American Transit Insurance Company, Petitioner, against Nexray Medical Imaging PC D/B/A Soul Radiology, A/A/O Carlos Guzman, Respondent.

Index No. 533041/2022

Larkin Farrell LLC, New York City (David Fair of counsel), for petitioner.

Roman Kravchenko, Melville, for Respondent.

Aaron D. Maslow, J.

The following numbered papers were read on this petition and cross-petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A – Arbitration Award (NYSCEF Doc No. 3)
Exhibit B – Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C — Respondent’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D — Petitioner’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 12)
Notice of Cross-Petition (NYSCEF Doc No. 13)
Cross-Petition (NYSCEF Doc No. 14)^[FN1]

Issues Presented

Should a No-Fault arbitration award be sustained where the insurer denied payment on the ground that there was a fact or founded belief that health services were unrelated to the motor vehicle accident but the insurer failed to submit an explanatory brief, witness statements, medical records, or an expert affidavit to support its defense?

Is it the role of a No-Fault hearing arbitrator to peruse a transcript of an examination under oath for the purpose of locating testimony to support such a defense, in the absence of the insurer’s highlighting the specific substantiating testimony?

Background

Petitioner American Transit Insurance Company (“ATIC”) commenced this CPLR Article 75 proceeding by notice of petition, seeking an order and judgment vacating a No-Fault Insurance master arbitration award of Victor J. D’Ammora, Esq. (dated September 8, 2022), which affirmed the arbitration award of Kihyun Kim, Esq. (dated June 4, 2022) granting Respondent Nexray Medical Imaging PC’s (“Nexray”) claim for No-Fault insurance [*2]compensation for health service expenses.^[FN2] ,^[FN3] Arbitrator Kim awarded $878.67 to Nexray as compensation for performing a left knee MRI on Carlos Guzman, its assignor ^[FN4] (“Assignor”), who claimed to have been injured in a motor vehicle accident on September 20, 2019. (NYSCEF Doc Nos. 2, Notice of Petition; 1, Petition.)

Respondent Nexray has opposed ATIC’s petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $878.67 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements (NYSCEF Doc No. 13, Notice of Cross-Petition; 14, Cross-Petition).

The petition and cross-petition were scheduled for oral argument on May 19, 2023, before this Court. Prior thereto, in accordance with IAS Part 2 Rules, the parties were notified that the matter would be determined on the submissions.

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association (“AAA”), which assigned Case No. 17-21-1191-8028 ^[FN5] to it. The AAA has been designated by the New York State Department of Financial Services to coordinate the mandatory arbitration provisions of Insurance Law § 5106 [b], which provides:

Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party [“No-Fault insurance”] benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.

Insurance Law article 51 provides for the payment of basic economic loss incurred by persons injured in motor vehicle accidents. Included within basic economic loss are first-party benefits for medical and other professional health services.^[FN6] First-party benefits are more commonly known as “No-Fault benefits.”^[FN7]

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations were promulgated by the Superintendent of Insurance (presently Superintendent of Financial Services). They are contained at 11 NYCRR Part 65. Said part is subdivided into five subparts which encompass the following topics: prescribed insurance policy endorsements, rights and liabilities of self-insurers, claims for benefits, arbitration, and unauthorized providers of health services. Part 65 is also known as Insurance Regulation 68.

Generally, the claims process for health service bills ^[FN8] for No-Fault compensation begins with the submission by a health service provider of a claim form (usually, but not always, a Form NF-3 verification of treatment by attending physician or other provider of health service).^[FN9] Besides providing information regarding the injured person, diagnoses, projected treatment, etc., [*3]the claim form includes a bill for services performed. The claim form can be submitted directly by the injured person to the No-Fault insurer but over many decades a practice developed by which the health service providers submit the claim forms. As noted in footnote 4, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN10] ,^[FN11] The insurer must either pay or deny the bill within 30 days, or seek additional verification within 15 business days. If it denies payment, it must issue a Form NF-10 denial of claim ^[FN12] identifying why the bill was not paid. (See Insurance Law § 5106 [a]; 11 NYCRR 65-3.5 [b]; Viviane Etienne Medical Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 505 [2015]; New York & Presbyterian Hospital v Progressive Casualty Ins. Co., 5 AD3d 568, 569-570 [2d Dept 2004]). The 30-day deadline does not apply to situations where the insurer claims that health services were not related to the subject motor vehicle accident (see Central Gen. Hosp. v. Chubb Group, 90 NY2d 195 [1997]).

The record evidence submitted in this Article 75 proceeding revealed that the underlying arbitration involved one Form NF-3 claim form (bill) submitted by Nexray to ATIC for payment. It was in the amount of $878.67 and it covered a left knee MRI of March 6, 2020. This was in accordance with the procedure outlined in the previous paragraph for the submission of claims for No-Fault compensation. After requesting additional verification, and receiving it on June 19, 2020, ATIC issued a Form NF-10 denial of claim on July 13, 2020.

The denial of claim asserted: “Based on American Transit’s investigation and EUO [examination under oath] testimony conducted on 6/17/20, American Transit is asserting a lack of coverage, as it has established the ‘fact or founded belief’ that the claimant’s treated condition was unrelated to the motor vehicle accident. The eligible injured person failed to establish that the alleged injuries were causally related to the motor vehicle accident.” (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief, at 4 ^[FN13] ). A fee defense was also asserted but not pursued in arbitration.

Arbitrator Kihyun Kim’s Award

The record evidence reveals further that on May 5, 2002, Arbitrator Kihyun Kim conducted a hearing at which Alexander Mun, Esq., from Russell Friedman & Associates LLP, appeared for Nexray, and Helen Cohen, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).

In his award, Arbitrator Kim stated that the hearing documents were contained in the [*4]AAA’s ADR Center ^[FN14] . ATIC conceded that the fee charged by Nexray was consistent with the applicable fee schedule. (Id. at numbered p 2.) The only issue in the case was “whether [ATIC] established its lack of coverage defense” (id. at numbered p 1).

In support of its claim that it established the fact or founded belief that Assignor’s treated condition was unrelated to the subject motor vehicle accident, ATIC’s counsel maintained that Assignor’s EUO “testimony revealed that the accident was a low impact condition, and that the scope and amount of treatment was disproportionate to the nature of the accident. She noted, among other things[,] that the Assignor did not go to the hospital and was not treated at the scene. Counsel further advised that Applicant’s [Nexray] owner has been indicted for his participation in a no fault fraud scheme involving Applicant.” (Id. at numbered p 4.) In terms of evidence, ATIC relied on “a Report of Motor Vehicle Accident – MV104; the Assignor’s NF-2 [application for No-Fault benefits]; the EUO scheduling letters; and the transcript of the Examination Under Oath of the Assignor, dated June 17, 2020” (id.).

Nexray’s counsel argued that ATIC “failed to upload sufficient proof to the record to establish its defense” (id.).

Arbitrator Kim reviewed case law pertaining to No-Fault insurers’ defense that a purported accident was not a covered event because there was a fact or founded belief that a condition and/or treatment was not proximately related to it (id. at numbered pp 2-3):

• Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]: The initial burden is on the insurer to come forward with proof establishing by “fact or founded belief” that the claimed injuries have no nexus to the accident.

• Mt. Sinai Hosp. v Triboro Coach Inc., 263 AD2d 11 [2d Dept. 1999]: Causation is presumed since it would not be reasonable to insist that an applicant must prove as a threshold matter that the patient’s condition was caused by the automobile accident; when alleging a lack of coverage defense, the insurer bears the burden of coming forward with admissible evidence of the fact of lack of coverage or of the foundation for its belief that there is no coverage.

• Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13 [2d Dept. 2009]: This defense often involves a fact pattern which calls for the insurer to present evidence by a medical expert who is qualified to render an opinion on causality.

• A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 822 [Civ Ct, Kings County 2005]: When arguing fraud as a defense, the insurer bears the burden of presenting sufficient evidence of the fact of fraud or of the foundation for its belief that fraud occurred; besides medical evidence an affidavit by a special investigator can suffice; if the insurer carries its burden then the insured must rebut it or succumb.

• A.B. Med. Servs. PLLC v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept, 9th & 10th [*5]Jud Dists 2002]: An insurer’s founded belief cannot be based upon unsubstantiated hypotheses and suppositions.

Applying the law to the evidence presented to him, Arbitrator Kim made the following findings (NYSCEF Doc No. 3, Arbitration Award, at numbered p 4):

I find that Respondent failed to establish its lack of coverage/causation defense. I find that there is insufficient credible evidence in the record to support a founded belief that, “the claimant’s treated condition was unrelated to the motor vehicle accident.” Respondent did not upload any explanatory brief, any witness statements, any medical records, any expert affidavit regarding causation, any SIU affidavit discussing Respondent’s investigation or explaining how or why Respondent’s determination was made, or any other actual proof to support and substantiate its defense, other than the EUO transcript of the Assignor, and the MV-104, Report of Motor Vehicle Accident. I have carefully review[ed] the EUO transcript of the Assignor, as well as the EUO transcript of the other claimant/passenger in the linked case, and I find it unclear as to what specific testimony Respondent believes adequately supports its assertions/defense and how Respondent made the leap that the Assignor’s treated condition was unrelated to the motor vehicle accident. While counsel asserted that the accident was not significant and that the asserted injuries were disproportionate to the low impact nature of the accident, I do not[ ] believe that the testimonial evidence alone was sufficient to reach such conclusion, particularly without the presentation of some actual medical evidence and/or expert opinion. With respect to the asserted indictment of Applicant’s owner, Respondent did not present any actual evidence of any indictment nor any evidence that any such indictment related to the subject accident, the claimants and/or claims at issue in this proceeding. If Respondent’s investigation was broader than what was presented herein, then Respondent should have uploaded such supporting evidence to the record herein. In sum, only limited evidence was uploaded to the record and on this record, the evidence submitted to the record in this case does not, in my view, make out a prima facie case in support of Respondent’s asserted defense. Based on the totality of the evidence in the record, Respondent has failed to meet its initial burden and its denial cannot be sustained. Accordingly, Applicant is entitled to reimbursement in the amount of $878.67. . . .

In essence, Arbitrator Kim held that there was a lack of evidence to support ATIC’s position that it established the fact or founded belief that Assignor’s condition and treatment were unrelated to the subject accident.

Arbitrator Kim awarded the $878.67 principal billed. He also awarded statutory interest of 2% per month, an attorney’s fee, and return of the $40 filing fee (id. at numbered pp 5-6; see 11 NYCRR 65-4.5 [s]).

Master Arbitrator Victor J. D’Ammora’s Award

ATIC filed for master arbitration to appeal Arbitrator Kim’s award. It argued that the latter’s award was irrational (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master [*6]Arbitration Brief, at pp 70-79).

Master Arbitrator D’Ammora held that while a hearing arbitrator’s award can be reversed if it is incorrect as a matter of law, a master arbitrator exceeds his statutory power by making his own factual determination, reviewing factual and procedural errors committed during the course of the arbitration, weighing the evidence, or resolving credibility issues (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2, citing 11 NYCRR 65-4.10 [a] [4]) and Mott v State Farm Ins. Co., 55 NY2d 224 [1982]).

He noted that Arbitrator Kim reached his determination after reviewing the submitted evidence—that there was insufficient evidence to sustain a lack of coverage defense. “Arbitrator Kim’s conclusions and findings were in his discretion and interpretation of the evidence. It cannot be regarded as reversible error within this Master Arbitrator’s purview. This Master Arbitrator cannot conduct a de novo review and substitute my interpretation and view of the evidence for that of Arbitrator Kim. In particular, as here, Arbitrator Kim’s determination is rational and supported by the record.” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2.) The award was affirmed along with a $195.00 attorney’s fee (id. at numbered pp 3-4).

ATIC’s Petition to Vacate

ATIC’s CPLR Article 75 petition to vacate stated that the claim was denied based upon ATIC’s investigation and the EUO testimony—that there was a fact or founded belief that Assignor’s treated condition was unrelated to the motor vehicle accident and that Assignor failed to establish that the alleged injuries were causally related to the accident (NYSCEF Doc No. 1, Petition, ¶ 26). “The arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (id. ¶ 35), in that “Arbitrator Kihyun Kim failed to follow well settled law” (id. ¶ 40). The petition proceeded to argue that ATIC needed only to show a founded belief to support its defense (id. ¶ 40), and that circumstantial evidence could support it (id. ¶ 47). “[ATIC] offered evidence to establish the ‘founded belief’ of fraud. [Nexray] did not offer any evidence to rebut that showing. The arbitrator ruled for [Nexray] despite the fact that [ATIC] offered evidence of a founded belief and [Nexray] failed to offer any evidence to rebut that showing. In doing so the arbitrator failed to follow well settled law.”

The petition concluded by asserting that Arbitrator Kim’s decision was “arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 49). ATIC was “entitled to a declaration that the arbitration decisions of Kihyun Kim, Esq. and Vic D’Ammora, Esq. in the matter designated AAA number 99-21-1191-8208 have no force or effect” (id. ¶ 50).

Nexray’s Cross-Petition to Confirm

Nexray argued in its cross-petition most significantly that the arbitration awards had to be confirmed if they were supported by evidence or other basis in reason (citing Matter of Petrofksy v Allstate Ins. Co., 54 NY2d 207 [1981]); rational (citing Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]); and not inapposite to settled law (citing Matter of Global Liberty Ins. Co. v Therapeutic Physical Therapy, P.C., 148 AD3d 502 [1st Dept 2017]). ATIC did not meet its burden of establishing that the master arbitration award did [*7]not meet this criteria. (See generally NYSCEF Doc No. 14, Cross-Petition ¶¶ 21-29.)

