Opinion
9533/2015
03-01-2016
Acuhealth Acupuncture, P.C., a/a/o LANCY ESTREMERA, Petitioner, v. New York City Transit Authority, Respondent.
Daniel Klein, Esq. Tsisirelman Law Firm PLLC Attorneys for Petitioner 79-09B Northern Boulevard Jackson Heights, New York 11372 Aaron E. Meyer, Esq. Foley, Smit, O'Boyle & Weisman Attorneys for Respondent 300 Wheeler Road, Hauppauge, New York 11788
Daniel Klein, Esq. Tsisirelman Law Firm PLLC Attorneys for Petitioner 79-09B Northern Boulevard Jackson Heights, New York 11372 Aaron E. Meyer, Esq. Foley, Smit, O'Boyle & Weisman Attorneys for Respondent 300 Wheeler Road, Hauppauge, New York 11788 Lara J. Genovesi, J.
Upon the foregoing papers, the petitioner Acuhealth Acupuncture, P.C, moves for an order (1) pursuant to CPLR § 7511, vacating a master arbitrator's award; (2) granting the petitioner $1,831.24 plus statutory interest, attorney's fees, costs and disbursements including arbitration fees; (3) or in the alternative remanding the matter to arbitration for further proceedings not inconsistent with the insurance law and implementing regulations and case law thereunder; and (4) such other and further relief as the Court deems just and proper. Respondent the New York City Transit Authority (NYCTA), opposes the application
Background
Petitioner, Lancy Estremera, was injured in an automobile accident on April 3, 2010. The respondent, NYCTA, is self-insured. At the time of the accident the automobile insurance policy contained New York State no fault law benefits for health insurance expenses. Petitioner, Acuhealth Acupuncture, P.C. (Acuhealth), performed services and is the assignee for Lancy Estremera. Acuhealth did not receive payment in full for services provided and filed a request for arbitration.
Robyn McAllister, an arbitrator designated by the American Arbitration Association, rendered an arbitration award on November 23, 2014. The issue presented to the arbitrator was "whether applicant is entitled to reimbursement for acupuncture treatment where the policy of insurance has been exhausted." (Notice of Petition, Exhibit 2, Arbitration Award). Acuhealth sought reimbursement in the amount of $1,831.24. "Respondent partially denied the majority of the Applicant's claim predicated on the Worker's Compensation Fee Schedule and denied the remainder of the claim based on exhaustion of the policy of insurance" (Notice of Petition, Exhibit 2, Arbitration Award). Respondent paid for all of the acupuncture services on the chiropractic fee schedule. The claims in dispute are as follows: Dates of ServiceBilledBill ReceivedDisputed Amount 07/07/10-08/07/1008/16/1008/20/10$955.09 09/03/10-09/30/1010/13/1010/27/10$270.07 10/07/10-10/14/1011/16/1012/02/10$253.02 10/23/10-11/03/1011/16/1012/02/10$107.44 11/04/10-11/18/1012/06/1012/10/10$80.50 01/01/11-01/19/1102/03/1102/03/11$165.04 The arbitrator found that the partial denials for dates of service 07/07/10-8/7/10; 10/07/10-10/14/10; and 11/04/10-11/18/10 "were late on their face". And there was no specific denial for services on 01/01/11-1/19/11.
The arbitrator's award is silent as to the partial denials for services performed on 09/03/10-09/30/10 and 10/23/10-11/03/10.
The arbitrator further found that Acuhealth "sustained its burden of demonstrating a prima facie showing of entitlement to reimbursement for the acupuncture service". However, at the time that Acuhealth's last bill was received on February 7, 2011, the policy was exhausted. The arbitrator stated that the "Applicant may not recover any of the outstanding fees since any such award would exceed my authority". In making this determination, the arbitrator relied, in part, on Matter of Brijmohan v. State Farm Ins. Co., (92 NY2d 821, 699 N.E.2d 414, 677 N.Y.S.2d 55 [1998]) and Matter of State Farm Ins. Co. v. Credle (228 AD2d 191, 643 N.Y.S.2d 97 [1 Dept., 1996]).
The petitioner requested a review of the arbitrator's award by a master arbitrator. Master Arbitrator Marilyn Felenstein rendered an award on April 28, 2015. The master arbitrators' award states that "Applicant seeks vacatur of the award as being arbitrary and capricious and incorrect as a matter of law because it did not take into consideration the proper priority of payment" (Notice of Petition, Exhibit 3, Master Arbitration Award). The master arbitrator award stated that, In the award of the lower arbitrator, it is clearly explained that an arbitration award made in excess of the contractual limits of an insurance policy would be in excess of the arbitrator's authority. After consideration of the briefs of both parties, it is determined that the lower arbitrator has set forth a rational basis for the award as issued. The lower arbitrator correctly refused to exceed the authority granted by statute and case law and denied the claim. The request for the vacaur [sic] of the award is denied and the award is sustained as written.
