Index No. 531225/2022

Larkin Farrell LLC, New York City (Anthony R. Troise of counsel), for Petitioner.

Roman A. Kravchenko, Garden City, for Respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition:

Issue Presented

In a No-Fault insurance master arbitration, where the master arbitrator failed to address the issue of law asserted by the insurer, but the issue of law was previously decided by the court in a different Article 75 proceeding, must the master arbitration award be vacated?

Background

Petitioner American Transit Insurance Company (“ATIC”) commenced this CPLR Article 75 proceeding by notice of petition, seeking an order and judgment vacating a No-Fault insurance master arbitration award of Richard B. Ancowitz, Esq. (dated July 25, 2022), which affirmed the arbitration award of Wendy Bishop, Esq. (dated April 8, 2022) granting Respondent Rutland Medical, PC’s (“Rutland”) claim for No-Fault insurance compensation for range of motion testing, muscle testing, physical performance testing, outcome assessment testing, trigger point injections, and chiropractic treatment reflected in a total of 25 bills.^[FN1] , ^[FN2] Arbitrator Bishop [*2]awarded $2,713.58 to Rutland as compensation.^[FN3] The services at issue were provided to Shania M. Pessoa Craig, who claimed to have been injured in a motor vehicle accident on April 18, 2019. She assigned her No-Fault insurance benefits to Rutland, and is denoted as “Assignor.” ^[FN4] (See NYSCEF Doc No. 1, Petition ¶¶ 2, 16-22; NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 145 ^[FN5] .)

Respondent Rutland has opposed ATIC’s petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $2,713.58 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements (see NYSCEF Doc No. 18, Notice of Cross-Petition; NYSCEF Doc No. 19, Cross-Petition).

The petition and cross-petition came before the undersigned for oral argument on June 23, 2023. At that time, both parties appeared by counsel.

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association (“AAA”), which assigned Case No. 17-20-1175-4211 ^[FN6] to it. [*3]The AAA has been designated by the New York State Department of Financial Services to coordinate the mandatory arbitration provisions of Insurance Law § 5106 (b), which provides:

Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party [“No-Fault insurance”] benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.

Insurance Law Article 51 provides for the payment of basic economic loss incurred by persons injured in motor vehicle accidents. Included within basic economic loss are first-party benefits for medical and other professional health services.^[FN7] First-party benefits are more commonly known as “No-Fault benefits.”^[FN8]

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations was promulgated by the Superintendent of Insurance (presently Superintendent of Financial Services). They are contained at 11 NYCRR Part 65. Said part is subdivided into five subparts which encompass the following topics: prescribed insurance policy endorsements, rights and liabilities of self-insurers, claims for benefits, arbitration, and unauthorized providers of health services. Part 65 is also known as Insurance Regulation 68.

Generally, the claims process for health service bills ^[FN9] for No-Fault insurance compensation begins with the submission by a health service provider of a claim form (usually, but not always, a Form NF-3 verification of treatment by attending physician or other provider [*4]of health service).^[FN10] Besides providing information regarding the injured person, the accident, the subject insurance policy, the billing health service provider, diagnoses, and projected treatment, the claim form includes a bill for services performed. The claim form can be submitted directly by the injured person to the No-Fault insurer but over many decades a practice developed whereby the health service providers submit the claim forms. As noted in footnote 4, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN11] , ^[FN12] The insurer must then either pay or deny the bill within 30 days, or seek additional verification within 15 business days. If it denies payment, it must issue a Form NF-10 denial of claim ^[FN13] explaining why the bill was not paid. (See Insurance Law § 5106 [a]; Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 505 [2015].)

The record evidence submitted in this Article 75 proceeding revealed that the underlying arbitration involved 25 claim forms covering services for a period of April 30, 2019-December 16, 2019, as per the Form AR Arbitration Request Form (see NYSCEF Doc No. 5, Rutland’s Arbitration Request Form & Submission at 14). Apparently, one claim form was neither paid nor denied and there is no evidence that it was pended for additional verification. The other claim forms (bills) were timely denied, either on the basis of respective peer reviews from Dr. Peter Chiu, M.D. (dated July 16, 2019; September 23, 2019; and December 6, 2019) or an IME (independent medical examination) report of Dr. Glenn Berman, D.C. Dr. Chiu had opined that the services were not medically necessary. Dr. Berman opined that further chiropractic was not medically necessary. (See NYSCEF Doc No. 3, Arbitration Award at numbered pp 1-2.)

Arbitrator Wendy Bishop’s Award

The record evidence reveals further that on April 7, 2002, Arbitrator Wendy Bishop, Esq., conducted a hearing at which Ryan Woodworth, Esq., from Russell Friedman & Associates LLP, appeared for Rutland, and nobody appeared for ATIC (see id. at numbered p 1).

In her award, Arbitrator Bishop noted that the hearing documents were contained in Modria ^[FN14] . With respect to the bill for which there was no appurtenant denial of claim, she noted that Rutland provided proof of its mailing and she awarded compensation. (See id. at numbered p 2.) Regarding the denials premised on a peer review of Chiu, she found them insufficient as lacking a standard of care and/or a medical rationale; ATIC therefore failed to satisfy an initial burden of establishing lack of medical necessity (see id.).

With regard to bills denied on the basis of Dr. Berman’s IME report, she found that ATIC did meet its initial burden of establishing lack of medical necessity; Dr. Berman’s conclusion that Assignor’s injuries had resolved was supported by negative range of motion and neurological testing. The burden therefore shifted to Rutland to demonstrate the medical necessity of the respective services. “[Rutland] submits the reports of its clinical examinations of the Assignor performed on July 15, 2019 and August 19, 2019. Range of motion in the Assignor’s cervical spine and lumbar spine was restricted. There were muscle spasms in the areas of the Assignor’s cervical spine and lumbar spine. Applicant has thus rebutted Dr. Berman’s IME report, and demonstrated the medical necessity of further treatment.” (Id. at numbered p 3.)

Arbitrator Bishop awarded $2,713.58 as principal. She also awarded interest of 2% per month, an attorney’s fee, and return of the $40.00 filing fee (see id. at numbered pp 4-5; Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s]).

Master Arbitrator Richard Ancowitz’s Award

ATIC filed for master arbitration to appeal Arbitrator Bishop’s award. It presented two arguments. The first was that Rutland was an entity formed by a No-Fault insurance fraud ring, as evidenced by an attached indictment. The second was that Arbitrator Bishop erred as a matter of law and her award was irrational because when she assessed medical necessity, she did not take into account well settled case law concerning the need for a medical claimant to meaningfully rebut and discuss the conclusions of the insurer’s expert (citing Innovative Chiropractic, P.C. v Mercury Ins. Co., 25 Misc 3d 137[A], 2009 NY Slip Op 52321[U] [2d, 11th & 13th Dists 2009]). (See NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief at 148-153.)

Master Arbitrator Ancowitz summarized the issues in dispute as follows: “Did the arbitrator err in finding that respondent’s lack of medical necessity defense was insufficiently stated? Was the award irrational or incorrect as a matter of law?” (NYSCEF Doc No. 4, Master Arbitration Award at 2.)

His findings and conclusions were as follows:

The award indicates that $2,713.58 was in dispute, relating to billing submitted to respondent by applicant for various medical and chiropractic services rendered to the Eligible Injured Person (EIP). The arbitrator rejected respondent’s physical examination and peer review-based defense of lack of medical necessity, and rendered an award for applicant.

