Election to arbitrate

Ellen Sue Ginsberg, D.O., P.C. v New York City Tr. Auth., 2020 NY Slip Op 50431(U)(App. Term 2d Dept. 2020)

Once you make an election to arbitrate with respect to a Assignee/Assignor, you have given up the ability to change or “flit” forums. This election is not carrier specific if more than one carrier is responsible for first party benefits. It makes sense.

“In this action by a provider to recover assigned first-party no-fault benefits, defendant New York City Transit Authority (NYCTA) moved to dismiss the complaint insofar as asserted against it on the ground that plaintiff had previously elected to arbitrate its claims arising out of the underlying accident. Insofar as is relevant to this appeal, the District Court denied the motion on the ground that the previously arbitrated claims were against GEICO, not NYCTA.

Contrary to the determination of the District Court, since plaintiff’s claims against NYCTA are for treatment of the same assignor, for injuries arising from the same accident, plaintiff is bound [*2]by its initial election to arbitrate these claims, even though asserted against a different entity (see Roggio v Nationwide Mut. Ins. Co.,66 NY2d 260 [1985]; American Ind. Ins. Co. v Art of Healing Medicine, P.C., 104 AD3d 761, 763 [2013]; Cortez v Countrywide Ins. Co., 17 AD3d 508, 509 [2005]; 563 Grand Med., P.C. v Country-Wide Ins. Co., 61 Misc 3d 136[A], 2018 NY Slip Op 51556[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]; Cockett v Nationwide Mut. Ins. Co., 143 Misc 2d 249 [App Term, 2d Dept, 2d & 11thJud Dists 1988])”

Forum Non Conveniens

Monroe v Foremost Signature Ins. Co., 2019 NY Slip Op 52042(U) (App. Term 2d Dept. 2019)

“In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for, among other things, an order dismissing the complaint pursuant to CPLR 327, on the ground that the action should have been commenced in New Jersey, where the accident had occurred. Plaintiff opposed defendant’s motion on the ground that defendant had failed to establish where the accident had occurred, and cross-moved for summary judgment. By order entered December 18, 2017, the Civil Court granted the branch of defendant’s motion seeking to dismiss the complaint pursuant to CPLR 327, without reaching the remaining branches of defendant’s motion, and denied plaintiff’s cross motion.

Under the doctrine of forum non conveniens, a court may dismiss an action when, although it may have jurisdiction, it determines that, “in the interest of substantial justice the action should be heard in another forum” (CPLR 327 [a]). The doctrine is flexible and requires the balancing of many factors, such as “the residency of the parties, the potential hardship to proposed witnesses including, especially, nonparty witnesses, the availability of an alternative forum, the situs of the underlying actionable events, the location of evidence, and the burden that retention of the case will impose upon the New York courts” (Turay v Beam Bros. Trucking, Inc., 61 AD3d 964, 966 [2009]; see Xiu Zhang Yin v Bennett, 78 AD3d 936 [2010]).

Upon the record before us, we find that defendant failed to demonstrate any potential hardship to proposed witnesses if the action is heard in New York (see Turay, 61 AD3d at 966), and defendant failed to otherwise establish with admissible evidence that “in the interest of substantial justice the action should be heard in another forum” (CPLR 327 [a]). Consequently, the branch of defendant’s motion seeking to dismiss the complaint on the ground of forum non conveniens should have been denied.”

Assuming this was a NJ policy, a motion to dismiss due to lack of compliance with the giving the carrier a chance to adjust the claim before suit or to move into arbitration under AICRA should have been made.

