impartial. It is unfair for a respondent insurer to place the arbitrator in the role of evidence explorer on its behalf. The arbitrator is not an investigator or detective. To argue to an arbitrator, “Our defense relies on the EUO testimony,” or offer a similar statement, without any identification of the transcript components being relied on is improper advocacy, and an arbitrator should decline the implied invitation to search the transcript to locate testimony supporting the respondent’s defense. It is unknown whether ATIC’s counsel made such a statement to Arbitrator Kim. From his award, it is evident that nothing was offered by way of specification as to particular testimony in one or more EUO transcripts. Arbitrator Kim did write that he “carefully review[ed] the EUO transcript of the Assignor, as well as the EUO transcript of the other claimant/passenger in the linked case, and I find it unclear as to what specific testimony Respondent believes adequately supports its assertions/defense and how Respondent made the leap that the Assignor’s treated condition was unrelated to the motor vehicle accident (NYSCEF Doc No. 3, Arbitration Award, at numbered p 4).” This burden of reviewing the transcript should not have been placed on Arbitrator Kim. And if ATIC asked him to perform this task, it should not have done so. Rather, ATIC should have submitted a brief, affidavit, or investigator’s report identifying by page and line the portions of the testimony it claims were inculpatory and thus made out its defense; or counsel at the hearing should have done so. Preferably the specification should be in writing as a document included in the arbitration submission.

If a No-Fault arbitration hearing respondent (the insurer) fails to adequately support its defense of lack of causation premised under any of the underlying theories — but especially one claiming that no true accident took place — because it failed to identify specific EUO testimony, it lacks a legal basis to challenge the hearing arbitrator’s award on appeal, either before the master arbitrator or the Article 75 judge.

The foregoing perspectives of this Court are in harmony with the expressions of sister courts. “While plaintiff [insurer] submits the transcripts of the claimants’ EUOs, it does not cite to any line or page of the claimants’ testimony to support such claims. The Court should not have to undertake the toilsome task of reading through pages and pages of testimony in order to ascertain which portions support plaintiff’s supposed contentions” that there exists a founded belief that the alleged injuries did not arise from a covered accident. (Unitrin Advantage Ins. Co. v Advanced Orthopedics and Joint Preservation P.C., 2018 NY Slip Op 33296[U] *6-7 [Sup Ct, NY County 2018]). Similarly, it has been held, “It is not the duty of the arbiter, be it an arbitrator or Court, to parse though hundreds of pages of exhibits to make out a claim or defense for a party (see e.g. Barsella v. City of New York, 82 AD2d 747, 748 [1st Dept 1981]); such duty belongs to counsel, as advocate. Failing to elucidate evidence in support of a party’s claim is not error of the arbitrator but is rather error of counsel, and such failure does not render an arbitrator’s award arbitrary and capricious [citation omitted].” Country-Wide Ins. Co. v M El Sayed Physical Therapy, P.C., 2022 NY Slip Op 31874[U] [Sup Ct, NY County 2022]).

There being a paucity of evidence to support ATIC’s defense of a fact or founded belief [*12]that Assignor’s treated condition was unrelated to the alleged motor vehicle accident, Arbitrator Kim’s factual determination against ATIC was eminently reasonable.

Lower and master arbitration awards were supported by a reasonable hypothesis and were not contrary to “fairly described settled law” when a biomechanical report was rejected by the lower arbitrator, who found as follows: “I have reviewed the EUO transcript in its entirety and I do not find sufficient evidence within the EIP’s testimony that would give rise to establishing a basis for Respondent’s denial. As for the opinion of the Respondent’s accident reconstruction expert, I find it is insufficient to establish that the EIP’s injuries were not causally related to the underlying accident. Unless an injury for which an EIP is treated is so clearly unrelated to the biomechanics of a motor vehicle accident, a low-impact study (standing alone without any accompanying medical evidence—which does not explain how the EIP’s injuries are causally incompatible with the subject accident) does not suffice to prove prima facie that the injuries were not causally related to the accident. Bronx Radiology, P.C. v. New York Cent. Mutual Fire Ins. Co., 17 Misc 3d 97, 847 N.Y.S.2d 313 (App. Term 1st Dept. 2007). [¶] In this case, I find the Respondent has not submitted sufficient evidence to establish its defense that the treatment was not causally related to the MVA.” (Matter of Am. Tr. Ins. Co. v North Shore Family Chiropractic, P.C., 2022 NY Slip Op 32663[U] *1-2 [Sup Ct, Kings County 2022]). The decision of Hon. Justice Peter P. Sweeney in the case found that “the lower and master arbitration awards were supported by a reasonable hypothesis’ and [were] not contrary to what could be fairly described as settled law. The determinations of the master and lower arbitrators had evidentiary support and a rational basis. (Id. at *3.) So too did Arbitrator Kim’s award.