Specifically, the arbitrator found that applicant had rebutted respondent’s physical examination report, and also found that respondent’s peer review report failed to adequately support the assertion of lack of medical necessity with a standard of care and/or medical rationale.

Respondent has submitted a brief which contends that the arbitrator erred in rejecting their defense. Respondent further contends in conclusory fashion that the award was irrational and should be vacated. Respondent contends that their proof was sufficient to sustain their defense.

Applicant has submitted a brief which contends that the award was rational and should not be disturbed.

Upon review of the contentions of the respondent, I see no reason to disturb the arbitrator’s weighing of the evidence, and in particular, the arbitrator’s determination that respondent’s peer review report was insufficient to support their lack of medical necessity defense. I also find no error in the arbitrator’s factual determination that applicant had rebutted respondent’s physical examination report.

Clearly, a no-fault arbitrator has wide latitude in deciding whether to credit and how to weigh such evidence. 11 NYCRR 65-4.5 (o)(1). See also, Matter of Bay Needle Acupuncture v. Country-Wide Ins. Co., 176 AD3d 806 (2nd Dept 2019); Matter of Jasser v. Allstate Ins. Co., 77 AD3d 751 (2nd Dept 2010); Allstate Ins. Co. v. Keegan, 201 AD2d 724 (2nd Dept 1994).

As per these cases, the weighing of evidence is generally not the function of a master arbitrator. In any event, in this case I find that the award here clearly was not irrational or otherwise infirm.

The award must be affirmed. Matter of Petrofsky v. Allstate Insurance Co., 54 NY2d 207 (1981).

ATIC’s Petition to Vacate

ATIC’s petition to vacate asserted that “The arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (NYSCEF Doc No. 1, Petition ¶ 35), in that “Arbitrator Wendy Bishop, Esq. failed to follow well settled law” (id. ¶ 37). It also made reference to the grounds set forth in CPLR 7511 (b) (1) for vacating an arbitration award (see id. ¶ 33):

The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the [*5]rights of that party were prejudiced by:

(i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

The petition proceeded to argue that the claims at issue were properly and timely denied for lack of medical necessity as per the attached peer review and IME report (see id. ¶ 39). ATIC’s evidence submitted to the hearing arbitrator “clearly satisfied its burden” (id. ¶ 40). Ultimately the medical provider — Rutland in this instance — had to prove by a preponderance of the evidence that its services were medically necessary, claimed ATIC; the petition to vacate cited to Dayan v Allstate Ins. Co. (49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]), and Park Slope Medical and Surgical Supply, Inc. v Travelers Ins. Co. (37 Misc 3d 19, 22 n. [App Term, 2d Dept, 2d, 11th & 13th Dists 2012]) (see id. ¶ 41). “In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer review,” maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2009]) (id. ¶ 42). Rutland failed to offer any rebuttal at all, and certainly did not meaningfully refer to the peer review and the IME report, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (see id. ¶ 43).

ATIC reiterated in several paragraphs of its petition that a health service provider seeking No-Fault medical expense compensation must meaningfully refer to and rebut an insurer’s peer reviewer’s and IME doctor’s conclusions (see id. ¶¶ 47-51). “This proposition is widely accepted as ‘well settled’ law in the industry” (id. ¶ 51). “In this case the arbitrator also ruled for Respondent [Rutland] despite the fact that there was no rebuttal. In doing so the arbitrator failed to follow well settled law. As such, this Court should vacate the arbitration award for the same reasons the Appellate Term reversed the trial courts in Pan Chiropractic, Eastern Star Acupuncture, Jaga Med. Servs., P.C. and High Quality Medical.” (Id. ¶ 54.)

“This decision was arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 57). The petition concluded by asserting that Arbitrator Bishop ignored ATIC’s “evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant [Rutland]” (id. ¶ 58). Therefore, ATIC’s rights were prejudiced by the arbitrator’s partiality “and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated” (id. ¶ 59). The relief sought was vacatur of the awards of both Arbitrator Bishop and Master Arbitrator Ancowitz — that they “have no force or effect” (id. ¶ 60).

Rutland’s Cross-Petition to Confirm

Rutland argued in its cross-petition most significantly that the arbitration awards had to be confirmed if they were supported by evidence or other basis in reason (citing Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]); rational (citing Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]); and not inapposite to settled law (citing Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 148 AD3d 502 [1st Dept 2017]). ATIC did not meet its burden of establishing that the master arbitration award did not meet these criteria. (See NYSCEF Doc No. 19, Cross-Petition.)

Rutland did not submit any calculation of an attorney’s fee for its opposition to the petition and maintenance of the cross-petition.

No-Fault Insurance Arbitration

When the No-Fault Law was first enacted by the Legislature in Chapter 13 of the Laws of 1973 to take effect February 1, 1974, § 675 of the Insurance Law was added. In subdivision 2 thereof, insurers were required to provide claimants with an arbitration option for disputes involving liability for first-party benefits. This provision was amended in Chapter 892 of the Laws of 1977, when several changes were made to the 1973 version.^[FN15] The provision regarding arbitration in § 675 was amended to add the following language:

An award by an arbitrator may be vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent [of insurance]. The grounds for vacating or modifying an arbitrator’s decision by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The decision of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute an action in a court of competent jurisdiction to adjudicate the dispute de novo.^[FN16]

The provisions regarding No-Fault insurance arbitration remained in the recodification of the Insurance Law enacted in Chapters 367 and 805 of the Laws of 1984. The arbitration provisions were set forth in § 5106, and subdivisions (b) and (c) now read as follows:

(b) Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent. Such simplified procedures shall include an expedited eligibility hearing option, when required, to designate the insurer for first party benefits pursuant to subsection (d) of this section. The expedited eligibility hearing option shall be a forum for eligibility disputes only, and shall not include the submission of any particular bill, payment or claim for any specific benefit for adjudication, nor shall it consider any other defense to payment.

(c) An award by an arbitrator shall be binding except where vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent. The grounds for vacating or modifying an arbitrator’s award by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.

Insofar as is here relevant, the No-Fault Insurance Regulations promulgated by the Superintendent of Insurance provided that a master arbitrator may vacate or modify a hearing arbitrator’s award where it “was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65.18 [a] [4]). This regulatory language was carried over into the revised Regulations promulgated in 2002, in 11 NYCRR 65-4.10 (a) (4).^[FN17] A master arbitrator may also vacate or modify a hearing [*6]arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN18]

Discussion

ATIC’s contention in its master arbitration appeal that Rutland was an entity formed by a No-Fault insurance fraud ring has not been pursued in this Article 75 proceeding and, therefore, is not before this Court. Remaining is ATIC’s contention that Arbitrator Bishop failed to follow well settled law that a medical provider applicant in arbitration must meaningfully refer to, or rebut, the conclusions set forth in the peer review and/or IME report and, therefore, Master Arbitrator Ancowitz’s affirmance was erroneous.

The proper standard of review by a No-Fault insurance master arbitrator is whether he or she reached their decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law; the master arbitrator may [*7]not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]).

The standard for Article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law is whether it is so irrational as to require vacatur (see Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224, 232 [1982]; Matter of Acuhealth Acupuncture, PC v Country-Wide Ins. Co., 170 AD3d 1168 [2d Dept 2019]; Matter of Acuhealth Acupuncture, P.C. v New York City Transit Authority, 167 AD3d 869 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). The master arbitrator’s determination of the law need not be correct, and mere errors of law are insufficient to set aside the master arbitrator’s award; on questions of substantive law, the master arbitrator’s determination must be upheld if there is a rational basis for his determination; if the master arbitrator’s errors on a matter of law are irrational, his award may be set aside (see Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]).