Besides seeking confirmation of the hearing arbitration award which was affirmed by the master arbitrator, Nexray sought interest, attorney’s fees, return of the arbitration filing fee, and costs and disbursements (NYSCEF Doc No. 13, Notice of Cross-Petition, at numbered p 1). Notably, Nexray did not submit any calculation of an attorney’s fee for its opposition to the Article 75 petition and maintenance of the cross-petition.

No-Fault Insurance Arbitration

When the No-Fault Law was first enacted by the Legislature in Chapter 13 of the Laws of 1973 to take effect February 1, 1974, § 675 of the Insurance Law was added. In subdivision 2 thereof, insurers were required to provide claimants with an arbitration option for disputes involving liability for first-party benefits. This provision was amended in Chapter 892 of the Laws of 1977, when several changes were made to the 1973 version.^[FN15] The provision regarding arbitration in § 675 was amended to add the following language:

An award by an arbitrator may be vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent [of insurance]. The grounds for vacating or modifying an arbitrator’s decision by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The decision of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute an action in a court of competent jurisdiction to adjudicate the dispute de novo.^[FN16]

The provisions regarding No-Fault insurance arbitration remained in the recodification of the Insurance Law enacted in Chapters 367 and 805 of the Laws of 1984. The arbitration provisions were set forth in § 5106, and subdivisions (b) and (c) now read as follows:

(b) Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent. Such simplified procedures shall include an expedited [*8]eligibility hearing option, when required, to designate the insurer for first party benefits pursuant to subsection (d) of this section. The expedited eligibility hearing option shall be a forum for eligibility disputes only, and shall not include the submission of any particular bill, payment or claim for any specific benefit for adjudication, nor shall it consider any other defense to payment.

(c) An award by an arbitrator shall be binding except where vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent. The grounds for vacating or modifying an arbitrator’s award by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.

Insofar as is here relevant, the No-Fault Insurance Regulations promulgated by the Superintendent of Insurance provided that a master arbitrator may vacate or modify a hearing arbitrator’s award where it “was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65.18 [a] [4]). This regulatory language was carried over into the revised Regulations promulgated in 2002, in 11 NYCRR 65-4.10 (a) (4).^[FN17] A master arbitrator may also vacate or modify a hearing arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN18]

Discussion

The burden of proof on the issue of whether a motor vehicle accident caused a medical condition for which a person was treated and the No-Fault insurer was billed falls upon the insurer if the latter asserts a lack of nexus between the accident and the condition; the underlying purpose of the No-Fault Law would be undermined if a claimant health care provider were required to prove as a threshold matter that a patient’s condition was caused by the accident and unrelated to his or her entire medical history (see Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13, 18-19 [2d Dept 2009]). An expert’s affirmation is needed to provide a factual foundation for an insurance carrier’s good faith belief that an alleged injury did not arise out of an insured accident; speculation or wishful thinking does not suffice (see Mount Sinai Hosp. v Triboro Coach Inc., 263 AD2d 11 [2d Dept. 1999]).

The courts have also recognized that a prima facie case of lack of coverage may be established by other than a medical expert. This can include a biomechanical engineer’s report (e.g., American Tr. Ins. Co. v AAAMG Leasing Corp., 2020 NY Slip Op 31811[U] [Sup Ct, NY County 2020]); Liberty Mut. Ins. Co. v Hayes, 2018 NY Slip Op 31283[U] [Sup Ct, NY County 2018]; a special investigator’s affidavit (e.g., A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 143[A], 2004 NY Slip Op 51104[U] [App Term, 2d Dept, 2nd & 11th Dists 2004]); or a low-impact study (e.g., A.B. Med. Servs. PLLC v New York Cent. Mut. Fire Ins. Co., 12 Misc 3d 140[A], 2006 NY Slip Op 51347[U] [App Term, 2d Dept, 2d & 11th Dists 2006]).

A claimant’s [health service provider] prima facie showing establishes a presumption of coverage, and the burden of going forward on the issue of coverage falls upon the insurer; once the insurer comes forward with proof for its belief that the claimed loss was a staged accident, the burden shifts to the claimant to prove coverage by a preponderance of the evidence (see New York Massage Therapy P.C. v State Farm Mut. Ins. Co., 14 Misc 3d 1231[A], 2006 NY Slip Op 52573[U] [Civ Ct, Kings County 2006]). The insurer bears the burden of coming forward with evidence of the fact of fraud or of the foundation for its belief that fraud occurred, but the burden of persuasion is on the applicant to prove that the loss was a covered event under the policy (see A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 822 [Civ Ct, Kings County 2005]). At trial, the ultimate burden of proof on issues of causal relationship of injuries to the [*9]accident in question lies with the plaintiff (see Dayan v Allstate Ins. Co., 49 Misc 3d 151[A], 2015 NY Slip Op 51751[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2015]).

The insurer must demonstrate that it has a founded basis for believing that the collision was intentionally caused but the burden of persuasion remains on the claimant, who must prove its case by a fair preponderance of the credible evidence; if the evidence weighs against the claimant or it is so evenly balanced that it is impossible to determine the matter, then judgment must be given for the insurer (see V.S. Med. Servs., P.C. v Allstate Ins. Co., 11 Misc 3d 334, 342-343 [Civ Ct, Kings County 2006], affd 25 Misc 3d 39 (App Term, 2d Dept, 2d, 11th & 13th Dists 2009]).

V.S. Med. Servs. provided an example of the evidence which demonstrated that the insurer established a founded belief that injuries did not arise from a covered accident. In that case, the insurer presented credible evidence that the subject vehicle was an older model, that the collision took place shortly after insurance was procured, that insurance on the vehicle was cancelled after the subject collision and once before after a collision, that there were several passengers in the vehicle, that no occupant underwent emergency room treatment, that there were material discrepancies in EUO testimony among the occupants as to the number and genders of people in the vehicle, where they were going, and whether the driver knew the vehicle owner, and that the vehicle sustained only a small scratch—that the collision was staged because at least one driver intended to make contact. The burden then shifted to the claimant health service provider; the latter having failed to produce the alleged injured persons or any witnesses to the collision, it failed to carry its burden of proving that the collision was a covered accident. (V.S. Med. Servs., P.C., 11 Misc 3d at 343-344 [“defendant’s proof, which plaintiff failed to rebut, established by a preponderance of the evidence its defense of lack of coverage”].)

Very rarely will a case contain a Perry Mason-like moment where there is a confession that an assignor injured person’s injuries were not the result of the claimed accident. Of necessity an insurer’s founded belief that a collision was staged will be established by circumstantial evidence. “Circumstances insignificant in themselves may acquire probative force as links in the chain of circumstantial proof.” (A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 7 Misc 3d at 827-828 [Civ Ct, Kings County 2005], quoting Van Iderstine Co. v Barnet Leather Co., 242 NY 425, 435 [1926]). For example, where a vehicle was involved in several collisions within a short period of time after the insurer issued an insurance policy, this may satisfy the need for a founded belief necessary to support a denial grounded in asserted fraud (e.g., State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490 [2d Dept 2003]). Where a driver rear ends another vehicle two days after taking out insurance, and again less than sixty days after the first collision, and his written and recorded statements contain discrepancies, this constitutes compelling circumstantial evidence that there was an intentional collision staged for the purpose of insurance fraud (e.g., National Grange Mut. Ins. Co. v Vitebskaya, 1 Misc 3d 774 [Sup Ct, Kings County 2003]).

Notwithstanding the foregoing, unsupported conclusions and suspicions, as well as unsubstantiated hypotheses and suppositions are insufficient to raise a triable issue of alleged fraud (see A.B. Medical Services PLLC v Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d Dept, 9th & 10th Dists 2002]). To create a trial issue of fraud or lack of coverage, the specific facts must be alleged with particularity (see Vital Points Acupuncture, P.C. v. New York Cent. Mut. Fire Ins. Co., 6 Misc 3d 1031[A], 2005 NY Slip Op 50267[U] [Civ Ct, Kings County 2005]).

Clearly, Arbitrator Kim did not misapply well-settled law in the arbitration at bar. As [*10]indicated above (supra at 5), he noted case law governing the adjudication of insurer defenses that there was a fact or founded belief that a condition and/or treatment was not proximately related to an alleged accident. What ATIC is challenging as a misapplication of settled law is Arbitrator Kim’s finding that its evidence did not meet the evidentiary minimum to make out its initial burden of proof. That is an issue of fact—not an issue of law.

The provision in 11 NYCRR 65-4.10 [a] [4] that a No-Fault insurance arbitration award may be vacated where it was incorrect as a matter of law refers to substantive issues—not issues of fact (see American Transit Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039, *11 [Sup Ct, Kings County 2023]).

ATIC did not submit witness statements, supporting medical records, or a medical or other expert affidavit or report. It did not submit evidence of an indictment of the owner of Nexray, which it mentioned, the argument inferentially being that the alleged accident was fraudulent and the MRI unnecessary. ATIC merely relied on conclusory assertions of counsel which focused in large part on Assignor’s EUO testimony. ATIC did not even submit a brief to Arbitrator Kim summarizing what EUO testimony supported its position. In essence, it appears that ATIC expected the arbitrator himself to peruse the transcript to locate questionable responses by Assignor which might be indicative that something was awry. This is not the role of the arbitrator.

This Court notes that most No-Fault insurance arbitrations organized by the AAA are scheduled at 15-minute intervals.^[FN19] Usually the only evidence iare the documentary submissions of the parties. In some instances where medical necessity is an issue a treating health provider or a peer review doctor may be called as a witness by the applicant or respondent respectively. In rare instances, an injured person may testify, especially if lost wages is an issue. The testimony of an SIU investigator might be offered where the respondent insurer asserts a contrived accident.

Here, it is not exactly clear whether ATIC’s defenses of lack of coverage and lack of a relationship between the accident and the treated condition were premised on a belief that the accident was staged, that Nexray performed the MRI without regard to whether Assignor actually sustained injuries in the accident, or that Assignor indeed had a condition for which an MRI was appropriate but the condition was unrelated to the accident.

At times a No-Fault arbitration respondent insurer will call the arbitrator’s attention to the fact that a transcript of the examination under oath taken of the assignor was included in its documentary submission and it alone supports the defense. Relying on this poses litigation risks for the insurer if the lack of coverage is premised upon an underlying theory that the health service was performed without regard to whether the injured person-assignor actually sustained injuries in the accident or that the injured person-assignor indeed had a condition for which the health service was appropriate but the condition was unrelated to the accident; such an underlying theory really necessitates expert medical opinion evidence and an EUO transcript likely will not suffice. Some insurers may rely on a biomechanical expert report which might be probative or not, depending on the arbitrator’s assessment of it.

Situations where the lack of coverage defense is predicated on an underlying theory that the accident was staged calls for proper advocacy by the respondent No-Fault insurer. [*11]Submitting a transcript alone without a brief, affidavit, SIU report, or counsel specifically detailing the testimony supporting its position unfairly places the hearing arbitrator in a quandary. The arbitrator has two options: (1) find that the respondent insurer failed to identify the supporting testimony, or (2) review the transcript himself and determine if any of its contents supports the fact or founded belief that there was a lack of causation due to a staged accident, i.e., that fraud took place.

The arbitrator must remain objective and impartial. It is unfair for a respondent insurer to place the arbitrator in the role of evidence explorer on its behalf. The arbitrator is not an investigator or detective. To argue to an arbitrator, “Our defense relies on the EUO testimony,” or offer a similar statement, without any identification of the transcript components being relied on is improper advocacy, and an arbitrator should decline the implied invitation to search the transcript to locate testimony supporting the respondent’s defense. It is unknown whether ATIC’s counsel made such a statement to Arbitrator Kim. From his award, it is evident that nothing was offered by way of specification as to particular testimony in one or more EUO transcripts. Arbitrator Kim did write that he “carefully review[ed] the EUO transcript of the Assignor, as well as the EUO transcript of the other claimant/passenger in the linked case, and I find it unclear as to what specific testimony Respondent believes adequately supports its assertions/defense and how Respondent made the leap that the Assignor’s treated condition was unrelated to the motor vehicle accident (NYSCEF Doc No. 3, Arbitration Award, at numbered p 4).” This burden of reviewing the transcript should not have been placed on Arbitrator Kim. And if ATIC asked him to perform this task, it should not have done so. Rather, ATIC should have submitted a brief, affidavit, or investigator’s report identifying by page and line the portions of the testimony it claims were inculpatory and thus made out its defense; or counsel at the hearing should have done so. Preferably the specification should be in writing as a document included in the arbitration submission.

If a No-Fault arbitration hearing respondent (the insurer) fails to adequately support its defense of lack of causation premised under any of the underlying theories — but especially one claiming that no true accident took place — because it failed to identify specific EUO testimony, it lacks a legal basis to challenge the hearing arbitrator’s award on appeal, either before the master arbitrator or the Article 75 judge.