Since the instant Article 75 proceeding to vacate is one where vacatur of the master arbitration award is sought, this Court must assess whether Master Arbitrator D’Ammora erred as a matter of law or fact. His findings are related hereinabove at page 7. After reviewing the case law on master arbitration appeals and Arbitrator Kim’s findings, Master Arbitrator D’Ammora concluded as follows: “I cannot conclude on the basis of the record before me that Arbitrator Kim’s decision was incorrect as a matter of law or arbitrary or capricious” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2).

The standard for Article 75 court scrutiny is whether the master arbitration award was so irrational with respect to settled law 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]). Clearly, Master Arbitrator D’Ammora did not err in concluding that Arbitrator Kim’s decision was not incorrect as a matter of law, because this Court reviewed the latter’s discussion of the law and found no error. Cases cited by Arbitrator Kim were directly on point in terms of the law and were likewise cited by this Court.

Did Master Arbitrator D’Ammora err in determining that Arbitrator Kim’s factual findings were erroneous? No. Here, the master arbitrator noted the case law that he cannot conduct a de novo review of the evidence and substitute his interpretation of the evidence. The arbitrator’s determination was “rational and supported by the record.” (NYSCEF Doc No. 4, [*13]Master Arbitration Award, at numbered p 2.) He was correct. This Court takes into account the general proposition that the admissibility of evidence and the determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award. . . .”]; Central Sq. Teachers Assn. v Board of Educ. of Cent. Sq. Cent. Sch. Dist., 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny.”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software Intl., Inc., 232 AD2d 336, 338 [1st Dept 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis.”]).

The proper standard of master arbitration review is whether the hearing arbitrator reached his decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]). Master Arbitrator D’Ammora adhered to this.

Judicial review of a master arbitrator’s authority to vacate a hearing arbitrator’s award derives from § 675 (presently § 5106 [c]) of the Insurance Law and involves the question of whether the master arbitrator exceeded his power (see Matter of Smith v Firemen’s Ins. Co., 55 NY2d at 231 [1982]). Master Arbitrator D’Ammora did not exceed his power and, therefore, his award must be sustained.

In its petition, ATIC concluded by asserting that Arbitrator Kim’s decision was “arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 49). ATIC was “entitled to a declaration that the arbitration decisions of Kihyun Kim, Esq. and Vic D’Ammora, Esq. in the matter designated AAA number 99-21-1191-8208 have no force or effect” (id. ¶ 50). Based on the foregoing analysis, this Court rejects these contentions.

ATIC’s petition in this Article 75 proceeding cited the four applicable grounds delineated in CPLR 7511 for vacating an arbitration award where a party participated in the arbitration:

if the court finds that the rights of that party were prejudiced by:

(i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

(NYSCEF Doc No. 1, petition, ¶ 33.)

This Court finds that ATIC failed to establish that there was corruption, fraud, or misconduct in procuring the award; that there was partiality on the part of either arbitrator; that either arbitrator exceeded his or her power or so imperfectly executed it that a final and definite [*14]award upon the subject matter submitted was not made; or that there was a failure to follow the procedure of Article 75.

Cross-Petition;
Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, Nexray sought in its cross-petition to confirm the arbitration determination. Nexray also sought additional payments in the nature of interest, attorney’s fees, return of the arbitration filing fee, and costs and disbursements (NYSCEF Doc No. 13, Notice of Cross-Petition, at numbered p 1). For the reasons set forth above, Nexray is entitled to confirmation of Master Arbitrator D’Ammora’s award.

