Unitrin has been back-doored into the Second Department

Matter of Global Liberty Ins. Co. v Professional Chiropractic Care, P.C., 2016 NY Slip Op 04156 (1st Dept. 2016)

Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered July 10, 2015, which denied the petition to vacate a master arbitrator’s award, unanimously reversed, on the law, without costs, the petition granted, and the award vacated. The Clerk is directed to enter judgment accordingly.

The Master Arbitrator’s award was arbitrary because it irrationally ignored the law, which petitioner insurer had presented to the Master Arbitrator, 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 American Tr. Ins. Co. v Lucas, 111 AD3d 423, 424 [1st Dept 2013]). The alleged error in petitioner’s denial of claim form is of “no moment” (Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [1st Dept 2011], lv denied 17 NY3d 705 [2011]), and was not a sufficient or rational basis for the award (see Auto One Ins. Co. v Hillside Chiropractic, P.C., 126 AD3d 423, 424 [1st Dept 2015], citing Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 211 [1981]).

This was one of my appeals.  The case began as three no-fault arbitrations on Franklin Avenue.  The carrier prevailed.  The lower arbitrator noted that there were errors in the denial (the dates of the no-shows) were wrong, but held in favor or the carrier.  The provider appealed and the master arbitrator REVERSED all three arbitration awards based upon the errors in the denials.

We filed a Petition (consolidated all three awards) in  Bronx Supreme Court and sought to vacate the award of the master arbitrator.  Supreme Court in a published decision denied the Petition, applied the extremely deferential Second Department “no-fault does not belong in the courts” standard.  I appealed, the Petition was granted and the claims were denied.

You want to know the lesson of this case is?  Know where you are filing these Petitions and have confidence in your position.  Admittedly, the Second Department would have probably affirmed saying that mistakes of law are not sufficient to vacate an arbitration award.  Moreover, the First Department believes that Unitrin is the correct statement of law.

Also, after Hillside came out, I realized that the First Department would follow the law without the Second Department’s anti-no-fault impediments.  And this decision and Hillside prove my theory right.  While I might be guilty of forum shopping, I am also guilty of trying to maximize my successes on an eventual appeal that I knew I would have to file.



Supreme Court held that Medicaid fee schedule applies to CPM rental

In the matter of Accelerated DME Recovery, INC. a/a/o Ana Pleitz v. State Farm Mutual Auto. Ins Co.. Index # 706132/15 (Sup. Ct. Queens  Co. 2015)(Modica, AJSC)

While the denial of an Article 75 challenge to a master arbitrator’s decision is not generally newsworthy, this Decision from Supreme Court appears to have gone a step further and on its face would have probably granted State Farm’s challenge to an arbitration award.

What you will discern through a reading of this opinion is the Court has found as a matter of law that the Medicaid formula for determining the proper amount of reimbursement for CPM, i.e. (1/6th * invoice /30) is proper.  I would parenthetically note that the DOH opinion that State Farm obtained on this issue appears to be 1) dispositive; and 2) the potential death knell to the argument that CPM providers can charge reasonable and customary.

I sense this may be a game changer.

Good job to counsel for State Farm on this discreet issue.  At fee schedule, will surgery providers deem CPM to be absolutely necessary for the recovery of surgery causally related to a motor vehicle accident?  I know where my vote is on that question.



Trial De Novo granted and declaration of non-coverage granted

Allstate Ins. Co. v. Phelps Memorial Hospital, 2013 NY Slip Op 33590(U)(Sup. Ct. Nassau Co. 2013)

“This Court conducted a non-jury trial on matter on November 7, 2013, and
reserved decision. The plaintiffs expert credibly testified the treatment rendered to Jorge  Caniero was neither caused by the November 18, 2010 motor vehicle accident nor was  there any exacerbation of a pre-existing condition caused by that same accident. The  Court finds Jorge Caniero was admitted to Phelps Memorial Hospital on suspicion he  experienced a stroke which was not related to the November 18, 20 I 0 motor vehicle  accident. The Court also finds the treatment rendered by the defendant was related to the  diagnosis of acute CVA hypertension, diabetes, mellitus, coronary artery disease and  hyperlipidemia. These conditions were not causally related to the November 18, 2010  motor vehicle accident.

