March 31, 2005

T.S. Med. P.C. v Country Wide Ins. Co. (2005 NY Slip Op 50581(U))


The relevant facts of the case include a medical provider, T.S. Medical P.C., being denied no-fault benefits by an insurance company, Country Wide Insurance Co. After filing for arbitration, the arbitration award denied the petitioner's claim and was then reviewed by a Master Arbitrator, who upheld the lower arbitration award. The main issue at hand was whether the Master Arbitrator's decision should be vacated, as the award did not have a rational basis and did not comport with established principles of law. The court decided that the Master Arbitrator's award should be vacated, as it did not have a rational basis and did not correctly apply the law. Therefore, the court granted the petitioner's motion and vacated the Master Arbitrator's award.

Reported in New York Official Reports at T.S. Med. P.C. v Country Wide Ins. Co. (2005 NY Slip Op 50581(U))

T.S. Med. P.C. v Country Wide Ins. Co. (2005 NY Slip Op 50581(U)) [*1]
T.S. Med. P.C. v Country Wide Ins. Co.
2005 NY Slip Op 50581(U)
Decided on March 31, 2005
Civil Court Of The City Of New York, Kings County
Spodek, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.
Decided on March 31, 2005

Civil Court of the City of New York, Kings County

T.S. Medical P.C. a/a/o XUE AL ZHENG, Petitioner,


Country Wide Insurance Company, Respondent.


Ellen M. Spodek, J.

Upon the foregoing papers, petitioner T.S. Medical P.C. moves for an order, pursuant to Article 75 of the CPLR, vacating a No-Fault Master Arbitration Award.

After petitioner was denied no-fault benefits, it filed a request for arbitration. The arbitration award that was rendered on March 23, 2004 denied petitioner’s claim. Petitioner then requested a review of the arbitration award by a Master Arbitrator. The case was reviewed and the Master Arbitrator upheld the lower arbitration award. This decision was rendered on or around July 22, 2004. This petition is filed less than ninety (90) days since receipt of the Master Arbitrator Award.

The Second Department holds “[w]hen a party to a controversy is compelled by statute to submit to arbitration—and thereby loses the right of initial resort to a judicial forum—the right to review the resulting arbitration award cannot in turn be overly limited in scope, without involving a due process issue. Thus the Court of Appeals has interpreted CPLR article 75 as requiring broader review when compulsory arbitration is in issue than when the matter has a consensual origin.” (Shand v Aetna Ins. Co., 74AD2d 442, 446 (2d Dept 1980); citing Furstenberg v Aetna Casualty & Surety Co., 49 NY2d 757 [1980]; Mounty St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 [*2]NY2d 493 [1970]; Caso v Cofey, 41 NY2d 153, 155 [1976]; 1 NY Jur 2d, Administrative Law §190). In the case at bar, petitioner chose to go to arbitration. Arbitration was only mandatory for the defendant thus a narrow review is required. Further, a master arbitrator’s award may be vacated if it is arbitrary and capricious, irrational or without a plausible basis. (Steinauer v. N.Y Central Mutual Fire Insurance Company, 707, N.Y.S.2d 706).

In it’s report, the arbitrator states that “Respondent’s denial for treatment in October 2001 is late and for those subsequent treatments the denial is improperly based on a nurse’s audit.” However, he concludes that the applicant had to prove medical necessity in it’s prima facie case. This position was upheld by the Master Arbitrator. It is well established that the burden is on the insurer to prove the lack of medical necessity and not on the insured to prove medical necessity in establishing their prima facie case. (Amaze Medical Supply Inc. v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U][App Term, 2d and 11th Jud Dists]; Damadian MRI In Elmhust, P.C. v Liberty Mutual Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U], [App Term, 9th and 10th Jud Dists]; see also A.B. Medical Services PLLC v Lumbermens Mutual Casualty Co., 4 Misc 3d 86, 87 [App Term, 2d and 11th Jud. Dists].)

The courts have consistently held that it is proper to “vacate the determinations of a master arbitrator who denied a petitioner payment for overdue no-fault benefits because it did not have rational basis.” (In the Matter of Pradip Das/N.Y. Medical Rehab P.C. v Allstate Insurance Company, 297 AD2d 321 (2nd Dept. 2002)). Clearly, in order for the decision of the Master Arbitrator to be rational it would have to comport with the established principles of law. The insurance regulations clearly enumerate the methods of review available to the Master Arbitrator including the ability to overturn an award that was “incorrect as a matter of law. “NYCRR 65.17 (a)(4). In this action, the Master Arbitrator had the power to correctly apply the law, but chose not to.

Accordingly, this Court grants the petitioner’s motion and finds that the Master Arbitrator’s award should be vacated.

The foregoing constitutes the decision and order of this court.

E N T E R,

Dated: March 31, 2005__________________

Hon. Ellen M. Spodek