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.
The good hands people at it again
Allstate Ins. Co. v Brown, 2019 NY Slip Op 51560(U)(App. Term 1st Dept. 2019)
“In particular, since the arbitrator’s rejection of petitioner’s IME no show defense was based, inter alia, upon her review of the proof of mailing the IME notices, the claimant’s appearance at eight prior scheduled IMEs and petitioner’s treatment of claimant as an adversary, the determination was therefore rational, as it was based on the evidence before her “
Well, much can be said here. Allstate appears to have acted in bad faith or perhaps even violated GBL 349 based upon the snipped I see here.
Also, if this lady appeared for 8 IME’s and I assume they were all positive, what the heck is going on here? This case legitimizes the 65-3.2 analysis and shows what happens when you push the envelope with really bad facts.
While I know there is caselaw that attending one IME does not excuse attending another IME, this is a first-party non-assigned case with poor facts for the carrier. Assuming there were lost wages and further assuming if I were Ms. Brown, I would be jumping on the bad-faith bandwagon and the GBL 349 bandwagon right now. The Court opened the door. Walk through it Ms. Brown!
Article 75 lay-up
Matter of Global Liberty Ins. Co. of N.Y. v Top Q. Inc., 2019 NY Slip Op 06445 (1st Dept. 2019)
I know AAA will not like this decision. But as we told the master arbitrator in our brief, this is the law. The master refused to listen.
The above thought actually traces back to a recent snarky post on the No-fault group on Facebook One poster I think hailed a AAA decision about the inability to delay for recorded statements as gospel. Another poster found a Civil Court case saying the same thing. I then found an App Term case from 12 years prior that was contrary. What is my point? Do not trust AAA (or the App. Term) on the law if you think you are right.
Truth be told, the App. Div First Department will grant you leave if you can show them that an App Term decision is inconsistent with precedent, common sense or of significant import. While I do not agree with every decision from that Court, you know that your applications are getting attention at that tribunal. Again, the First Department only hears cases from two counties and has significant resources to give cases the attention they deserve.
The Second Department, however, is a lot more sparring with their grants of leave. They will only grant leave if the issue is hot button and involves millions of dollars, if not addressed. For proof, ask yourself why that court heard a pre-LMK interest case and will hear the Alleviation case. That said, leave will almost never be granted in mundane cases.
In fact, if you were to track First and Second Department CPL 440 leave applications, you would see the same trend. I do not blame the Second Department for its stinginess in granting leave application, despite being the victim of perfunctory leave denials. That Court is the busiest appellate court in the country.
Time for a Fifth Appellate Division anyone?
As to this case:
“Order, Supreme Court, Bronx County (Julia I. Rodriguez, J.), entered August 31, 2018, which denied the petition to vacate a master arbitrator’s award, unanimously reversed, on the law, without costs, and the petition granted.
The master arbitrator’s award was arbitrary because it irrationally ignored the controlling law that the no-fault policy issued by petitioner was void ab initio due to respondent’s assignor’s failure to attend duly scheduled independent medical exams (see Hereford Ins. Co. v Lida’s Med. Supply, Inc., 161 AD3d 442, 443 [1st Dept 2018]; Matter of Global Liberty Ins. Co. v Professional Chiropractic Care, P.C., 139 AD3d 645, 646 [1st Dept 2016]; American Tr. Ins. Co. v Lucas, 111 AD3d 423, 424 [1st Dept 2013]).”
Can’t backdoor the Master award through a DJ
Hereford Ins. Co. v Iconic Wellness Surgical Servs., LLC, 2019 NY Slip Op 50801(U)(App. Term 1st Dept. 2019)
“Civil Court erred in vacating the master arbitrator’s no-fault award on the ground that it is contrary to a subsequent order rendered by the Supreme Court, New York County, which declared that petitioner-insurer is not liable for no-fault benefits arising from the underlying automobile accident. While the preclusive effect of a pre-arbitration judicial decision may be sufficient to vacate an arbitral award (see Matter of Tokio Mar. & Fire Ins. Co. v Allstate Ins. Co., 8 AD3d 492 [2004]), a post-arbitration judicial determination concerning the insurer’s liability is not one of the limited grounds for vacating an arbitration award (see Matter of Hirsch Constr. Corp. [Cooper], 181 AD2d 52 [1992], lv denied 81 NY2d 701 [1992]). Indeed, if a motion to vacate an arbitration award on this ground could be entertained, “the arbitration award would be the beginning rather than the end of the controversy and the protracted litigation which arbitration is meant to avoid would be invited” (Matter of Mole [Queen Ins. Co. of Am.], 14 AD2d 1, 3 [1961]).”