Interest:

ATIC issued its Form NF-10 denial of claim on July 13, 2020, within 30 days after final verification was received on June 19, 2020; the denial was timely (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief, at 5). Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 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] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action.

Nexray arbitration request was received by the AAA on January 22, 2021 (NYSCEF Doc No. 6, Nexray’s Arbitration Request Form and Arbitration Submission, at 1), which was clearly more than 30 days after it received the denial of claim issued on July 13, 2020. Thus, interest accrued from the filing date of January 22, 2021, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest is calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2022]).

[*15]Attorney’s Fees:

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $195.00 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [i].

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, Nexray is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of New York v Nexray Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Nexray’s counsel did not submit an affirmation specifying details with regard to work performed in this Article 75 special proceeding. It is not known whether an attorney or support staff performed the work. The cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The cross-petition asserted that Nexray “should be granted leave to serve an afirmation in order to set forth its resonable attroneys’ fees in defending this action” (NYSCEF Doc No. 13, Cross-Petition, ¶ 45).

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.) Counsel should have included an affirmation containing details describing the work performed (see Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695 [2d Dept 2019] [claim for hourly fee for prevailing on policy issue not substantiated with any time records]). It behooved counsel to do so considering the expedited nature of special proceedings.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issues in the case at bar was neither novel nor unique, especially since there was already a plethora of case law dealing with them and Nexray’s cross-petition contained boilerplate statements of law.

Consdering the factors delineated herein, this Court awards $140.00 for work performed by Nexray’s counsel on this Article 75 proceeding. This Court applies the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level (see 11 NYCRR 65-4.6 [c]), having assumed that there was attorney involvement for two hours at the most. It does not apply the $80.00 per hour fee for personal appearances before the arbitration forum or court (see id.), inasmuch as this proceeding was determined on the submissions.

Return of Arbitration Filing Fee:

ATIC shall also pay Nexray $40.00 as reimbursement for the fee paid to the AAA (see 11 NYCRR 65-4.5 [s] [1]).

[*16]Costs and Disbursements:

As the prevailing party, Nexray shall recover its costs and disbursements, to be taxed by the Clerk.

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:

(1) ATIC’s petition to vacate the master arbitration award of Victor J. D’Ammora in AAA Case No. 99-21-1191-8028 is dismissed.

(2) Nexray’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) Nexray is awarded the principal amount of $878.67 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent per month on a pro rate basis using a 30-day month, computed from January 22, 2021 to the date of payment of the principal amount, but excluding January 22, 2021 from being counted within the period of interest.

(5) After calculating the sum total of the principal amount of $878.67 plus the interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay Nexray an attorney’s fee of $195.00 in connection with the master arbitration.

(7) ATIC shall pay Nexray an attorney’s fee of $140.00 for work performed by counsel on this Article 75 proceeding.

(8) Nexray shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

E N T E R
Dated: Brooklyn, New York, May 25, 2023

______________________________
HON. AARON D. MASLOW
Justice of the Supreme Court of the
State of New York

Footnotes

Footnote 1:A reply affirmation from Respondent’s counsel (NYSCEF Doc No. 15) is not considered inasmuch as it was filed on the motion calendar date of May 19, 2023, several days after all counsels were advised that this proceeding was being determined on submissions. The time of filing of 1:13 p.m. on May 19, 2023, was after the calendar call too.

Footnote 2:The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Kihyun Kim, Esq. and/or Master Arbitrator Victor J. D’Ammora, Esq.” (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. Insurance Law § 5106 (c) provides that “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. . . .” 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 an arbitration award without first seeking master arbitration (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 Property & 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 3: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, Nexray, was not the respondent in the arbitration, but was the applicant.

Footnote 4: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 5:Paragraph 28 of the petition describes the AAA Case No. as 99-21-1191-8028, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1191-8028.

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 sustained 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 service was an MRI.

Footnote 9:The prescribed claim forms are included within 11 NYCRR Part 65 (Regulation 68) Appendix 13. In addition to 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). Other official No-Fault forms also appear in Appendix 13.

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:References to NYSCEF filings lacking page numbers are to the PDF page numbers.