The foregoing perspectives of this Court are in harmony with the expressions of sister courts. “While plaintiff [insurer] submits the transcripts of the claimants’ EUOs, it does not cite to any line or page of the claimants’ testimony to support such claims. The Court should not have to undertake the toilsome task of reading through pages and pages of testimony in order to ascertain which portions support plaintiff’s supposed contentions” that there exists a founded belief that the alleged injuries did not arise from a covered accident. (Unitrin Advantage Ins. Co. v Advanced Orthopedics and Joint Preservation P.C., 2018 NY Slip Op 33296[U] *6-7 [Sup Ct, NY County 2018]). Similarly, it has been held, “It is not the duty of the arbiter, be it an arbitrator or Court, to parse though hundreds of pages of exhibits to make out a claim or defense for a party (see e.g. Barsella v. City of New York, 82 AD2d 747, 748 [1st Dept 1981]); such duty belongs to counsel, as advocate. Failing to elucidate evidence in support of a party’s claim is not error of the arbitrator but is rather error of counsel, and such failure does not render an arbitrator’s award arbitrary and capricious [citation omitted].” Country-Wide Ins. Co. v M El Sayed Physical Therapy, P.C., 2022 NY Slip Op 31874[U] [Sup Ct, NY County 2022]).

There being a paucity of evidence to support ATIC’s defense of a fact or founded belief [*12]that Assignor’s treated condition was unrelated to the alleged motor vehicle accident, Arbitrator Kim’s factual determination against ATIC was eminently reasonable.

Lower and master arbitration awards were supported by a reasonable hypothesis and were not contrary to “fairly described settled law” when a biomechanical report was rejected by the lower arbitrator, who found as follows: “I have reviewed the EUO transcript in its entirety and I do not find sufficient evidence within the EIP’s testimony that would give rise to establishing a basis for Respondent’s denial. As for the opinion of the Respondent’s accident reconstruction expert, I find it is insufficient to establish that the EIP’s injuries were not causally related to the underlying accident. Unless an injury for which an EIP is treated is so clearly unrelated to the biomechanics of a motor vehicle accident, a low-impact study (standing alone without any accompanying medical evidence—which does not explain how the EIP’s injuries are causally incompatible with the subject accident) does not suffice to prove prima facie that the injuries were not causally related to the accident. Bronx Radiology, P.C. v. New York Cent. Mutual Fire Ins. Co., 17 Misc 3d 97, 847 N.Y.S.2d 313 (App. Term 1st Dept. 2007). [¶] In this case, I find the Respondent has not submitted sufficient evidence to establish its defense that the treatment was not causally related to the MVA.” (Matter of Am. Tr. Ins. Co. v North Shore Family Chiropractic, P.C., 2022 NY Slip Op 32663[U] *1-2 [Sup Ct, Kings County 2022]). The decision of Hon. Justice Peter P. Sweeney in the case found that “the lower and master arbitration awards were supported by a reasonable hypothesis’ and [were] not contrary to what could be fairly described as settled law. The determinations of the master and lower arbitrators had evidentiary support and a rational basis. (Id. at *3.) So too did Arbitrator Kim’s award.

Since the instant Article 75 proceeding to vacate is one where vacatur of the master arbitration award is sought, this Court must assess whether Master Arbitrator D’Ammora erred as a matter of law or fact. His findings are related hereinabove at page 7. After reviewing the case law on master arbitration appeals and Arbitrator Kim’s findings, Master Arbitrator D’Ammora concluded as follows: “I cannot conclude on the basis of the record before me that Arbitrator Kim’s decision was incorrect as a matter of law or arbitrary or capricious” (NYSCEF Doc No. 4, Master Arbitration Award, at numbered p 2).

The standard for Article 75 court scrutiny is whether the master arbitration award was so irrational with respect to settled law as to require vacatur (see Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224, 232 [1982]; Matter of Acuhealth Acupuncture, PC v Country-Wide Ins. Co., 170 AD3d 1168 [2d Dept 2019]; Matter of Acuhealth Acupuncture, P.C. v New York City Transit Authority, 167 AD3d 314 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). A master arbitrator’s review of a hearing arbitrator’s award where an error of a rule of substantive law is alleged must be upheld unless it is irrational (see Golden Earth Chiropractic & Acupuncture, PLLC v Global Liberty Ins. Co. of New York, 54 Misc 3d 31 [App Term, 2d Dept, 2d, 11th & 13th Dists 2016]). Clearly, Master Arbitrator D’Ammora did not err in concluding that Arbitrator Kim’s decision was not incorrect as a matter of law, because this Court reviewed the latter’s discussion of the law and found no error. Cases cited by Arbitrator Kim were directly on point in terms of the law and were likewise cited by this Court.

Did Master Arbitrator D’Ammora err in determining that Arbitrator Kim’s factual findings were erroneous? No. Here, the master arbitrator noted the case law that he cannot conduct a de novo review of the evidence and substitute his interpretation of the evidence. The arbitrator’s determination was “rational and supported by the record.” (NYSCEF Doc No. 4, [*13]Master Arbitration Award, at numbered p 2.) He was correct. This Court takes into account the general proposition that the admissibility of evidence and the determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award. . . .”]; Central Sq. Teachers Assn. v Board of Educ. of Cent. Sq. Cent. Sch. Dist., 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny.”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software Intl., Inc., 232 AD2d 336, 338 [1st Dept 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis.”]).

The proper standard of master arbitration review is whether the hearing arbitrator reached his decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]). Master Arbitrator D’Ammora adhered to this.

Judicial review of a master arbitrator’s authority to vacate a hearing arbitrator’s award derives from § 675 (presently § 5106 [c]) of the Insurance Law and involves the question of whether the master arbitrator exceeded his power (see Matter of Smith v Firemen’s Ins. Co., 55 NY2d at 231 [1982]). Master Arbitrator D’Ammora did not exceed his power and, therefore, his award must be sustained.

In its petition, ATIC concluded by asserting that Arbitrator Kim’s decision was “arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence” (id. ¶ 49). ATIC was “entitled to a declaration that the arbitration decisions of Kihyun Kim, Esq. and Vic D’Ammora, Esq. in the matter designated AAA number 99-21-1191-8208 have no force or effect” (id. ¶ 50). Based on the foregoing analysis, this Court rejects these contentions.

ATIC’s petition in this Article 75 proceeding cited the four applicable grounds delineated in CPLR 7511 for vacating an arbitration award where a party participated in the arbitration:

if the court finds that the rights of that party were prejudiced by:

(i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

(NYSCEF Doc No. 1, petition, ¶ 33.)

This Court finds that ATIC failed to establish that there was corruption, fraud, or misconduct in procuring the award; that there was partiality on the part of either arbitrator; that either arbitrator exceeded his or her power or so imperfectly executed it that a final and definite [*14]award upon the subject matter submitted was not made; or that there was a failure to follow the procedure of Article 75.

Cross-Petition;
Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, Nexray sought in its cross-petition to confirm the arbitration determination. Nexray also sought additional payments in the nature of interest, attorney’s fees, return of the arbitration filing fee, and costs and disbursements (NYSCEF Doc No. 13, Notice of Cross-Petition, at numbered p 1). For the reasons set forth above, Nexray is entitled to confirmation of Master Arbitrator D’Ammora’s award.

Interest:

ATIC issued its Form NF-10 denial of claim on July 13, 2020, within 30 days after final verification was received on June 19, 2020; the denial was timely (NYSCEF Doc No. 6, ATIC’s Arbitration Submission and Master Arbitration Brief, at 5). Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s] [3], 65-3.9 [c]; Canarsie Med. Health, P.C. v National Grange Mut. Ins. Co., 21 Misc 3d 791, 797 [Sup Ct, NY County 2008] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action.

Nexray arbitration request was received by the AAA on January 22, 2021 (NYSCEF Doc No. 6, Nexray’s Arbitration Request Form and Arbitration Submission, at 1), which was clearly more than 30 days after it received the denial of claim issued on July 13, 2020. Thus, interest accrued from the filing date of January 22, 2021, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest is calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2022]).

[*15]Attorney’s Fees:

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $195.00 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [i].

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, Nexray is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of New York v Nexray Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Nexray’s counsel did not submit an affirmation specifying details with regard to work performed in this Article 75 special proceeding. It is not known whether an attorney or support staff performed the work. The cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The cross-petition asserted that Nexray “should be granted leave to serve an afirmation in order to set forth its resonable attroneys’ fees in defending this action” (NYSCEF Doc No. 13, Cross-Petition, ¶ 45).

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, “is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure.” (Vincent C. Alexander, Prac Commentaries, McKinney’s Cons Laws of NY, CPLR C401:01.) Counsel should have included an affirmation containing details describing the work performed (see Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695 [2d Dept 2019] [claim for hourly fee for prevailing on policy issue not substantiated with any time records]). It behooved counsel to do so considering the expedited nature of special proceedings.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issues in the case at bar was neither novel nor unique, especially since there was already a plethora of case law dealing with them and Nexray’s cross-petition contained boilerplate statements of law.

Consdering the factors delineated herein, this Court awards $140.00 for work performed by Nexray’s counsel on this Article 75 proceeding. This Court applies the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level (see 11 NYCRR 65-4.6 [c]), having assumed that there was attorney involvement for two hours at the most. It does not apply the $80.00 per hour fee for personal appearances before the arbitration forum or court (see id.), inasmuch as this proceeding was determined on the submissions.

Return of Arbitration Filing Fee:

ATIC shall also pay Nexray $40.00 as reimbursement for the fee paid to the AAA (see 11 NYCRR 65-4.5 [s] [1]).

[*16]Costs and Disbursements:

As the prevailing party, Nexray shall recover its costs and disbursements, to be taxed by the Clerk.

Other Requested Relief

Any requested relief not expressly addressed herein has nonetheless been considered and is hereby expressly rejected.

Conclusion

Accordingly, it is hereby ORDERED, ADJUDGED, and DECREED that:

(1) ATIC’s petition to vacate the master arbitration award of Victor J. D’Ammora in AAA Case No. 99-21-1191-8028 is dismissed.

(2) Nexray’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) Nexray is awarded the principal amount of $878.67 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent per month on a pro rate basis using a 30-day month, computed from January 22, 2021 to the date of payment of the principal amount, but excluding January 22, 2021 from being counted within the period of interest.

(5) After calculating the sum total of the principal amount of $878.67 plus the interest thereon, ATIC shall pay Nexray an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay Nexray an attorney’s fee of $195.00 in connection with the master arbitration.

(7) ATIC shall pay Nexray an attorney’s fee of $140.00 for work performed by counsel on this Article 75 proceeding.

(8) Nexray shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

E N T E R
Dated: Brooklyn, New York, May 25, 2023

______________________________
HON. AARON D. MASLOW
Justice of the Supreme Court of the
State of New York

Footnotes

Footnote 1:A reply affirmation from Respondent’s counsel (NYSCEF Doc No. 15) is not considered inasmuch as it was filed on the motion calendar date of May 19, 2023, several days after all counsels were advised that this proceeding was being determined on submissions. The time of filing of 1:13 p.m. on May 19, 2023, was after the calendar call too.

Footnote 2:The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Kihyun Kim, Esq. and/or Master Arbitrator Victor J. D’Ammora, Esq.” (NYSCEF Doc No. 2, notice of petition), but it must be deemed to seek vacatur of just the master arbitration award inasmuch as the latter is the final determination of the arbitration process. Insurance Law § 5106 (c) provides that “The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules. . . .” The No-Fault Regulations provide that “court review pursuant to an article 75 proceeding” is from the “decision of a master arbitrator” (11 NYCRR 65-4.10 [h] [1] [i]). In fact, a party may not appeal from an arbitration award without first seeking master arbitration (see Matter of Staten Is. Hosp. v USAA, 103 AD2d 744 [2d Dept 1984]; Matter of Griffith v Home Indem. Co., 84 AD2d 332 [1st Dept 1982]; Matter of Lampasona v Prudential Property & Cas. Ins. Co.,111 Misc 2d 623 [Sup Ct, Kings County 1981]). “[T]he Legislature intended the provision of CPLR article 75 to apply only to the review of the awards of master arbitrators (see, Insurance Law § 5106[c])” (Matter of Custen v General Acc. Fire and Life Ins. Co., 126 AD2d 256 [2d Dept. 1987]). Naturally, if the hearing arbitrator’s award is imperfect, this can impact judicial review of a master arbitration award affirming it.

Footnote 3:Rather than denote the parties here as “Petitioner” and “Respondent” in discussion, the parties’ names are used. This is to facilitate the reader’s understanding of the facts, arguments, analysis, and determination. This also minimizes confusion because the respondent in the underlying arbitration (ATIC) is not the respondent herein but rather is the petitioner herein. The respondent herein, Nexray, was not the respondent in the arbitration, but was the applicant.

Footnote 4:Health service providers obtain standing to pursue No-Fault insurance compensation in arbitration by virtue of having received an assignment of benefits from the respective person claiming to have been injured in a covered motor vehicle accident; such person is often denoted as an “assignor.”

Footnote 5:Paragraph 28 of the petition describes the AAA Case No. as 99-21-1191-8028, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1191-8028.

Footnote 6:This statutory scheme was developed by New York’s legislature in 1973, as part of a tradeoff whereby lawsuits for pain and suffering sustained from personal injuries in motor vehicle accidents were limited to instances of serious injury. (See generally Insurance Law art 51; L 1973, ch 13, as amended L 1977, ch 892; John R. Dunne, New York’s No-Fault Automobile Insurance Law—A Glimpse of the Past and a Glance at the Future, 50 NY St BJ 284 [June 1978]; J. Benedict, New York Adopts No-Fault: A Summary and Analysis, 37 Albany L Rev 662 [1973]).

