MVAIC v Astro Med. Care P.C. (2009 NY Slip Op 50509(U))

Reported in New York Official Reports at MVAIC v Astro Med. Care P.C. (2009 NY Slip Op 50509(U))

On or about September 7, 2005, George Layne was riding a bicycle when he was struck by a motor vehicle registered in Georgia and owned and operated by Princess Hurst. The police report lists the Hurst vehicle as being insured. On or about September 12, 2005, Layne submitted a Notice of Intent to Make a Claim with MVAIC. Due to the injuries he allegedly sustained as a result of the accident, Layne sought treatment from respondent Astro Medical Care, P.C. (Astro or respondent) between September 12, 2005 and December 22, 2005. For these services, Astro submitted bills to MVAIC in the amount of $3,929.69. MVAIC admits that it did not make any payments on these bills because, although requested, neither Astro nor Layne submitted proof that the Hurst vehicle was uninsured. Thereafter, Astro filed for arbitration against MVAIC with the American Arbitration Association. On April 17, 2008, an arbitration hearing was held before Ann L. Russo, Esq., wherein MVAIC contended that the thirty (30) day time requirement contained in the no-fault stature does not apply to it until after MVAIC had qualified Layne. On May 9, 2008, the arbitrator rendered an award against MVAIC, rejecting MVAIC’s “coverage argument based upon whether the injured person qualified for MVAIC benefits”. The arbitrator stated that MVAIC is subject to the same thirty (30) day pay or deny provision of the no-fault regulation that control all insurance companies doing business in New York State and that since MVAIC failed to deny the claim or comply with the verification protocol in order to toll the statutory time period, MVAIC’s coverage argument was untimely. MVAIC appealed to a Master Arbitrator, Victor Hershdorfer, Esq., arguing that the decision was arbitrary, capricious and irrational as a matter of law because the arbitrator precluded MVAIC from raising a coverage question. The Master Arbitrator affirmed the decision in his award dated August 28, 2008, stating that the award was not arbitrary or capricious and that the 30 day requirement does not depend on whether or not the injured party has first been qualified. MVAIC, which received a copy of the award on September 8, 2008, currently moves to vacate this award. [*2]

No opposition has been submitted.

The Appellate Division, in Shand v Aetna Ins. Co. (74 AD2d 442 [2d Dept., 1980]), held that all no-fault arbitration determinations are to be reviewed as if they were “compulsory arbitration” regardless of whether the review is requested by the insurance carrier, which is compelled to submit to arbitration, or the claimant, which is not compelled to submit to arbitration. Insofar as this arbitration under the no-fault insurance laws was compulsory as distinguished from consensual, judicial review of the arbitration award applies an arbitrary and capricious standard which includes whether the arbitrator “exceeded his power” pursuant to CPLR § 7511 [b][1][iii] and whether any rational basis whatsoever exists to support the arbitrator’s determination (see Motor Vehicle Acc. Indemnification Corp. v Aetna Cas. & Sur Co., 89 NY2d 214 [1996]; Cady v Aetna Life & Cas. Co., 96 AD2d 967 [3d Dept., 1983]).

The purpose of MVAIC is to pay bodily injury damages and no-fault benefits to “qualified” victims of motor vehicle accidents caused by uninsured motorists (see Insurance Law § 5201). A “qualified person” is defined by MVAIC, as “a resident of this state, other than an insured, or the owner of an uninsured motor vehicle and his spouse when a passenger in such vehicle …” (Insurance Law § 5202). Under these definitions, Layne meets these requirements and is a qualified person. As a condition precedent to the right to apply for payment, the qualified person must file a timely affidavit, pursuant to Insurance Law § 5208, providing MVAIC with a Notice of Intention to File a Claim. Here, Layne served a Notice of Intention to File a claim against MVAIC and there is no issue that it was untimely or insufficient.

As stated by the arbitrator, the Appellate Division has held that MVAIC is subject to the same thirty (30) day time requirement as is applicable to an insurer subject to Article 31 of the Insurance Law (see New York Medical Center of Queens v MVAIC, 12 AD3d 429 [2d Dept., 2004 ] lv denied 4 NY2d 705 [2005]) and must pay or deny a claim within thirty days of receipt of the billing or must extend the time by requesting verification (see 11 NYCRR 65-3.8[a][1]). Inasmuch as MVAIC admittedly never denied the claim within 30 days after its receipt and there is no showing that it properly sought to extend this time by timely requesting verification, it is precluded from raising most defenses (see New York Hosp. Med. Ctr. Of Queens v MVAIC, supra).

While MVAIC is precluded from raising most defenses, the Court of Appeals has stated that since a lack of coverage goes to the heart of whether a claim is legitimate, the defense of lack of coverage may be raised at any time (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]; see also A.B. Medical Services PLLC v MVAIC, 10 Misc 3d 145[A] [App Term, 2d & 11th Jud Dists, 2006]). As stated by the Appellate Division in Hauswirth v American Home Assur. Co. (244 AD2d 528 [2d Dept., 1977]), in order to recover MVAIC benefits, an injured party must be eligible for MVAIC benefits, which requires that the party not have any other available insurance covering its claim and that the accident is of the nature contemplated by MVAIC. Since respondent and Layne are aware of the identity of the owner [*3]and insurer of the adverse vehicle, respondent must first exhaust its remedies against them before seeking relief from MVAIC (see Hauswirth v American Home Assur. Co., supra; Rombom v MVAIC, 2008 WL 4712439 [App Term, 2d & 11th Jud Dists, 2008]; Complete Medical Services of NY, P.C. v MVAIC, 20 Misc 3d 137[A][App Term, 2d & 11th Jud Dists, 2008]).

Accordingly, the thirty day time requirement should not have precluded MVAIC from asserting a coverage defense and the failure of the arbitrator to consider such an argument was arbitrary and capricious (CPLR § 7511). Therefore the motion is granted, the arbitration award is vacated and the matter is remanded for a new hearing, at which time MVAIC shall be permitted to present evidence to show that Layne is not entitled to MVAIC benefits because there is other insurance available.

Dated: March 26, 2009________________________

J.S.C.