Matter of Fast Care Med. Diagnostics, PLLC/PV v Government Employees Ins. Co., 2018 NY Slip Op 03831 (2d Dept. 2018)
“We agree with the Supreme Court that the arbitrator’s award was irrational and in conflict with CPLR 1209, which applies “only where an infant is a party” to an arbitration proceeding (Goldenberg v Goldenberg, 25 AD2d 670, 670, affd 19 NY2d 759; see Schneider v Schneider, 17 NY2d 123, 127). The infant patient was not a party to the arbitration; rather, Fast Care, as the infant’s assignee, was the party that brought the arbitration (see 11 NYCRR 65-3.11[a]). Therefore, we agree with the court that the arbitrator disregarded established law in determining that the requirements of CPLR 1209 applied here (Schneider v Schneider, 17 NY2d at 127; see Goldenberg v Goldenberg, 25 AD2d at 670). Furthermore, the master arbitrator’s determination that the assignment of benefits was not effective was not based on any requirement set forth in established law or regulations (see generally 11 NYCRR 65-2.4[c]).”
Bonus attorney fees: “Fast Care did not demonstrate its entitlement to an award of an attorney’s fee, as the arbitrator did not reach the issue of whether the subject claims were “overdue””
Matter of Marine Holdings, LLC v New York City Commn. on Human Rights, 2018 NY Slip Op 03303 (2018)
Every Article 75 compulsory arbitration case involving legal insufficiency or credibility of evidence claims is subjected to a substantial evidence review. The term is a misnomer as we learned this week from the Court of Appeals:
“”Quite often there is substantial evidence on both sides” of an issue disputed before an administrative agency (Matter of Ridge Rd. Fire Dist. v Schiano, 16 NY3d 494, 500 ), and the substantial evidence test “demands only that a given inference is reasonable and plausible, not necessarily the most probable” (id. at 499 [internal quotation marks and citation omitted]). Applying this standard, “[c]ourts may not weigh the evidence or reject [a] determination where the evidence is conflicting and room for choice exists” (Matter of State Div. of Human Rights (Granelle), 70 NY2d 100, 106 ). Instead, “when a rational basis for the conclusion adopted by the [agency] is found, the judicial function is exhausted. The question, thus, is not whether [the reviewing court] find[s] the proof . . . convincing, but whether the [agency] could do so” (id. [citations omitted]).”
The Court’s abdication of the ability to review administrative awards that are inherently questionable but not “off the charts wrong” is improper. We have three levels here. The first is that the award has support. The second is the award smells bad. The third is the award is “off the charts wrong”.
We all agree the Courts have no business addressing level 1 and must address level 3. It is level 2 that forms the basis of so many appeals. I only suggest that a deeper look at level 2 cases is warranted. The dissent (I did not publish it) did just that.
In my other life, I represent all sorts of people who have been wronged. One of the worst things I encounter when advocating for people who have had their insurance coverage wrongfully disclaimed is the arbitration clause. Imagine having to travel to California to file an arbitration when an insurance carrier abandons you prior to trial in NY because you allegedly violated a condition of the medical malpractice policy? It is reality, and the FAA will not protect you.
This case involves arbitration under Article 75 and a more reasonable standard in deciding whether the arbitration clause may be bypassed. This is a good case – although it has so little to do with no-fault here in NY. But, it is interesting.
Adams v Kent Sec. of N.Y., Inc., 2017 NY Slip Op 09274 (1st Dept. 2017)
“Applying the foregoing standard, we hold that plaintiff has made a preliminary showing that the fee sharing and venue provisions in the arbitration agreement have the effect of precluding him from pursuing his statutory wage claim in arbitration. We remand for further proceedings, consistent with Brady, which, at a minimum, would include proof of plaintiff’s income and assets, as well as proof of the expected costs and fees to arbitrate this dispute in Florida. Because the parties’ arbitration agreements contains a severability clause, in the event plaintiff prevails on his claim that the aforementioned fee sharing and venue provisions should be held unenforceable under Brady, the matter should proceed to arbitration in New York, with defendant to bear the costs of the arbitration.”