Footnote 7:Although Insurance Law article 51 does not mention the term “No-Fault,” shortly after the post-motor vehicle accident economic loss compensation system was enacted in 1973, the appellation “No-Fault” was adopted in common parlance to describe it.

Footnote 8:This Court uses the term “health service bills” instead of “medical bills” because the No-Fault Law provides for reimbursement of “(i) medical, hospital . . . , surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical therapy . . . and occupational therapy and rehabilitation . . . and (iv) any other professional heath services” (Insurance Law § 5102 [b] [1]). Hence, the No-Fault insurance system encompasses not just “medical” services. In the instant case, the service was an MRI.

Footnote 9:The prescribed claim forms are included within 11 NYCRR Part 65 (Regulation 68) Appendix 13. In addition to Form NF-3 (verification of treatment by attending physician or other provider of health service), Appendix 13 contains Form NF-4 (verification of hospital treatment) and Form NF-5 (hospital facility form). Other official No-Fault forms also appear in Appendix 13.

Footnote 10:There is a prescribed assignment of benefits form (Form NF-AOB) in 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 11:The process of submitting a No-Fault claim to the insurer is governed by 11 NYCRR subpart 65-3, which contains §§ 65-3.1 et seq.

Footnote 12:Form NF-10 is also included within 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 13:References to NYSCEF filings lacking page numbers are to the PDF page numbers.

Footnote 14:The AAA’s electronic case management and filing platform maintained on the Internet is known as “Modria,” which was the name of the company which developed it for the AAA (see Liveblogging #ODR2014: The Developing Field of Online Dispute Resolution, https://civic.mit.edu/index.html%3Fp=1452.html [last accessed Mar. 19, 2023]; Welcome to the Modria Resolution Center for the American Arbitration Association, https://aaa-nynf.modria.com/ [last accessed Mar. 19, 2023]).

Footnote 15:Among the more substantial changes in the 1977 legislation were the adoption of fee schedules to limit health service expenses and modifying the threshold categories to be able to sue for pain and suffering.

Footnote 16:Nothing in the Governor’s Bill Jacket for Chapter 13 of the Laws of 1977 or other contemporary records comments on the provision adopting master arbitration review of hearing arbitrators’ decisions, so it is not known why the master arbitration process was created.

Footnote 17:Most non-No-Fault insurance arbitration awards cannot be vacated due to an error of law (see Matter of Sprinzen v Nomberg, 46 NY2d 623, 629-630 [1979]). No-Fault insurance arbitrations are different; an error of law can be the basis for reversal—by a master arbitrator. In that sense, the master arbitrator’s review is broader than that of a court, since a court will not vacate an arbitration award due to an error of law (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207, 211-212 [1981]; Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 800, 802 [2d Dept 2019]).

Footnote 18:11 NYCRR 65-4.10 (a) provides as follows:

Grounds for review. An award by an arbitrator rendered pursuant to section 5106(b) of the Insurance Law and section 65-4.4 or 65-4.5 of this Subpart may be vacated or modified solely by appeal to a master arbitrator, and only upon one or more of the following grounds:

(1) any ground for vacating or modifying an award enumerated in article 75 of the Civil Practice Law and Rules (an article 75 proceeding), except the ground enumerated in CPLR subparagraph 7511(b)(1)(iv) (failure to follow article 75 procedure);

(2) that the award required the insurer to pay amounts in excess of the policy limitations for any element of first-party benefits; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of an appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(3) that the award required the insurer to pay amounts in excess of the policy limitations for any element of additional first-party benefits (when the parties had agreed to arbitrate the dispute under the additional personal injury protection endorsement for an accident which occurred prior to January 1, 1982); provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(4) that an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground);

(5) that the attorney’s fee awarded by an arbitrator below was not rendered in accordance with the limitations prescribed in section 65-4.6 of this Subpart; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart.

Footnote 19:This Court served as a No-Fault insurance arbitrator for close to 21 years.

American Transit Insurance Company, Petitioner, against North Shore Family Chiropractic PC, A/A/O ALBERTO CARPINTEYRO, Respondent.

Index No. 535468/2022

Larkin Farrell LLC (David Fair of counsel), for petitioner.

Aaron D. Maslow, J.

The following numbered papers were read on this petition and cross-petition:

Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A – Arbitration Award (NYSCEF Doc No. 3)
Exhibit B – Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C – Respondent North Shore Family Chiropractic PC’s Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D – Petitioner American Transit Insurance Company’s Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing Affidavit of Service (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)
Answer (NYSCEF Doc No. 12)
Notice of Cross-Petition (NYSCEF Doc No. 13)
Affirmation in Opposition to Motion and in Support of Cross-Petition (NYSCEF Doc No. 14)
Exhibit A – Affirmation as to Attorney’s Fees (NYSCEF Doc No. 15)
Affirmation in Opposition to Cross-Petition and in Further Support of Petition (NYSCEF Doc No. 16)

Issue Presented

Case law holds that where a health service provider’s bills for treating an injured for-hire vehicle driver are submitted to the No-Fault insurer and the latter denies payment on the asserted ground that the driver was injured in the course of employment, adjudication of that defense in court or arbitration must be held in abeyance pending its resolution by the Workers’ Compensation Board. Considering this, is it arbitrary and capricious, without rational basis, and incorrect as matter of law for a No-Fault insurance arbitrator to reject the course-of-employment defense — and not defer resolution of it to the Workers’ Compensation Board — where the No-Fault insurer’s only evidence is a police report establishing that the driver was operating a vehicle which bore “TC” plates and lacked passengers?

Background

Petitioner American Transit Insurance Company (“ATIC”) commenced this CPLR Article 75 proceeding by notice of petition, seeking an order and judgment vacating a No-Fault Insurance master arbitration award of Robyn D. Weisman, Esq. (dated September 29, 2022), which affirmed the arbitration award of Mitchell Lustig, Esq. (dated July 10, 2022) granting Respondent North Shore Family Chiropractic PC’s (“North Shore”) claim for No-Fault insurance compensation for health service expenses.^[FN1] ,^[FN2] Arbitrator Lustig awarded $2,104.48 to North Shore as compensation for treating Alberto Carpinteyro, its assignor ^[FN3] (“Assignor”), who claimed [*2]to have been injured in a motor vehicle accident on July 29, 2019.

Respondent North Shore has opposed ATIC’s petition to vacate the master arbitration award, and it cross-petitioned for a judgment confirming the master arbitration award and awarding $2,173.14 as principal, statutory interest, the $40.00 arbitration filing fee, attorney’s fees, and costs and disbursements. ATIC opposed North Shore’s cross-petition and filed a reply in support of its petition.

The petition and cross-petition came before the undersigned for oral argument on March 8, 2023. At that time, ATIC appeared by counsel. North Shore did not appear.

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association (“AAA”), which assigned Case No. 17-21-1223-5155 ^[FN4] to it. The AAA has been designated by the New York State Department of Financial Services to coordinate the mandatory arbitration provisions of Insurance Law § 5106 [b], which provides:

Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party [“No-Fault insurance”] benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.

Insurance Law article 51 provides for the payment of basic economic loss incurred by persons injured in motor vehicle accidents. Included within basic economic loss are first-party benefits for medical and other professional health services.^[FN5] First-party benefits are more commonly known as “No-Fault benefits.”^[FN6] Notably, and relevant in the instant case, is that first-party benefits are reduced by, among other things, Workers’ Compensation benefits where an injured person in a motor vehicle accident was acting in the course of employment (Insurance Law § 5102 [b] [2]).

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations were promulgated by the Superintendent of Insurance (presently Financial Services). They are contained at 11 NYCRR part 65. Said part is subdivided into five subparts which encompass the [*3]following topics: prescribed insurance policy endorsements, rights and liabilities of self-insurers, claims for benefits, arbitration, and unauthorized providers of health services. Part 65 is also known as Insurance Regulation 83.

Generally, the claims process for health service bills ^[FN7] for No-Fault compensation begins with the submission by a health service provider of a claim form (usually, but not always, a Form NF-3 verification of treatment by attending physician or other provider of health service).^[FN8] Besides providing information regarding the injured person, diagnoses, projected treatment, etc., the claim form includes a bill for services performed. The claim form can be submitted directly by the injured person to the No-Fault insurer but over many decades a practice developed by which the health service providers submit the claim forms. As noted in footnote 3, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons.^[FN9] ,^[FN10] The insurer must either pay or deny the bill within 30 days, or seek additional verification within 15 business days. If it denies payment, it must issue a Form NF-10 denial of claim ^[FN11] identifying why the bill was not paid. (See Insurance Law § 5106 [a]; Viviane Etienne Medical Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 505 [2015].)

The record evidence submitted in this Article 75 proceeding revealed that the underlying arbitration involved seven Form NF-3 claim forms (bills) submitted by North Shore to ATIC for payment. This was in accordance with the procedure outlined in the previous paragraph for the submission of claims for No-Fault compensation. For each of North Shore’s claim forms there was an appurtenant Form NF-10 denial form issued by ATIC. Pertinent details are as follows:

• Dates of service October 2, 2020 – October 23, 2020 ($343.30):

Bill received November 18, 2020, and timely denied on December 16, 2020. Grounds of denial: (1) Assignor was in the course of employment and therefore eligible for Workers’ Compensation, so the bill must be submitted to the Workers’ Compensation insurer [*4](“course-of-employment defense”), (2) excessive fees ^[FN12], and (3) untimely submission of proof of claim (45-day rule)^[FN13].

• Dates of service November 6, 2020 – November 30, 2020 ($411.96):

Bill received December 18, 2020, and timely denied on January 14, 2021. Grounds of denial: (1) course-of-employment defense, (2) excessive fees.

• Dates of service December 7, 2020 – December 28, 2020 ($217.15):

Bill received January 19, 2021, and timely denied on December 16, 2021. Grounds of denial: (1) course-of-employment defense, (2) excessive fees.

• Dates of service January 3, 2021 – January 25, 2021 ($354.47):

Bill received February 16, 2021, and timely denied on March 12, 2021. Grounds of denial: (1) course-of-employment defense, (2) excessive fees, (3) no further treatment needed effective January 4, 2021 per Dr. Dennis Mann’s Dec. 10, 2020 independent medical examination (“IME defense”).

• Dates of service February 9, 2021 – February 26, 2021 ($285.81):

Bill received March 15, 2021, and timely denied on April 13, 2021. Grounds of denial: (1) course-of-employment defense, (2) excessive fees, (3) IME defense.

• Dates of service March 1, 2021 – March 29, 2021 ($343.30):

Bill received April 19, 2021, and timely denied on May 18, 2021. Grounds of denial: (1) course-of-employment defense, (2) excessive fees, (3) IME defense.

• Dates of service April 18, 2021 – April 30, 2021 ($217.15):

Bill received May 20, 2021, and timely denied on June 18, 2021. Grounds of denial: (1) course-of-employment defense, (2) excessive fees, (3) IME defense.

The record evidence reveals further that on July 6, 2002, Arbitrator Lustig conducted a hearing at which Alex Beyenson, Esq., from The Beynenson Law Firm, P.C., appeared for North Shore, and Helen Cohen, Esq., appeared for ATIC.

Arbitrator Mitchell Lustig’s Award

In his award, Arbitrator Lustig stated that his findings and conclusions were based upon the documents submitted by the parties in the AAA’s ADR Center ^[FN14] and the parties’ arguments at the hearing. He first found that North Shore established its prima facie case of entitlement to compensation “by submitting evidentiary proof that the prescribed statutory billing forms had been mailed and received and that payment of No-Fault benefits were overdue.” The arbitrator [*5]cited to Westchester Med. Ctr. v Lincoln Gen. Ins. Co. (60 AD3d 1045 [2d Dept 2009]) and Mary Immaculate Hosp. v Allstate Ins. Co. (5 AD3d 742 [2d Dept 2004]). (NYSCEF Doc No. 3, arbitration award, at numbered p 2.)

The arbitrator then reviewed the defenses asserted by ATIC in its Form NF-10 denials of claim. The first defense reviewed was the one concerning the timeliness of submission of the bill for dates of service October 2, 2020 – October 23, 2020. Given that this defense to payment of the bill was not raised in this Article 75 proceeding, it suffices to say that the arbitrator sustained it with respect to a date of service which was more than 45 days earlier than the bill was received by ATIC; other dates of service were within the 45-day period so the defense was denied as to them. (Id. at numbered pp 2-4.)

The arbitrator then reviewed ATIC’s IME defense. He found that North Shore’s contemporaneous and post-IME cutoff re-examination reports outweighed Dr. Mann’s IME report; that Assignor had documented complaints of pain in his neck and lower back and restrictions in motion in those locations. He found that North Shore had refuted Dr. Mann’s determination that further chiropractic treatment was not necessary. (Id. at numbered pp 4-5.) Arbitrator Lustig’s determination of this issue is not challenged in the within Article 75 proceeding.