The petitioner commenced the instant proceeding pursuant to CPLR 7511(b) to vacate the arbitration award contending that the master arbitrator's award is arbitrary, capricious, irrational, and in violation of the letter and the spirit of the no-fault law. In opposition to the petition, NYCTA asserted that the arbitrator's determination had a reasonable hypothesis and was not arbitrary and capricious.
Discussion
The Standard of Review
It is well settled that a court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power (see Matter of New York City Tr. Auth. v. 1199 69 Transport Workers' Union of Am., Local 100, AFL—CIO, 6 NY3d 332, 336, 812 N.Y.S.2d 413, 845 N.E.2d 1243 [2005]; Matter of United Fedn. of Teachers, Local 2, AFT, AFL—CIO v. Board of Educ. of City School Dist. of City of NY, 1 NY3d 72, 79, 769 N.Y.S.2d 451, 801 N.E.2d 827 [2003]; CPLR 7511[b][1][iii] ). Even where an arbitrator has made an error of law or fact, courts generally may not disturb the arbitrator's decision (see Transport Workers' Union of Am., Local 100, AFL—CIO, 6 NY3d at 336, 812 N.Y.S.2d 413, 845 N.E.2d 1243 ["(C)ourts are obligated to give deference to the decision of the arbitrator. This is true even if the arbitrator misapplied the substantive law in the area of the contract" (citations omitted)]). In re Falzone (New York Cent. Mut. Fire Ins. Co.), 15 NY3d 530, 939 N.E.2d 1197, 914 N.Y.S.2d 67 [2010]).
The Codes Rules and Regulations of the State of New York state that an arbitration award may be vacated or modified solely by appeal to a master arbitrator, when "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)" (11 NYCRR 65-4.10 (a) (4); see Colon v. GEICO, 18 AD3d 467,794 N.Y.S.2d 431 [2 Dept., 2005]; see also Matter of Petrofsky, 54 NY2d 207, 445 N.Y.S.2d 77, 429 N.E.2d 755 [1981]). "The power of the master arbitrator to review factual and procedural issues is limited to whether the arbitrator acted in a manner that was arbitrary and capricious, irrational or without a plausible basis'" (Matter of Petrofsky, 54 NY2d 207, 211, 445 N.Y.S.2d 77, 429 N.E.2d 755)." (Liberty Mut. Ins. Co. v. Spine Americare Medical, P.C., 294 AD2d 574, 743 N.Y.S.2d 144 [2 Dept., 2002]). Further, an arbitration award may be modified or vacated pursuant to CPLR section 7511(b)(1)(iii) if it "manifestly exceeds a specific, enumerated limitation on the arbitrator's power." (Kowaleski v. New York State Department of Correctional Services, 16 NY3d 85, 942 N.E.2d 291, 917 N.Y.S.2d 82 [2010]).
Since arbitration pursuant to Insurance Law §5105(b) is compulsory, the arbitrators determination is subject to "closer judicial scrutiny" than an arbitration conducted pursuant to a voluntary agreement ( Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 214, 674 N.E.2d 134, 9652 N.Y.S.2d 584 [1996]). "Moreover, with respect to determinations of law, the applicable standard in mandatory no-fault arbitrations is whether any reasonable hypothesis can be found to support the questioned interpretation'" (Fiduciary Ins. Co. v. American Bankers Ins. Co. of Florida, 132 AD3d 40, 14 N.Y.S.3d 427 [ 2 Dept., 2015], quoting Shand v. Aetna Ins. Co., 74 AD2d 442, 428 N.Y.S.2d 462 [2 Dept., 1980]).
At issue here is the interplay of the priority of lien regulation and the arbitrators authority to direct payment in excess of the no fault policy.
Priority of Lien Regulation
"The no-fault regulations provide that "[n]o-[f]ault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to section 65-3.5" (11 NYCRR 65-3.8 [a] [1]). With exceptions not relevant to this appeal, an insurer may not deny a claim "prior to its receipt of verification of all of the relevant information requested pursuant to section 65-3.5 (11 NYCRR 65-3.8 [b] [3])." (Nyack Hosp. v. General Motors Acceptance Corp., 8 NY3d 294, 864 N.E.2d 1279, 832 N.Y.S.2d 880 [2007]). The insurance regulation which dictates priority states that, When claims aggregate to more than $50,000, payments for basic economic loss shall be made to the applicant and/or an assignee in the order in which each service was rendered or each expense was incurred, provided claims therefor were made to the insurer prior to the exhaustion of the $50,000. If the insurer pays the $50,000 before receiving claims for services rendered prior in time to those which were paid, the insurer will not be liable to pay such late claims. If the insurer receives claims of a number of providers of services, at the same time, the payments shall be made in the order of rendition of services. (11 NYCRR 65-3.15).
