Prior Arb?

The Irrevocability of Arbitration Elections in New York No-Fault Cases

The choice between arbitration and court litigation represents one of the most significant strategic decisions healthcare providers make when pursuing unpaid no-fault insurance benefits. In New York’s no-fault system, medical providers have the initial option to elect either arbitration or court litigation as their forum for recovering disputed benefits. However, once a provider makes this election and commences an arbitration proceeding, that choice becomes irrevocable—even if the provider later withdraws the arbitration with prejudice. This principle of election irrevocability has profound implications for providers’ ability to recover benefits and requires careful consideration before filing any arbitration demand.

The doctrine preventing providers from switching forums after electing arbitration stems from fundamental principles of waiver and election of remedies. When a provider voluntarily chooses one forum and initiates proceedings there, that choice manifests an intentional relinquishment of the right to pursue the alternative forum. New York courts have consistently held that this waiver occurs at the moment the provider files the arbitration demand, not when the arbitration concludes. The policy rationale for this strict rule is to prevent forum shopping and to protect insurance companies from the burden of defending claims in multiple forums.

The case of Ultimate Health Products, Inc. v Ameriprise Auto & Home Insurance Co. exemplifies how this doctrine operates to bar subsequent court litigation even when the provider withdrew its arbitration proceeding with prejudice. Understanding this principle is essential for no-fault practitioners, as an ill-considered arbitration filing can permanently foreclose court remedies and leave providers with no viable forum to pursue legitimate claims.

Case Background and Procedural History

Ultimate Health Products involved a medical provider that initially elected to arbitrate its dispute with Ameriprise regarding unpaid no-fault benefits. The provider filed an arbitration demand seeking recovery of the amounts it claimed were owed. At some point during the arbitration proceedings, the provider decided to withdraw its arbitration claim. Significantly, this withdrawal was done “with prejudice,” meaning the provider voluntarily agreed that the arbitration would be dismissed in a manner that would prevent refiling the same claim in the arbitration forum.

After withdrawing the arbitration with prejudice, the provider attempted a different strategy: it filed a lawsuit in Civil Court seeking to recover the same unpaid benefits through judicial proceedings. The insurance company moved to dismiss this court action, arguing that the provider’s prior election to arbitrate permanently waived its right to pursue litigation. The Civil Court granted the insurer’s motion and awarded it summary judgment dismissing the complaint.

The provider appealed to the Appellate Term, Second Department, arguing that its voluntary withdrawal of the arbitration with prejudice should not bar subsequent litigation. The provider’s position appeared to be that since it had terminated the arbitration proceeding by its own voluntary act, it should be free to pursue its claims in another forum. The insurance company countered that the provider’s initial election to arbitrate constituted an irrevocable waiver of court litigation regardless of what subsequently occurred in the arbitration.

Jason Tenenbaum’s Analysis:

Ultimate Health Prods., Inc. v Ameriprise Auto & Home, 2019 NY Slip Op 51890(U)(App. Term 2d Dept. 2019)

My only thought would be by actively litigating the matter in the Civil Courts, doesn’t the insurance carrier waive its right to demand arbitration? While arbitration in NY rests solely upon the provider, a carrier when given the right to request it can waive it under certain conditions.

“By decision and order dated July 14, 2017 (57 Misc 3d 9 ), this court reversed the June 9, 2014 order, insofar as appealed from, and denied the branches of defendant’s cross motion seeking leave to amend defendant’s answer to assert that the action is barred by the doctrine of res judicata and, upon such amendment, to award defendant summary judgment on that ground. The matter was remitted to the Civil Court for a new determination of plaintiff’s motion for summary judgment and for a determination of the remaining branches of defendant’s cross motion ”

“With respect to the branch of defendant’s cross motion seeking summary judgment based on plaintiff’s previous election to arbitrate the claims, it is undisputed that after plaintiff had commenced an arbitration, it had been withdrawn with prejudice. However, “laintiff, by electing to arbitrate, waived its right to commence an action to litigate its claims arising out of the same motor vehicle accident” (563 Grand Med., P.C. v Country-Wide Ins. Co., 61 Misc 3d 136, 2018 NY Slip Op 51556, *2 ; see Roggio v Nationwide Mut. Ins. Co., 66 NY2d 260 ; Cortez v Countrywide Ins. Co., 17 AD3d 508, 509 ; Rockaway Blvd. Med. P.C. v Progressive Ins., 2003 NY Slip Op 50938, *2 t is well settled that once a claimant chooses arbitration, it cannot resort to the courts”]).”