Longevity Med. Supply, Inc. v 21st Century Ins. Co., 2019 NY Slip Op 52041(U)(App. Term 2d Dept. 2019)

“In the case at bar, defendant relied upon a New Jersey police crash investigation report to demonstrate both that the underlying accident had occurred in New Jersey and that plaintiff’s assignor lived in Texas, thus offering the police report to establish the truth of the matters asserted therein. However, the police report constituted inadmissible hearsay, as the report was not certified as a business record (see CPLR 4518 [a]; Gezelter v Pecora, 129 AD3d 1021 [2015]; Hernandez v Tepan, 92 AD3d 721 [2012]). Consequently, defendant failed to demonstrate the location of the underlying accident or the assignor’s residence. In any event, we note that defendant’s own exhibits—an NF-3 form, invoice for the supplies at issue, and assignment of benefits form—all stated that the assignor lived in Staten Island. Upon the record presented, we find that the Civil Court erred in determining, as to the branch of defendant’s motion seeking dismissal based on forum non conveniens, that defendant’s evidence had sufficiently demonstrated a lack of significant contacts to New York.”

Prior Arb?

Ultimate Health Prods., Inc. v Ameriprise Auto & Home, 2019 NY Slip Op 51890(U)(App. Term 2d Dept. 2019)

My only thought would be by actively litigating the matter in the Civil Courts, doesn’t the insurance carrier waive its right to demand arbitration? While arbitration in NY rests solely upon the provider, a carrier when given the right to request it can waive it under certain conditions.

“By decision and order dated July 14, 2017 (57 Misc 3d 9 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]), this court reversed the June 9, 2014 order, insofar as appealed from, and denied the branches of defendant’s cross motion seeking leave to amend defendant’s answer to assert that the action is barred by the doctrine of res judicata and, upon such amendment, to award defendant summary judgment on that ground. The matter was remitted to the Civil Court for a new determination of plaintiff’s motion for summary judgment and for a determination of the remaining branches of defendant’s cross motion ”

“With respect to the branch of defendant’s cross motion seeking summary judgment based on plaintiff’s previous election to arbitrate the claims, it is undisputed that after plaintiff had commenced an arbitration, it had been withdrawn with prejudice. However, “[p]laintiff, by electing to arbitrate, waived its right to commence an action to litigate its claims arising out of the same motor vehicle accident” (563 Grand Med., P.C. v Country-Wide Ins. Co., 61 Misc 3d 136[A], 2018 NY Slip Op 51556[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]; see Roggio v Nationwide Mut. Ins. Co., 66 NY2d 260 [1985]; Cortez v Countrywide Ins. Co., 17 AD3d 508, 509 [2005]; Rockaway Blvd. Med. P.C. v Progressive Ins., 2003 NY Slip Op 50938[U], *2 [App Term, 2d Dept, 2d & 11th Jud Dists 2003] [where arbitration was commenced and the arbitrator dismissed the claim without prejudice to renewal, the court stated, “[i]t is well settled that once a claimant chooses arbitration, it cannot resort to the courts”]).”

Gary T day

Case #1

Matter of Bay Needle Care Acupuncture v Country-Wide Ins. Co., 2019 NY Slip Op 07249 (2d Dept. 2019)

(1) ”  The arbitrator stated that he found “no reasonable or credible evidence” establishing the defense, and he found in favor of Bay Needle. On Country-Wide’s appeal, a master arbitrator vacated the original arbitrator’s award and remitted the matter for a new hearing before a new arbitrator. The master arbitrator stated that the evidence of fraudulent incorporation presented by Country-Wide “was substantial.” Bay Needle commenced this proceeding pursuant to CPLR article 75 to vacate the master arbitrator’s award. The Supreme Court granted the petition, vacated the master arbitrator’s award, confirmed the original arbitrator’s award in favor of Bay Needle, and entered a judgment accordingly. Country-Wide appeals. “

(2) ” We agree with the Supreme Court that the master arbitrator exceeded his power in vacating the original arbitrator’s award after, in effect, weighing the evidence and coming to a different conclusion than the original arbitrator as to what that evidence proved (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 212). As such, we agree with the court’s determination to vacate the master arbitrator’s award and to confirm the original arbitrator’s award in favor of Bay Needle “

(3) ” Moreover, as Bay Needle contends and Country-Wide concedes, Bay Needle is entitled to an attorney’s fee for this appeal pursuant to 11 NYCRR 65-4.10(j), to be fixed by the Supreme Court “

It is strange to see the Second Department wade into the no-fault arbitration realm. The master arbitrator found a lack of proof and remanded. Now, if the master arbitrator found as a matter of law that the evidence was insufficient and dismissed, then the outcome would be different. Well, it should be different.

