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.
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]). 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.
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.
Matter of DTG Operations, Inc. v Travelers Indem. Co., 2016 NY Slip Op 08967 (1st Dept. 2016)
This looks like a case where the Petitioner was fighting an inter-company arbitration award on the basis that the injuries sustained to Respondent Assignor were not related to the accident
(1) “Accordingly, this matter involves compulsory arbitration, and the award will be upheld so long as it comports with CPLR 7511 and is not arbitrary and capricious (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 ; Matter of Emerald Claims Mgt. for Ullico Cas. Ins. Co. v A. Cent. Ins. Co., 121 AD3d 481, 482 [1st Dept 2014]).”
(2) “An evidentiary basis exists in the record to support a finding that respondent had demonstrated a causal relationship between the accident and the medical treatments for which it paid (American Transit Insurance Company v Acceptance Indemnity Insurance Company, 2009 NY Slip Op 33169[U] [Sup Ct, Nassau County ). Respondent “responded in writing to the causation argument” (emphasis omitted), stating that the applicant passenger, who was injured while riding in an Access-A-Ride vehicle insured by respondent, was disabled prior to this loss, that the loss worsened any prior condition, that it takes a disabled person much longer to recover from said injuries, and that a disabled person therefore requires more treatment.
As can be seen here, the exacerbation argument won the day in this case. As we saw in Liberty v. Global, the burden was on DTG to present evidence that the injury was not related or that the accident made the condition worse. Failing this showing, the award could not be vacated.
Matter of Liberty Mut. Fire Ins. Co. v Global Liberty Ins. Co. of N.Y., 2016 NY Slip Op 08078 (2d Dept. 2016)
“Here, in response to Liberty Mutual’s submission of evidence establishing the medical payments for which it sought reimbursement, Global failed to produce any evidence that any of the medical claims were improperly paid (see generally State Farm Mut. Auto. Ins. Co. v Stack, 55 AD3d 594, 595). Accordingly, the arbitrator’s determination that Liberty Mutual was not entitled to full reimbursement was not supported by evidence in the record and was arbitrary and capricious (see generally Matter of Progressive Cas. Ins. Co. v New York State Ins. Fund, 47 AD3d 633, 634).”
This case was interesting and really asked the Court how far it would take a hands off stance on getting involved in no-fault matters, whether it was a standard arbitration or loss transfer proceeding. Here, there was no evidence of medical management in the file and the loss-transfer arbitrator noted the same. Supreme Court and Appellate Division said this was insufficient to justify the underlying award.
What this case does, however, is give us a groundwork to defend or prosecute loss transfer claims. A respondent carrier needs to provide affirmative proof, i.e., peer reviews or documentary evidence explaining why a file was not properly medically managed. Quite interesting.
Golden Earth Chiropractic & Acupuncture, PLLC v Global Liberty Ins. Co. of N.Y., 2016 NY Slip Op 26395 (App. Term 2d Dept. 2016)
This was an interesting one. This case (which was mine) looked at the distinction between master arbitrator’s legal powers and their factual review power. The players at AAA on this record were Regina Kurz (I am always appealing her); the master arbitrator was Peter Merani (he is pretty good); and the the rest can be discerned from the opinion.
Lower Arbitration proceeding
(1) “The IME scheduling letters that had been sent to the assignor stated that he would be reimbursed for any proven loss of earnings and reasonable transportation expenses incurred in complying with the IME request. The arbitrator determined that the IME scheduling letters were defective because they called for “proven” loss of earnings and did not track the language of the regulation, and found that, as a result, proper notice was not effectuated.”
Master Arbitration proceeding
(2) “The insurer appealed the adverse decision to a master arbitrator, who vacated the arbitrator’s award in favor of the provider, upon a determination that the award “was not supported by sufficient evidence and was irrational, arbitrary and capricious and incorrect as a matter of law,” thereby, in effect, finding for the insurer.”
(3) “The provider then commenced this proceeding to vacate the master arbitrator’s award, contending that the master arbitrator had exceeded his power, within the meaning of CPLR 7511 (b) (1) (iii), because he had performed an independent review of the evidence, assessed its [*2]credibility and made his own factual determinations. The insurer, by cross petition, sought to confirm the master arbitrator’s award.”
(4) “[t]he District Court granted the provider’s petition and denied so much of the insurer’s cross petition as sought to confirm the master arbitrator’s award, finding that the master arbitrator had exceeded his authority by reviewing factual issues which had already been decided by the arbitrator and had impermissibly substituted his own factual determination for that of the arbitrator”
(5) “We reverse.”
Statements of Law
(6) “A master arbitrator is empowered to vacate an arbitration award based upon most grounds set forth in CPLR 7511 (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d at 210; see also 11 NYCRR 65-4.10 [a] )”
(7) “[o]r based upon the ground that the arbitration award “was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65-4.10 [a] 
(8) “The power of a master arbitrator to review factual and procedural issues (unlike substantive law issues) is limited to “whether the arbitrator acted in a manner that was arbitrary and capricious, irrational or without a plausible basis”
(9) “If, however, 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”
(10) “Contrary to the provider’s contention, we find that the master arbitrator did not exceed the scope of his authority, as he did not weigh or independently evaluate issues of credibility or engage in any factual analysis. Rather, his legal analysis of the arbitrator’s determination was well within the scope of his authority to review and correct an error of law made by the arbitrator”
(11) “Here, the master arbitrator determined that the use of the word “proven” in the IME scheduling letters did not render such letters ineffective, notwithstanding the fact that the word “proven” does not appear in 11 NYCRR 65-3.5 (e), and that proper notice of the scheduled IMEs was, therefore, effectuated.
(12) Reversed with one bill of costs
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]).”
Global Liberty v. Coastal Anesthesia
Another attempt is being made to demonstrate that “rocket docket” preclusion is subject to an interest of justice review and that CPLR 2005 applies in the correct situation.
Procedurally, the submissions were 5-days late and a colorable showing of law office failure was presented in the moving papers. In my eyes, if this case does not call for the tempering of a hard-line standard, you might as well throw the baby out with the bath water.
The lower arbitrator – a rocket docket enthusiast – precluded the submissions. I have usually kept my views of the rocket docket club of arbitrators off this blog, and I will continue that policy. Opportunely, the regulation really needs to be amended to incorporate a prejudice or substantial justice standard prior to disallowing a party the opportunity to plead its case. Parenthetically, Countriwide would not get much sympathy under my proposed rule change since mercy is not granted towards the insolent few.
The case is up for submission on 11/25/16. If we win, then some sanity will reign. Should we lose, then we may be looking to DFS to amend the rule, lest DFS looks like they just do not get it.
My prediction. Assuming the Court follows Matter of Unitrin Advantage Ins. Co. Kemper A. Unitrin Bus. v Professional Health Radiology, 2016 NY Slip Op 06767 (1st Dept. 2016), which held that consideration of evidence was not proper:”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”, the appeal has a good shot at success.
Just note the one mistake that was made on Heatlhmakers, i.e., the failure to include an explanation for the slightly late evidence, was herein not repeated. Fool me once… you know the bit. We cannot say the same about “the partner affirmation”
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.