Legal Significance: The Irrevocability Doctrine

The Appellate Term’s decision reinforces the foundational principle that election of arbitration constitutes an irrevocable waiver of the right to pursue court litigation for the same claims. This holding rests on several important legal doctrines that collectively bar providers from switching forums after initiating arbitration proceedings.

First, the election of remedies doctrine provides that when a party has alternative methods of relief available and voluntarily chooses one method, that choice precludes later pursuit of the alternative method. This doctrine prevents parties from hedging their bets or strategically manipulating different forums to achieve favorable outcomes. Once a provider files an arbitration demand, that act constitutes an election that forecloses subsequent litigation.

Second, the waiver principle holds that a party may intentionally relinquish a known right or privilege. By electing arbitration, the provider waives its right to court litigation. This waiver is effective regardless of whether the arbitration proceeding reaches a final determination on the merits. The waiver occurs upon filing the arbitration demand, not upon completion of the arbitration process.

Third, the decision reflects policy concerns about forum manipulation and unfair burdens on insurers. Allowing providers to commence arbitrations, assess their likelihood of success, and then withdraw to pursue litigation would create significant inefficiencies and potential for abuse. Insurers would face the burden of preparing defenses in multiple forums and could never achieve finality regarding forum selection. The irrevocability doctrine prevents such manipulation and ensures that the forum choice, once made, remains fixed.

The court’s citation to Roggio v Nationwide Mutual Insurance Co., a Court of Appeals decision, demonstrates the authoritative nature of this principle. When New York’s highest court has spoken directly on an issue, lower courts must follow that precedent absent subsequent legislative changes or Court of Appeals modifications. The Roggio court’s holding that “once a claimant chooses arbitration, it cannot resort to the courts” leaves no ambiguity about the permanence of the arbitration election.

Jason Tenenbaum’s observation in his analysis raises an interesting counterargument: doesn’t the insurance company’s participation in the subsequent court litigation constitute a waiver of its right to object to that forum? This argument has some logical appeal—if an insurer actively litigates a case in court rather than immediately moving to dismiss based on the prior arbitration election, perhaps the insurer has waived its objection to the court forum. However, the cases cited by the Appellate Term suggest that the provider’s waiver of court litigation through arbitration election is so fundamental that insurer waiver doctrines cannot revive the provider’s already-waived rights.

Practical Implications for Medical Providers

For healthcare providers pursuing unpaid no-fault benefits, this decision carries critical strategic implications. Before filing any arbitration demand, providers must carefully assess whether arbitration or litigation offers better prospects for recovery. This assessment should consider factors including:

The complexity of the case and whether it involves legal issues better suited to judicial determination or factual disputes appropriate for arbitration. Arbitrators generally have experience with no-fault insurance matters but may lack the legal training that judges possess for resolving novel legal questions.

The amount in controversy and filing fees associated with each forum. Arbitration filing fees can be substantial for higher-value claims, while court filing fees are typically lower. Providers must weigh these costs against the potential benefits of each forum.

The likelihood of needing discovery beyond what arbitration typically allows. While arbitration procedures have become more expansive in recent years, court litigation still offers more robust discovery mechanisms for complex cases.

The time frame for resolution. Arbitration is often faster than court litigation, but this advantage must be balanced against the permanence of the arbitration election.

Most importantly, providers must recognize that filing an arbitration demand is essentially irreversible. Even if the arbitration proceeds poorly or the provider discovers new information suggesting court litigation would be preferable, the arbitration election permanently forecloses that option. This reality requires providers to be certain about their forum choice before filing any arbitration demand.

For providers who have already commenced arbitration but realize they face an unfavorable outcome, this decision offers no escape route. Withdrawing the arbitration—whether with or without prejudice—will not resurrect the right to pursue court litigation. The only way to recover benefits after electing arbitration is to proceed through the arbitration to completion, even if the prospects for success appear dim.

The decision also suggests that providers should carefully document their decision-making process regarding forum selection. While such documentation won’t change the legal rule, it may help providers avoid malpractice claims by demonstrating that the arbitration election was made after careful consideration of alternatives.

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