That part of Arbitrator Lustig’s award which is at issue herein — the course-of-employment defense — will be assessed in more detail. As noted above, ATIC asserted in each of its Form NF-10 denials of claim that Assignor was in the course of employment and therefore eligible for Workers’ Compensation, so the bills had to be submitted to the Workers’ Compensation insurer. The arbitrator cited to Arvatz v Empire Mutual Ins. Co. (171 AD2d 262 [1st Dept 1991]), for the point of law that “[t]he Workers’ Compensation Board is the exclusive forum to determine whether an individual was in the course of his employment at the time of a motor vehicle accident” (NYSCEF Doc No. 3, arbitration award, at numbered p 5). Citing to a master arbitration award reported in 2000, the arbitrator continued by stating that “As long as there is ‘at least minimal proof of the indicia of employment from which an inference could be drawn to support the defense’ that the assignor is covered by the Workers’ Compensation Law . . . the claim must be denied without prejudice, pending the determination of the issue of employment by the Board.” The third statement of law by the arbitrator was a citation to A.B. Med. Servs. PLLC v American Transit Ins. Co. (8 Misc 3d 127[A], 2005 NY Slip Op. 50959[U] [App Term 2d & 11th Dists 2005]), for the proposition that “If, however, the insurer’s contention that the Assignor acted in the course of his or her employment at the time of the accident is ‘mere speculation’ that fails to establish the defense’s ‘potential merit’ so as to warrant the Board’s review of the facts, the issue need not be resolved by the Board” (NYSCEF Doc No. 3, arbitration award, at numbered p 5).

This was followed by Arbitrator Lustig’s review of the evidence submitted by ATIC concerning its course-of-employment defense: “In support of its Workers’ Compensation defense, [ATIC] submitted a copy of the Police Accident Report indicating that at the time of the accident the Assignor was operating a 2015 Nissan license plate number T751729C.^[FN15] [¶] However, notably absent from the Respondent’s submission is any proof that the Assignor was acting in the course of his employment, such as an Affidavit from its underwriting manager [*6]indicating that the Respondent issued a livery or taxi policy to the Assignor for a ‘for hire vehicle.’ ” (Id.)

Arbitrator Lustig concluded his analysis of the course-of-employment defense as follows: “After careful consideration of the evidence, I find, as a matter of fact, that the Respondent has not submitted sufficient proof that the Assignor was acting in the course of his employment at the time of the accident. Accordingly, the Respondent’s denials premised upon Workers’ Compensation being primary are vacated.” (Id. at numbered p 6.) (emphasis added)

As a result of his analysis, Arbitrator Lustig awarded compensation to North Shore for all amounts billed except for the date of service concerning which the 45-day rule defense was sustained. A total of $2,104.48 was awarded to North Shore. (Id. at numbered pp 6-7.) Interest, an attorney’s fee, and return of the $40.00 arbitration filing fee were also awarded.

Master Arbitrator Robyn D. Weisman’s Award

ATIC filed for master arbitration to appeal Arbitrator Lustig’s award. ATIC did not challenge Arbitrator Lustig’s determinations regarding the defenses of untimely proof of claim (45-day rule) and lack of necessity past an IME cutoff, which pertained to certain bills. The only issue raised in master arbitration was Arbitrator Lustig’s not having deferred to the Workers’ Compensation Board on ATIC’s course-of-employment defense — that he determined it himself. (NYSCEF Doc No. 6, ATIC’s arbitration submissions, at 60-72.)

In her award, Master Arbitrator Weisman set forth the issue in dispute as follows: “Whether [the] lower arbitrator acted in an arbitrary and capricious manner or in violation of a law in ruling that [North Shore] was entitled to reimbursement regardless of [ATIC]’s claim of Worker’s Compensation benefits” (NYSCEF Doc No. 4, master arbitration award, at numbered p 1).

Master Arbitrator Weisman cited to Arvatz (171 AD2d 262), as did Arbitrator Lustig. She also cited to Liss v Trans Auto Systems, Inc. (68 NY2d 15 [1986] [determination that worker did not sustain injuries in course of employment not binding in liability suit on those not parties to compensation proceeding], to the effect that the question of whether one was injured in the course of employment must be resolved by the Workers’ Compensation Board. (Id. at numbered p 2.)

Acknowledging that in arbitration there are many instances in which the possible existence of Workers’ Compensation coverage should be determined by the Workers’ Compensation Board, Master Arbitrator Weisman wrote that here the issue “came down to a question of fact. The issue of whether the accident occurred during the course of employment was a factual one.” (Id.) With respect to this issue of fact, the standard of review was whether the hearing arbitrator’s award was supported by the evidence, had a reasonable and plausible basis, and was rational, Master Arbitrator Weisman citing principally to Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]. She found that Arbitrator Lustig’s decision “was based on the evidence submitted” (id. at numbered p 3). As for any issue of law, “The grounds of review also included wither the decision was incorrect as a matter of law, as provided for in 11 NYCRR 65-4.10 [a] [4]. I do not see a misapplication of law” (id.).

Arbitrator Lustig’s award was affirmed in its entirety by Master Arbitrator Weisman.

ATIC’s Petition to Vacate

ATIC’s petition to vacate asserted that “The arbitration decision was arbitrary and capricious, irrational and without a plausible basis” (NYSCEF Doc No. 1, petition, ¶ 35), in that “Arbitrator Lustig failed to follow well settled law” (id., ¶ 41). The petition proceeded to argue that ATIC had reason to believe that Assignor may have been in the course of his employment at the time of the motor vehicle accident, rendering Workers’ Compensation benefits primary to No-Fault (id., ¶ 42), and it was improper for Arbitrator Lustig to express an opinion whether Workers’ Compensation coverage existed (id., ¶ 54). The petition cited to case law concerning the Workers’ Compensation Board’s jurisdiction over the issue of whether one was in the course of employment when injured. That issue is the only one ATIC advanced in this Article 75 proceeding.

The petition concluded by asserting that Arbitrator Lustig’s decision was “arbitrary and capricious, without rational basis and incorrect as a matter of law because the arbitrator ignored [ATIC]’s evidence and/or well settled legal precedent in order to justify a determination in favor of [North Shore]” (id., ¶ 56). “As a result, [ATIC]’s rights were prejudiced by the partiality of the arbitrator and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated” (id., ¶ 57). ATIC was “entitled to a declaration that the arbitration decisions of Mitchell Lustig, Esq. and Robyn D. Weisman, Esq. in the matter designated AAA number 99-21-1223-5155 have no force or effect” (id., ¶ 58).

North Shore’s Cross-Petition to Confirm

North Shore argued in its cross-petition most significantly that the arbitration awards had to be confirmed if there was a colorable justification and a plausible basis for them, citing to Rose Castle Redevelopment II LLC v Franklin Realty Corp. (184 AD3d 230 [1st Dept 2020], and if they were neither arbitrary nor capricious, citing to Matter of Petrofsky v Allstate Ins. Co. (54 NY2d 207) ((NYSCEF Doc No. 14, cross-petition, ¶¶ 3, 6). North Shore pointed out that Arbitrator Lustig found that ATIC did not submit sufficient evidence to support its defense that Assignor was in the course of his employment and that Master Arbitrator Weisman found the finding to be neither arbitrary, capricious, nor contrary to law (id., ¶¶ 14, 15). There was no basis to vacate the awards, it insisted (id., ¶ 3).

North Shore added that it was entitled to an attorney’s fee of $1,650.00 in connection with the Article 75 proceeding as well as costs and disbursements (id. ¶ 23). The original principal amount of $2,173.14, as well as interest, attorney’s fees, and a return of the arbitration filing fee should likewise be awarded (id. at numbered pp 7-8).

No-Fault Insurance Arbitration

When the No-Fault Law was first enacted by the Legislature in Chapter 13 of the Laws of 1973 to take effect February 1, 1974, § 675 of the Insurance Law was added. In subdivision 2 thereof, insurers were required to provide claimants with an arbitration option for disputes involving liability for first-party benefits. This provision was amended in Chapter 892 of the [*7]Laws of 1977, when several changes were made to the 1973 version.^[FN16] The provision regarding arbitration in § 675 was amended to add the following language:

An award by an arbitrator may be vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent [of insurance]. The grounds for vacating or modifying an arbitrator’s decision by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The decision of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute an action in a court of competent jurisdiction to adjudicate the dispute de novo.^[FN17]

The provisions regarding No-Fault insurance arbitration remained in the recodification of the Insurance Law enacted in Chapters 367 and 805 of the Laws of 1984. The arbitration provisions were set forth in § 5106, and subdivisions (b) and (c) now read as follows:

(b) Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent. Such simplified procedures shall include an expedited eligibility hearing option, when required, to designate the insurer for first party benefits pursuant to subsection (d) of this section. The expedited eligibility hearing option shall be a forum for eligibility disputes only, and shall not include the submission of any particular bill, payment or claim for any specific benefit for adjudication, nor shall it consider any other defense to payment.

(c) An award by an arbitrator shall be binding except where vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent. The grounds for vacating or modifying an arbitrator’s award by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s [*8]fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.

Insofar as is here relevant, the No-Fault Insurance Regulations promulgated by the Superintendent of Insurance provided that a master arbitrator may vacate or modify a hearing arbitrator’s award where it “was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground)” (11 NYCRR 65.18 [a] [4]). This regulatory language was carried over into the revised Regulations promulgated in 2002, in 11 NYCRR 65-4.10 (a) (4).^[FN18] A master arbitrator may also vacate or modify a hearing arbitrator’s award under certain other grounds also (see 11 NYCRR 65-4.10 [a]).^[FN19]

Discussion

The provision that a hearing arbitrator may vacate or modify a hearing arbitrator’s award due to an error of law is one of several grounds but is the main gravamen of ATIC’s objection to the arbitration outcome here. As noted above, ATIC has maintained that Arbitrator Lustig erred in not complying with “well settled legal precedent” concerning how to deal with a No-Fault insurer’s defense asserting that an injured person was in the course of employment when the motor vehicle accident occurred (NYSCEF Doc No. 1, petition, ¶ 41). ATIC has insisted that the Workers’ Compensation Board had to decide whether Assignor was injured in the course of employment — that Arbitrator Lustig should have never ventured into any sort of consideration of it.

The issue of the availability of Workers’ Compensation benefits as a first line source before No-Fault compensation is available derives from Insurance Law § 5102 [b] [2], where the No-Fault Law defines first-party benefits:

payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less: . . .

(2) Amounts recovered or recoverable on account of such injury under state or federal laws providing social security disability benefits, or workers’ compensation benefits, or disability benefits under article nine of the workers’ compensation law, or medicare benefits, other than lifetime reserve days and provided further that the medicare benefits utilized herein do not result in a reduction of such person’s medicare benefits for a subsequent illness or injury. (emphasis added)

The No-Fault Regulations implement this at 11 NYCRR 65-3.16 (a) (9): “Pursuant to section 5102(b)(2) of the Insurance Law, when the applicant is entitled to workers’ compensation benefits due to the same accident, the workers’ compensation carrier shall be the sole source of reimbursement for medical expenses.”

Probably the first appellate decision on the issue of how to treat a No-Fault insurer’s defense that a court lacked jurisdiction to determine if motor vehicle accident injuries occurred while in the course of employment was Arvatz v Empire Mut Ins. Co., 171 AD2d 262 (1st Dept 1991], to which both arbitrators cited. This was a declaratory judgment action commenced by an injured driver against his vehicle’s No-Fault insurer. The latter had contended that the plaintiff operated his vehicle while being employed by a car service. The plaintiff maintained that the No-Fault insurer was required to make the mandated No-Fault payments to which he was entitled. The Supreme Court found at a framed issue hearing that the plaintiff was an independent contractor and not an employee. This was in error, held the Appellate Division, “since the matter should have been remanded to the Workers’ Compensation Board to determine the threshold issue of whether plaintiff is an employee or independent contractor” (id. at 267). This was a mixed question of law and fact, noted the court, and the Board has primary jurisdiction to resolve the question of coverage. The court cited to O’Rourke v Long (41 NY2d 219 [1976] and Liss v Trans Auto Systems, Inc. (68 NY2d 15 [1986]). The judgment of Supreme Court was reversed and a declaration was made that the Workers’ Compensation Board had to make the initial determination as to whether the alleged injuries were within the purview of the Workers’ Compensation Law.

Arvatz was a First Department decision. The Appellate Division, Second Department, in LMK Psychological Services, P.C. v American Transit Ins. Co. (64 AD3d 752 [2d Dept 2009]), [*9]held that it was improper for the Supreme Court to sustain a No-Fault insurer’s defense that the injured person was injured in the course of employment. Rather the determination had to be made by the Workers’ Compensation Board. Although the decision did not mention Arvatz, it placed the Second Department in conformity with the First Department.

Consistent with LMK Psychological Services, P.C. and citing to Arvatz, the Second Department wrote in Dunn v American Transit Ins. Co. (71 AD3d 629, 630 [2010]): “[I]t is therefore inappropriate for the courts to express views with respect thereto pending determination by the board. . . . In this case, the defendant’s motion presented factual questions as to the plaintiff’s ‘status as either an independent contractor, as he claims he is, or as an employee of’ a car service dispatch base, as the defendant claims. . . . Resolution of these questions ‘is best suited for determination by the [Workers’ Compensation] Board, given its expertise in the area’. . . . Accordingly, prior to rendering a determination on the motion, the Supreme Court should have referred the matter to the Workers’ Compensation Board for a hearing and determination as to whether the plaintiff is relegated to benefits under the Workers’ Compensation Law. . . .”