This Court has previously discussed the issue raised by ATIC — whether a medical provider applicant in No-Fault insurance arbitration must submit expert medical opinion evidence which specifically refers to and either discusses or rebuts the insurer’s expert medical opinion evidence. This Court held that it need not, because the case law ATIC relied upon governs summary judgment motions in court, not No-Fault arbitrations. (See American Tr. Ins. Co. v Right Choice Supply, 78 Misc 3d 890 [Sup Ct, Kings County 2023].) Assessment of medical necessity entails a factual review of evidence and this is committed to the arbitrator’s discretion (id.). As this Court wrote,

In part, this Court’s present determination is based on the additional provision in 11 NYCRR 65-4.10 (a) (4) which provides that “procedural or factual errors committed in the arbitration below are not encompassed within this ground.” The reference to “factual errors” conveys impliedly that when it comes to assessing evidence for the purpose of fact-finding, an arbitrator has wider latitude and should not be required to comply with settled or established law concerning what specific evidence suffices to refute the opposing party’s evidence. This Court also takes into account the general proposition that the admissibility of evidence and the determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award. . . .”]; Central Square Teachers Association v Board of Education of the Central Square Central School District, 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny.”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept. 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software International, Inc., 232 AD2d 336, 338 [1st Dept. 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis.”]). In light of this case law with respect to the admissibility of evidence and the determination of issues of fact in arbitration, 11 NYCRR 65-4.10 (a) (4)’s “matter of law” should be limited in its breadth.

Therefore, this Court holds that Arbitrator Bishop did not err when she did not require a formal rebuttal from Rutland which would have specifically referred to and either discussed or rebutted ATIC’s peer reviews and IME report. In point of fact, according to Arbitrator Bishop, Dr. Chiu’s peer reviews did not even rise to the level of a prima facie case of lack of medical necessity. It was within the arbitrator’s discretion to find that Dr. Chiu did not adequately support his conclusions. Ergo, the burden of proof did not shift to Rutland to rebut them.

The situation is a bit different with regard to Dr. Berman’s IME report. Arbitrator Bishop held that ATIC did meet its initial burden of proof and the burden of proof then shifted to Rutland to prove medical necessity, which it did with examination report findings. Based on this Court’s decision in American Tr. Ins. Co. v Right Choice Supply, however, a formal rebuttal was not necessary. It was within the arbitrator’s discretion to find that the IME report was overcome by evidence which was not a formal rebuttal (clinical examination results).

This Court notes that Master Arbitrator Ancowitz did not consider the legal issue he was presented with in the master arbitration appeal. In the segment of his award reserved for a summary of the issues, he wrote, “Was the award irrational or incorrect as a matter of law?” (NYSCEF Doc No. 4, Master Arbitration Award at 2). This court’s scrutiny of his master arbitration award reveals that he never discussed the issue posed by ATIC — that Rutland failed to submit a rebuttal meaningfully referring to and either discussing or rebutting ATIC’s medical evidence (peer reviews and IME report). Master Arbitrator Ancowitz found no error in Arbitrator Bishop’s analysis of the factual issue of medical necessity; it was neither arbitrary nor otherwise inform. Yet he did not mention the asserted error of law! In essence, his master arbitration award was incomplete. Despite that, however, this Court is constrained to uphold his award because the ultimate determination affirming Arbitrator Bishop was not irrational (see Matter of Smith, 55 NY2d 224; Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828; Matter of Liberty Mut. Ins. Co., 294 AD2d 574). The reason Master Arbitrator Ancowitz’s award was not irrational is because Arbitrator Bishop was not required to apply the case law cited by ATIC regarding meaningfully referring to the insurer’s peer reviews and IME reports, as this Court held in American Tr. Ins. Co. v Right Choice Supply. Even if Master Arbitrator Ancowitz ignored this legal issue, it was academic; Arbitrator Bishop was within her rights to ignore the absence of a formal rebuttal referring to ATIC’s expert evidence.^[FN19]

“An arbitration award is indefinite or nonfinal for purposes of CPLR 7511 and subject to vacatur ‘only if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted or if it creates a new controversy’ [citations omitted]” (Westchester County Corr. Officers Benevolent Assn., Inc. v Cheverko, 112 AD3d 842 [2d Dept [*8]2013]). While Master Arbitrator Ancowitz did not rule on the asserted error of law, it is inconsequential inasmuch as did not find that there was an error of law. Arbitrator Bishop’s award determined the rights and obligations of the parties and resolved the submitted controversy, and her determination was sustained by Master Arbitrator Ancowitz. There has been a final and definite resolution of the parties’ dispute (see Civil Serv. Empls. Assn. v County of Nassau, 305 AD2d 498 [2d Dept 2003]; Matter of Paul v Insurance Co. of N. Am., 81 AD2d 671 [2d Dept 1981]; cf. Papapietro v Pollack v Kotler, 9 AD3d 419 [2d Dept 2004]; Matter of Teamsters Local Union 693 [Coverall Serv. & Supply Co.], 84 AD2d 609 [3d Dept 1981]).

“This Court has recognized the authority of a court, before which there is a petition to confirm or to vacate an arbitration award, to remand the matter to the arbitration panel when the panel’s award does not dispose of a particular issue raised by the parties or indicate the panel’s intention with respect to it (see, Matter of Ritchie Bldg. Co. [Rosenthal], 9 AD2d 880), or when the award is ambiguous and not sufficiently explicit, since a court may not impose its own interpretation of the award (see, Matter of Jolson [Forest Labs.], 15 AD2d 901). Here, the award is not only ambiguous as to the intent of the panel, but also fails to address and dispose of the issues raised by the parties or to make any specific findings of fact or credibility. Given the diametrically opposed positions of the parties, the award, which apparently denied both sets of claims on the merits, cannot be harmonized or interpreted without speculation as to the panel’s intent.” (Hamilton Partners v Singer, 290 AD2d 316, 316-317 [2d Dept 2002].) Master Arbitrator Ancowitz’s award is not ambiguous. His intent to affirm Arbitrator Bishop is quite manifest. His approval of her analysis is evident. There is nothing to speculate about how the master arbitrator treated the hearing arbitration award. Although he did not explicitly deal with the issue raised by ATIC asserting an error of law, Master Arbitrator Ancowitz was sufficiently explicit to enable this Court to review it without having to speculate about his intent.

Accordingly, this Court rejects ATIC’s contentions in its petition. ATIC’s rights were not prejudiced, the arbitrator was not partial, she did not exceed her powers, her decision was neither arbitrary nor capricious, it had a rational basis, and she did not render a nonfinal award.

None of the CPLR 7511 (b) (1) grounds cited by ATIC for vacating an arbitration award have been proved by ATIC. There was no corruption, fraud or misconduct in the arbitration process. There was no partiality. Neither arbitrator exceeded his or her power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made. There was no failure to follow the procedure of Article 75.

Cross-Petition;
Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, Rutland sought in its cross-petition to confirm the arbitration determinations. Having found that no grounds exist to vacate them, the master arbitration award must be confirmed. Rutland is entitled to No-Fault compensation for health services in the principal amount of $2,713.58.

Rutland also sought additional payments in the nature of interest, attorney’s fees, return [*9]of the arbitration filing fee, costs, and disbursements.

Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s] [3], 65-3.9 [c]; Canarsie Med. Health, P.C. v National Grange Mut. Ins. Co., 21 Misc 3d 791, 797 [Sup Ct, NY County 2008] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action. Rutland’s arbitration request was received by the AAA on August 14, 2020 (see NYSCEF Doc No. 5, Rutland’s Arbitration Request Form & Submission at 1), which was more than 30 days after ATIC’s last denial of claim. Thus, interest on all of the claims herein accrued from August 14, 2020, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest is calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term 2d Dept, 2d, 11th & 13th Dists 2022]).

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay Rutland an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $130.00 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [i].

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, Rutland is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of NY v Nexray Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Rutland’s counsel did not submit an affirmation specifying details with regard to work performed in this Article 75 special proceeding. It is not known whether an attorney or support staff performed the work. The cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The same boierplate allegations have been submitted by Rutland’s counsel in past Article 75 proceedings. The cross-petition asserted that Rutland “should be granted leave to serve an afirmation in order to set forth its resonable attroneys’ fees in defending this action” (NYSCEF Doc No. 19, Cross-Petition ¶ 61).

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.) Counsel should have included an affirmation containing details describing the work performed (see Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695 [2d Dept 2019] [claim for hourly fee for prevailing on policy issue not substantiated with any time records]). It behooved counsel to do so considering the expedited nature of special proceedings.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issue in the case at bar was neither novel nor unique, especially since the preclusion rule for untimely assertions of lack of medical necessity is established law.

Consdering the factors delineated herein, this Court awards $375.00 for work performed by Rutland’s counsel on this Article 75 proceeding. This Court considered the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level, increased it to $125.00 per hour, and assumed that there was attorney involvement for two hours at the most in preparation of Rutland’s papers. In addition, a $125.00 for a personal appearance in court is awarded. (See 11 NYCRR 65-4.6 [c].)

ATIC shall also pay Rutland $40.00 as reimbursement for the fee paid to the AAA (see 11 NYCRR 65-4.5 [s] [1]).

Costs and Disbursements:

As the prevailing party in this special proceeding, Rutland shall recover its costs and disbursements, to be taxed by the Clerk.

Other Requested Relief

Any requested relief not expressly addressed herein has nonetheless been considered and is hereby expressly rejected.

Conclusion

Accordingly, it is hereby ORDERED, ADJUDGED, and DECREED that:

(1) ATIC’s petition to vacate the master arbitration award of Richard Ancowitz in AAA Case No. 99-20-1175-4211 is denied and this special proceeding is dismissed.

(2) Rutland’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) Rutland is awarded the principal amount of $2,713.58 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent per month on a pro rate basis using a 30-day month, computed from August 14, 2020 to the date of payment of the principal amount, but excluding August 14, 2020 from being counted within the period of interest.

(5) After calculating the sum total of the principal amount of $2,713.58 plus the interest thereon, ATIC shall pay Rutland an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay Rutland an attorney’s fee of $130.00 in connection with the master arbitration.

(7) ATIC shall pay Rutland an attorney’s fee of $375.00 for work performed by counsel on this Article 75 proceeding.

(8) Rutland shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

Footnotes

Footnote 1:The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Wendy Bishop, Esq. and/or Master Arbitrator Richard Ancowitz, Esq. under Article 75 of the CPLR” (NYSCEF Doc No. 2, Notice of Petition at 1), but it must be deemed to seek vacatur of just the master arbitration award inasmuch as the latter is the final determination of the arbitration process. The No-Fault Regulations provide that “court review pursuant to an article 75 proceeding” is from the “decision of a master arbitrator” (11 NYCRR 65-4.10 [h] [1] [i]). In fact, a party may not appeal from a hearing arbitration award (see Matter of Staten Is. Hosp. v USAA, 103 AD2d 744 [2d Dept 1984]; Matter of Griffith v Home Indem. Co., 84 AD2d 332 [1st Dept 1982]; Matter of Lampasona v Prudential Prop. & Cas. Ins. Co., 111 Misc 2d 623 [Sup Ct, Kings County 1981]). “[T]he Legislature intended the provision of CPLR article 75 to apply only to the review of the awards of master arbitrators (see, Insurance Law § 5106[c])” (Matter of Custen v General Acc. Fire and Life Ins. Co., 126 AD2d 256 [2d Dept. 1987]). It follows that if the hearing arbitrator’s award is imperfect, this can affect judicial review of a master arbitration award affirming it.

Footnote 2:Rather than denote the parties here as “Petitioner” and “Respondent” in discussion, the parties’ names are used. This is to facilitate the reader’s understanding of the facts, arguments, analysis, and determination. This also minimizes confusion because the respondent in the underlying arbitration (ATIC) is not the respondent herein but rather is the petitioner herein. The respondent herein, Rutland, was not the respondent in the arbitration, but was the applicant.

Footnote 3:Arbitrator Bishop wrote that the claimed amount in the arbitration request form was $2,713.58, which conflicts with the Form AR Arbitration Request Form (compare NYSCEF Doc No. 3 (Arbitration Award at numbered p 1) with NYSCEF Doc No. 5 (Rutland’s Arbitration Request Form & Submission at 15).

Footnote 4:Health service providers obtain standing to pursue No-Fault insurance compensation in arbitration by virtue of having received an assignment of benefits from the respective person claiming to have been injured in a covered motor vehicle accident; such person is often denoted as an “assignor.”

Footnote 5:References to page numbers in NYSCEF filings lacking specified page numbers are to the PDF page numbers.

Footnote 6:Paragraph 28 of the petition describes the AAA Case No. as 99-20-1175-4211, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-20-1175-4211 (see NYSCEF Doc No. 3, Arbitration Award at numbered p 1).

Footnote 7:This statutory scheme was developed by New York’s legislature in 1973, as part of a tradeoff whereby lawsuits for pain and suffering resulting from personal injuries in motor vehicle accidents were limited to instances of serious injury (see generally Insurance Law art 51; L 1973, ch 13, as amended L 1977, ch 892; John R. Dunne, New York’s No-Fault Automobile Insurance Law A Glimpse of the Past and a Glance at the Future, 50 NY St BJ 284 [June 1978]; J. Benedict, New York Adopts No-Fault: A Summary and Analysis, 37 Albany L Rev 662 [1973]).

Footnote 8:Although Insurance Law Article 51 does not mention the term “No-Fault,” shortly after the post-motor vehicle accident economic loss compensation system was enacted in 1973, the appellation “No-Fault” was adopted in common parlance to describe it.

Footnote 9:This Court uses the term “health service bills” instead of “medical bills” because the No-Fault Law provides for reimbursement of “(i) medical, hospital . . . , surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical therapy . . . and occupational therapy and rehabilitation . . . and (iv) any other professional heath services” (Insurance Law § 5102 [b] [1]). Hence, the No-Fault insurance system encompasses not just “medical” services. In the instant case, the services at issue encompassed diagnostic testing, therapeutic injections, and chiropractic.

Footnote 10:The prescribed claim forms are included within 11 NYCRR Part 65 (Regulation 68) Appendix 13. Besides Form NF-3 (verification of treatment by attending physician or other provider of health service), Appendix 13 contains Form NF-4 (verification of hospital treatment) and Form NF-5 (hospital facility form). Not every No-Fault insurance provider uses the prescribed forms; some utilize a HICF (Health Insurance Claim Form) or a UB-04 form more commonly used for inpatient outpatient claims billed by hospitals, healthcare facilities, and surgical facilities.

