Matter of Advanced Orthopaedics, PLLC v Country-Wide Ins. Co., 2022 NY Slip Op 02406 (2d Dept. 2021)
In a Court that on paper is overly deferential to arbitration decsisions on the basis that mistakes of law are allowed, we tend to see decisions that, on paper, seem better suited for the First Department. This case really highlights the tension between the two Departments.
(1) ” “If the master arbitrator vacates the arbitrator’s award based upon an alleged error of ‘a rule of substantive law,’ the determination of the master arbitrator must be upheld unless it is irrational” (id. at 576 [internal quotation marks omitted]; see Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 170 AD3d 1168).”
(2) “The Supreme Court erred in denying the petition, inter alia, to vacate the award of the master arbitrator, as there was no rational basis to support the award. The master arbitrator’s determination that a denial of liability based upon a failure to appear at an examination under oath constitutes a defense of lack of coverage, which is not subject to preclusion, is irrational (see Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 170 AD3d at 1168; Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045, 1046-1047).”
(3) “Further, the master arbitrator’s application of 11 NYCRR 65-3.5(p) is irrational, as it effectively allows an insurer to avoid the statutory timeliness requirements set forth in 11 NYCRR 65-3.8(a). Where, as here, the initial request for an examination under oath is sent more than 30 days after receipt of the claim, the request is a nullity (see Excel Prods., Inc. v Farmington Cas. Co., 71 Misc 3d 137[A], 2021 NY Slip Op 50441[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists]), and the insurer’s failure to timely notice the examination under oath is not excused by 11 NYCRR 65-3.5(p)”
What did we learn here? Plenty! A finding that a disclaimer is not required for what some could call a post loss condition precedent to coverage, a/k/a, condition subsequent. The net effect of this means that the substantive law to be applied is based upon the court that ultimately is called upon to confirm or vacate an arbitration award. Very slippery.
The second issue involves 11 NYCRR 65-3.5(p). This involves extensions of times to perform acts under the regulations. Insofar as a time to pay, deny or take legally cognizable action extends beyond 30-days after a bill is received, it is deemed a nullity. The Court leaves open the failure to timely serve a follow-up verification request.
And the Second Department acknowledges that an action taken between 15 business day and 30 calendar days is valid. A regulatory cornucopia
