Matter of NY Med. Health P.C. v New York City Tr. Auth.
Annotate this CaseDecided on July 13, 2009
Civil Court of the City of New York, Kings County
In the Matter of the Arbitration of Certain Controversies between NY Medical Health, P.C., a/a/o Kadrush Mehmeti, Petitioner,
against
New York City Transit Authority and Manhattan and Bronx Surface Transit Operating Authority, Respondent/Cross-petitioner.
50385/2008
Petitioner's Counsel :
Laura Rosenberg & Associates, PLLC
11 Park Place, 10th Floor
New York, NY 10007
Tel: (212) 233-3305
Ivan J. Rodriguez, Esq., Of Counsel, on the petition.
Respondent/Cross-petitioners' Counsel of Record:
Law Offices of Jones Jones O'Connell, LLP
45 Main Street, Suite 1101
Brooklyn, NY 11201
Tel.: (718) 222-8880
Saar Pankowski-Diamond, Esq., of Counsel, on the Cross-petition and in opposition.
Peter P. Sweeney, J.
In this Article 75 proceeding, petitioner, NY Medical & Health, P.C. seeks
to confirm an arbitration award, and respondent, the New York City Transit Authority
(NYCTA), cross-petitions to vacate the award. For the reasons which follow, the petition is
granted and the cross-petition is denied.
Factual Background[*2]
Petitioner's assignor, Kadrush Mehmeti, was involved in an accident on September 9, 2005. On or about October 26, 2005, an application for no-fault benefits was submitted to the NYCTA on Mr. Mehmeti's behalf. On November 21, 2005, the NYCTA issued a blanket denial of coverage stating "[t]he claimant's injury was caused by his own fault and not the use and operation of a TA vehicle. The claimant rode his bike into a disabled bus that was standing still."
The petitioner provided medical treatment to Mr. Mehmeti for this injuries from October 24, 2005 through May 26, 2006. The total cost of the treatment was $5,948.39. On or about October 23, 2006, after Mr. Mehmeti had assigned his entitlement for first-party no-fault benefits from the NYCTA to the petitioner, petitioner served the NYCTA with a demand for arbitration. As part of its arbitration submission, which was served on the respondent, petitioner annexed the medical bills for which it was seeking payment. The bills had not been submitted to the NYCTA prior thereto.
The matter proceed to arbitration and an award was issued in petitioner's favor for the entire amount in dispute, together with interest, costs and attorney's fees. The arbitrator found that petitioner "established by a preponderance of the credible evidence that the accident was indeed due to the use or operation of a New York City Transit Authority motor vehicle."
By letter dated June 21, 2007, the NYCTA demanded a Master Arbitrator's review arguing that the award was "arbitrary and capricious and incorrect as a matter of law." The NYCTA maintained that the arbitrator erred in failing to hold petitioner to its prima facie burden of establishing that the bills had been submitted and had become overdue prior to the time the arbitration was demanded. The Master Arbitrator rejected this argument and affirmed the award in all respects.
On this petition and cross-petition, respondent again argues that the petitioner was required
to prove at the arbitration that the disputed bills had been submitted to the respondent prior to
petitioner's demanding arbitration, and that its failure to do so requires vacatur of the Master
Arbitration award.
Analysis:
Generally, a medical provider establishes its prima facie entitlement to recover on a claim for first-party no-fault benefits by demonstrating that it submitted the claim, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742[2004] ). While respondent correctly states that petitioner failed to make such a showing at the arbitration, however, since respondent had denied all liability for the payment of first-party no-fault benefits on or about November 21, 2005, no such showing was necessary. [*3]
As a condition precedent to the obligation of an insurer to pay first-party no-fault benefits, regardless of whether the insurer is self-insured or is obligated to provide such benefits pursuant to a policy of insurance containing the Mandatory Personal Injury Protection (PIP) Endorsement, an eligible injured person or that person's assignee is required to "submit written proof of claim to the [insurer], including full particulars of the nature and extent of the injuries and treatment received and contemplated, as soon as reasonably practicable but, in no event later than 45 days after the date services are rendered" (11 NYCRR 65-1.1, 65-24[c] ). However, "an insurer cannot insist upon cooperation or adherence to the terms of its policy after it has repudiated liability on the claim * * * by sending a letter denying liability" (Rajchandra Corp. v. Title Guar. Co., 163 AD2d 765,769 [1990] ). In other words, "[o]nce an insurer repudiates liability * * * the [in]sured is excused from any of [his] obligations under the policy" ( Ocean-Clear, Inc. v. Continental Cas. Co., 94 AD2d 717, 718 [1983], see also American Ref Fuel Co. of Hempstead v. Resource Recycling, Inc., 281 AD2d 573, 574 [2001] ), including his obligation to comply with the conditions precedent to the obligation of the insurer to provide coverage (see Auerbach v. Otsego Mut. Fire Ins. Co., 36 AD3d 840, 842 [2007]; Lee v. American Transit Ins. Co., 304 AD2d 713, 714 [2003]; State Farm Ins. Co. v. Domotor, 266 AD2d 219, 220-221 [1999]; Appell v. Liberty Mut. Ins. Co.,22 AD2d 906,906 [1964]; Bornas v. Standard Acc. Ins. Co. of Detroit, Mich., 5 AD2d 96, 102 [1958] ).
