An article 75 that went nowhere

Acuhealth Acupuncture, P.C. v New York City Tr. Auth., 2016 NY Slip Op 50297(U)(Sup Ct. Kings Co. 2016)

Facts

(1) The arbitration

“The arbitrator found that the partial denials for dates of service 07/07/10-8/7/10; 10/07/10-10/14/10; and 11/04/10-11/18/10 “were late on their face”. And there was no specific denial for services on 01/01/11-1/19/11.

The arbitrator further found that Acuhealth “sustained its burden of demonstrating a prima facie showing of entitlement to reimbursement for the acupuncture service”. However, at the time that Acuhealth’s last bill was received on February 7, 2011, the policy was exhausted. The arbitrator stated that the “Applicant may not recover any of the outstanding fees since any such award would exceed my authority”. In making this determination, the arbitrator relied, in part, on Matter of Brijmohan v. State Farm Ins. Co., (92 NY2d 821, 699 N.E.2d 414, 677 N.Y.S.2d 55 [1998]) and Matter of State Farm Ins. Co. v. Credle (228 AD2d 191, 643 N.Y.S.2d 97 [1 Dept., 1996]).”

(2) The master arbitration

“The master arbitrators’ award states that “Applicant seeks vacatur of the award as being arbitrary and capricious and incorrect as a matter of law because it did not take into consideration the proper priority of payment” (Notice of Petition, Exhibit 3, Master Arbitration Award). The master arbitrator [*3]award stated that,

In the award of the lower arbitrator, it is clearly explained that an arbitration award made in excess of the contractual limits of an insurance policy would be in excess of the arbitrator’s authority. After consideration of the briefs of both parties, it is determined that the lower arbitrator has set forth a rational basis for the award as issued. The lower arbitrator correctly refused to exceed the authority granted by statute and case law and denied the claim. The request for the vacaur [sic] of the award is denied and the award is sustained as written.”

(3) Supreme Court

“At issue here is the interplay of the priority of lien regulation and the arbitrators authority to direct payment in excess of the no fault policy.”  The Court recognized that under priority of payment, the billing should have been paid since the policy exhausted after the billing was received and the denials were untimely.

This is what is telling: “This Court appreciates the petitioner’s valid argument, however, the standard of review of an arbitration award is limited. Acuhealth failed to demonstrate, by clear and convincing evidence, the existence of any of the statutory grounds for vacating the master arbitrator’s award”…”The standard herein is quite different. Petitioner has not presented any appellate authority permitting the arbitrator to exceed a specific enumerated limitation on the arbitrators power by rendering an award in excess of the policy limits. The master arbitrator in confirming the lower arbitration award had evidentiary support and a rational basis, and was not arbitrary, capricious, irrational or without a plausible basis”

This the risk of arbitration.  We saw a similar situation where the Appellate Division, Third Department ignored binding Appellate principle in Patient Care because the matter involved arbitration.  At the end of the day, the Courts in the Second Department will not get involved with no-fault arbitration matters.  It is my thought that abdicating the gatekeeper role allows rogue arbitrators and lazy master arbitrators to get away with illegal decisions.  With the death of Norma Dachs, we are left with “rubber stamp” master arbitrators and no checks and balances on the lower arbitrators.