Footnote 14:The AAA’s electronic case management and filing platform maintained on the Internet 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%3Fp=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 15: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 to be able to sue for pain and suffering.

Footnote 16: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.

Footnote 17: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 18:11 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 19:This Court served as a No-Fault insurance arbitrator for close to 21 years.

Michele B. Glispy AAO RODRIGUEZ, MARIA, Plaintiff, against Ameriprise Insurance Company, Defendant. MICHELE B. GLISPY AAO RODRIGUEZ, MARIA, Plaintiff, against AMERIPRISE INSURANCE COMPANY, Defendant. MICHELE B. GLISPY AAO RODRIGUEZ, MARIA, Plaintiff, against AMERIPRISE INSURANCE COMPANY, Defendant.

Index No. CV-721025-20-KI

Plaintiff: Oleg Rybak
The Rybak Firm PLLC
1810 Voorhies Ave, Suite 7
Brooklyn, NY 11235-3313
(718) 975-2035
orybak@rybakfirm.com

Defendant: Steven Levy
Callinan and Smith LLP
3361 Park Avenue-Suite 104
Wantagh, NY 11793
(516)-784-5148
slevy@callinansmith.com

Jill R. Epstein, J.

Recitation, as required by CPLR § 2219 (a), of the papers considered in the review of this Motion for Summary Judgment submitted on February 1, 2023,

Papers/Numbered
Notice of Motion and Affirmations/Affidavits Annexed 1-6
Affidavits/Affirmations in Opposition 7-13
Reply 14-16

Upon the foregoing cited papers, and oral argument, the Decision/Order on the Defendant’s Motions for Summary Judgement and Plaintiff’s Cross-Motions for Summary Judgement is as follows:

Defendant, Ameriprise Insurance Company, (hereinafter “Defendant”) moves by Notices of Motion dated November 2, 2020, for Orders pursuant to CPLR § 3212 (b) granting Defendant summary judgment as a matter of law and dismissing Plaintiff’s Summons and Complaint, in its entirety, with prejudice, based upon Plaintiff’s failure to attend duly scheduled Examinations Under Oath (“EUOs”). These matters are consolidated for the purposes of oral argument and this motion. Plaintiff, Michele B. Glispy, (hereinafter “Plaintiff” or “Assignee”), cross moves by Notices of Cross-Motion dated, July 9, 2021, July 12, 2021, and July 6, 2021, respectively, pursuant to CPLR § 3211 (c), CPLR § 3212 (a) seeking summary judgment in favor of plaintiff, denying defendant’s Motion for Summary Judgement, or limiting the issues of fact for trial pursuant to CPLR § 3212 (g), and seeking dismissal of defendant’s affirmative defenses pursuant to CPLR § 3211 (b).

This matter involves a claim for assigned first-party no fault benefits, which resulted from plaintiff providing medical treatment to Assignor, Maria Rodriguez (hereinafter “Assignor”), following a motor vehicle accident, which occurred on October 25, 2018. Defendant acknowledges receipt of specified bills in its denials, however, at oral argument both defendant and plaintiff agreed that bills one, two, and three were not received. After the receipt of the bills specified, defendant sent two Examinations Under Oath (hereinafter “EUO”) scheduling letters for each matter, CV-721025-20-KI letters are dated January 23, 2019, and February 19, 2019, CV-721026-20-KI and CV- 721033-20-KI letters are both dated January 4, 2019 and January, 23, 2019, respectively, to the assignor’s home address listed on the NF-3’s and Verification of Treatment forms and to the provider’s billing address. Defendant annexed affidavits in all three instant matters of Michael A. Callinan, Esq. (hereinafter the “Callinan Affidavits”) all dated October 19, 2020, in order to establish the mailing of the scheduling letters and the non-appearance of the assignor for the scheduled EUO’s. Defendant states that the [*2]assignor did not attend the two scheduled EUO’s for each of the three matters sub judice, and therefore, the defendant asserts that they are entitled to summary judgement dismissing the complaints.

