Key Takeaway
New York court clarifies trial de novo requirements in no-fault insurance arbitration cases, ruling that awards under $5,000 prevent parties from pursuing litigation.
Understanding Trial De Novo Rights in No-Fault Insurance Arbitration
No-fault insurance disputes often go through multiple layers of review before reaching the courts. When initial arbitration doesn’t resolve a claim to a party’s satisfaction, they may seek review by a master arbitrator. But what happens when that master arbitrator’s decision falls short of expectations? A recent Second Department case clarifies an important limitation on when parties can pursue trial de novo—essentially starting fresh in court—after unfavorable arbitration outcomes.
The case of Avenue C Med., P.C. v Encompass Ins. of MA addresses a critical threshold that determines whether disputed parties can escalate their denial of claims cases from arbitration to litigation. This ruling has significant implications for medical providers and insurers navigating the no-fault insurance system.
Jason Tenenbaum’s Analysis:
Avenue C Med., P.C. v Encompass Ins. of MA, 2015 NY Slip Op 06101 (2d Dept. 2015)
“The statute permits an insurer or a claimant to institute a court action to adjudicate the dispute de novo where the master arbitrator’s award is $5,000 or greater” (Green v Liberty Mut. Ins. Co. Trust, 16 AD3d 457, 457). Here, the master arbitrator, by vacating the arbitrator’s award in its entirety, effectively made no monetary award, and, because the master arbitrator’s award was less than $5,000, neither party is entitled to maintain a court action to adjudicate the dispute de novo”
The common rule is that the last layer of review prior to filing a trial de novo must be more than $5,000.00 Thus, if a master arbitrator reduces or awards less than $5,000, then there is no right to file litigation.
Key Takeaway
The $5,000 threshold acts as a gatekeeper for trial de novo rights in no-fault insurance disputes. When a master arbitrator vacates an award entirely or reduces it below this amount, parties lose their statutory right to pursue fresh litigation in court, effectively making the arbitration decision final regardless of either party’s satisfaction with the outcome.
This decision demonstrates how procedural requirements can significantly impact litigation strategy in insurance disputes, similar to other technical requirements that can derail cases, such as proper documentation in declaratory judgment actions.