Footnote 11:There is a prescribed assignment of benefits form (Form NF-AOB) in 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 12:The process of submitting a No-Fault claim to the insurer is governed by 11 NYCRR Subpart 65-3, which contains §§ 65-3.1 et seq.

Footnote 13:Form NF-10 is also included within 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 14:This is the AAA’s electronic case management and filing platform maintained on the Internet; it is known as “Modria,” which was the name of the company which developed it for the AAA (see Liveblogging #ODR2014: The Developing Field of Online Dispute Resolution, https://civic.mit.edu/index.html%3 Fp=1452.html [last accessed Mar. 19, 2023]; Welcome to the Modria Resolution Center for the American Arbitration Association, https://aaa-nynf.modria.com/ [last accessed Mar. 19, 2023]).

Footnote 15:Among the more substantial changes in the 1977 legislation were the adoption of fee schedules to limit health service expenses and modifying the threshold categories for suing for noneconomic loss, i.e., pain and suffering.

Footnote 16:Nothing in the Governor’s Bill Jacket for Chapter 13 of the Laws of 1977 or other contemporary records comments on the provision adopting master arbitration review of hearing arbitrators’ decisions, so it is not known why the master arbitration process was created (see Matter of Bamond v Nationwide Mut. Ins. Co., 75 AD2d 812, 813 [2d Dept 1980], affd 52 NY2d 957 [1981]). This Court speculates that at least one reason was that No-Fault arbitration was compulsory and the Legislature desired to permit a party to an arbitration to seek review of the hearing arbitrator’s award on the basis of an assertion of an error of law, which traditionally was not a basis for review in an Article 75 proceeding (see Mott v State Farm Ins. Co., 77 AD2d 488 [3d Dept 1980], revd sub nom. on other grounds Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224 [1982]).

Footnote 17:Most non-No-Fault insurance arbitration awards cannot be vacated due to an error of law (see Matter of Sprinzen v Nomberg, 46 NY2d 623, 629-630 [1979]). No-Fault insurance arbitrations are different; an error of law can be the basis for reversal — by a master arbitrator. In that sense, the master arbitrator’s review is broader than that of a court, since a court will not vacate an arbitration award due to an error of law (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207, 211-212 [1981]; Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 800, 802 [2d Dept 2019]).

Footnote 18:11 NYCRR 65-4.10 (a) provides as follows:

Grounds for review. An award by an arbitrator rendered pursuant to section 5106(b) of the Insurance Law and section 65-4.4 or 65-4.5 of this Subpart may be vacated or modified solely by appeal to a master arbitrator, and only upon one or more of the following grounds:

(1) any ground for vacating or modifying an award enumerated in article 75 of the Civil Practice Law and Rules (an article 75 proceeding), except the ground enumerated in CPLR subparagraph 7511(b)(1)(iv) (failure to follow article 75 procedure);

(2) that the award required the insurer to pay amounts in excess of the policy limitations for any element of first-party benefits; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of an appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(3) that the award required the insurer to pay amounts in excess of the policy limitations for any element of additional first-party benefits (when the parties had agreed to arbitrate the dispute under the additional personal injury protection endorsement for an accident which occurred prior to January 1, 1982); provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(4) that an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground);

(5) that the attorney’s fee awarded by an arbitrator below was not rendered in accordance with the limitations prescribed in section 65-4.6 of this Subpart; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart.

The Rybak Firm, PLLC (Maksim Leyvi and Richard Rozhik of counsel), for appellant. Rubin, Fiorella, Friedman & Mercante, LLP (Michael Philippou of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Matthew P. Blum, J.), dated November 16, 2021. The order, insofar as appealed from and as limited by the brief, granted the branch of defendant’s motion seeking a permanent stay of the action.

ORDERED that the order, insofar as appealed from, is reversed, with $30 costs, and the branch of defendant’s motion seeking a permanent stay of the action is denied.

Plaintiff commenced this action in August of 2018 to recover assigned first-party no-fault benefits for medical services he had provided to his assignor in December 2017 and January 2018 as a result of injuries allegedly sustained in an automobile accident on November 14, 2017. As limited by his brief, plaintiff appeals from so much of an order of the Civil Court (Matthew P. Blum, J.) dated November 16, 2021 as granted the branch of defendant’s motion seeking a permanent stay of the instant action based on the doctrines of collateral estoppel and/or res judicata as a result of an “order and judgment” (declaratory judgment order) issued by the Supreme Court, New York County (Gerald Lebovits, J.), on February 21, 2017. In the declaratory judgment order, the Supreme Court found that no-fault actions that had been commenced by plaintiff herein as a result of an accident on November 7, 2013 were permanently [*2]barred because plaintiff herein had been operating in violation of various New York State laws and therefore was not entitled to recover no-fault payments (see 11 NYCRR 65-3.16 [a] [12]; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).

Plaintiff correctly argues that the Civil Court improperly applied the declaratory judgment order beyond its explicit purview so as to include this action, which was commenced more than eight months after the declaratory judgment order was issued (see Parisien v Zipcar, 77 Misc 3d 132[A], 2022 NY Slip Op 51245[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2022]; Active Care Med. Supply Corp. v Titan Ins.Co., 66 Misc 3d 144[A], 2020 NY Slip Op 50183[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]). Contrary to defendant’s contention that collateral estoppel effect should be given to the issue decided by the declaratory judgment order, namely that plaintiff was operating in violation of various New York State laws and not entitled to recover no-fault benefits, that issue is not identical to an issue to be decided in this case. The February 2017 declaratory judgment order could not have decided the issue of whether, in December of 2017 and January of 2018, plaintiff was continuing to operate in such a way that would preclude it from recovering any no-fault payments for the medical treatment rendered in connection with the November 14, 2017 accident. Thus, collateral estoppel does not apply here.

Accordingly, the order, insofar as appealed from, is reversed and the branch of defendant’s motion seeking a permanent stay of the action is denied.

TOUSSAINT, P.J., MUNDY and VENTURA, JJ., concur.

Index No. 651387/2022

Bennett, Bricklin & Saltzburg, LLC, New York, NY (Alex R. Garriga of counsel), for plaintiffs.

No appearance for defendant.

This is a no-fault insurance coverage action. Plaintiffs, State Farm Mutual Automobile Insurance Company and State Farm Fire & Casualty Company, seek a declaratory judgment that defendant, Garden Medical Care, P.C., has no right to receive payment for hundreds of no-fault claims for medical treatment, totaling approximately $312,000. (See NYSCEF No. 10 at 6 [spreadsheet of claims at issue].) Plaintiffs are contending that defendant’s claims for treatment are foreclosed by defendant’s (asserted) failure or refusal to provide information and documents in response to discovery requests served by plaintiffs following defendant’s examination under oath (EUO).

Plaintiffs now move without opposition for default judgment under CPLR 3215. The motion is denied.

BACKGROUND

Defendant is a medical provider, submitting treatment bills to no-fault insurers like plaintiffs, as the assignee of injured persons eligible for no-fault coverage. Between July and September 2021, defendant submitted hundreds of no-fault bills for treatment provided in [*2]connection with numerous no-fault claims. (See generally NYSCEF No. 10 [claims spreadsheet].) In response to each bill, plaintiffs asked defendant to appear for an EUO. (See id.) Plaintiffs allege that before doing so, they had investigated defendant’s billing and treatment practices and its eligibility to receive no-fault benefits. (See NYSCEF No. 1 at 28 [verified complaint]; see also NYSCEF No. 12 at ¶¶ 4-10 [affidavit of Michael Bodnar, State Farm Special Investigative Unit investigator].)