Country-Wide Ins. Co. v Radiology of Westchester, P.C., 2017 NY Slip Op 01461 (1st Dept. 2017)
“The master arbitrator’s award was arbitrary because it irrationally ignored petitioner’s uncontroverted evidence establishing that the assignor failed to appear at the three scheduled examinations under oath (cf. Hertz Corp. v Active Care Med. Supply Corp., 124 AD3d 411 [1st Dept 2015]; Easy Care Acupuncture P.C. v Praetorian Ins. Co., 49 Misc 3d 137[A], 2015 NY Slip Op 51524[U] [App Term, 1st Dept 2015]).”
Again, the blame on this goes to the master arbitration system that rubber stamps the awards of the lower arbitrators. I never read Petrofsky to require a master arbitrator to ignore evidence that proves a factual proposition or a well known legal principle. These master arbitration awards (and I master arbitrate a lot of cases) usually affirm arbitrator awards because they believe that most review is out of their hands. Read this case, Hillside, Professional Chiro and understand that legal challenges to lower arbitration awards are fair game. Factual challenges when there are no facts to support a key proposition of fact are fair game for review, but a closer call for affirmance than legal challenges. There are other cases that are escaping me – but those involve MVAIC.
As an aside, I have 7 masters on IME no shows (same date of loss and assignor/assignee) where the lower arbitrator misconstrued an IME letter and affidavit. The error is as clear as the day is long. That said, I am not going to blame the lower arbitrator because there was a lot going on in the file and he probably missed it. Mistakes happen and that is why we have appellate courts and a master arbitration tribunal. I have a feeling the master is going to affirm because of “Petrofsky” and it will take Supreme Court to vacate the awards.
Matter of Global Liberty Ins. Co. v Coastal Anesthesia Servs., LLC, 2016 NY Slip Op 08964 (1st Dept. 2016)
What’s interesting about this case is that the submissions were five days late (accompanied by a showing of law office failure in the moving memorandum of law) and Respondent provider did not object to the tardy submissions. Rather, Respondent provider sought time to put in a rebuttal. The arbitration was held 6 months following the uploading of the evidence.
Lower arbitrator Ann Lorraine Russo decided that rocket docket preclusion was proper and Master Arbitrator Donald DeCarlo gave his “Petrofsky” stamp of approval. Clearly, I was displeased by what I sensed as a complete perversion of the regulation.
Supreme Court without directly saying it wrote that it did not agree with the rulings of the lower arbitrator but would not disturb what amounted to a broken arbitration system on this issue. The Appellate Division did not want to get involved. “The decision of the Master Arbitrator in affirming the arbitration award had evidentiary support, a rational basis, and was not arbitrary and capricious (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 211 ). The original arbitrator properly acted within her discretionary authority to refuse to entertain any late submissions proffered by petitioner (see 11 NYCRR 65-4.2[b]; Matter of Mercury Cas. Co. v Healthmakers Med. Group, P.C., 67 AD3d 1017 [2d Dept 2009]).”
At the end of the day, AAA and DFS needs to take a hard look (and I have sources who have said they will) at the application of 11 NYCRR 65-4.2. This was the prototypical example of AAA just does not getting it and the courts turning a blind eye to a real problem. I sense needed regulatory change is on the horizon.
Also remember that you (the participant) have the right to rate the performance of an arbitrator. I just wish we could rate the performance of the master arbitrators. But does anyone read what I wrote after I get a decision like this one? smh.
Nationwide Mut. Ins. Co. v Geico Cas., 2016 NY Slip Op 51700(U)(App. Term 2d Dept. 2016)
(1) “Geico further stated, among its contentions, that Nationwide was aware of the policy’s $25,000 property damage limit, that the amount of damage to the three vehicles involved in the accident exceeded the property damage limit in the policy, and “is pending signed releases to issue all parties a pro rata amount for reimbursement.”
(2) “In its petition to confirm, Nationwide conceded that it had received $17,399.95 from Geico, but stated that it was still owed the remaining unpaid balance of $4,437.33.”
(3) The arbitrator, in a decision published on September 10, 2013, noted that Geico had not submitted a declarations page from the policy to confirm the policy limits, and awarded Nationwide the total sum of $22,337.28 ($21,837.28 plus a $500 deductible).