“We have considered petitioner Hereford’s alternative grounds for vacating the award and find them unavailing. The master arbitrator’s affirmance of the lower arbitration award was not irrational (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 211 [1981]), nor did it ignore controlling law (see Matter of Global Liberty Ins. Co. v ISurply, LLC, 163 AD3d 418 [2018]).”
I think the smarter approach would have been to consolidate the DJ action with the Article 75 action (COA #1 DJ; COA #2 Art 75) and to move by Notice of Petition. This assumes the the DJ had merit and was not one to force a default in an attempt to create unfounded res judicata.
Confirmed
Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 2019 NY Slip Op 02338 (2d Dept. 2019)
“The master arbitrator’s determination of the law need not be correct: mere errors of law are insufficient to set aside the award of a master arbitrator” (Matter of Liberty Mut. Ins. Co. v Spine Americare Med., 294 AD2d at 577). “If the master arbitrator vacates the arbitrator’s award based upon an alleged error of a rule of substantive law,’ the determination of the master arbitrator must be upheld unless it is irrational” (id. at 576; see Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d at 829). Here, we agree with the Supreme Court’s determination vacating the master arbitrator’s determination, as there was no rational basis to support it.“
What was the error of substantive law that that Supreme Court felt needed was wrong and required reversal?
Another arbitration only rule bites the dust
Matter of Global Liberty Ins. Co. v Medco Tech, Inc., 2019 NY Slip Op 02167 (1st Dept 2019)
” Respondent seeks from petitioner no-fault insurance benefits for medical equipment that respondent provided to its assignor, who was involved in a motor vehicle accident. In denying respondent’s claim, petitioner relied on a peer review report that concluded, based on a review of the medical records, that the assignor’s condition was degenerative in nature and not post-traumatic and therefore that the surgery undergone by the assignor was “not medically necessary in relation to the accident” (emphasis supplied). The arbitral award must be vacated and a de novo hearing held, because, on the record before us, as argued, it would be irrational to conclude that the need for the subject medical equipment was causally related to the accident (see Matter of Smith [Firemen’s Ins. Co.], 55 NY2d 224, 232 [1982]; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 18-19 [2d Dept 1999]; Shahid Mian, M.D., P.C. v Interboro Ins. Co., 39 Misc 3d 135[A], 2013 NY Slip Op 50589[U] [App Term, 1st Dept 2013]). “
I always ask myself what is it that causes me to appeal certain cases. Sometimes, it is pure curiosity, sometimes it is because the lower arbitrator did such a horrible job that I cannot see record support for the award and other times it is because the lower fact finder created a legal precedent that is completely without legal support. You can figure that my level of success in categories number one and two are minimal. Category two represents the cases that are most personal to me (e.g., Miller v Elrac) and are heart-breakers because AAA just got the cases wrong. As to category three, I have gotten some bites, as can be seen here.
The issue in this case represented the perfect storm. Arbitrator Resko was not able to make a factual determination based upon the master arbitrator rule stating that post-surgical DME peer reviews and IMEs must make reference to the DME in order to be valid. That was not done here. An award was entered in favor of the Applicant. The master arbitrator gave it the Petrofsky “seal of approval” and I bounced into Supreme Court. FYI – the master arbitration program is a disgrace, but I can discuss that off-line.
My issue had nothing to do with this applicant, law firm or my dislike towards CPM and some of the abuses I see with extremity surgery billing. Some people think these appeals are personal, but this was not. It was based upon a rule of law that I found not well reasoned and I will say was “stupid”. I was hesitant about appealing this, but I went to an arbitration, saw a certain law firm with many surgery cases “cite” to voluminous master awards involving this issue and I said to myself that I should pull the trigger. The beneficiary of this rule will probably be Geico and Allstate given their presence in the market. But, I never want to see this rule applied in any of my cases. I got my wish.
If you look at the oral arguments, my main point is that that the medical necessity or causal relationship should not be barred due to a made up rule that runs counter to established precedent. I told one of the judges I do not even care if I win or lose at the end, just apply a rational precedent. The Court agreed. My bill for this case? Satisfaction that reason prevailed.
Good hands people launched a less than laudable appeal
Allstate Ins. Co. v Longevity Med. Supply, Inc., 2018 NY Slip Op 50238(U)(App. Term 1st Dept. 2018)
“There was a rational basis, based on the no-fault regulations, for the master arbitrator’s finding that respondent-medical provider’s proof was sufficient to establish that (1) it responded to the verification demands sent by petitioner, and (2) that petitioner was therefore required, but failed, to rebut the presumption of receipt of the verification, or show that it timely acted upon receipt by paying or denying the claim, or seeking further verification. The master arbitrator’s legal analysis of the arbitrator’s determination was well within the scope of her authority to review and correct an error of law made by the arbitrator”
I do not what the purpose of this appeal was except to maximize on hourly billing. Perhaps i am missing something and need enlightenment.