Let us not forget about the attorney’s fees. Applicant is using the one remaining provision of the regulations that allows a non NY style PIP attorney fee.

Case #2

Matter of V.S. Care Acupuncture, P.C. v Country-Wide Ins. Co., 2019 NY Slip Op 07264 (2d Dept. 2019)

(1) “On appeal, a master arbitrator affirmed the original arbitrator’s award, finding that it was not arbitrary and capricious. V.S. then commenced this proceeding pursuant to CPLR article 75 to vacate the master arbitrator’s award. The Supreme Court granted the petition, vacated the master arbitrator’s award, and entered a judgment in favor of V.S. in the amount of the claim for no-fault benefits plus statutory interest, attorneys’ fees, and costs and disbursements. Country-Wide appeals.”

(2) Contrary to the Supreme Court’s determination, V.S. failed to demonstrate any grounds for vacating the master arbitrator’s award. A court reviewing the award of a master arbitrator is limited to the grounds set forth in CPLR article 75, which include, in this compulsory arbitration, the question of whether the determination had evidentiary support, was rational, or had a plausible basis .

(3)  “[t]he determination of the master arbitrator affirming the original arbitrator’s award had evidentiary support and was not irrational, it is not subject to vacatur by the courts (see Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223-224; Matter of Acuhealth Acupuncture, P.C. v New York City Tr. Auth., 167 AD3d 869), even if the master arbitrator committed an error of law

The Falzone standard is exacting and problematic. While we want arbitrations to be the end and now the beginning of a new round of litigation, the “mere error of law” test does not advance public policy. All it does is insulate bad PIP and UM arbitration decisions from further review. Real people get hurt when arbitrators make up the law as they go along.

Case #3

Matter of V.S. Care Acupuncture, P.C. v Country-Wide Ins. Co., 2019 NY Slip Op 07265 (2d Dept. 2019)

(1) “A master arbitrator’s review powers, however, do include reviewing the facts to determine “whether or not the evidence is sufficient, as a matter of law, to support the determination of the arbitrator” (id. at 212). Here, there is no rational basis for the determination of the master arbitrator that the original arbitrator committed an error of law in rejecting Country-Wide’s fraudulent incorporation defense “

(2) “Moreover, as V.S. contends and Country-Wide concedes, V.S. is entitled to an attorney’s fee for this appeal pursuant to 11 NYCRR 65-4.10(j), to be fixed by the Supreme Court.”

(1)  “The arbitrator, upon refusing to consider Country-Wide’s defenses on the ground that Country-Wide’s submissions to the arbitrator were late, with no excuse for their lateness, found in favor of Acuhealth. On Country-Wide’s appeal, the master arbitrator vacated the award and issued a new award in favor of Country-Wide based on the defense that Acuhealth was fraudulently incorporated, which the original arbitrator had refused to consider on the ground that it was untimely submitted. “

(2) ” Acuhealth then commenced this proceeding pursuant to CPLR article 75 to vacate the master arbitrator’s award. The Supreme Court granted Acuhealth’s petition, vacated the master arbitrator’s award in favor of Country-Wide, and confirmed the original arbitrator’s award in favor of Acuhealth. Country-Wide appeals.”

(3) ” An arbitrator acts within his or her discretionary authority by refusing to entertain late submissions (see Matter of Global Liberty Ins. Co. v Coastal Anesthesia Servs., LLC, 145 AD3d 644, 645; Matter of Mercury Cas. Co. v Healthmakers Med. Group, P.C., 67 AD3d 1017, 1017; Matter of Green v Liberty Mut. Ins. Co., 22 AD3d 755, 756). Here, in rejecting the original arbitrator’s proper exercise of his discretionary authority, and in passing, de novo, upon factual questions concerning the validity of Country-Wide’s defense that Acuhealth was fraudulently incorporated (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 320-321), the master arbitrator exceeded his power .”