The first reported court decision to apply Arvatz in the context of No-Fault arbitration was JSI Expert Services Inc. v Fireman’s Fund Ins. Co. (10 Misc 3d 1060[A], 2005 NY Slip Op 52058[U] [Civ Ct, Kings County 2005]). At the arbitration, the No-Fault insurer raised the question as to whether the assignor was working at the time of the accident. The arbitrator determined that there was at least minimal proof of the indicia of employment and, therefore, the Workers’ Compensation Board — and not arbitration — was the proper forum for making the ultimate determination on the course-of-employment defense. The master arbitrator affirmed. The court held that the master arbitrator’s award was neither arbitrary, capricious, irrational, nor without a substantial or plausible basis.

In JSI Expert Services Inc. the course-of-employment defense was not asserted in a timely Form NF-10 denial of claim, yet the court sustained the arbitrator’s finding that there was an indicia of employment, warranting deferring a determination of the issue to the Workers’ Compensation Board. Subsequently, the Appellate Division, Second Department held that an insurer’s course-of-employment defense in a No-Fault insurance compensation case had to be timely asserted, i.e., within the statutory 30-day deadline for issuing denials (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2d Dept 2009]).^[FN20] Notwithstanding this, JSI Expert Services Inc. is still good law for the principle that just as a court must defer to the Workers’ Compensation Board if a course-of-employment defense is raised by the No-Fault insurer (albeit timely), so too should an arbitrator.

Strict compliance with Arvatz in No-Fault insurance compensation actions took a turn in A.B. Med. Servs. PLLC v American Transit Ins. Co. (8 Misc 3d 127[A], 2005 NY Slip Op. 50959[U] [App Term 2d & 11th Dists 2005]). The defendant No-Fault insurer timely rejected the claims on the sole ground that at the time of the accident the assignor was acting in the course of his employment, and ergo the plaintiff health service providers had to pursue their claims before the Workers’ Compensation Board. The Civil Court denied the motions of all parties for summary judgment. The Appellate Term modified the Civil Court’s order by granting the plaintiff health service providers’ motion for summary judgment. “In our view, the insurer [*10]failed to establish the defense’s ‘potential merit’ so as to warrant Board review of the facts” (id. at *1). The Appellate Term noted that the No-Fault insurer’s evidence on the issue consisted of a claim adjuster’s assertion that the claimant was eligible for Workers’ Compensation, and this determination was based solely on an employer’s unsworn statement dated 18 months before the accident and a police accident report. The police accident report was offered in evidence in support of the insurer’s motion for the first time in reply papers. In contrast, the health service providers submitted sworn statements by the assignor and his purported employer that the assignor was not working when the accident occurred. The court described the insurer’s claim that the assignor acted in the course of employment as “mere speculation,” and found that the insurer failed to establish any issues of fact that had to be resolved by the Workers’ Compensation Board. This case stands as a precedent for the principle that although the routine course would be to defer to the Workers’ Compensation Board, the No-Fault insurer must submit enough evidence of potential merit so as to create an issue of fact; it may not rely on mere speculation. Arbitrator Lustig relied on this Appellate Term decision.

In another Appellate Term decision it was found that the “defendant’s proof, including the police accident report, was sufficient to raise a question of fact as to whether [the injured person] was acting as an employee at the time of the accident, which issue must be resolved by the Workers’ Compensation Board” (Response Equipment, Inc. v American Transit Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op. 51176[U] [App Term 2d & 11th Dists 2007]). The court did not elucidate on what evidence besides the police accident report was submitted.

There are various instances where court decisions have found the No-Fault insurer’s evidence sufficient to trigger deference to a determination by the Workers’ Compensation Board:

• A certified EUO transcript was submitted (see Active Care Med. Supply Corp. v Global Liberty Ins., 71 Misc 3d 129[A], 2021 NY Slip Op. 50257[U] [App Term 2d, 11th & 13th Dists. 2021] [error for trial court to deny admission of EUO transcript during trial]).

• The injured person’s statement was submitted (see AEE Med. Diagnostic, P.C. v Travelers Prop. Cas. Co. of America, 57 Misc 3d 131[A], 2017 NY Slip Op. 51209[U] (App Term 1st Dept 2017]).

• The injured person checked off on the Form NF-2 application for No-Fault benefits that he was employed at the time of the accident and the police report stated that the vehicle operated by him was a taxi (see Compas Med., P.C. v American Transit Ins. Co. (49 Misc 3d 146[A], 2015 NY Slip Op 51675[U] [App Term 2d, 11th & 13th Dists 2015]); Lenox Hill Radiology, P.C. v American Transit Ins. Co., 18 Misc 3d 1136[A], 2008 NY Slip Op. 50330[U] [Civ Ct, NY County 2008]).

• The police report indicated that the vehicle had a taxi license plate and two passengers were inside (see Clear Water Psychological Servs. PC v American Transit Ins. Co., 54 Misc 3d 915 [Civ Ct, Kings County 2016]).

• A cab company owned the vehicle involved in the accident and was named as the insured on the automobile policy (Chiropractic Testing Servs. of New York, P.C. v American Transit Ins. Co. (59 Misc 3d 250 [Civ Ct, Richmond County 2018]).

• The injured person drove a vehicle with TC plates which was owned by a livery company and insured under a livery policy (see RX Warehouse Pharm., Inc. v American Transit Ins. Co., Civ Ct, Kings County, Nov. 13, 2015, Montelione, J., index No. 51265/13).

Numerous decisions have held that the No-Fault insurer’s evidence was sufficient to raise a question of fact triggering the necessity for a Workers’ Compensation Board determination but did not describe the evidence (e.g. Madison Products of USA, Inc. v American Transit Ins. Co., 67 Misc 3d 144[A], 2020 NY Slip Op 50749[U] [App Term 2d, 11th & 13th Dists 2020]; A.B. Med. Servs., PLLC v American Transit Ins. Co., 34 Misc 3d 141[A], 2012 NY Slip Op 50076[U] [App Term 9th & 10th Dists 2012]; Jamaica Med. Supply, Inc. v American Transit Ins. Co., 34 Misc 3d 133[A], 2011 NY Slip Op 52371[U] [App Term 2d, 11th & 13th Dists 2011]; Devonshire Surgical Facility, L.L.C. v Hereford Ins. Co., 30 Misc 3d 129[A], 2010 NY Slip Op 52297[U] [App Term 1st Dept 2010]); AR Med. Rehabilitation, P.C. v American Transit Ins. Co., 27 Misc 3d 133[A], 2010 NY Slip Op 50708[U] [App Term 2d, 11th & 13th Dists 2010]; A.B. Med. Servs., PLLC v American Transit Ins. Co., 24 Misc 3d 75 [App Term 9th & 10th Dists 2009]).

On the other hand, there are holdings in a few decisions where the No-Fault insurer’s evidence was insufficient to create an issue of fact in support of a course-of-employment defense: The assignor, driving a livery car, had been issued his license from the Taxi and Limousine Commission (“TLC”) that day and the insurer submitted no evidence that the assignor was on duty or carrying a paying passenger at the time of the accident; the Supreme Court properly denied the No-Fault insurer’s petition to vacate the arbitration award granting compensation to the health service provider (by coincidence the provider herein) (see Matter of Global Liberty Ins. Co. of New York v North Shore Family Chiropractic, P.C., 178 AD3d 525 [1st Dept 2019]). A third-party claims administrator’s affidavit alleged in a conclusory manner that the assignor was injured in the course of employment without substantiating the assertion with any evidence (see Central Radiology Servs., P.C. v First America Ins., 40 Misc 3d 126[A], 2013 NY Slip Op 51031[U] [App Term 2d, 11th & 13th Dists 2013]). The police report listed TC plates for the vehicle, Katt Corporation as the registered owner, and an insurance policy number, and indicated that a report must be sent to the TLC, and the NF-3 claim form had “No” checked for whether the patient’s condition was due to an injury arising from employment (see Jing Huo Lac v American Transit Ins. Co., 19 Misc 3d 1146[A], 2008 NY Slip Op 51177[U] [Civ Ct, Richmond County 2008]).

Synthesizing all of the above decisions — both those involving actions commenced in court and those reviewing No-Fault arbitrations — the settled law on the subject issue is as follows: Generally, where a health service provider’s bills for treating an injured for-hire vehicle driver are submitted to the No-Fault insurer and the latter denies payment on the asserted ground that the driver was injured in the course of employment, adjudication of that defense in court or arbitration must be held in abeyance pending its resolution by the Workers’ Compensation Board.

However, the No-Fault insurer’s evidence must demonstrate potential merit sufficient to create an issue of fact in support of its defense; mere speculation does not suffice. Evidentiary indicia of potential merit include the injured person’s statement in one form or another that he was working; the vehicle had taxi plates and passengers; a cab company owned the vehicle and was named as the insured on the automobile policy; the injured person drove a vehicle which was owned by a livery company, had TC plates, and was insured under a livery policy; or there was a police accident report plus other supporting evidence. There is no potential merit to the course-of-employment defense where the insured person had been issued his TLC license that day and there were no paying passengers; the claims administrator’s affidavit was conclusory; [*11]the police report listed TC plates but the vehicle was owned by an ambiguously named company and the claim forms indicated the injured person’s injuries did not arise from employment; or the claim adjuster’s information was based on an unsworn employer’s statement predating the accident and a police report which was not properly in evidence.

Determination

In the instant case, ATIC’s sole evidence at the arbitration in support of its course-of-employment defense was the police report. Assignor was indicated to be driving a TC-plated vehicle owned by Edge Limo Inc. No insurance company code was listed. Nobody else besides Assignor was in the vehicle. No insurance policy for the vehicle was submitted so it is unknown whether the insurance policy was specific to liveries. The NF-3 claim forms had “No” checked off for whether Assignor’s injuries arose from employment. None of the decisions cited above dealt with this combination of evidence. However, Jing Huo Lac v American Transit Ins. Co. (19 Misc 3d 1146[A], 2008 NY Slip Op 51177[U]) comes closest. There, the police report listed TC plates for the vehicle, Katt Corporation as the registered owner, and an insurance policy number, and indicated that a report must be sent to the TLC, and the NF-3 claim form had “No” checked for whether the patient’s condition was due to an injury arising from employment. In fact, although the registered owner had the word “Limo” in it, the quantum of evidence in the instant case was less than that in Jing Huo Lac. Significantly there was no policy submitted by ATIC. The Jing Huo Lac court held that the insurer failed to show potential merit to its course-of-employment defense (id. *6). In fact, Arbitrator Lustig noted that absent from ATIC’s submission was evidence that it had issued a livery or taxi policy to Assignor for a for-hire vehicle (NYSCEF Doc No. 3, arbitration award, at numbered p 5).

The provision in 11 NYCRR 65-4.10 [a] [4] that a No-Fault insurance arbitration award may be vacated where it was incorrect as a matter of law refers to substantive issues — not issues of fact (see American Transit Ins. Co. v Right Choice Supply, Inc., — Misc 3d —, 2023 NY Slip Op 23039, *11 [Sup Ct, Kings County 2023]).

Arbitrator Lustig correctly applied the substantive law when he cited to Arvatz for the principle that “[t]he Workers’ Compensation Board is the exclusive forum to determine whether an individual was in the course of his employment at the time of a motor vehicle accident” (NYSCEF Doc No. 3, arbitration award, at numbered p 5). He correctly applied the law when he cited to A.B. Med. Servs. PLLC v American Transit Ins. Co. (8 Misc 3d 127[A], 2005 NY Slip Op. 50959[U]), for the proposition that “If, however, the insurer’s contention that the Assignor acted in the course of his or her employment at the time of the accident is ‘mere speculation’ that fails to establish the defense’s ‘potential merit’ so as to warrant the Board’s review of the facts, the issue need not be resolved by the Board” (id.).

At oral argument on the within Article 75 petition, ATIC’s counsel argued that the law was to the effect that a No-Fault insurer’s submission of a police report indicating that the vehicle operated by the injured person bore TC plates, without any other evidence — even without a claim examiner’s affidavit and even without a copy of the insurance policy — required the arbitrator to rule that a course-of-employment defense had to be determined by the Workers’ Compensation Board. This Court rejects said argument as it is not in accord with the settled law discussed above. Arbitrator Lustig’s award was not incorrect as a matter of law within the purview of 11 NYCRR 65-4.10 (a) (4).

This Court must next determine whether to sustain Master Arbitrator Weisman’s review of Arbitrator’s Lustig award for an error of law. The standard for such Article 75 court scrutiny is whether the master arbitration award was so irrational as to require vacatur (see Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224, 232 [1982]; Matter of Acuhealth Acupuncture, PC v Country-Wide Ins. Co., 170 AD3d 1168 [2d Dept 2019]; Matter of Acuhealth Acupuncture, P.C. v New York City Transit Authority, 167 AD3d 314 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). A master arbitrator’s review of a hearing arbitrator’s award where an error of a rule of substantive law is alleged must be upheld unless it is irrational (see Golden Earth Chiropractic & Acupuncture, PLLC v Global Liberty Ins. Co. of New York, 54 Misc 3d 31 [App Term, 2d Dept, 2d, 11th & 13th Dists 2016]).

Master Arbitrator Weisman held, “The grounds of review also include that the decision was incorrect as a matter of law. 11 NYCRR 65-4.10(a)(4). I do not see a misapplication of law.” (NYSCEF Doc No. 4, master arbitration award, at numbered p 3). In the case at bar, Master Arbitrator Weisman’s review of the legal issue presented by ATIC was not irrational. Hence, in terms of the legal issue, Master Arbitrator Weisman’s award was actually correct, let alone not irrational.

