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June 5, 2018

Matter of Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C. (2018 NY Slip Op 03929)

https://www.beynensonlaw.com/case-law/matter-of-country-wide-ins-co-v-bay-needle-care-acupuncture-p-c-2018-ny-slipop-03929/

Court
Appellate Division, First Department
Decided
June 5, 2018
Citation
2018 NY Slip Op 03929 · 162 AD3d 407
Posture
Article 75 petition
Outcome
Provider prevailed
Later treatment
Contrasted (cf., but see) in 1 and followed in 4 later decisions (see Cited by)
Issues
Fraudulent incorporation (Mallela) CPLR article 75 (arbitration awards) Interest and attorney fees
Legal questions
Fraudulent incorporation (Mallela) (see the maps)
Cite as
Matter of Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C., 162 AD3d 407 (1st Dept 2018)

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.

The insurer's Mallela challenge failed because it presented no evidence that the provider was fraudulently incorporated. The Appellate Division, First Department, affirmed the judgment awarding reimbursement and dismissed the superseded judgment's appeal. Although the arbitrator required clear and convincing proof and the insurer urged a preponderance standard, vacatur was unwarranted under either standard. The court rejected the argument that insufficient explanation prevented meaningful review and found the master arbitrator's affirmance rational. Under 11 NYCRR 65-4.10 (j) (4), the court adjudicating an appeal from a master arbitration award fixes appellate attorney fees. The matter was remanded to Supreme Court to determine the provider's reasonable appellate fees, and the court declined to follow Valdan Acupuncture's different fee-calculation approach.

Reported in New York Official Reports at Matter of Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C. (2018 NY Slip Op 03929)

Matter of Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C.
2018 NY Slip Op 03929 [162 AD3d 407]
June 5, 2018
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, August 1, 2018

[*1]

 In the Matter of Country-Wide Insurance Company, Appellant,
v
Bay Needle Care Acupuncture, P.C., as Assignee of Rosa Corona, Respondent.

Thomas Torto, New York (Jason Levine of counsel), for appellant.

Gary Tsirelman, P.C., Brooklyn (Gary Tsirelman of counsel), for respondent.

Judgment, Supreme Court, New York County (Joan M. Kenney, J.), entered February 23, 2017, in favor of respondent, unanimously affirmed, without costs, and the matter is remanded for a determination of respondent’s reasonable attorney’s fees for this appeal. Appeal from judgment entered February 14, 2017, unanimously dismissed, without costs, as superseded by the appeal from the February 23, 2017 judgment.

Respondent commenced an arbitration against petitioner seeking reimbursement of bills for health care services it had rendered to an individual injured in a motor vehicle accident. Petitioner asserted a Mallela defense (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]), i.e., that it could withhold payment for the services because respondent was fraudulently incorporated. After a hearing, an arbitrator found that petitioner failed to meet its burden of providing clear and convincing evidence of fraudulent incorporation, and awarded respondent full reimbursement. The award was affirmed by the master arbitrator.

Petitioner argues that it was held to an incorrect standard of proof and that the correct standard is a preponderance of the evidence. However, the award is not subject to vacatur under either standard (see Country-Wide Ins. Co. v TC Acupuncture, P.C., 140 AD3d 643 [1st Dept 2016]; Nationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C., 155 AD3d 885, 886-887 [2d Dept 2017]). Petitioner failed to present any evidence that respondent was fraudulently incorporated.

We reject petitioner’s contention that the master arbitrator’s determination affirming the award was irrational because the arbitrator’s failure to set forth his reasons for rejecting petitioner’s Mallela defense precluded meaningful review of the award (see Matter of Guetta [Raxon Fabrics Corp.], 123 AD2d 40 [1st Dept 1987]; Matter of Nationwide Mut. Ins. Co. v Steiner, 227 AD2d 563 [2d Dept 1996]; see also Purpura v Bear Stearns Cos., 238 AD2d 216 [1st Dept 1997], lv denied 90 NY2d 806 [1997]). In any event, the master arbitrator’s determination, which considered the arbitrator’s familiarity with similar cases and past decisions on the issues presented, was rational.

Respondent is entitled to reasonable attorney’s fees for this appeal. Supreme Court has authority to award attorneys fees as this is an appeal from a master arbitration award pursuant to 11 NYCRR 65-4.10 (j) (4), which, in pertinent part, provides: “The attorney’s fee for services rendered in connection with . . . a court appeal from a master arbitration award and any further appeals, shall be fixed by the court adjudicating the matter” (see also Matter of GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017], recalling and vacating Matter of GEICO Ins. Co. v AAAMG Leasing Corp., 139 AD3d 947 [2d Dept 2016]). Accordingly, we remand the matter to Supreme Court for a determination of respondent’s reasonable attorney’s [*2]fees for this appeal. To the extent Country-Wide Ins. Co. v Valdan Acupuncture, P.C. (150 AD3d 560, 561 [1st Dept 2017]) takes a different approach to calculating attorneys’ fees, we decline to follow it. Concur—Renwick, J.P., Manzanet-Daniels, Mazzarelli, Gesmer, Oing, JJ.

