June 3, 2019

Matter of Spartan Med. Supply v Liberty Mut. Ins. Co. (2019 NY Slip Op 50862(U))

https://www.beynensonlaw.com/case-law/matter-of-spartan-med-supply-v-liberty-mut-ins-co-2019-ny-slip-op50862u/

Court: District Court of Nassau County
Judge: Ignatius L. Muscarella, J.
Decided: June 3, 2019
Citation: 2019 NY Slip Op 50862(U)
Posture: Article 75 petition
Outcome: Insurer prevailed
Issues: CPLR article 75 (arbitration awards) Policy issues

Cite as

Matter of Spartan Med. Supply v Liberty Mut. Ins. Co., 2019 NY Slip Op 50862(U) (Dist Ct, Nassau County 2019)

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 master arbitrator's affirmance of a policy-exhaustion denial was rational despite conflicting appellate authority. The provider argued that exhaustion could not defeat its claim because the policy remained unexhausted when the insurer earlier denied the claim in good faith. Both arbitrators considered the split between the First and Second Departments concerning exhaustion and payment priority, and followed Harmonic Physical Therapy, P.C. v Praetorian Ins. Co. The District Court, Nassau County, found that choice rational and denied the provider's vacatur application under CPLR 7511 (b) (1) (iii). Judicial review did not permit vacatur for an asserted substantive legal error unless the award was so irrational as to require it. The court confirmed the master arbitration award under CPLR 7511 (e).

Reported in New York Official Reports at Matter of Spartan Med. Supply v Liberty Mut. Ins. Co. (2019 NY Slip Op 50862(U))

In the Matter of the Arbitration Between Spartan Medical Supply a/a/o Julio Pelaez, Petitioner(s),
against
Liberty Mutual Insurance Company, Respondent(s).

CV-002459-19

Attorneys for Plaintiffs: Economou & Economou, P.C., 85 Cold Spring Road, Suite 200, Syosset, NY 11791 (516) 682-0010

Attorneys for Defendants: Martyn and Martyn, 330 Old Country Road, Suite 211, Mineola, NY 11501 (516) 739-0329

Ignatius L. Muscarella, J.

The following papers have been considered by the Court on this special proceeding submitted April 12, 2019

Papers Numbered

Notice of Petition w/ annexed supporting papers 1
Affirmation in Opposition w/ annexed supporting papers 2
Reply Affirmation 3

Petitioner brings this proceeding seeking an order, pursuant to CPLR 7511(1), vacating the master arbitration award herein, dated November 14, 2018, which affirmed the lower arbitration award, dated August 10, 2018. Petitioner further requests that, upon such award being vacated, it be awarded the amount of $2,027.00, together with statutory interest from December 29, 2016, as well as, costs and attorneys fees.

Specifically, petitioner contends that the master arbitrator’s award was arbitrary, capricious and incorrect as a matter of law in upholding a denial of benefits defense premised upon exhaustion of policy limits notwithstanding that the policy was not exhausted at the time petitioner’s otherwise valid claim was earlier denied in good faith by respondent carrier.

New York public policy strongly favors arbitration (Hackett v Milbank, Tweed, Hadley & McCloy, 86 NY2d 146,155 [1995]; Maross Constr., Inc. v Central New York Regional Transp. Authority, 66 NY2d 341, 346 [1985]). Since the purpose of arbitration is to allow final, binding resolution of parties’ claims without resorting to the courts, the scope of review of an arbitration decision is extremely limited. “Moreover, courts are obligated to give deference to the decision of the arbitrator” (In re N.Y.C. Transit Authority v Transport Workers’ Union of America, Local [*2]100, AFL-CIO, 6 NY3d 332, 336 [2005]).

Judicial review of a master arbitrator’s award is restricted to the grounds set forth in CPLR 7511, except in those instances where the award is $5,000 or more (see Matter of Petrofsky (Allstate Ins. Co.), 54 NY2d 207, 210 [1981]). As applicable in this case, Section 7511(b)(1)(iii) of the CPLR allows the court to vacate an arbitration award upon the application of either party, if it finds that the arbitrator prejudiced the applicant’s right by exceeding the scope of his or her authority in making the award. In no-fault insurance cases, it is the role of the master arbitrator to review the lower arbitration award and determine whether it was made in a rational manner and that it was neither arbitrary nor capricious (see Allstate Ins. Co. v Keegan, 201 AD2d 724, 725 [2d Dept 1994]).

