JSI Expert Servs. Inc. v Firemans Fund Ins. Co. (2005 NY Slip Op 52058(U))

Civil Court of the City of New York, Kings County

119832/05

Eric Gil, Esq. of Gary Tsirelman, PC, 4022 18th Avenue, Brooklyn, NY 11218, appeared for petitioners.

Sandy Jainauth-Barone, Esq. of Chesney & Murphy, LLP, 2305 Grand Avenue, Baldwin, NY 11510, appeared for the respondent.

Delores J. Thomas, J.

Petitioner, a provider of medical goods seeks to recover first party no-fault benefits for medical equipment provided to its assignor. Petitioner filed a request for Arbitration. An arbitrator designated by the American Arbitration Association (“AAA”) issued a decision April 12, 2004 with the date of mailing shown as April 26, 2004 whereby the claim was denied without prejudice pending a determination of the issue of employment by the Worker’s Compensation Board.

At issue before the Arbitrator was petitioner’s claim for reimbursement for medical supplies provided to treat its assignor for injuries sustained in an automobile accident on March 4, 2001. At the hearing, respondent, after failing to deny the claim or to make timely evidentiary submission, raised the question as to whether the assignor was working at the time of the accident. Respondent also sought to submit a police accident report. Both parties were given the opportunity to make a post-hearing submission in regards to whether good cause existed to permit respondent’s late submission. Respondent made the submission but petitioner did not.

Upon reviewing the documents submitted by petitioner in support of its claims and those submitted by respondent, the arbitrator determined that the workers’ compensation defense was a [*2]well recognized exception to the rule precluding defenses if not raised in a timely denial of claim. The arbitrator further determined that the evidence presented “at least minimal proof of the indicia of employment (citing Arvatz v. Empire Mutual Ins. Co., 171 AD2d 262 [1st Dept. , 1991] which held that upon proper showing, Worker’s Compensation Board and not arbitration is the proper forum for deciding the issue of whether the insured was injured in the course of employment).

Petitioner, thereafter filed a timely request for review by a Master Arbitrator alleging that the lower arbitrator’s decision was arbitrary, capricious, irrational and without a plausible basis.

In a decision dated September 20, 2004 and showing a mailing date of September 30, 2004, the Master Arbitrator upheld the lower arbitration decision finding that the arbitrator had a sufficient basis to deny the claim pending a determination of the employment issue by the Worker’s Compensation Board. The Master Arbitrator therefore determined that the lower decision had a rational basis and was neither arbitrary or capricious nor incorrect as a matter of law. The lower arbitration decision was affirmed.

Petitioner argues that the lower arbitrator erred in allowing respondent to raise at the hearing the defense that the assignor was working at the time of the accident where petitioner had established its prima facie case, i.e. proper submission of its bills and respondent had failed to timely deny the bills. Petitioner argues respondent was therefore precluded from raising that defense at the hearing.

In its Affirmation in Opposition and Notice o Motion to Dismiss the Petition, respondent argues that its defense that the assignor was injured while engaged in employment is a denial of coverage defense and therefore not precluded by the fact that it failed to timely deny the claim. Respondent further asserts that as issues of employment must first be decided by the Worker’s Compensation Board, the lower arbitrator acted properly in determining that it had presented sufficient proof to require that the claim be denied pending a determination of the issue by the Worker’s Compensation Board. Respondent further argues that the Master Arbitrator’s award affirming this decision was based upon a proper exercise of discretion and was grounded on a rational application of the law and the decision was neither arbitrary or capricious.

Judicial review of a Master Arbitrator’s award “is restricted, by the terms of the statute, to the grounds for review set forth in article seventy five’ of the CPLR, specifically § 7511 (Petrofsky v. Allstate Insurance Company, 54 NY2d 207 [1981]).

Section 7511 (6) sets forth the following grounds for vacating an award:

(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 conversion; 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 procedures of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect [*3]and without objection.

In cases of compulsory arbitration, such as no-fault claims, the court has held that CPLR Article 75 includes review of whether the award is supported by evidence or other basis in reason (Mount St. Mary’s Hosp. of Niagara Falls v. Catherwood, 26 NY2d 493, 508 [1970]); arbitrary and capricious (Caso v. Coffy, 41 NY2d 153, 158 [1976]) ; and whether the decision was rational or had a plausible basis (Caso v. Coffy, supra ).

Unlike the court, a Master Arbitrator in reviewing the award rendered by the lower arbitrator is not limited to the grounds set forth in CPLR § 7511 but may look to rules promulgated by the Superintendent of Insurance in 11 N.Y.C.R.R. 65.17 and developed by case law (see, Petrofsky v. Allstate Ins. Co., supra ; Mount St. Mary’s Hosp. of Niagara Falls v. Catherwood, supra ,; Caso v. Coffy, supra ,).

The role of the Master Arbitrator is to review the determination of the lower arbitrator to assure that the arbitrator reached his decision in a rational manner; and, that the decision was not arbitrary and capricious, or incorrect as a matter of law (Petrofsky v. Allstate Insurance Co., supra ).

A view of the arbitration award from both the lower and Master Arbitrator shows that there is no basis to vacate the award. Both arbitrators determined that the workers compensation defense was not precluded by respondent’s failure to timely deny the claim. This holding and thus the arbitrator’s award was based upon the resolution of factual and legal determinations reached after reviewing the evidence submitted; such a determination may not be set aside by this Court even were the court to disagree with those findings. The Master Arbitrator’s award therefore was neither arbitrary, capricious, irrational or without a substantial or plausible basis.

Accordingly, the petition is dismissed. Respondent’s motion to dismiss the petition is granted to that extent only.

This constitutes the decision and order of the Court.

DATED: December 16, 2005

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court