I highlighted the “with no excuse for their lateness” but if you read Coastal Anesthesia, you can have the best law office failure excuse and the Courts will show no mercy. Here, the Court invaded the arbitration system and said it was not proper to substitute your discretion for that of the lower arbitrator. The Second Department acts in strange ways as to the defects in the arbitration system it will stick its head out and invade and the ones it won’t.

Case #4: The grand finale

Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 2019 NY Slip Op 07246 (2d Dept. 2019)

(1 “A court reviewing the award of a master arbitrator is limited to the grounds set forth in CPLR article 75, which include, in this compulsory arbitration, the question of whether the determination had evidentiary support, was rational, or had a plausible basis (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 212). Notably, the master arbitrator’s review power is broader than that of the courts’ because it includes the power to review for errors of law (seeid. at 211-212; 11 NYCRR 65-4.10[a][4]). In contrast, the courts “generally will not vacate an arbitrator’s award where the error claimed is the incorrect application of a rule of substantive law, unless it is so irrational as to require vacatur” (Matter of Smith [Firemen’s Ins. Co.], 55 NY2d 224, 232 [citations and internal quotation marks omitted]; see Matter of Liberty Mut. Ins. Co. v Spine Americare Med., 294 AD2d 574, 576 “

You will note that the First Department disagreed with the above statement: Matter of Global Liberty Ins. Co. v McMahon, 172 A.D.3d 500, 501 (1st Dept. 2019 (“Accordingly, because CPT Assistant is incorporated by reference into the CPT book, which is incorporated by reference into the Official New York Workers’ Compensation Medical Fee Schedule applicable to this claim under the No-Fault Law, the award rendered without consideration of CPT Assistant is incorrect as a matter of law (see 11 NYCRR 65-4.10[a][4])“)

(2) “Here, since Country-Wide submitted evidence tending to support its fraudulent incorporation defense, it cannot be said that the determination of the master arbitrator affirming the original arbitrator’s award lacked evidentiary support. Nor can it be said that the determination to affirm the original arbitrator, who supported her determination with reasons based on the evidence, lacked a rational basis. Thus, even if it was an error of law to conclude that Country-Wide proved its defense as a matter of law (seeNationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C., 155 AD3d 885, 886-887), the master arbitrator’s determination is not subject to vacatur by the courts on the mere basis of that error of law “

(3) “Notably, this Court’s decision in Nationwide Affinity, which is contrary to the conclusion of the master arbitrator in this case, was not published until after the master arbitrator’s award was rendered. Moreover, Country-Wide submitted evidence in support of its defense which, while inadmissible, could be considered by the original arbitrator in this case, who, unlike a court deciding a summary judgment motion like that at issue in Nationwide Affinity, was not bound by the rules of evidence “

This last case on GT day was remarkable. The Appellate Division finally told us that it does not have 4.10(a)(4) power, while the First Department said otherwise. Next, it allowed an award that violated settled precedent to stand. And finally, the Court for the first time I can remember explicitly held that an arbitrator is not bound by the rules of evidence. The flip side is that an arbitrator who demands compliance with the rules of evidence may run afowl of this rule? It is a hard one to tell, and I do not know the answer.

No jurisdiction

EMC Health Prods., Inc. v Maryland Auto. Ins. Fund, 2019 NY Slip Op 51316(U)(App. Term 2d Dept. 2019)

” In support of its motion, defendant alleged that it conducts no business in the State of New York, including that it does not issue insurance policies here, has no sales representative or agent within [*2]the state, and is not licensed to transact business within the State of New York. Plaintiff opposed the motion”

The motion was granted.