In State Farm Ins. Co. v. Domotor, supra., a case almost directly on point, the court applied these principles and concluded that once the insurer unequivocally notified its insured that it was denying all no-fault benefits based upon the opinion of its medical expert that she no longer required medical treatment, the insured was excused from her obligation to comply with the conditions precedent to coverage under the PIP Endorsement regarding submission of proofs of loss (266 AD2d at 220-221). The court held that the insured was therefore entitled to arbitrate her claim that she was entitled to such benefits for medical services provided following the issuance of the denial even though the bills for those services were never submitted to the insurer before she demanded arbitration (id.).
The standard applicable to judicial review of a compulsory arbitration proceeding, such as a no-fault arbitration, is whether the award was "supported by a reasonable hypothesis and was not contrary to what could be fairly described as settled law" ( Matter of State Farm Mut. Auto. Ins. Co. v. Lumbermens Mut. Cas. Co., 18 AD3d 762, 763 [2005], citing Matter of Motor Veh. Acc. Indem. Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 214, 224 [1996]; see also Matter of Hanover Ins. Co. v. State Farm Mut. Auto. Ins. Co., 226 AD2d 533, 534 [1996]; Matter of Adams v. Allstate Ins. Co., 210 AD2d 319, 320 [1994] ). In light of the above principles and on the authority of State Farm Ins. Co. v. Domotor, supra, the Court holds that the Master Arbitrator's award must be confirmed.
Respondent unequivocally notified Mr. Mehmeti on or about November 21, 2005 that it [*4]was denying all no-fault benefits based upon its contention that the accident did not arise out of the use and operation of a TA bus. From that point on, Mr. Mehmeti was excused from his obligation to comply with the conditions precedent to respondent's obligation to pay first-party no-fault benefits, including those which required him to submit written proofs of claim to the respondent. It stands to reason that respondent's repudiation of liability also excused the petitioner, as Mr. Mehmeti's assignee, from its obligation to provide respondent with written proofs of claim since the petitioner as an assignee stood in its assignor's shoes and acquired all his rights and defenses of its assignor (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126 [1975]; East Acupuncture, P.C. v. Allstate Ins. Co., 61 AD3d 202, 211 [2009]; Long Is. Radiology v. Allstate Ins. Co., 36 AD3d 763, 765 [2007] ).
The fact that the respondent is a self-insurer and never issued a policy of insurance is of no consequence. Insurance Regulation 68-B (11 NYCRR § 65-2.1 et seq.) sets forth the liabilities of self-insurers for the payment of first-party benefits as well as the obligations of eligible injured persons who are seeking first-party benefits from a self-insurer. These liabilities and obligations are essentially the same as those set forth in the Mandatory Personal Injury Protection (PIP) Endorsement (see Alleviation Supplies Inc. v. Enterprise Rent A Car, 12 Misc 3d 787, 791 [2006] ). Indeed, it was recently held that "the right to obtain first-party no-fault coverage from a self-insurer is no less than the right to obtain the same from an insure[r] under a policy" (Spring World Acupuncture, P.C. v. NYC Transit Authority, ___ Misc 3d, 2009 NY Slip Op. 29229 [App Term, 2nd & 11th Jud Dists], citing Pinnacle Open MRI, P.C. v. Republic W. Ins. Co., 18 Misc 3d 626 [2008] ). It necessarily follows that when a self-insurer repudiates liability for the payment of first-party benefits, the consequences should be no different than when an insurer repudiates liability for the payment of first-party benefits under the Mandatory PIP Endorsement.
Clearly, the Master Arbitrator's award was supported by a reasonable hypothesis and was not contrary to what could be fairly described as settled law. Respondent's contention that petitioner was required to demonstrate at the arbitration that the disputed claims had been submitted to the respondent prior to service of the demand for arbitration is without merit.
Accordingly, it is hereby
ORDERED that the petitioner's petition to confirm the Master Arbitrator's award is GRANTED and the petitioner may enter judgment for the full amount of the award, together with interest and attorneys as provided for under the No-Fault Law that have accrued since the issuance of the award, plus the costs of this proceeding; and it is further
ORDERED that respondent's cross-petition to vacate the award is DENIED. [*5]
This constitutes the decision and order of the Court.
Dated: July 13, 2009____________/S/____________
PETER P. SWEENEY
Civil Court Judge
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