“The plaintiff proffered medical facts by its expert which were sufficient to show the medical condition  for which Jorge Caniero was treated was not related to the November 18, 2010 motor vehicle accident nor was there any exacerbation of a pre-existing condition caused by that same accident”

This is an interesting order as it is one of the few times a lack of causation defense has actually been successful.  It seems to help that Defendant did not put on a case?  If you look at the history of this matter, Defendant made a motion to dismiss the action as time barred, presumably because the Trial de-novo/declaratory judgment action was not commenced within the 90-day period set forth in Article 75 of the CPLR.  This motion was denied.

I suspect Defendant’s motion should have probably been granted.  The simple reason is that assuming the demand for trial de-novo occurs more than 6-years after the claim became overdue, while the original arbitration was commenced timely, then the trial de novo would be time barred.  I am not sure that makes sense and is in accord with the meaning of Ins. Law 5106(c).

Great Wall is binding precedent on American Arbitration Association

Allstate Ins. Co. v Natural Healing Acupuncture, P.C., 2013 NY Slip Op 50645(U)(Civ. Ct. Kings Co. 2013)

“The arbitrator failed to mention, much less follow the Appellate Term’s decision in Great Wall Acupuncture v. GEICO Gen. Ins. Co., 16 Misc 3d 23 (App. Term, 2nd Dept. 2007), which addressed the issue and applied the fee schedule for licensed chiropractors to acupuncture services provided by licensed acupuncturists.  In Great Wall, the Appellate Term analogized licensed chiropractors to licensed acupuncturists based on the similar training they underwent for licensure in order to perform acupuncture services, while contrasting them to physicians, who only had to obtain certification in order to perform acupuncture. The Appellate Term further noted the Department of Insurance’s lack of “specific guidance as to which particular fee schedule should be applied to a licensed acupuncturist performing acupuncture,” and urged it to do so. Great Wall, supra at 24.

“Although acknowledging Great Wall, supra, and the fact that the proposed legislation to increase the reimbursement rates for both chiropractors and acupuncturists was still pending, the master arbitrator confirmed the award. The master arbitrator found that Allstate impermissible sought to have him conduct a de novo review, and that the lower arbitrator’s award had “a plausible basis in the evidence presented” and thus conformed to applicable law.”

“This Court does not understand the reasoning behind the master arbitrator’s award. Allstate did not seek a de novo or a factual review, as prohibited by Petrofsky, supra. Rather, petitioner argued that the decision was arbitrary and capricious and contrary to well settled law. This Court cannot countenance an award which finds that proposed or pending legislation trumps well established precedent, i.e. Great Wall, supra. Therefore, the award is vacated and the Court directs that the arbitrator calculate the fees owed to respondent in accordance with the fee schedule for licensed chiropractors who perform acupuncture.”

Ins Law 5105 – loss transfer regarding a livery vehilce and a standard passenger vehicle

Matter of Matter of Philadelphia Ins. Co. (Utica Natl. Ins. Group), 2012 NY Slip Op 05470 (4th Dept. 2012)

This is a coverage case with a vigorous, and I think an accurate dissent.  There is never a shortage of dissenting opinions out of this Rochester based Court, and I am starting to believe the dissents out of this Court make more sense than the majority opinions.  You will see that if you regularly read this blog.  Regarding the case, I will break it down.

(1) Two car collision – it appears the possible livery vehicle is at fault.  Philadelphia insures this vehicle;

(2) Utica is insurer for vehicle that the Injured victim was present inside, and Utica paid Assignor and/or assignee medical providers no-fault benefits;

(3) Utica files for 5105 intercompany arbitration;

(4) Philadelphia did not move for a permanent stay of arbitration;

(5) Philadelphia raised defense during arbitration: (a) Lack of Jurisdiction; (b) Claim not subject to Arbitration;

(6) Arb Forums rules in favor of Utica finding Philadelphia’s vehicle was a livery vehicle;

(7) Philadelphia files an Article 75 to vacate the award on the basis that Arb Forums was wrong on the law; and Utica cross-moves to confirm the award;

(8) Supreme Court grants the petition and vacates the award, awarding judgment in favor of Philadelphia;

(9) Utica Appeals and the Fourth Department reverses and dismisses the Petition;

(10) Fourth Department holds that Philadelphia should have moved to stay arbitration and waived its right to dispute the result of the arbitration because it raised jurisdictional defenses at Arb Forums;

(11) On the merits, the Fourth Department holds that Arb Forums’ finding that the vehicle was used as a livery vehicle has record support;

(12) Dissent dispels the jurisdictional argument; looks at this case from a less deferential viewpoint; and finds that Philadelphia’s vehicle was not being used as a livery vehicle, and would have affirmed Supreme Court’s granting of the petition.