Legal questions

A question 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: Insurer's proof of unlicensed ownership/control insufficient (rules on the question, but another ground decided the case)

Left standing an arbitration award rejecting the insurer's defense because the insurer presented no evidence of fraudulent incorporation, so the award survived under either a clear-and-convincing or preponderance standard.

  • Court of AppealsCt App 3
  • Appellate DivisionApp Div 5
  • Appellate TermApp Term 5
  • Trial courtsTrial 4
2019, Court of Appeals: 1 decision (1 Defense established)2005, Court of Appeals: 1 decision (1 Defense established)2025, Court of Appeals: 1 decision (1 Not a Mallela ground)2021, Appellate Division: 1 decision (1 Defense not established)2018, Appellate Division: 2 decisions (1 Defense not established, 1 Not a Mallela ground)2017, Appellate Division: 1 decision (1 Defense not established)2015, Appellate Division: 1 decision (1 Not a Mallela ground)2013, Appellate Term: 1 decision (1 Defense established)2008, Appellate Term: 1 decision (1 Defense not established)2006, Appellate Term: 2 decisions (1 Triable issue, 1 Not a Mallela ground)2007, Appellate Term: 1 decision (1 Triable issue)2020, Trial courts: 1 decision (1 Triable issue)2007, Trial courts: 1 decision (1 Not a Mallela ground)2006, Trial courts: 2 decisions (2 Defense established)This decision
20052010201520202025
Defense establishedTriable issueDefense not establishedNot a Mallela groundThis decisionCites it or cited by itCited or followedDeclined to follow, questioned, overruled or reversed

Of the 17 decisions on this question in the First Department courts and the Court of Appeals, 4 (this one included) are in the same category. 3 decisions in other departments that cite or are cited by this one are on the full map.

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)Fraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
  • Nationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C. (2017 NY Slip Op 08007)A nonphysician's guilty plea and forfeiture allegations did not establish that the providers were fraudulently incorporated.
  • Matter of GEICO Ins. Co. v AAAMG Leasing Corp. (2017 NY Slip Op 01552)A provider may recover an additional attorney's fee for an article 75 proceeding to confirm or vacate a master arbitration award.
  • Matter of GEICO Ins. Co. v AAAMG Leasing Corp. (2016 NY Slip Op 03879)A provider's attorney's fee for judicial review of a master arbitration award is fixed by the court under 11 NYCRR 65-4.10 (j) (4).
  • Country-Wide Ins. Co. v Valdan Acupuncture, P.C. (2017 NY Slip Op 04068) Declined to followThe insurer failed to establish grounds to vacate an award rejecting its fraudulent incorporation defense.

Cited by

A label shows how the later decision treated this one.

  • Matter of V.S. Care Acupuncture, P.C. v Country-Wide Ins. Co. (2019 NY Slip Op 07265) Contrasted (cf., but see)A master arbitrator may assess legal sufficiency but may not weigh evidence or make independent factual findings.
  • Matter of Country-Wide Ins. Co. v TC Acupuncture P.C. (2020 NY Slip Op 00048) FollowedA prevailing provider is entitled to court-fixed attorney fees for article 75 proceedings reviewing a master arbitration award and further appeals.
  • Matter of Country-Wide Ins. Co. v Bay Needle Acupuncture, P.C. (2018 NY Slip Op 08238) FollowedThe insurer's billing-fraud evidence did not establish a Mallela defense exempt from the 30-day denial deadline.
  • Matter of Country-Wide Ins. Co. v TC Acupuncture P.C. (2019 NY Slip Op 04087) FollowedAttorney fees for judicial review of a master arbitration award are fixed by the court under 11 NYCRR 65-4.10 (j) (4).
  • Matter of Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C. (2023 NY Slip Op 05094) FollowedThe provider's request for additional attorney's fees was denied because its lengthy delay was unexplained and its fees were undocumented.
  • Matter of Bay Needle Care Acupuncture v Country-Wide Ins. Co. (2019 NY Slip Op 07249)A master arbitrator exceeds the permitted review power by reweighing evidence of fraudulent incorporation and reaching a different factual conclusion.
  • Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co. (2019 NY Slip Op 07245)An arbitrator acts within discretionary authority by refusing to consider late submissions.

Similar decisions

  • Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co. (2019 NY Slip Op 07061)The provider's challenge to its arbitration attorney fee failed because it submitted no documentation of hours worked.
  • Matter of Country-Wide Ins. Co. v TC Acupuncture, P.C. (2021 NY Slip Op 01120)An alleged error in the burden of proof for a fraudulent incorporation defense does not alone warrant vacatur of an arbitration award.
  • Matter of John T. Mather Mem. Hosp. v American Tr. Ins. Co. (2026 NY Slip Op 01788)A proceeding to confirm a master arbitration award is a court appeal entitling the provider to reasonable attorney's fees.
  • New York Recovery PT, P.C. v American Tr. Ins. Co. (2025 NY Slip Op 25166)A provider may recover attorney's fees for confirming an overdue master arbitration award and for the ensuing appeal.
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