Defendant’s principal appeared for an EUO in September 2021. (See NYSCEF No. 1 at ¶ 34.) Although the affidavit of plaintiffs’ investigator describes defendant’s EUO testimony (see NYSCEF No. 12 at ¶¶ 12-16), plaintiffs have not provided a copy of the full EUO transcript. Plaintiffs represent that following the EUO, they served demands seeking further information and documents. (See NYSCEF No. 1 at ¶ 35; NYSCEF No. 12 at ¶¶ 17-18.) The demands themselves have not been provided. Plaintiffs further represent that defendant provided some of the requested discovery, objected to some of plaintiffs’ demands, and asserted that some of the requested documents were not in its possession. (NYSCEF No. 1 at ¶ 38; NYSCEF No. 12 at ¶ 19.) Plaintiffs do not provide copies of defendant’s responses and objections.

Plaintiffs contend that they still need more information to evaluate the eligibility of the claims for reimbursement that defendant has refused to provide: financial records from April 1, 2021, to the present, including complete bank records, general ledgers, profit and loss statements, and balance statements; documents reflecting the purchase, sale, or transfer of any ownership or investment interest in defendant, a professional corporation; documents concerning examinations performed and billed by defendant; documents concerning agreements with anyone providing billing and/or management services on behalf of defendant; documents concerning the referral, solicitation, and procurement of patients for the defendant; documents concerning the Extracorporeal Shock Wave Therapy (ESWT) machine device owned by defendant; scheduling documents for individuals who provided services for defendant; and articles or publications that support, among other things, defendant’s use of ESWT to treat patients’ conditions.^[FN1] (NYSCEF No. 12 at 20.)

Plaintiffs allege that given defendant’s (asserted) failure to comply sufficiently with plaintiffs’ post-EUO verification requests, plaintiffs timely denied payment on all of the no-fault treatment bills at issue. Plaintiffs then brought this action for a no-coverage declaration with respect to those bills. Plaintiffs now move for default judgment.

DISCUSSION

A plaintiff moving for default judgment must demonstrate proper service, the defendant’s default, and the facts constituting plaintiff’s claim. (See CPLR 3215 [f].) Plaintiffs have shown that it properly served defendant (see NYSCEF No. 4 [affidavit of service]; and defendant has not appeared. But plaintiffs have not provided proof of the facts constituting its claim.

Plaintiffs’ claim rests on defendant’s (putative) failure to respond to post-EUO document demands warranted by defendant’s EUO testimony. But plaintiffs’ motion papers do not attach copies of (i) the EUO transcript; (ii) plaintiffs’ post-EUO demands; (iii) defendant’s responses and objections to those demands; or (iv) defendant’s document production. Absent those materials, this court cannot assess the key question presented by plaintiffs’ motion—whether defendant failed to respond adequately to post-EUO verification requests that plaintiffs were entitled to make. The brief, conclusory statements to that effect in plaintiffs’ complaint and SIU affidavit are not alone sufficient.

Accordingly, it is

ORDERED that plaintiffs’ default-judgment motion is denied; and it is further

ORDERED that if plaintiffs do not bring a renewed default-judgment motion within 30 days of entry of this order, the action will be dismissed; and it is further

ORDERED that plaintiffs serve a copy of this order with notice of its entry on defendant by certified mail, return receipt requested, directed to defendant’s last-known address.

Footnotes

Footnote 1: Plaintiffs’ additional verification requests for bank records, documents about billing/management services, and documents relating to the purchase, sale, or transfer of ownership or investment interests appear to be seeking information into so-called Mallela issues—i.e., whether defendant here fails to meet applicable state or local licensing requirements, such that plaintiffs are entitled to withhold no-fault payments. (See State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313, 319 [2005] [construing 11 NYCRR 65-3.16 [12]].) This court need not, and does not, address on this motion whether plaintiffs have established sufficient cause for seeking that information from defendant during the claim-verification process. (See HKP Physical Therapy, P.C. v Government Empls. Ins. Co., 67 Misc 3d 282, 296-301 [Civ Ct, NY County 2019] [discussing threshold showing for seeking Mallela discovery].)

Decided on July 21, 2023

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

The Rybak Firm, PLLC (Damin J. Toell and Richard Rozhik of counsel), for appellant. Rivkin Radler, LLP (Stuart M. Bodoff of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (D. Bernadette Neckles, J.), entered July 29, 2022. The order, insofar as appealed from as limited by the brief, granted the branches of defendant’s motion seeking summary judgment dismissing the first and second causes of action of the complaint and denied the branches of plaintiff’s cross-motion seeking summary judgment upon those causes of action.

ORDERED that the order, insofar as appealed from, is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals, as limited by its brief, from so much of an order of the Civil Court as granted the branches of defendant’s motion seeking summary judgment dismissing the first and second causes of action and denied the branches of plaintiff’s cross-motion seeking summary judgment upon those causes of action.

Contrary to plaintiff’s sole contention with respect to the branches of defendant’s motion seeking summary judgment upon the first and second causes of action, the affidavit of defendant’s employee was sufficient to give rise to a presumption that the examination under oath scheduling letters and denial of claim forms as to the claims underlying those causes of action had been timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Horizon P.T. Care, P.C. v State Farm Mut. Auto. Ins. Co., 78 Misc 3d 133[A], 2023 NY Slip Op 50442[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2023]). [*2]Thus, plaintiff has not demonstrated any basis to disturb so much of the order as granted the branches of defendant’s motion seeking summary judgment dismissing the first and second causes of action, and denied the branches of plaintiff’s cross-motion seeking summary judgment upon those causes of action.

Accordingly, the order, insofar as appealed from, is affirmed.

MUNDY, J.P., OTTLEY and VENTURA, JJ., concur.

The Rybak Firm, PLLC (Damin J. Toell and Richard Rozhik of counsel), for appellant. Rivkin Radler, LLP (Stuart M. Bodoff of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Ellen E. Edwards, J.), entered April 5, 2022. The order granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s cross-motion for summary judgment.

ORDERED that the order is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits arising out of a March 9, 2015 accident, defendant moved for summary judgment dismissing the first through fifth and seventh causes of action on the ground that plaintiff had failed to appear for duly scheduled examinations under oath (EUOs), and dismissing the sixth cause of action on the ground that it was barred by an April 18, 2019 declaratory judgment issued by the Supreme Court, Nassau County, in an action commenced by defendant herein against plaintiff herein in regard to the same March 9, 2015 accident. Plaintiff opposed defendant’s motion and cross-moved for summary judgment. By order entered April 5, 2022, the Civil Court (Ellen E. Edwards, J.) granted defendant’s motion for summary judgment on the ground that plaintiff had failed to appear for duly scheduled EUOs and denied plaintiff’s cross-motion.

“Under the doctrine of res judicata, a final adjudication of a claim on the merits precludes relitigation of that claim and all claims arising out of the same transaction or series of transactions by a party or those in privity with a party” (Ciraldo v JP Morgan Chase Bank, N.A., 140 AD3d 912, 913 [2016]; see Matter of Hunter, 4 NY3d 260, 269 [2005]; Schuylkill Fuel [*2]Corp. v Nieberg Realty Corp., 250 NY 304, 306-307 [1929]).