11 NYCRR 65-4.10 (a) (4) provides that “procedural or factual errors committed in the arbitration below are not encompassed within this ground,” i.e., the review by a master arbitrator for an error of law. It is an issue of fact as to whether submitted evidence rises to potential merit to support a course-of-employment defense and is not mere speculation. Did Arbitrator Lustig err as a matter of fact in finding that “the Respondent has not submitted sufficient proof that the Assignor was acting in the course of his employment at the time of the accident” (NYSCEF Doc No. 3, arbitration award, at numbered p 6)?

This Court takes into account the general proposition that the admissibility of evidence and the determination of issues of fact are left to the arbitrator’s discretion (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 483 [2006] [“Manifest disregard of the facts is not a permissible ground for vacatur of an award. . . .”]; Cent. Square Teachers Assn. v Board of Educ. of Cent. Sq. Cent. Sch. Dist., 52 NY2d 918, 919 [1981] [“The path of analysis, proof and persuasion by which the arbitrator reached this conclusion is beyond judicial scrutiny.”]; Matter of Lipson v Herman, 189 AD3d 440, 441 [1st Dept 2020] [“error of fact . . . will not result in the vacatur of an arbitrator’s award”]; Matter of Bernstein v On-Line Software Intl., Inc., 232 AD2d 336, 338 [1st Dept 1996] [“It is well established, however, that arbitrators are not bound by the rules of evidence and may admit or deny exhibits on an equitable basis.”]).

Considering that in no reported case did a court find that the mere submission of a police report listing TC plates ipso facto warranted referral to the Workers’ Compensation Board for a determination on a course-of-employment defense, this Court finds reasonable Arbitrator Lustig’s factual determination that there was insufficient proof submitted to support such defense. This Court notes that the police report reflected no passengers being in Assignor’s vehicle.

With respect to the factual issues reviewed by Master Arbitrator Weisman, the proper standard of her review was whether Arbitrator Lustig reached his decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, and making independent findings of fact [*12](Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207 [1981]). Here, Master Arbitrator Weisman correctly held that “The issue of whether the accident occurred during the course of employment was a factual one” (NYSCEF Doc No. 4, master arbitration award, at numbered p 3). She noted that Arbitrator Lustig “did discuss the findings in detail” and “the decision was based on the evidence submitted” (id.)

Judicial review of a master arbitrator’s authority to vacate a hearing arbitrator’s award derives from § 675 (presently § 5106 [c]) of the Insurance Law and involves the question of whether the master arbitrator exceeded his power (Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224, 231 [1982]). Master Arbitrator Weisman did not exceed her power when she reviewed the factual findings of Arbitrator Lustig. She applied the correct standard of review, mentioning that it involved whether the award was supported by the evidence, arbitrary and capricious, irrational, or without plausible basis. She noted that she could not conduct a de novo review. Master Arbitrator Weisman was correct when she found that Arbitrator Lustig discussed his findings in detail and his decision was based on the evidence submitted. This Court finds that Master Arbitrator Weisman’s review of Arbitrator Lustig’s factual determination that the evidence was insufficient to sustain a course-of-employment defense was neither arbitrary, capricious, irrational, nor without a plausible basis (see Matter of Petrofsky v Allstate Ins. Co.).

ATIC’s petition in this Article 75 proceeding cited the four applicable grounds delineated in CPLR 7511 for vacating an arbitration award where a party participated in the arbitration:

if the court finds that the rights of that party were prejudiced by:

(i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

(NYSCEF Doc No. 1, petition, ¶ 33)

This Court finds that ATIC failed to establish that there was corruption, fraud, or misconduct in procuring the award; that there was partiality on the part of either arbitrator; that either arbitrator exceeded his or her power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or that there was a failure to follow the procedure of Article 75.

Cross-Petition;

Interest, Attorney’s Fees, Return of Arbitration Filing Fee, Costs, and Disbursements

As mentioned above, North Shore sought in its cross-petition to confirm Master Arbitrator Weisman’s award. Having found that no grounds exist to vacate it, it must be confirmed. North Shore’s cross-petition sought $2,173.14, whereas the amount awarded by Arbitrator Lustig was $2,104.48. The difference results from Arbitrator Lustig denying [*13]compensation for one date of service because of untimely submission of proof of claim (the 45-day rule). The cross-petition did not challenge this component of Arbitrator Lustig’s award so any challenge to it is deemed abandoned by North Shore. North Shore is entitled to No-Fault compensation for health services in the principal amount of $2,104.48.

North Shore also sought additional payments in the nature of interest, attorney’s fees, return of the arbitration filing fee, costs, and disbursements.

Interest:

Where a claim is timely denied, interest at two per cent per month shall begin to accrue as of the date arbitration was requested by the claimant, i.e., the date the AAA received the applicant’s arbitration request, unless arbitration was commenced within 30 days after receipt of the denial, in which event interest shall begin to accrues as of the 30th day after proof of claim was received by the insurer (see Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [(s] [3], 65-3.9 [c]; Canarsie Med. Health, P.C. v National Grange Mut. Ins. Co., 21 Misc 3d 791, 797 [Sup Ct, NY County 2008] [“The regulation provides that where the insurer timely denies, then the applicant is to seek redress within 30 days, after which interest will accrue.”]). The plaintiff health care provider in Canarsie Med. Health, P.C. argued that where a timely issued denial is later found to have been improper, the interest should not be stayed merely because the provider did not seek arbitration within 30 days after having received the denial. The court rejected this argument, finding that the regulation concerning interest was properly promulgated; this includes the provision staying interest until arbitration is commenced, where the claimant does not promptly take such action. North Shore presumptively received ATIC’s last-issued denial a few days after June 18, 2021, when it was issued. Applicant’s arbitration request was received by the AAA on October 19, 2021, which was certainly more than 30 days later. Thus, interest on all of the claims herein accrued from that date, not from the 30th day after proof of claim was received by ATIC. The end date for the calculation of the period of interest shall be the date of payment of the claims. In calculating interest, the date of accrual is excluded from the calculation (see General Construction Law § 20 [“The day from which any specified period of time is reckoned shall be excluded in making the reckoning.”]). Where a motor vehicle accident occurred after April 5, 2002, interest as calculated at the rate of two percent per month, simple, on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9 [a]; Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]). CPLR 5004’s nine percent per annum is superseded by Insurance Law § 5106 [a]’s two percent per month (see Pro-Med Med., P.C. v MVAIC (74 Misc 3d 130[A], 2022 NY Slip Op 50135[U] [App Term 2d, 11th & 13th Dists 2022]).

Attorney’s Fees:

After calculating the sum total of the first-party benefits awarded in this arbitration plus interest thereon, ATIC shall pay North Shore an attorney’s fee equal to 20 percent of that sum total subject to a maximum fee of $1,360.00, as provided for in 11 NYCRR 65-4.6 [d].

Additionally, this Court sustains the $65.00 attorney’s fee for preparatory services in connection with the master arbitration. This is in accordance with 11 NYCRR 65-4.10 [j] [2] [*14][i].^[FN21]

Moreover, pursuant to 11 NYCRR 65-4.10 [j] [4], having successfully prevailed in this Article 75 proceeding, North Shore is entitled to an additional attorney’s fee (see Global Liberty Ins. Co. of New York v North Shore Family Chiropractic, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

Alek Beynenson, Esq., submitted an affirmation in support of an attorney’s fee with regard to this Article 75 proceeding (NYSCEF Doc No. 15). In pertinent part, he wrote:

1. As the principal attorney at The Beynenson Law Firm, P.C., attorneys for Respondent, I provided valuable and necessary services on behalf of NORTH SHORE FAMILY CHIROPRACTIC PC, A/A/O ALBERTO CARPINTEYRO for which I am requesting compensation pursuant to 11 NYCRR 65—4.10(j)(4). . . .

3. I request the usual hour billing rate for my services which is $550.00 per hour. This figure takes into account over a decade of experience specializing primarily in no-fault litigation and arbitration.

4. The total time required to provide these legal services to the client was 3.0 hours including case review, research, drafting, exhibit preparation, and e-filing.

5. Based upon the above calculations, Respondent NORTH SHORE FAMILY CHIROPRACTIC PC, A/A/O ALBERTO CARPINTEYRO seeks an attorney’s fee of $1,650.00 ($550.00 x 3.0 hours) for the necessary time expended in this matter.

This Court notes that Attorney Beynenson did not attest to he himself having performed the work in connection with opposing the petition and preparing the cross-petition. He did not indicate whether a different attorney or perhaps a paralegal performed it. The affirmation in support of the cross-petition contains mostly boilerplate statements which could apply to most Article 75 proceedings to confirm No-Fault arbitration awards, with a few insertions specific to this particular claim. The amount of $550.00 per hour is excessive, especially considering that the attorney’s fee for policy issues litigated in arbitration or at the trial court level in court is $70.00 per hour (see 11 NYCRR 65-4.6 [c]). It is also excessive considering that North Shore’s papers for this case consisted of a two-page answer (NYSCEF Doc No. 12), a one-page notice of cross-petition (NYSCEF Doc No. 13), an eight-page affirmation in opposition to the petition and in support of the cross-petition (NYSCEF Doc No. 14), and a two-page affirmation in support of an attorney’s fee (NYSCEF Doc No. 15).^[FN22] Mr. Beynenson did not even attend oral argument when the proceeding appeared on this Court’s calendar. Neither did Mr. Beynenson submit a timesheet as to when the work was performed and how much time was spent on each document.

In a Kings County No-Fault insurance case involving an appeal to the Court of Appeals, the court awarded $250.00 per hour but this was in connection with the litigation of a novel or unique issue (see Viviane Etienne Med. Care PC v Country-Wide Ins. Co., 59 Misc 3d 579 [Sup Ct, Kings County 2018]). The issue in the case at bar was neither novel nor unique, especially since there was already a plethora of case law on it.

Consdering the factors delineated herein, this Court awards $210.00 for work performed by North Shore’s counsel on this Article 75 proceeding. This Court applied the $70.00 per hour fee for policy issues litigated in arbitration or at the trial level.

Return of Arbitration Filing Fee:

ATIC shall also pay North Shore $40.00 as reimbursement for the fee paid to the AAA [see 11 NYCRR 65-4.5 [s] [1]).

Costs and Disbursements:

As the prevailing party, North Shore shall recover its costs and disbursements, to be taxed by the Clerk.

Other Requested Relief

Any requested relief not expressly addressed herein has nonetheless been considered and is hereby expressly rejected.

Notice to Superintendent of Financial Services and the AAA

The Superintendent of Financial Services (formerly the Superintendent of Insurance) bears the statutory duty to promulgate procedures governing the No-Fault arbitration system (see Insurance Law § 5106 [b], [c], [d]). The AAA has been charged by the Superintendent with administering the No-Fault insurance arbitration program in New York, and “The superintendent shall oversee the operation procedures of the designated organization” (11 NYCRR 65-4.2 [a] [5]). The proper application of case law to No-Fault arbitration is in the public interest. Inasmuch as the underlying arbitration called for application of case law to the No-Fault insurance dispute between the parties, this Court finds that the Superintendent of Financial Services and the AAA be notified of the outcome of this judicial review of the arbitration.

Conclusion

Accordingly, it is hereby ORDERED, ADJUDGED, and DECREED that:

(1) ATIC’s petition to vacate the master arbitration award of Robyn D. Weisman in AAA Case No. 99-21-1223-5155 is dismissed.

(2) North Shore’s cross-petition to confirm said master arbitration award is granted.

(3) Said master arbitration award is confirmed in its entirety.

(4) North Shore is awarded the principal amount of $2,104.48 as No-Fault insurance health service benefits, along with simple interest thereon (i.e., not compounded) at two per cent [*15]per month on a pro rate basis using a 30-day month, computed from October 19, 2021 to the date of payment of the principal amount of $2,104.48, but excluding October 19, 2021 from being counted within the period of interest.

(5) After calculating the sum total of the principal amount of $2,104.48 plus the interest thereon, ATIC shall pay North Shore an attorney’s fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00.

(6) ATIC shall pay North Shore an attorney’s fee of $65.00 for preparatory services in connection with the master arbitration.

(7) ATIC shall pay North Shore an attorney’s fee of $210.00 for work performed by counsel on this Article 75 proceeding.

(8) North Shore shall recover from ATIC costs and disbursements as allowed by law to be taxed by the Clerk.

E N T E R
Dated: Brooklyn, New York, March 20, 2023

______________________________
HON. AARON D. MASLOW
Justice of the Supreme Court of the
State of New York

Footnotes

Footnote 1: The notice of petition seeks vacatur of “the arbitration award issued by Arbitrator Mitchell Lustig, Esq. and/or Master Arbitrator Robyn D. Weisman, Esq.” (NYSCEF Doc No. 2, notice of petition), but it must be deemed to seek vacatur of just the master arbitration award inasmuch as the latter is the final determination of the arbitration process. The No-Fault Regulations provide that “court review pursuant to an article 75 proceeding” is from the “decision of a master arbitrator” (11 NYCRR 65-4.10 [h] [1] [i]). In fact, a party may not appeal from an arbitration award without first seeking master arbitration (see Matter of Staten Island Hospital v USAA, 103 AD2d 744 [2d Dept 1984]). Naturally, if the hearing arbitrator’s award is imperfect, this can impact judicial review of a master arbitration award affirming it.