20-days means just that
Matter of Ameriprise Ins. Co. v Sandy 2018 NY Slip Op 00828 (2d Dept. 2018)
“Where an insurance policy contains an agreement to arbitrate, CPLR 7503 (c) requires a party, once served with a [notice of intention to arbitrate], to move to stay such arbitration within 20 days of service of such [notice], else he or she is precluded from objecting'” (Matter of Government Empls. Ins. Co. v Castillo-Gomez, 34 AD3d 477, 478, quoting Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082, 1084). Here, the proceeding was not commenced within 20 days of the receipt of the November 2, 2015, notice of intention to arbitrate.
In order for the 20-day limitation period to be enforceable, the notice of intention to arbitrate must comply with the requirements of CPLR 7503(c) (see Government Empls. Ins. Co. v Castillo-Gomez, 34 AD3d at 478; Matter of Nassau Ins. Co. [Clemente], 100 AD2d 969, 970; State Farm Mut. Auto. Ins. Co. v Szwec, 36 AD2d 863, 863). Here, contrary to Ameriprise’s contention, the November 2, 2015, notice complied with all the statutory requirements.
Ameriprise failed to establish that the November 2, 2015, notice of intention to arbitrate was deceptive and intended to prevent it from timely contesting the issue of arbitrability ”
I think Ameriprise wants the legal fees the expended back.
Malella and Attorneys fees
Country-Wide Ins. Co. v Valdan Acupuncture, P.C., 2017 NY Slip Op 04068 (1st Dept. 2017)
(1) Assuming without deciding that an insurer’s defense of fraudulent incorporation cannot be precluded (see AVA Acupuncture, P.C. v AutoOne Ins. Co., 28 Misc 3d 134[A], 2010 NY Slip Op 51350[U] [App Term 2d Dept 2010]; Bath Med. Supply, Inc. v Allstate Indem. Co., 27 Misc 3d 92, 95 [App Term 2d Dept 2010]), we conclude that the master arbitrator properly confirmed the award of the arbitrator, who reviewed petitioner’s submissions relating to the plea of guilty to no-fault insurance fraud by a man married to the owner of respondent, found that respondent was not mentioned once in the “hundreds of pages” submitted, and rejected petitioner’s attempt to hold the owner “responsible by association.”
(2) “Respondent is entitled to attorneys’ fees for this appeal (11 NYCRR 65-4.10(j)(4)), calculated, in accordance with 11 NYCRR 65-4.6(b), as 20% of the no-fault benefits awarded.”
This decision goes against Geico v. AAMG, which seems to imply an hourly fee for work in relation to an article 75. This decision does not touch upon a de-novo action, which may or may not be subjection to an attorney fee in accordance with 4.6(b) viz 4.10(j)(4).
Also, precludable Mallela? So much in a small case.
Hourly attorneys fees (65-4.10[j][4])
Matter of GEICO Ins. Co. v AAAMG Leasing Corp., 2017 NY Slip Op 01552 (2d Dept. 2017)
(1) “The petitioner opposed that demand for relief. In the alternative, the petitioner stated that the appellant’s fee should be limited to $650.”
(2) “In the order and judgment appealed from, the Supreme Court confirmed the arbitration award. That branch of the cross petition which was for an award of an additional attorney’s fee was denied without comment. The appeal is limited to so much of the order and judgment as denied that branch of the cross petition which was for an award of an additional attorney’s fee.”
(3) “The general rule is that in proceedings involving arbitration, as in other litigation, an attorney’s fee is not recoverable unless provided for by agreement or statute (see Myron Assoc. v Obstfeld, 224 AD2d 504). Pursuant to Insurance Law § 5106(a), if a valid claim or portion of a claim for no-fault benefits is overdue, “the claimant shall also be entitled to recover his attorney’s reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to [the] limitations promulgated by the superintendent in regulations.” As applicable here, the superintendent’s regulations provide that an attorney’s fee for services rendered in connection with “a court appeal from a master arbitration award . . . shall be fixed by the court adjudicating the matter” (Insurance Department Regulations [11 NYCRR] § 65-4.10[j][4]). The term “court appeal” applies to a proceeding such as this, taken pursuant to CPLR article 75 to vacate or confirm a master arbitration award (see Matter of Hempstead Gen. Hosp. v National Grange Mut. Ins. Co., 179 AD2d 645).”
(3) “Accordingly, the matter must be remitted to the Supreme Court, Nassau County, for a determination of the amount of the additional attorney’s fee to which the appellant is entitled, stating the evidentiary basis for the award. We note that the court shall not consider any time spent by the appellant’s attorney in applying for and substantiating his fee, as the appellant is not entitled to a “fee upon a fee”
The Court in this matter was pellucid that any Article 75 or trial de novo that a medical provider initiates or responds to will be subjected to an hourly attorney fee. I see damage coming.