Key Takeaway
Court ruling on fee schedule defense preservation in NY no-fault insurance claims, addressing the eight unit rule and arbitrator award reversal.
Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 2017 NY Slip Op 01833 (1st Dept. 2017)
“Respondent sought recovery for physical therapy services provided to its assignor before April 1, 2013, and petitioner insurer disclaimed parts of the claim on the ground that it had already reimbursed a different provider for “eight units” for services on some of the same dates. Respondent checked the box on the prescribed disclaimer form indicating that it was relying on a “fee schedule” defense, specifically the “eight unit rule.” The lower arbitrator held that respondent was precluded from asserting its defense because the disclaimer was insufficiently specific in that the other provider was not named. Respondent appealed to the master arbitrator, arguing that it adequately preserved its defense. The master arbitrator, without addressing the issue of preservation, incorrectly found that the lower arbitrator had “considered the fee schedule defense” and “determined that espondent failed to provide evidence as to the other provider.”
The master arbitrator’s award was arbitrary, because it irrationally ignored the controlling law presented on the preservation issue (Matter of Global Liberty Ins. Co. v Professional Chiropractic Care, P.C., 139 AD3d 645, 646 ; see generally Matter of Smith , 55 NY2d 224, 232 ) — namely, that an insurer adequately preserves its fee schedule defense “by checking box 18 on the NF—10 denial of claim form to assert that plaintiff’s fees not in accordance with the fee schedule” (Megacure Acupuncture PC v Lancer Ins Co., 41 Misc 3d 139, 2013 NY Slip Op 51994, *3 ; Surgicare Surgical v National Interstate Ins. Co., 46 Misc 3d 736, 745-746 , affd sub nom. Surgicare Surgical Assoc. v National Interstate Ins. Co., 50 Misc 3d 85 ). Accordingly, we remand the matter to the extent indicated.”
So the arbitrator and master arbitrator are nameless, but you can look them up if you are curious – this was an e-filed case. I remember this case vividly. I appeared at the arbitration. The lower arbitrator told me she follows the Maslow rule which states that the disclaimer must set forth a prima facie defense. I told the lower arbitrator (who I never met before) that she was wrong, and I remember she was indignant at my comment. Perhaps I came off too strong. I was furious and stated that I did not care what she did because I will take the case up to the Appellate Division. She followed through on her promise and I followed through on mine. Man did I eat my words because the Master Arbitrator gave me the Petrofsky treatment and Justice Tapia said he thought the lower arbitrator’s analysis was spot on. I was starting to feel as though I did not understand the law anymore. Sometimes you read affirmations and opinions and you get the feeling that perhaps it is you, not them.
Again, the loss of Norman Dachs (prior to his illness) could be felt in the master arbitration system, as the master failed to address controlling case law on the box #18 issue.
As happens all too frequently, it took the Appellate Division to straighten this out If I only had Geico’s resources and volume, I would probably own half the docket at the Appellate Division, First Department (kidding, well kind of… not really).
The lesson here is that if you feel you have a solid legal argument, do not let AAA or a Supreme Court judge let you down. You will win some and lose some. Just make sure your papers are in order.
Related Articles
- Fee schedule defense requirements and preservation issues
- Competent evidence standards for fee schedule defenses
- Medical billing and down-coding in no-fault insurance claims
- First application of 11 NYCRR 65-3.8(g)(1)(ii) regulations
- New York No-Fault Insurance Law
Legal Update (February 2026): Since this 2017 decision, New York’s no-fault fee schedules have undergone multiple revisions, and arbitration procedures regarding fee schedule defenses and disclaimer specificity requirements may have been modified through regulatory amendments. Practitioners should verify current fee schedule provisions and arbitration rules, as the “eight unit rule” and related reimbursement limitations discussed in this case may have been updated or replaced.