If you read the opinion and are familiar with the wild west of arb forums, it seems that the dissents argument is more persuasive.  Using what looked to be the inartful claims representative’s use of a legal term in a less than formal setting to preclude Article 75 relief seems to be over the top.  On the merits, the dissent hit the nail on the head.

This one should go to the Court of Appeals and looks interesting.

Non-compulsory arbitration award vacated

Siegel v Landy, 2012 NY Slip Op 03625 (2d Dept. 2012)

There is a right to be able to present evidence at an arbitration…

“However, as the plaintiff correctly contends, the arbitration award, as modified, *3 should have been vacated on the ground that the arbitrator failed to follow the procedures set forth in CPLR article 75 (see CPLR 7511 [b][1][iv]). The plaintiff was effectively denied her right to notice, the opportunity to be heard, and the opportunity to present evidence (see CPLR 7506). Accordingly, the Supreme Court should have denied that branch of the defendants’ motion which was to confirm the award, as modified, and granted the plaintiff’s cross motion to vacate the award, as modified”

While delay was lengthy, the lack of prejudice excused it

Ava Acupuncture, P.C. v GEICO Gen. Ins. Co., 2012 NY Slip Op 50234(U)(App. Term 2d Dept. 2012)

“In this case, while the delay was lengthy, plaintiff does not deny that discovery and trial postponements intervened to delay the action and for reasons unrelated to the motion’s merits. Since the defenses address the effect of contractual terms on recovery and since plaintiff does not deny defendant’s claim that its NF-10 forms invoked a deductible, the claim of surprise or prejudice so great as to warrant the motion’s denial is not established.”

“Since plaintiff as assignee stands in the shoes of the insured, plaintiff cannot claim ignorance of the terms of the very contract under which it alleges entitlement to no-fault benefits compensation”

The Appellate Division grants an Article 75 petition and remands the matter back to AAA arbitration

Matter of Mvaic v Interboro Med. Care & Diagnostic PC, 2010 NY Slip Op 04522 (1st Dept. 2010)

“MVAIC defended the arbitration on the ground that the police accident report showed that the offending vehicle was registered out-of-state and was insured, but the arbitrator refused to consider that defense on the merits on the ground that MVAIC had failed to pay or deny the claim within 30 days of its submission, as required by the no-fault law (Insurance Law § 5106[a]; 11 NYCRR 65-3.8[a][1]; [c]). This was contrary to settled law (see generally Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co., 18 AD3d 762, 763 [2005]) recognizing a narrow exception to the 30-day deadline for defenses based on lack of coverage (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 318 [2007]). New York Hosp. Med. Ctr. of Queens v MVAIC (12 AD3d 429 [2d Dept 2004], lv denied 4 NY3d 705 [2005]), relied on by the arbitrator, did not involve a lack of coverage issue.”

A few things should be observed.  First, note the special treatment the courts give MVAIC as opposed to that given the insurance carriers that my fellow brethren and I regulalry defend.  That being said, the Appellate Division correctly found the existence of a triable issue of fact as to coverage.  But note how the Appellate Division, Second Department has insulated most arbitration awards from judicial scrutiny, whereas the First Department appears willing to look at the merits of an arbitral dispute.

Good luck trying to vacate a no-fault arbitration award pursuant to Article 75

Matter of Chin v State Farm Ins. Co., 2010 NY Slip Op 04186 (2d Dept. 2010)