The Court of Appeals in Nyack Hosp. v. General Motors Acceptance Corp. (8 NY3d 294, supra) stated that, the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65), determined that these regulations were "the most effective means of advancing the legislative intent of providing prompt payment of [no-fault] benefits as the loss is incurred, while reducing rampant abuse. . . . In sum, the priority-of-payment regulation came into play . . when the insurer received the requested inpatient hospital records, which established verified claims aggregating more than $50,000. At that point, the insurer should have paid the hospital ahead of any other unpaid verified claims for services rendered or expenses incurred later than the services billed by the hospital, up to the policy's limits. The insurer was required to pay these moneys to the hospital . . . .
Arbitrators Authority to Direct Payment in Excess of the No Fault Policy
"Relief granted by an arbitrator cannot exceed a specifically enumerated limitation on his or her power [citations omitted]" ( Merrick Union Free School Dist. v. Merrick Faculty Ass'n, Inc., 87 AD3d 536, 928 N.Y.S.2d 60 [2 Dept., 2011]). "It is well settled that an arbitration award may be vacated upon the ground that the arbitrator exceeded his or her authority by making an award in excess of the limits fixed by the insurance policy ( see, Matter of Brijmohan v. State Farm Ins. Co., 92 NY2d 821, 677 N.Y.S.2d 55, 699 N.E.2d 414; Matter of Sagona v. State Farm Ins. Co., 218 AD2d 660, 630 N.Y.S.2d 352; Matter of Allstate Ins. Co. v. Silver, 225 AD2d 690, 639 N.Y.S.2d 485)." ( Spears v. New York City Transit Authority, 262 AD2d 493, 692 N.Y.S.2d 100 [2 Dept., 1999]).
Analysis
The arbitrator's award essentially stated that Acuhealth billed for services provided and partial payment was made by the NYCTA. Although NYCTA's denials were late, the arbitrator was unable to award the disputed portion of the bills, $1,831.24, on November 23, 2014, since the policy was exhausted as of February 1, 2011. The arbitrator stated that to do so would exceed her authority. The master arbitrator found that the arbitrator's award was not arbitrary, capricious nor incorrect as a matter of law inasmuch as the award of $1,831.24 would be in excess of the policy limits.
This Court appreciates the petitioner's valid argument, however, the standard of review of an arbitration award is limited. Acuhealth failed to demonstrate, by clear and convincing evidence, the existence of any of the statutory grounds for vacating the master arbitrator's award (see generally Matter of Collazo v. Suffolk County, — AD3d ?, 2016 NY Slip Op 01321 [2 Dept., 2016]). Here, petitioner's claim that the arbitrator erred in failing to apply the priority of payment falls squarely within the category of claims of legal error, which courts generally cannot review. Further, a reasonable hypothesis can be found to support the master arbitrator's interpretation that the arbitrator does not have the authority to direct payment in excess of the no fault policy. Petitioner's reliance on Nyack is insufficient to warrant a determination that the master arbitrator's award was arbitrary, capricious or incorrect as a matter of law. The Court in Nyack concluded that while awaiting information to verify a pending claim, the priority of payment regulation does not preclude the insurer from paying other verified claims. The Nyack action was a court proceeding, de novo — it did not involve an arbitration. The standard herein is quite different. Petitioner has not presented any appellate authority permitting the arbitrator to exceed a specific enumerated limitation on the arbitrators power by rendering an award in excess of the policy limits. The master arbitrator in confirming the lower arbitration award had evidentiary support and a rational basis, and was not arbitrary, capricious, irrational or without a plausible basis (see Mercury Cas. Co. v. Healthmakers Medical Group, P.C., 67 AD3d 1017, 888 N.Y.S.2d 762 [2 Dept., 2009]; see also Matter of Petrofsky, 54 NY2d 207, supra).
Conclusion
The petition to vacate the master arbitrator's award is denied. "Upon denying a motion to vacate or modify an arbitration award, the court must confirm the award (see CPLR 7511[e]; 1018 Larsen & Toubro Ltd. v. Millenium Mgt. Inc., 45 AD3d 453, 845 N.Y.S.2d 330; Matter of American Fed. Group v. AFG Partners, 277 AD2d 119, 120, 717 N.Y.S.2d 42)." (id.). Accordingly, the master arbitrator's award is confirmed. The foregoing constitutes the decision and order of this Court. ENTER: __________________ Hon. Lara J. Genovesi J.S.C.