(4) Nationwide sought the remainder, which was granted. Geico objected but lost.
(5) “Furthermore, where the arbitration agreement provides that the arbitrator may not make an award in an amount beyond the policy’s limits, an award in excess of those limits is subject to vacatur, pursuant to CPLR 7511 (b) (1) (iii), as an award in excess of the arbitrator’s power (see Matter of Brijmohan v State Farm Ins. Co., 92 NY2d 821 ).”
(6) “The provision upon which Geico relies, however, is not a specific limitation on the power and authority of the arbitrator to make an award in excess of the policy’s limits. Instead, the provision affords Geico the option to reject arbitration, but Geico did not exercise that option.”
(7) Geico loses.
The lesson – reject voluntary arbitration when you sense the policy limits are going to be exceeded.
Matter of DTG Operations v AutoOne Ins. Co., 2016 NY Slip Op 07133
For all that has been written in assigned first-party litigation, there has been an equal dearth of writing on loss transfer issues. There are plenty of loss transfer cases; just very few of them make it passed Arb forums.
This case was interesting because it involved a loss transfer case brought due to the cv vehicle being insured a passenger policy of insurance yet being used as livery vehicle. While the cv insurance vehicle carrier had the right to disclaim, I am left to assume that knowledge of the true use of the vehicle came after payments were made or denials issued on grounds other than fraudulent procurement. Like many things in life, this leads the carriers into the murky area of intercompany arbitration.
CV insurance carrier notwithstanding insuring vehicle as a passenger vehicle filed (it appears) a demand for loss tranfer on the grounds that it was a for hire vehicle. Without reading the record and looking at the decision from the Court, the Adverse vehicle argued that CV vehicle was a passenger vehicle and had no right to engage in inter-company arbitration. DTG struck out at arb forums, Supreme Court and now at the Appellate Division.
“The AutoOne vehicle had been registered as a livery vehicle for the five years prior to the accident, and the change of registration — just five days prior to the date of loss — was orchestrated by an insurance agent who was illegally insuring “dollar vans” as personal use vehicles. All four of the injured passengers confirmed that the AutoOne vehicle was being used as a vehicle for hire and for commercial purposes on the accident date, and the registration on the AutoOne vehicle was switched back to a “livery” vehicle shortly following the accident. Thus, there was adequate support for the arbitrator’s finding that the AutoOne vehicle was being used, “principally,” for the “transportation of persons or property for hire,” and loss transfer applied (Matter of State Farm Mut. Auto. Ins. Co. v Aetna Cas. & Surety Co., 132 AD2d 930 [4th Dept 1987], affd 71 NY2d 1013 ; Matter of 20th Century Ins. Co. [Lumberman’s Mut. Cas. Co.], 80 AD2d 288, 290 [4th Dept 1981]).”
Matter of Unitrin Advantage Ins. Co. Kemper A. Unitrin Bus. v Professional Health Radiology, 2016 NY Slip Op 06767 (1st Dept. 2016)
I read through this case. The carrier left out page two of one of the letters (that contain the reimbursement language) and, after the arbitration, sought to include it in its Petition to set aside the arbitration award. The Supreme Court was not impressed and neither was the Appellate Division. But had Unitrin (or counsel) not committed as many errors, the rocket docket rule appeared to be malleable upon a finding of law office failure. I am looking to see how this concept plays out in future cases.
” The no-fault regulations include mandatory notice requirements governing insurer requests for both IMEs and examinations under oath (11 NYCRR 65-3.5[e]). The regulations expressly provide that the insurer “shall inform the applicant at the time the examination is scheduled that the applicant will be reimbursed for any loss of earnings and reasonable transportation expenses incurred in complying with the request” (id.). Unitrin failed to establish that the requisite regulatory language was contained within its November 30, 2011 letters sent to the assignors, and, based on the multiple errors committed by Unitrin, it failed to establish inadvertent law office error, or that the cases should be remanded, in the interest of justice, for a new arbitration hearing.”
In addition, the Court correctly held that: “In a proceeding for judicial review of an award by a master arbitrator, an attorney’s fee shall be fixed by the court adjudicating the matter” (Matter of GEICO Ins. Co. v AAAMG Leasing Corp., 139 AD3d 947, 948 [2d Dept 2016]; see 11 NYCRR 65-4.10[j])”
Unfortunately for the provider, AAMG limits reimbursement to $70 an hour.
