December 10, 2015

Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C. (2015 NY Slip Op 09184)

https://www.beynensonlaw.com/case-law/matter-of-allstate-prop-cas-ins-co-v-new-way-massage-therapyp-c-2015-ny-slip-op-09184/

Court: Appellate Division, First Department
Decided: December 10, 2015
Citation: 2015 NY Slip Op 09184 · 134 AD3d 495
Posture: Article 75 petition
Outcome: Provider prevailed
Later treatment: Distinguished in 1 later decision (see Cited by)
Issues: Fraudulent incorporation (Mallela) CPLR article 75 (arbitration awards)
Legal questions: Fraudulent incorporation (Mallela) · Court review of arbitration awards (see the maps)

Cite as

Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C., 134 AD3d 495 (1st Dept 2015)

Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.

Summary

Editorial summary by Beynenson Law, not part of the court’s decision.

A provider's fee-sharing arrangement does not furnish a no-fault defense merely because it may constitute unprofessional conduct. The insurer petitioned to vacate a master arbitrator's award. The Appellate Division, First Department, affirmed the order denying vacatur and confirming the award, leaving the provider's award intact. The court left open whether the arrangement constituted unprofessional conduct under 8 NYCRR 29.1 (b) (4), concluding that the matter belonged solely to the appropriate state licensing board, and contrasted Mallela's defense concerning fraudulently incorporated enterprises.

Reported in New York Official Reports at Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C. (2015 NY Slip Op 09184)

Matter of Allstate Prop. & Cas. Ins. Co. v New Way Massage Therapy P.C.

2015 NY Slip Op 09184 [134 AD3d 495]

December 10, 2015

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, February 10, 2016

[*1]

In the Matter of Allstate Property and Casualty Insurance Company, Appellant,
v
New Way Massage Therapy P.C., as Assignee of Nancy Febus, Respondent.

Bruno, Gerbino & Soriano, LLP, Melville (Mitchell L. Kaufman of counsel), for appellant.

The Geller Law Group, P.C., Brooklyn (Abraham J. Meir of counsel), for respondent.

Order, Supreme Court, New York County (Cynthia S. Kern, J.), entered on or about April 2, 2014, which denied the petition to vacate the award of the master arbitrator, and confirmed the award, unanimously affirmed, with costs.

Whether or not the fee-sharing arrangement at issue constitutes unprofessional conduct (see 8 NYCRR 29.1 [b] [4]), it does not constitute a defense to a no-fault action (compare State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319 [2005] [“insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims”]). It is solely a matter for the appropriate state licensing board (see e.g. Necula v Glass, 231 AD2d 457 [1st Dept 1996]; see also H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co., 47 Misc 3d 1075, 1078 [Civ Ct, Queens County 2015]). Concur—Mazzarelli, J.P., Richter, Manzanet-Daniels and Kapnick, JJ. [Prior Case History: 2014 NY Slip Op 30874(U).]

Legal questions (2)

Questions of no-fault law this decision rules on, from our Legal Questions pages. Bars count the decisions on the question by year and court, coloured by category; circles are this decision and the decisions on the question it cites or that cite it. Point at a bar or circle for details. The categories and summaries are Beynenson Law’s classification, made by a language model and checked by a second reading.

Fraudulent incorporation (Mallela)

Open the full map

On the merits, when may a no-fault insurer withhold payment because unlicensed persons own or control the provider (Mallela)?

This decision: Alleged conduct legally cannot support the ineligibility defense

Held that a fee-sharing arrangement, even if unprofessional conduct, was not a defense to a no-fault claim, unlike fraudulent incorporation, but a matter for the licensing board, so the master arbitrator's award was confirmed.

Defense establishedTriable issueDefense not establishedNot a Mallela groundThis decisionCites it or cited by itCited or followedDistinguished or limited

Of the 17 decisions on this question in the First Department courts and the Court of Appeals, 5 (this one included) are in the same category. One decision in other departments that cites or is cited by this one is on the full map.

Court review of arbitration awards

Open the full map

When does a court vacate, modify or confirm a no-fault arbitrator’s or master arbitrator’s award under CPLR article 75?

This decision: No ground for vacatur or modification shown: the award is confirmed or left in place

Affirmed denial of the insurer's petition and confirmation of the master award because a fee-sharing arrangement, even if unprofessional conduct, is not a defense to a no-fault claim but a matter for the licensing board.

Award standsVacated: irrational/arbitraryVacated: exceeded powerRemanded, undecidedThis decision

Of the 55 decisions on this question in the First Department courts and the Court of Appeals, 34 (this one included) are in the same category.

Cited in this decision

A label shows how this decision treated the case it cites.

State Farm Mut. Auto. Ins. Co. v Mallela (2005 NY Slip Op 02416) Contrasted (cf., but see)Fraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
H & H Chiropractic Servs., P.C. v Metropolitan Prop. & Cas. Ins. Co. (2015 NY Slip Op 25132)Impermissible fee-splitting alone does not violate a licensing requirement or furnish a defense to a no-fault claim.

Cited by

A label shows how the later decision treated this one.

Andrew Carothers, M.D., P.C. v Progressive Ins. Co. (2019 NY Slip Op 04643) DistinguishedAn insurer need not prove common-law fraud to deny reimbursement to a medical corporation improperly controlled by nonphysicians.
Government Employees Ins. Co. v Mayzenberg (2025 NY Slip Op 06527)An insurer may not deny no-fault reimbursement for alleged professional misconduct short of ceding control to an unlicensed party.

Similar decisions

Matter of Country-Wide Ins. Co. v Bay Needle Acupuncture, P.C. (2018 NY Slip Op 08238)The insurer's billing-fraud evidence did not establish a Mallela defense exempt from the 30-day denial deadline.
Matter of Global Liberty Ins. Co. of N.Y. v North Shore Family Chiropractic, PC (2019 NY Slip Op 08951)The insurer failed to establish that the assignor was injured in the course of employment and eligible for workers' compensation.
Matter of Global Liberty Ins. Co. v Professional Chiropractic Care, P.C. (2016 NY Slip Op 04156)A master arbitrator's award was irrational because it ignored the coverage effect of the assignor's failure to attend duly scheduled IMEs. The insurer presented authority establishing that the IME nonappearances rendered the no-fault policy void ab initio.
Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C. (2017 NY Slip Op 01833)An insurer preserves a fee-schedule defense by checking box 18 on the NF-10 denial form to assert noncompliance with the fee schedule.
Country-Wide Ins. Co. v Valdan Acupuncture, P.C. (2017 NY Slip Op 04068)The insurer failed to establish grounds to vacate an award rejecting its fraudulent incorporation defense.