At oral argument, defendant confirmed that it properly mailed EUO scheduling letters to the assignor for all three scheduled EUO’s. Defendant contends that the EUO scheduling letters sent to the assignor, the Callinan affidavits establishing both mailing of the letters and the non-appearance of assignor, in conjunction with a statement on the record, are sufficient under the current no-fault laws, to warrant dismissal of plaintiff’s case for the assignor’s failure to appear. The Court notes that the Callinan affidavits were identical in sum and substance as to the instant matters, but for the dates of the scheduling letters. As set forth below, defendant put forth numerous cases in which the Second Department has held that affidavits similar to Mr. Callinan’s were sufficient to establish the proper mailing of EUO scheduling letters and EUO non-appearance.

Plaintiff argues that the Callinan affidavits were conclusory and insufficient to establish proper mailing as required under CPLR. Plaintiff asserted that defendant did not annex copies of the envelopes in which the scheduling letters were sent as was required according to plaintiff. In the Cross-Motions for Summary Judgement and at oral argument, plaintiff drew the Court’s attention to the matter of Carle Place Chiropractic v. New York Cent. Mut. Fire Ins. Co., 19 Misc 3d 1139A, 866 NYS2d 90 [1st Dist. Nassau Co. 2008]. Plaintiff argues that the Court’s rationale in Carle Place should be applied to the matters sub judice for failure to establish proper mailing procedure. The case is not an appellate case and has no precedential authority herein.

Plaintiff seeks to create new law by using this Court to impose more rigorous requirements on defendants to prove EUO non-appearance and the mailing of scheduling EUO letters. There is no legal requirement of such additional proof along with personal knowledge of mailing procedures to prove mailing of scheduling notices. Additionally, there is no requirement of that which plaintiff urged at oral arguments, to wit: annexing proof of first class mailing and/or envelopes in which the scheduling letters were sent, in addition to affidavits by an attorney with personal knowledge of the mailing of the specific scheduling letters at issue.

All three of plaintiff’s Cross-Motions acknowledge receipt of the scheduling letters by stating that plaintiff responded to the EUO scheduling letters in March of 2019. Though not annexed in plaintiff’s cross-motions, defendant’s motion papers contain, three letters from plaintiff’s counsel, all dated March 5, 2019, after the two scheduled EUO dates had already passed in each instant matter.

In this matter the Callinan affidavits describe in detail that he created the mailing procedure at the legal office handling these matters for defendant, as he was partner and oversaw the mailing of EUO scheduling letters, explicitly outlining his personal knowledge of mailing procedure. The Callinan affidavits state Mr. Callinan was personally responsible for handling these instant matters and these files “on a day-to-day basis.” His “personal knowledge” was not limited to file review and office mailing procedure. It was based upon his personal involvement on these matters in conjunction with review of the file, his creation and over-sight of office mailing procedure, and his knowledge of office mailing procedure.

Defendant argues that the Callinan affidavits established both mailing and the EUO non-appearances. There was no contradictory evidence provided by plaintiff in their motion papers aside from a blanket assertion that defendant did not have enough personal knowledge to establish proper mailing and EUO non-appearance and letters allegedly sent to defendant in [*3]March 2019 attempting to reschedule the EUO’s that were not actually annexed. Plaintiff did not provide any affidavit from its assignor to contradict the assertions made by the Callinan affidavits. Defendant cited to multiple cases in which the Second Department upheld both the sufficiency of similar affidavits to establish EUO no-shows and mailing of scheduling letters, to those of the Callinan affidavits in the matters sub judice as set forth below. Though plaintiff’s Cross-Motion asserts that there was no statement on the record to prove EUO non-appearance, in each of the three instant matters, defendant attached Mr. Callinan’s statements (Defendant’s Motions for Summary Judgement Exhibit “F”) on the record reflecting the non-appearances of plaintiff’s assignor for the scheduled EUO’s in contradiction to plaintiff’s assertions.