With respect to the branch of defendant’s motion seeking summary judgment dismissing the sixth cause of action, defendant demonstrated that the assignor, accident date, and date of service in the Supreme Court declaratory judgment action were identical to those for the claim underlying the sixth cause of action in the instant case. Consequently, that cause of action was barred under the doctrine of res judicata by virtue of the April 18, 2019 declaratory judgment and, thus, the Civil Court properly granted the branch of defendant’s motion seeking summary judgment dismissing that cause of action (see ZG Chiropractic Care, P.C. v 21st Century Ins. Co., 70 Misc 3d 138[A], 2021 NY Slip Op 50079[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021]; Valdan Acupuncture, P.C. v Nationwide Mut. Fire Ins. Co., 64 Misc 3d 134[A], 2019 NY Slip Op 51098[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]; EBM Med. Health Care, P.C. v Republic W. Ins., 38 Misc 3d 1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), albeit on other grounds, since a judgment in favor of plaintiff upon the sixth cause of action in this action would destroy or impair rights or interests established by the declaratory judgment (see Schuylkill Fuel Corp., 250 NY at 306-307; North Val. Med., P.C., 2022 NY Slip Op 50048[U]; ZG Chiropractic Care, P.C., 2021 NY Slip Op 50079[U]; Valdan Acupuncture, P.C., 2019 NY Slip Op 51098[U]; EBM Med. Health Care, P.C., 38 Misc 3d at 2).

Contrary to plaintiff’s sole contention on appeal with respect to so much of the order as granted the branches of defendant’s motion seeking summary judgment dismissing the first through fifth and seventh causes of action, the affidavit of defendant’s employee was sufficient to give rise to a presumption that the EUO scheduling letters and denial of claim forms as to the claims underlying those causes of action had been timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Horizon P.T. Care, P.C. v State Farm Mut. Auto. Ins. Co., 78 Misc 3d 133[A], 2023 NY Slip Op 50442[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2023]). Thus, plaintiff has not demonstrated any basis to disturb so much of the order as granted the branches of defendant’s motion seeking summary judgment dismissing those causes of action.

Accordingly, the order is affirmed.

MUNDY, J.P., OTTLEY and VENTURA, JJ., concur.

Rivkin Radler, LLP (Stuart M. Bodoff of counsel), for appellant. The Rybak Firm, PLLC (Oleg Rybak and Richard Rozhik of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Odessa Kennedy, J.), entered December 9, 2021. The order, insofar as appealed from and as limited by the brief, denied defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is reversed, with $30 costs, and defendant’s motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that plaintiff failed to provide requested verification. Plaintiff cross-moved for summary judgment or, in the alternative, for an order pursuant to CPLR 3212 (g) deeming certain facts established for all purposes in this action. In an order entered December 9, 2021, the Civil Court (Odessa Kennedy, J.) denied defendant’s motion and, upon implicitly denying plaintiff’s cross motion for summary judgment, found, in effect pursuant to CPLR 3212 (g), that plaintiff timely submitted the bills at issue to defendant. As limited by its brief, defendant appeals from so much of the order as denied its motion for summary judgment.

The proof submitted by defendant in support of its motion for summary judgment established that defendant had timely mailed its initial and follow-up verification requests (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]) and that defendant had not received the requested verification (see American Kinetics Lab, Inc. v GEICO Gen. Ins. Co., 77 Misc 3d 135[A], 2022 NY Slip Op 51267[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2022]). As defendant further demonstrated that it had timely denied plaintiff’s [*2]claims (see 11 NYCRR 65-3.5 [o]; St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d at 1124), defendant made a prima facie showing of its entitlement to summary judgment dismissing the complaint (see Burke Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co., 75 Misc 3d 143[A], 2022 NY Slip Op 50623[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2022]; Chapa Prods. Corp. v MVAIC, 66 Misc 3d 16, 18-19 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]; CPM Med Supply, Inc. v State Farm Fire & Cas. Ins. Co., 63 Misc 3d 140[A], 2019 NY Slip Op 50576[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]).

Plaintiff’s owner’s statement that he had mailed the requested verification “to the extent such responses were proper and in [his] possession” does not raise a triable issue of fact, as it does not “demonstrate that [plaintiff] had provided the requested verification or had set forth a reasonable justification for the failure to comply with defendant’s verification requests” (Burke Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co., 2022 NY Slip Op 50623[U], *1-2; see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3]; CPM Med Supply, Inc. v State Farm Fire & Cas. Ins. Co., 2019 NY Slip Op 50576[U], *1). To the extent plaintiff argues that the verification requests were improper since they were issued after plaintiff had appeared for an examination under oath (EUO), this argument lacks merit, as the EUO pertained to claims for a different assignor, and was held five months before the claims at issue were submitted.

Accordingly, the order, insofar as appealed from, is reversed and defendant’s motion for summary judgment dismissing the complaint is granted.

MUNDY, J.P., OTTLEY and VENTURA, JJ., concur.

Index No. 650571/2022

Correia, Conway & Stiefeld, White Plains, NY (Melissa D. Broder of counsel), for plaintiffs.

No appearances for defendants.

This is a no-fault-insurance coverage action. Plaintiffs, Liberty Mutual Insurance Company and LM General Insurance Company (Liberty Mutual), denied the no-fault-benefits claims of the alleged injured person, defendant Nordigay Anderson, and the other defendants, medical-provider-assignees of Anderson’s, on the ground that Anderson had materially misrepresented the insured vehicle’s garaging address and the identity of the vehicle’s operators. Liberty Mutual has brought this action for a judgment declaring, in essence, that it has no duty to pay those claims.

Liberty Mutual now moves without opposition for default judgment under CPLR 3215 against non-answering defendants Anderson, ADV Diagnostic Inc., Aztec Medical PA, Citimed [*2]Surgery Center, LLC, Good Samaritan Hospital Medical Center, and Laxmidhar Diwan MD. The motion is denied.

No-fault benefits claims must be paid or denied “[w]ithin 30 calendar days after proof of claim is received.” (11 NYCRR 65-3.8 [c].) Proof of claim “shall include verification of all of the relevant information requested pursuant to section 65-3.5 of this Subpart,” such as requests that an injured person or medical-provider-assignee appear for an examination under oath (EUO). (Id. § 65-3.8 [a] [1].) an insurer’s failure to deny a claim within that 30-day period will generally preclude the insurer from asserting a defense against payment of the claim. (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008].)

An exception to this preclusion rule exists where the ground for denying the claim (or defending against a claim to payment) is a lack of coverage in the first instance. (Id.) But the denial of a no-fault claim on the ground that the policyholder made material misrepresentations in obtaining the policy does not come within this preclusion exception. (See Liberty Mutual Ins. Co. v Brutus, 2022 NY Slip Op 50799[U], at *4 [Sup Ct, NY County Aug. 16, 2022], citing Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603, 604-605 [2d Dept 2011].)

In short, Liberty Mutual may not raise material misrepresentations as a defense to the no-fault claims at issue in this action unless it denied those claims within 30 days after receiving proof of claim.

Liberty Mutual first sought verification from Anderson, in the form of an EUO, by letter dated June 29, 2021. (See NYSCEF No. 25.) Liberty Mutual conducted that EUO on July 12, 2021. (See NYSCEF No. 26 [EUO transcript].) Liberty Mutual later interviewed Anderson’s father (the vehicle operator named on the policy) on August 3, 2021 (see NYSCEF No. 27 [interview transcript]); and issued claim denials two days later, on August 5 (see NYSCEF No. 28.)