Matter of Allstate Ins. Co. (Cappadonia), 2016 NY Slip Op 06584 (4th Dept. 2016)
This is every Plaintiff personal injury attorney’s dream. Surprisingly, it happens all the time.
(1) “Respondent obtained an automobile liability insurance policy from petitioner for a pickup truck and two passenger vehicles. The policy provided SUM coverage to respondent, and also included an arbitration clause. While the policy was in effect, respondent sustained personal injuries when a motorcycle he was operating was struck by an allegedly underinsured vehicle. Although the motorcycle was not covered under the policy issued to him by petitioner, respondent made a claim with petitioner for SUM coverage. Petitioner disclaimed coverage on the ground that the motorcycle was not covered under the policy, prompting respondent to demand arbitration pursuant to CPLR 7503 (c). More than five months after respondent’s demand, petitioner commenced this proceeding to stay arbitration, asserting, as it did in the disclaimer letter, that no SUM coverage existed in connection with the accident because the motorcycle on which petitioner was riding was not a covered vehicle under the policy.”
(2) “We agree with respondent that the petition to stay arbitration is time-barred because it was not filed within 20 days of respondent’s formal arbitration demand”
New York’s 20-day rule to stay an arbitration when there is palpably no coverage is just brutal at times. You snooze, you lose.
AutoOne Ins. Co. v Eastern Is. Med. Care, P.C., 2016 NY Slip Op 05354 (2d Dept. 2016)
This case is interesting on a few levels since it addresses what could be categorized as unresolved issues involving provisions of the no-fault law that have not had much exercise in recent years. Ironically, since the nature of the practice is more arbitration based, I am now more involved with appeals of trial de novo rulings and Article 75 rulings at the Supreme Court and the Appellate Division. The nice part about this trend is that the carrier gets to chose the venue and I am not stuck in Civil Court. This means the papers are read, “the briefing schedule” does not exist and real orders are generated. Civility in practice.
This case it upon the issue of what happens when you file a master arbitration brief and chose not submit one. Why would this happen? Simply put, the award is in excess of $5,000 and there is no way to vacate the award through the arbitration system. The question asked is why bother submitting a brief. After this case, I have taken the position to put in a pro forma brief, whatever that is. The Supreme Court did not rule on this issue but it was a large part of Defendant’s argument for dismissing the declaratory judgment action/trial de novo and seeking confirmation of the master arbitral award.
(1) The Court correctly held that: “the insurance regulations specifically provide that a master arbitration will proceed even if a party fails to appear or submit materials and that the master arbitrator must make a determination on the merits, not in favor of an appearing party solely on the default of the other party (see 11 NYCRR 65-4.10[d]). Thus, the plaintiff’s failure to file a brief with the master arbitrator was not determinative of whether it satisfied a condition precedent or exhausted its administrative remedies”
Secondly, how much time does an insurance carrier have to commence a trial de novo following a master arbitration award? Supreme Court said that one only has 35-days to commence a trial de novo, relying on the uniform court rule. The Court in applying 65-4.10(h)(2) said that the 90-day period to vacate an arbitration award would apply to this situation.
(2) “As this arbitration dispute was originally submitted to the American Arbitration Association (hereinafter AAA) and was not court-ordered, the 35-day timetable applied by the court pursuant to 28 NYCRR 28.12 was not applicable (see 22 NYCRR 28.2). Instead, the plaintiff had 90 days from the date the master arbitrator’s award was mailed to it to commence this action (seeInsurance Law § 5106[c]; CPLR 7511; 11 NYCRR 65-4.10[h]; see also Matter of Slater v Eagle Ins. Co., 294 AD2d at 369), and the plaintiff did so. Thus, the court erred in granting the defendant’s cross motion to confirm the award of the master arbitrator on the ground that this action was not timely commenced and in denying that branch of the plaintiff’s motion which was pursuant to CPLR 3211(b) to dismiss the third affirmative defense, which alleged that the action was not timely commenced.”
Now the case is remanded for a determination in the merits of Plaintiff’s motion for summary judgment.