Metropolitan Radiological Imaging, P.C. v Country-Wide Ins. Co. (2008 NY Slip Op 50539(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Loren Baily-Schiffman, J.), entered July 31, 2006. The judgment granted the petition to vacate the master arbitrator’s award and awarded petitioner unpaid no-fault benefits in the principal sum of $1,791.73.

Judgment affirmed without costs.

Metropolitan Radiological Imaging, P.C. (Metropolitan) commenced this proceeding pursuant to CPLR 7511 to vacate a master arbitrator’s award which upheld the denial of its claim for assigned first-party no-fault benefits. The insurer opposed the petition, asserting that the master arbitrator’s award was not irrational. The court granted the petition to vacate the master arbitrator’s award, and awarded petitioner the principal sum of $1,791.73. The instant appeal by the insurer ensued.

The standard applicable to judicial review of a compulsory arbitration proceeding is whether the award was “supported by a reasonable hypothesis’ and was not contrary to what could be fairly described as settled law” (Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co., 18 AD3d 762, 763 [2005], citing Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 224 [1996]; see Matter of Hanover Ins. Co. v State Farm Mut. Auto. Ins. Co., 226 AD2d 533, 534 [1996]; Matter of Adams v Allstate Ins. Co., 210 AD2d 319, 320 [1994]). Applying this standard to the instant proceeding, we find that the master arbitrator’s award was irrational (see Matter of State Farm Mut. Auto. Ins. Co., 18 AD3d at 763; Matter of Hanover Ins. Co., 226 AD2d at 534) since he upheld the arbitrator’s determination which was contrary to settled law (see Mount Sinai Hosp. v Joan Serv. Corp., 22 AD3d 649 [2005]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). [*2]

It is well settled that a provider seeking to recover assigned first-party no-fault benefits makes a prima facie showing by demonstrating that a complete proof of claim setting forth the fact and amount of the loss sustained was submitted to the insurer and that payment of no-fault benefits was overdue (see Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004], supra). Notwithstanding the foregoing, the arbitrator held that Metropolitan failed to make a prima facie showing because it did not submit sufficient additional evidence to establish the medical necessity of the services rendered. Consequently, the court properly granted the petition and vacated the master arbitrator’s award.

Under the circumstances presented, we affirm the judgment (Matter of Pradip Das/N.Y. Med. Rehab v Allstate Ins. Co., 297 AD2d 321 [2002]; cf. Matter of Health & Endurance Med., P.C. v Deerbrook Ins. Co., 44 AD3d 857 [2007]).
Pesce, P.J., and Weston Patterson, J., concur.

Golia, J., concurs in a separate memorandum.

Golia, J., concurs with the result only, in the following memorandum:

I am constrained to agree with the ultimate disposition in the decision reached by the majority. I, however, wish to note that I do not agree with certain propositions of law relied on by the majority which I find inconsistent with higher court precedents and generally contrary to my views.

Most specifically, I am referring to what appears to be the standard of review which was utilized by the majority in this case. The majority herein applies the more exacting standard applicable to judicial review of “compulsory” arbitration proceedings. It applies this standard without addressing the fact that in this case it is the claimant-provider which is seeking judicial review and not the defendant insurance carrier. The reason that I raise this distinction is that a claimant-provider has the unfettered choice to elect to bring its claim before the court or an arbitrator, whereas a defendant insurance carrier is compelled to submit to an arbitration proceeding if the claimant chooses to prosecute its claim in that forum.

Although I find this distinction, between one party which has a choice and the other which does not, to be vital, I nevertheless raise my concerns by way of a concurrence and not in dissent by reason of the Appellate Division, Second Department’s holding in Matter of Shand (Aetna Ins. Co.) (74 AD2d 442 [1980]), which, I submit, provides the support for the finding of the majority on this issue.

The Appellate Division, in Matter of Shand (Aetna Ins. Co.), held that all no-fault arbitration determinations are to be reviewed as if they were “compulsory arbitration” regardless of whether the review is requested by the insurance carrier, which is compelled to submit to arbitration, or the claimant, which is not compelled to submit to arbitration. The Appellate Division relied upon two cases for the principle that a clamant’s application to review a no-fault arbitrator’s award should be determined by the higher standard of compulsory arbitration even though the claimant had freely elected to have the matter heard by an arbitrator.

The Shand court cites to Matter of Conroy v Country Wide Ins. Co. (75 AD2d 852 [1980]), which was decided in the same court exactly one week earlier and without any specific reference to this issue. It also cites to a Supreme Court, Bronx County case, Matter of Hicks (Royal Globe Ins. Co.) (96 Misc 2d 477 [1978]). In Hicks, it appears that the court may have [*3]been confused regarding the distinction between “binding” arbitration and “compulsory” arbitration. The reason stated by the Hicks court is the belief that “parties to voluntary arbitration waive their due process right to judicial review, while the parties to compulsory arbitration do not” (id. at 478-479). This appears to be a valid expression of the difference between binding and non-binding arbitration and not between voluntary and compulsory arbitration.
The Appellate Division, Second Department, appropriately ruled in Matter of Shand (Aetna Ins. Co.) (74 AD2d at 446):
“When a part of a controversy is compelled by statute to submit to arbitration. . . and thereby loses the right of initial resort to a judicial forum. . . the right to review the resulting arbitration award cannot in turn be overly limited in scope without involving a due process issue” (emphasis added).
Unfortunately, the Shand court also found that “insurers [must] submit to binding arbitration of no-fault claims at the option of the insured. Such compelled submissions are classified as compulsory arbitrations . . . even if (as here), it is the assured who complains after exercising the option to pursue [his right to] arbitration instead of legal action. . .” (Matter of Shand [Aetna Ins. Co.], 74 AD2d at 446 [emphasis added]).

I interpret the Shand court as saying that even a claimant, who has the free election to choose to bring his claim in court or by arbitration, must receive the benefit of the higher standard of review which is accorded to those subjected to compulsory arbitration because he “is compelled by statute to submit to arbitration” (Matter of Shand [Aetna Ins. Co.], 74 AD2d at 446).

I submit this holding, within two consecutive paragraphs, is internally conflicting and does not comport with the holdings of the Court of Appeals.

In Matter of Furstenberg (Aetna Cas. & Sur. Co. – – Allstate Ins. Co.) (49 NY2d 757 [1980]), cited by the Shand court, the Court of Appeals clearly states that since “Aetna Casualty & Security Co. was obliged under the statute to accept the arbitral forum for the resolution of the claim against it, we agree that the standard for judicial review of the award is more exacting than in voluntary arbitration” (Matter of Furstenberg [Aetna Cas. & Sur. Co. – – Allstate Ins. Co.], 49 NY2d at 758 [emphasis added and citations omitted]). Indeed, this statement merely amplifies the standard presented by the Appellate Division, First Department, which opined (in the same case) that “[a]t least as to the insurance company, arbitration under the no-fault insurance law
is compulsory and not voluntary” (Matter of Furstenberg [Aetna Cas. & Sur. Co.], 67 AD2d 580, 583 [1979], revd 49 NY2d 757 [1980]).

I would only hope that the Appellate Division, if again confronted with this anomaly, would re-examine this issue and find that a claimant which voluntarily and freely elects to have its no-fault claim brought before an arbitrator is not deemed to be one which was subjected to compulsory arbitration.
Decision Date: March 13, 2008