“Consistent with the public policy in favor of arbitration, the grounds specified in CPLR 7511 for vacating or modifying a no-fault arbitration award are few in number and narrowly applied” (Matter of Mercury Cas. Co. v Healthmakers Med. Group, P.C., 67 AD3d 1017, 1017). “An arbitration award can be vacated by a court pursuant to CPLR 7511(b) on only three narrow grounds: if it is clearly violative of a strong public policy, if it is totally or completely irrational, or if it manifestly exceeds a specific, enumerated limitation on the arbitrator’s power” (Matter of Erin Constr. & Dev. Co., Inc. v Meltzer, 58 AD3d 729, 729; see Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, 79; Matter of Board of Educ. of Arlington Cent. School Dist. v Arlington Teachers Assn., 78 NY2d 33, 37; Cifuentes v Rose & Thistle, Ltd., 32 AD3d 816; Matter of Rockland County Bd. of Coop. Educ. Servs. v BOCES Staff Assn., 308 AD2d 452, 453). “An award is irrational if there is no proof whatever to justify the award'” (Matter of Erin Constr. & Dev. Co., Inc. v Meltzer, 58 AD3d at 730, quoting Matter of Peckerman v D & D Assoc., 165 AD2d 289, 296). “Even if the arbitrators misapply substantive rules of law or make an error of fact, unless one of the three narrow grounds applies in the particular case, the award will not be vacated” (Matter of Erin Constr. & Dev. Co., Inc. v Meltzer, 58 AD3d at 730; see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471; Matter of Silverman [Benmor Coats], 61 NY2d 299, 308; Matter of Sprinzen [Nomberg], 46 NY2d 623, 629; Cifuentes v Rose & Thistle, Ltd., 32 AD3d at 821). “An arbitrator is not bound by principles of substantive law or rules of evidence, and may do justice and apply his or her own sense of law and equity to the facts as he or she finds them to be.”

If you think an arbitrator is going to be unfair, it is probably best to order a stenographer and obtain a transcript of the proceeding.  A proper record never lies.

EBT in aid of arbitration? No dice.

Matter of Travelers Indem. Co. v United Diagnostic Imaging, P.C., 2010 NY Slip Op 03944 (2d Dept. 2010)

“The test for ordering disclosure to aid in arbitration is “necessity,” as opposed to “convenience” (Hendler & Murray v Lambert, 147 AD2d 442, 443 [internal quotation marks omitted]). Thus, court-ordered disclosure to aid in arbitration is justified only where that relief is “absolutely necessary for the protection of the rights of a party” to the arbitration (Hendler & Murray v Lambert, 147 AD2d at 443 [internal quotation marks omitted]). [*2]

Here, the petitioner already has evidence sufficient to establish a potential defense in the arbitration proceedings (cf. 11 NYCRR 65-1.1[d], 65-3.2[c], 65-3.5[b], [c], [e]). Furthermore, the petitioner can potentially obtain the requested disclosure in the context of those proceedings (see 11 NYCRR 65-4.5[o][2]; cf. Matter of Katz [Burkin], 3 AD2d 238, 238-239). Finally, the record provides no indication that if a disclosure directive is made during those proceedings, the requested disclosure will, at that point, be unavailable (cf. Bergen Shipping Co., Ltd. v Japan Marine Servs., Ltd., 386 F Supp 430, 435 n 8). Under the circumstances, the petitioner failed to demonstrate the existence of extraordinary circumstances justifying court-ordered disclosure to aid in those proceedings. Accordingly, the Supreme Court improvidently exercised its discretion in granting the petition.”

The Appellate Division seems to be continuing its cruisade to insulate the arbitration forum from any collateral attack.  Travelers Indem. Co. v. United Diagnostic Imaging, P.C., 70 A.D.3d 1043 (2d Dept. 2010); Mercury Cas. Co. v. Healthmakers Medical Group, P.C., 67 A.D.3d 1017 (2d Dept. 2010).

Also, look at the the regulagtory provisions that were delimited by a “c.f.” cite: 65-3.2(c) “Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.”; 65-1.1(d) “[Claimant shall] provide any other pertinent information that may assist the Company in determining the amount due and payable.”; 65-3.5 (allowing verification via EUO under the tight claims determinative time frames).

It appears that this might have been a Mallela case, and the Court was not willing to allow the same type of discovery in arbitral proceedings that it would allow in plenary actions.  Compare, One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 54 A.D.3d 738 (2d Dept. 2008).

Also, note the purported ability to obtain discovery through the arbitration proceeding itself.  We saw this doctrine enunciated in another context a few years  ago.  In re Progressive Northeastern Ins. Co. (New York State Ins. Fund),  56 A.D.3d 1111 (3d Dept. 2008).  Yet, should the arbitrator refuse to grant you the sought after discovery, you are probably out of luck.  See, Mercury Cas. Co. v. Healthmakers Medical Group, P.C..

Finally, without knowing what the proofs were in this matter, I cannot say that I necessarily agree or disagree with the outcome of the ultimate disposition of the case.  I take issue, however, with the court denying discovery on the basis that the information could have been obtained during the claims determination phase, inasmuch as broad discovery is usually allowed where true coverage issues or non-precludable standing issues arise.