“A master arbitrator exceeds his statutory power by making his own factual determination, by reviewing factual and procedural errors committed during the course of the arbitration, by weighing the evidence, or by resolving issues such as the credibility of the witnesses (see Matter of Smith [(Fireman’s Ins. Co.) 55 NY2d 224 [1982]]” (Id.; see also Matter of Jasser v Allstate Ins. Co., 77 AD3d 751 [2d Dept 2010]). On the other hand, even if the master arbitrator’s decision vacates the lower arbitration award based upon the fact that the lower arbitrator made an error of law, this is within the scope of the master arbitrator’s review, and “the courts are limited in their further review of the master arbitrator’s resolution of that error of law, since we generally will not vacate an arbitrator’s award where the error claimed is the incorrect application of a rule of substantive law, unless it is so irrational as to require vacatur” (Matter of Smith (Firemen’s Ins. Co.) 55 NY2d at 232 [citations and internal quotations omitted] [bold type added]).

Here, there is no claim that the master arbitrator made his own factual determination. Rather petitioner’s contention that the master arbitrator’s decision to affirm the lower arbitration was “contrary to controlling law” (Petition at ¶ 10) is necessarily premised on the contention that, as such, it is “so irrational as to require vacatur” within the meaning of Matter of Smith (Firemen’s Ins. Co.), supra.

Where as here, both the arbitrator and the master arbitrator cited and considered the split between the First and Second Departments on the issue of policy exhaustion and priority of payment (compare Harmonic Physical Therapy, P.C. v Praetorian Ins. Co., 47 Misc 3d 137(A) [App Term 1st Dept [2015]; Alleviation Med. Servs., P.C. v. Allstate Ins. Co., 55 Misc 3d 44 [App Term 2d Dept [2017]), ultimately following the rationale of Harmonic, the master arbitrator’s award cannot be found to be irrational. As the master arbitrator did not exceed his authority in affirming the lower arbitration award, vacatur of that award is not warranted,

Accordingly, petitioner’s motion is denied in all respects, and the master arbitrator’s award is confirmed (CPLR 7511[e]; Matter of Mercury Cas. Co. v Healthmakers Med. Group, PC, 67 AD3d 1017 [2d Dept 2009]).

So Ordered.

Dated: June 3, 2019
Hon. Ignatius L. Muscarella
DISTRICT COURT JUDGE

Cited in this decision

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

Harmonic Physical Therapy, P.C. v Praetorian Ins. Co. (2015 NY Slip Op 50525(U)) FollowedAn insurer need not defer payment of other legitimate claims pending resolution of a claim it timely denied for lack of medical necessity.
Alleviation Med. Servs., P.C. v Allstate Ins. Co. (2017 NY Slip Op 27097)An insurer cannot establish policy exhaustion through payments made after it denied a fully verified claim.
Matter of Mercury Cas. Co. v Healthmakers Med. Group, P.C. (2009 NY Slip Op 08826)A court denying vacatur or modification of a no-fault arbitration award must confirm the award under CPLR 7511 (e).

Similar decisions

Matter of Global Liberty Ins. Co. v Professional Chiropractic Care P.C. (2015 NY Slip Op 50936(U))A rational master arbitration award is not subject to judicial vacatur for mere errors of substantive law.
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Acuhealth Acupuncture, P.C. v New York City Tr. Auth. (2016 NY Slip Op 50297(U))The provider failed to establish grounds to vacate an award denying reimbursement because the no-fault policy was exhausted.
American Tr. Ins. Co. v Marta Med. Supply, Corp (2023 NY Slip Op 50513(U))The insurer failed to establish grounds to vacate an award rejecting its causation and medical necessity defenses.
Matter of American Tr. Ins. Co. v Sovereign Med. Servs., P.C. (2026 NY Slip Op 03160)The master arbitrator's application of collateral estoppel to reject a verification defense was rational and supported by evidence.