This case hearkens back to the bounds of jurisdiction in this State. While a Court may not be able to exercise personal jurisdiction, the deemer provision in the insurance contract combined with the compulsory arbitration law may lead to a different conclusion.

The powers of a court to vacate an arbitration award

Matter of Miller v Elrac, LLC, 2019 NY Slip Op 01544 (1st Dept. 2019)

(1) ”  Since the master arbitrator found that the no-fault arbitrator reached the decision in a rational manner and that the decision was not arbitrary or capricious, incorrect as a matter of law, in excess of policy limits, or in conflict with other no-fault arbitration proceedings there were no grounds for its vacatur; the motion court correctly upheld the master arbitrator’s determination “

(2) “Contrary to petitioner’s argument, there is no basis to conclude that the arbitrator made a mistake of law by ignoring whether petitioner’s condition could have worsened after respondent’s independent medical examination; she just made a factual determination that it had not “

My only comment on this case is that the lower arbitrator made two significant mistakes. First, the arbitrator said that Petitioner should lose because of a “gap in treatment”. Besides gaps in treatment having no applicability outside Ins Law 5102(d) motions, Petitioner suffered a fracture. Second, the Petitioner developed a tumor on the finger that broke and his condition declined subsequently. The lower arbitrator looked at all records until the one where the tumor arose. The record is clear.

Anyway, arbitration can be just that: arbitrary.

Lack of personal jurisdiction for an out of state insurance carrier

Pavlova v American Ind. Ins. Co., 2018 NY Slip Op 50943(U)(App. Term 2d Dept. 2018)

To me, this is the ultimate fight.  The accident occurred in New York and putting aside whether the deemer applies, you cannot drag the carrier into a NY Court.

“In this action by a provider to recover assigned first-party no-fault benefits, defendant moved to dismiss the complaint, pursuant to CPLR 3211 (a) (8), on the ground that the Civil Court lacked personal jurisdiction over defendant. In several affidavits in support of the motion, defendant’s employees asserted that defendant is a Pennsylvania company, which is not licensed to do business in New York, maintains no offices in New York, has no agents operating out of, or representatives soliciting business in, New York, and does not own, use or possess any real property in New York. Furthermore, defendant argued that it had been held in prior cases that the courts in the State of New York cannot exercise personal jurisdiction over this defendant. Plaintiff opposed the motion with an affirmation by its counsel, who made unsupported assertions that defendant had transacted business in New York by knowingly issuing policies to New York drivers, and that defendant had established an ongoing relationship with defense counsel in New York, thereby subjecting defendant to jurisdiction in New York. Defendant’s attorney asserted in a reply affirmation that the arguments raised by plaintiff had been rejected by this court in Compas Med., P.C. v American Ind. Ins. Co. (47 Misc 3d 134[A], 2015 NY Slip Op 50481[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]). Defendant appeals from an order of the Civil Court entered August 11, 2016 denying defendant’s motion to dismiss the complaint.

Defendant made a prima facie showing that personal jurisdiction had not been obtained over it. “In opposing a motion to dismiss pursuant to CPLR 3211 (a) (8) on the ground of lack of personal jurisdiction, ‘a plaintiff need only make a prima facie showing that such jurisdiction exists’ ” (Hopstein v Cohen, 143 AD3d 859, 860 [2016], quoting Lang v Wycoff Hgts. Med. Ctr., [*2]55 AD3d 793, 798 [2008]). In the case at bar, the affirmation of plaintiff’s attorney was insufficient to demonstrate that personal jurisdiction over defendant existed under the Civil Court’s long-arm statute (see CCA 404 [a]), as plaintiff’s counsel failed to establish that he possessed personal knowledge of the facts”

I hate ending a post with a categorical statement that does not complete the story.  Assume Plaintiff filed an arbitration?

Infants compromise order not needed to proceed in arbitration in assignee case

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””

What is substantial evidence?

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 [2011]), 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 [1987]). 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.

Arbitration is waivable

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.”