In Adelaida Physical Therapy, P.C. v Ameriprise Auto & Home, 58 Misc 3d 130(A), 92 NYS3d 702 (2nd Dept., 2017), the Second Department held that, “contrary to plaintiff’s contention, the affirmation submitted by defendant’s attorney, who was present in his office to conduct plaintiff’s EUO on the scheduled dates, was sufficient to establish that plaintiff had failed to appear for the EUOs” (see, Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 827 NYS2d 217 [2006]). Adelaida Physical Therapy, P.C. v Ameriprise Auto & Home, 58 Misc 3d 130(A), 92 NYS3d 702 (2nd Dept., 2017). Adelaida represents one of many examples proffered by defendant in which the Second Department has held that attorney affirmations alone can establish both mailing of EUO scheduling letters and non-appearance for an EUO. The Court in Adelaida did not require defendant to provide envelopes in which the scheduling letters were sent out in, nor did it as plaintiff requested in its Cross-Motion, ask defendant to provide a log of other people scheduled for EUO’s the same day as the assignor in question. Id. The affirmation of the attorney was relied upon in Adelaida to prove both sufficient mailing and failure of the assignor to appear for an EUO and therefore, affirmed the dismissal of plaintiff’s case. Id.

The Second Department applied similar logic in Island Life Chiropractic Pain Care, PLLC v Ameriprise Ins., 1, 69 Misc 3d 143(A), 133 NYS3d 384, (2nd Dept. 2020) and wrote “defendant established that initial and follow-up letters scheduling an examination under oath had been timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123, 857 NYS2d 211 [2008]); that plaintiff’s assignor had failed to appear on either date (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 827 NYS2d 217 [2006]); and that the claims had been timely denied on that ground (see St. Vincent’s Hosp. of Richmond, 50 AD3d 1123, 857 NYS2d 211). As plaintiff failed to raise a triable issue of fact in opposition to defendant’s motion, defendant is entitled to summary judgment dismissing the complaint. Island Life Chiropractic Pain Care, PLLC v Ameriprise Ins., 1, 69 Misc 3d 143(A), 133 NYS3d 384, (2nd Dept. 2020). Similarly, to Island Life Chiropractic Pain Care, PLLC v Ameriprise Ins., this Court finds that in the three matters sub judice that defendant has established timely mailing of EUO scheduling letters and the non-appearance of the assignor at scheduled EUO’s by the Callinan affidavits and Mr. Callinan’s three statements on the record. Additionally, plaintiff has failed to raise an issue of fact for trial.

Summary Judgment is a drastic remedy and should be granted only in the absence of any triable issue of material fact. See, Rotuba Extruders, Inc. v Ceppos, 46 NY2d 141 [1978]; Andre v Pomeroy, 35 NY2d 361 [1974]. In order to prevail, the movant must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient proof to demonstrate the absence of any material issues of fact. Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]. The appearance of the eligible injured person, or its assignor, at an EUO is a condition precedent [*4]to coverage. See W&Z Acupuncture, P.C. v. Amex Assur. Co., 24 Misc 3d 142(A) (NY App. Term July 31, 2009). The Second Department holds that, “[a]n insurer may establish its prima facie entitlement to judgment as a matter of law based on the failure to submit to an EUO by establishing that the letters scheduling the EUOs were timely and properly mailed, that the insured failed to appear at two scheduled EUOs, and that the insurer issued a timely and proper denial of the claims.” Nationwide Affinity Ins. Co. of Am. v. George, 183 AD3d 755, 756 (2nd Dept. 2020).

The Court finds that though other arguments were raised by both plaintiff and defendant in their Motion papers, the sole issues at oral argument were the mailing of the scheduling letters and the veracity of the Callinan affidavits to prove non-appearance of the assignor at the scheduled the EUO’s. The Court found no need to explore those additional written arguments as they are rendered moot by the issues determined in this decision.

Thus, the defendant’s Motion for Summary Judgement must be granted as plaintiff has failed to rebut the presumption of the mailing of the EUO scheduling letters and non-appearance at the EUO’s. Plaintiff has failed to raise an issue of fact for trial. Therefore, Plaintiff’s motion must be denied by the Court as it is moot.

WHEREFORE it is hereby

ORDERED AND ADJUDGED that defendant’s motions for summary judgement dismissing the complaint is granted pursuant to CPLR § 3212 and the matter is dismissed. Plaintiff’s cross-motions for Summary Judgement are denied in all respects.

Dated: Brooklyn, New York
April 13, 2023

_______________s/_____________________
HON. JILL R. EPSTEIN, JCC