Thus, it appears on this record that Liberty Mutual denied the claims at issue within two days after obtaining the additional verification that it sought from Anderson and her father. That chronology, though, does not resolve the crucial question whether the 30-day period to pay or deny ran before Liberty Mutual first sought that verification on June 29. That is, if Liberty Mutual received benefits claims more than 28 calendar days before issuing the EUO request letter on June 29, 2021, the August 5, 2021, denial would be untimely with respect to those claims.^[FN1]

Liberty Mutual has not established on this motion that its denials were timely with respect to each of the defendants against whom it seeks default judgment. At most, Liberty Mutual has submitted a delay letter that it sent on June 4, 2021, to defendant Good Samaritan Hospital Medical Center (see NYSCEF No. 24 at 3-4); and Liberty Mutual’s counsel represents in an affirmation that delay letters were also sent “to the medical provider defendants who had submitted NF-3s or bills” as of early June 2021 (NYSCEF No. 13 at ¶ 29). But a delay letter that does not itself request verification from the recipient will not toll the 30-day pay-or-deny period. [*3](Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045, 1046 [2d Dept 2009]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535, 536 [2d Dept 2005].)

On this record, therefore, Liberty Mutual has not established the facts constituting its claims against the non-appearing defendants.

Accordingly, it is

ORDERED that Liberty Mutual’s motion for default judgment is denied; and it is further

ORDERED that if Liberty Mutual does not file a renewed default-judgment motion against the defaulting defendants within 30 days of entry of this order, the action will be dismissed as against those defendants; and it is further

ORDERED that Liberty Mutual serve a copy of this order with notice of its entry on all appearing parties by e-filing on NYSCEF; and on all non-appearing parties by certified mail, return receipt requested, directed to their respective last-known addresses.

Footnotes

Footnote 1:This calculation adds together the days elapsed before Liberty Mutual sought additional verification of the claim with the two days elapsed after Liberty Mutual obtained that verification upon interviewing Anderson’s father. (See 11 NYCRR 65-3.8 [a] [1] [“In the case of an examination under oath . . . the verification is deemed to have been received by the insurer on the day the examination was performed.”].)

[*1]

Civil Court of the City of New York, Queens County, June 30, 2023

APPEARANCES OF COUNSEL

Hollander Legal Group, P.C., Melville (Justin A. Calabrese of counsel), for defendant.

Law Offices of Gabriel & Moroff, P.C., Rockville Centre (John E. Fagan of counsel), for plaintiff.

Defendant’s motion for summary judgment and to dismiss plaintiff’s complaint on the grounds that plaintiff assignor failed to appear for four duly and timely scheduled examinations under oath (EUO) is granted in its entirety, and plaintiff’s cross-motion is denied. Plaintiff’s argument that defendant failed to establish timely denial, in that denial exceeded the 30-day time period from the second EUO no-show, is unpersuasive and outmoded in light of the Appellate Division’s recent decision in Quality Health Supply Corp. v Nationwide Ins. (216 AD3d 1013 [2d Dept 2023]), reversing a decision of the Appellate Term (see Quality Health Supply Corp. v Nationwide Ins., 69 Misc 3d 133[A], 2020 NY Slip Op 51226[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]).

This court has struggled with this issue in the past. Despite that the earlier Quality Health held that “the 30-day period for an insurer to pay or deny a claim based upon a failure to appear for an EUO begins to run on the date of the second EUO nonappearance” (2020 NY Slip Op 51226[U], *1 [citation omitted]), this court found that a timely denial issued after a fourth missed EUO was sufficient to support defendant’s request for summary judgment (see NGM Acupuncture, P.C. v Nationwide Ins. Co., Civ Ct, Queens County, June 15, 2021, index No. 706015/2019). This court reasoned that to hold otherwise puts defendants at a disadvantage for offering plaintiffs additional opportunities to appear for an EUO, and disincentivizes diligent and thorough investigations. Even more so, it gave plaintiffs an advantage if they did appear at a third or fourth scheduled EUO.

Following the earlier Quality Health, the Appellate Term issued a decision in FJL Med. Servs., P.C. v Nationwide Ins. (77 Misc 3d 129[A], 2022 NY Slip Op 51213[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2022]) that addressed this issue in a more comprehensive fashion. FJL essentially confirmed the finding of the Appellate Term in Quality Health. It reasoned that “an insurer cannot indefinitely extend its toll of the time to pay or deny a claim after a second nonappearance at a scheduled EUO by scheduling successive additional EUOs until the insurer unilaterally decides that it has offered enough opportunities{**80 Misc 3d at 653} to appear and end its toll” (2022 NY Slip Op 51213[U], *2-3). Disregarding defendant’s arguments based upon the regulations and rooted in fairness principles, the court framed the issue as whether an insurer properly continued its toll period to pay or deny a claim, instead of whether a provider or insured appeared for a duly scheduled and/or rescheduled EUO.

Although this court continued to disagree with the premise expressed in Quality Health and expounded upon in FJL, in light of that later decision, this [*2]court capitulated and denied a defendant’s motion contemplating the same issue discussed here (see Access Care PT, P.C. v Palisades Ins. Co., 2023 NY Slip Op 32567[U] [Civ Ct, Queens County, Mar. 7, 2023]).

Having to contend with its prior decisions, this court is being asked to, again, consider this issue. However, now it has the Appellate Division’s decision in Quality Health which, arguably, endorses this court’s earlier opinion in NGM Acupuncture. In reversing the Appellate Term, the Appellate Division found that a denial for nonappearance issued after the last scheduled EUO, and in that case there were three, was timely and proper (see Quality Health Supply Corp., 216 AD3d at 1013). With this in mind, the court finds here that defendant demonstrated its prima facie entitlement to judgment as a matter of law dismissing plaintiff’s complaint by showing that its scheduling letters were timely and properly mailed, that the assignor failed to appear on each of the four scheduled dates, and that it ultimately issued a timely and proper denial following a failure to appear on the last scheduled date (see e.g. Quality Health Supply Corp., 216 AD3d 1013).

It is noteworthy that plaintiff did not deny receipt of the scheduling letters or that the assignor failed to appear on all four occasions. Actually, plaintiff highlighted that it responded to defendant’s scheduling letters by objecting to the location of the EUO but, also, expressing its assignor’s willingness to attend. Despite these responses, plaintiff seeks to penalize defendant for extending multiple opportunities to its assignor to appear. The contradictory nature of this argument and its effect of placing insurers in a problematic position is evident.

Most importantly, and what this court believes was previously overlooked, is that appearance for an EUO is a condition precedent to coverage (see generally Nationwide Affinity Ins. Co. of Am. v George, 183 AD3d 755, 756 [2d Dept 2020];Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35{**80 Misc 3d at 654} AD3d 720, 722 [2d Dept 2006]; Excel Imaging, P.C. v Infinity Select Ins. Co., 46 Misc 3d 128[A], 2014 NY Slip Op 51796[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]). By circumventing this principle, and virtually ignoring the EUO nonappearances, form prevailed over substance. The most recent Quality Health rectifies this imbalance and, also, promotes the mandate of the no-fault regulations prohibiting insurers from treating their insureds in an adversarial fashion (see 11 NYCRR 65-3.2 [b]; see also NGM Acupuncture, P.C. v Nationwide Ins. Co.). Ultimately, a plaintiff’s failure to appear for a duly scheduled EUO, barring any issues of timeliness, should be the predominate consideration in disputes such as the one before this court.

Plaintiff’s complaint is hereby dismissed.