Footnote 2:Rather than denote the parties here as “Petitioner” and “Respondent” in discussion, the parties’ names are used. This is to facilitate the reader’s understanding of the facts, arguments, analysis, and determination. This also minimizes confusion because the respondent in the underlying arbitration (ATIC) is not the respondent herein but rather is the petitioner herein. The respondent herein, North Shore, was not the respondent in the arbitration, but was the applicant.

Footnote 3:Health service providers obtain standing to pursue No-Fault insurance compensation in arbitration by virtue of having received an assignment of benefits from the respective person claiming to have been injured in a covered motor vehicle accident; such person is often denoted as an “assignor.”

Footnote 4:Paragraph 28 of the petition describes the AAA Case No. as 99-21-1223-5155, which was assigned to the master arbitration appeal. The original arbitration was assigned AAA Case No. 17-21-1223-5155.

Footnote 5:This statutory scheme was developed by New York’s legislature in 1973, as part of a tradeoff whereby lawsuits for pain and suffering sustained from personal injuries in such accidents were limited to instances of serious injury. (See generally Insurance Law art 51; L 1973, ch 13, as amended L 1977, ch 892; John R. Dunne, New York’s No-Fault Automobile Insurance Law—A Glimpse of the Past and a Glance at the Future, 50 NY St BJ 284 [June 1978]; J. Benedict, New York Adopts No-Fault: A Summary and Analysis, 37 Albany L Rev 662 [1973]).

Footnote 6:Although Insurance Law article 51 does not mention the term “No-Fault,” shortly after the post-motor vehicle accident economic loss compensation system was enacted in 1973, the appellation “No-Fault” was adopted in common parlance to describe it.

Footnote 7:This Court uses the term “health service bills” instead of “medical bills” because the No-Fault Law provides for reimbursement of “(i) medical, hospital . . . , surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical therapy . . . and occupational therapy and rehabilitation . . . and (iv) any other professional heath services” (Insurance Law § 5102 [b] [1]). Hence, the No-Fault insurance system encompasses not just “medical” services. In the instant case, the services were chiropractic treatments.

Footnote 8:The prescribed claim forms are included within 11 NYCRR Part 65 (Regulation 68) Appendix 13. Besides Form NF-3 (verification of treatment by attending physician or other provider of health service), Appendix 13 contains Form NF-4 (verification of hospital treatment) and Form NF-5 (hospital facility form).

Footnote 9:There is a prescribed assignment of benefits form (Form NF-AOB) in 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 10:The process of submitting a No-Fault claim to the insurer is governed by 11 NYCRR subpart 65-3, which contains §§ 65-3.1 et seq.

Footnote 11:Form NF-10 is also included within 11 NYCRR Part 65 (Regulation 68) Appendix 13.

Footnote 12:The defense of excessive fees asserted in each denial of claim appears to have been abandoned by ATIC, as Arbitrator Lustig did not refer to it.

Footnote 13:The 45-day rule is set forth within the No-Fault Regulations at 11 NYCRR 65-1.1 (d) (“Conditions”).

Footnote 14:This is the AAA’s electronic case management and filing platform maintained on the Internet; it is known as “Modria,” which was the name of the company which developed it for the AAA (see Liveblogging #ODR2014: The Developing Field of Online Dispute Resolution, https://civic.mit.edu/index.html%3Fp=1452.html [last accessed Mar. 19, 2023]; Welcome to the Modria Resolution Center for the American Arbitration Association, https://aaa-nynf.modria.com/ [last accessed Mar. 19, 2023]).

Footnote 15:TC license plates are indicative that the vehicle was registered for use as a for-hire vehicle.

Footnote 16:Among the more substantial changes in the 1977 legislation were the adoption of fee schedules to limit health service expenses and modifying the threshold categories to be able to sue for pain and suffering.

Footnote 17:Nothing in the Governor’s Bill Jacket for Chapter 13 of the Laws of 1977 or other contemporary records comments on the provision adopting master arbitration review of hearing arbitrators’ decisions, so it is not known why the master arbitration process was created.

Footnote 18:Most non-No-Fault insurance arbitration awards cannot be vacated due to an error of law (see Matter of Sprinzen v Nomberg, 46 NY2d 623, 629-630 [1979]). No-Fault insurance arbitrations are different; an error of law can be the basis for reversal — by a master arbitrator. In that sense, the master arbitrator’s review is broader than that of a court, since a court will not vacate an arbitration award due to an error of law (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207, 211-212 [1981]; Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 800, 802 [2d Dept 2019]).

Footnote 19:11 NYCRR 65-4.10 (a) provides as follows:

Grounds for review. An award by an arbitrator rendered pursuant to section 5106(b) of the Insurance Law and section 65-4.4 or 65-4.5 of this Subpart may be vacated or modified solely by appeal to a master arbitrator, and only upon one or more of the following grounds:

(1) any ground for vacating or modifying an award enumerated in article 75 of the Civil Practice Law and Rules (an article 75 proceeding), except the ground enumerated in CPLR subparagraph 7511(b)(1)(iv) (failure to follow article 75 procedure);

(2) that the award required the insurer to pay amounts in excess of the policy limitations for any element of first-party benefits; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of an appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(3) that the award required the insurer to pay amounts in excess of the policy limitations for any element of additional first-party benefits (when the parties had agreed to arbitrate the dispute under the additional personal injury protection endorsement for an accident which occurred prior to January 1, 1982); provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(4) that an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground);

(5) that the attorney’s fee awarded by an arbitrator below was not rendered in accordance with the limitations prescribed in section 65-4.6 of this Subpart; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart.

Footnote 20:There is no issue of timeliness of ATIC’s denial of claim forms in the case at bar.

Footnote 21:Master Arbitrator Weisman misstated the regulation under which an attorney’s fee is awarded for successfully prevailing at master arbitration. She cited to 11 NYCRR 65-4.6 [d], which is applicable to the hearing arbitration or a trial court adjudication.

Footnote 22:No compensation can be awarded for preparing the affirmation in support of an attorney’s fee (see Hempstead General Hospital v Allstate Ins. Co., 106 AD2d 429 [2d Dept 1984], aff’d 64 NY2d 958 [1985] [attorney’s fee for time spent in substantiating counsel fees is not authorized]).

American Transit Insurance Company, Petitioner, against Marta Medical Supply, Corp, A/A/O SANDRA GOMES, Respondent

Index No. 533882/2022

Attorney for Petitioner
William Robert Larkin, Esq.
Larkin Farrell, LLC
1250 Broadway, 36th Fl.
New York City, NY 10001

Respondent Marta Medical Supply, Corp, A/A/O Sandra Gomes did not appear.

Francois A. Rivera, J.

Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of petition and petition filed on November 18, 2022, by American Transit Insurance Company (hereinafter ATIC or petitioner) pursuant to CPLR Article 75, seeking to vacate an award of a master arbitrator which affirmed, in its entirety, an award of a lower arbitrator in the amount of $4,423.99 in favor of the respondent Marta Medical Supply, Corp, A/A/O Sandra Gomes.

-Notice of Petition
-Petition
-Exhibits A to D
-Affirmation of Service

BACKGROUND

On November 18, 2022, ATIC commenced the instant special proceeding pursuant to CPLR Article 75 to vacate an award of a master arbitrator in favor of the respondent Marta Medical Supply, Corp, A/A/O Sandra Gomes (hereinafter respondent). The respondent has not appeared or interposed an answer.

The petition alleges the following salient facts. The petitioner issued a New York insurance policy to Hugo Gomes which included a no-fault endorsement. The no-fault [*2]endorsement provided coverage to any eligible injured person for all necessary medical expenses, lost wages and other expenses resulting from a motor vehicle accident up to the minimum statutory amount of $50,000.00.

On June 23, 2020, while the policy was in effect, Sandra Gomes (hereinafter Sandra G.) was injured in a motor vehicle accident (hereinafter the subject accident). Sandra G. put the petitioner on notice of the subject accident and the injuries that it caused. Sandra G. sought medical treatment for those injuries and the respondent was one of the medical providers that allegedly rendered treatment to Sandra G. She assigned the right to collect no-fault benefits to the respondent in exchange for the medical treatment she allegedly received.

The respondent submitted no-fault claims to the petitioner seeking reimbursement for medical services rendered to Sandra G. from July 21 through August 4, 2020, in the total amount of $4,423.99. The petitioner did not pay and denied the claim contending that the alleged injuries were not causally related to the motor vehicle accident based, in part, on the opinion of biomechanical expert Omid Komari.

The respondent initiated an arbitration claiming entitlement to $4,423.99. The arbitration matter was decided by Arbitrator Deepak Sohi, Esq. (hereinafter the no-fault arbitrator) who awarded the respondent the full amount claimed of $4,423.99. Thereafter, the petitioner filed for Master Arbitration. Master Arbitrator Burt Feilich, Esq. (hereinafter the master arbitrator) upheld the lower arbitration award in its entirety.

The petitioner contends that the arbitration award was arbitrary and capricious, irrational and without a plausible basis. The petitioner contends that the claim was properly and timely denied for lack of medical necessity and, also, because the petitioner had a founded belief that the alleged injuries were not causally related to the subject accident.

The respondent has not appeared or filed an answer.

LAW AND APPLICATION

A court reviewing the award of a master arbitrator is limited to the grounds set forth in CPLR Article 75, which include, in this compulsory arbitration, the question of whether the determination had evidentiary support, was rational, or had a plausible basis (see Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207, 212 [1981]). Notably, the master arbitrator’s review power is broader than that of the courts’ because it includes the power to review for errors of law (see id. at 211—212; 11 NYCRR 65—4.10[a][4]). In contrast, the courts 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 224, 232 [1982]; see also Matter of Liberty Mut. Ins. Co. v Spine Americare Med., 294 AD2d 574, 576 [2d Dept 2002]).

The petitioner’s evidentiary submissions include the no-fault arbitrator’s award and the master arbitrator’s award. The no-fault arbitrator set forth the following in the award letter. The no-fault arbitrator found that on June 23, 2020, Sandra Gomes was involved in a motor vehicle accident as a passenger. She was injured and sought treatment. Part of the treatment included durable equipment, specifically a lumbar-sacral orthosis, knee orthosis, and shoulder orthosis.

The no fault arbitrator noted that Marta Medical Supply, Corp. was seeking reimbursement for the durable medical equipment provided to Sandra G. on dates of service during July 21, 2020, and August 4, 2020. ATIC denied reimbursement for the durable medical equipment based upon its belief the alleged injuries did not arise out of an insured event and/or were not causally related to a covered incident. ATIC based that claim on Sandra G.’s [*3]examination under oath dated December 4, 2020, and the report of biomechanical engineering consultant, Mr. Omid Komari, PhD, dated December 24, 2020.

The no fault arbitrator found that the opinion of Omid Komari was too vague to provide a definitive analysis of the subject accident. It was also too vague to conclude that Sandra G.’s injuries and subsequent medical treatment were not causally related to the subject accident.

The no fault arbitrator found that ATIC’s evidentiary submission failed to establish that Sandra G.’s injury was not caused by the subject accident and its contention that the medical devices were not medically necessary. The no-fault arbitrator determined that the petitioner failed to meet the burden of proof in support of its lack of medical necessity defense and, accordingly, issued an award in favor of the respondent in the amount of $4,423.99.

The standard for Article 75 court scrutiny of a master arbitrator’s review of a hearing arbitrator’s award in terms of whether there was an error of law is whether it is so irrational as to require vacatur (Am. Transit Ins. Co. v Right Choice Supply, Inc., 2023 NY Slip Op 23039 [Sup Ct Feb. 9, 2023], citing Matter of Smith v Firemen’s Ins. Co., 55 NY2d 224, 232 [1982]).

Here, the master arbitrator reviewed the record and award of the no-fault arbitrator and stated the following findings. The award by the no-fault arbitrator did not violate the regulations. It was within the province of the no-fault arbitrator to determine what evidence to accept or reject and what inferences should be drawn based on the evidence. Upon reviewing the record and evidence submitted, the master arbitrator did not find the no-fault arbitrator’s interpretation of the evidence and applicable law pertaining to this dispute to be arbitrary, capricious, or contrary to law. Consequently, the master arbitrator upheld the award to the respondent in the amount of $4,423.99.

The instant petition is a special proceeding. The procedure for special proceedings contemplates that the petition will be accompanied by affidavits demonstrating the evidentiary grounds for the relief requested (see CPLR 403[a]). It is settled that a special proceeding is subject to the same standards and rules of decision as apply on a motion for summary judgment, requiring the court to decide the matter upon the pleadings, papers, and admissions to the extent that no triable issues of fact are raised (CPLR 409 [b]; Saadia Safdi Realty, LLC v Melvin Press, 207 AD3d 633, 635 [2d Dept 2022], citing Matter of Arben Corp. v Durastone, LLC, 186 AD3d 599 at 600 [2d Dept 2020]).

The evidentiary submissions and legal reasoning proffered by the petitioner did not make a prima facie showing that the no-fault arbitrator’s award or the master arbitrator’s award was either arbitrary or capricious. To the contrary, the petitioner’s evidentiary submissions established that the no-fault arbitrator’s award and the master arbitrator’s affirmance of the award was based on sound and well-reasoned analysis of the evidence submitted and upon the proper application of the pertinent laws and regulations.

CONCLUSION

The petition by petitioner American Transit Insurance Company for an order pursuant to Article 75 of the CPLR vacating an Arbitration Award and a Master Arbitration is denied and the petition is dismissed.

The foregoing constitutes the decision and order of this Court.

ENTER:

_____________________________
J.S.C

Supreme Court, Saratoga County