Preferred Med. Imaging, P.C. v Liberty Mut. Fire Ins. Co.

[*1] Preferred Med. Imaging, P.C. v Liberty Mut. Fire Ins. Co. 2006 NY Slip Op 50278(U) [11 Misc 3d 1059(A)] Decided on January 19, 2006 Suffolk District Court Hackeling, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 19, 2006
Suffolk District Court

Preferred Medical Imaging, P.C., a/a/o Jacob Laufer, Petitioner,

against

Liberty Mutual Fire Ins. Co., Defendant, Respondent.



HUC 7806-05

C. Stephen Hackeling, J.

ORDERED that this petition by a health services provider to vacate the master arbitrator's award in this no-fault matter pursuant to CPLR Article 75 and to enter judgment in favor of the Petitioner is granted.

The Petitioner brings this proceeding under CPLR Article 75 to vacate a no-fault master arbitrator's award, dated September 15, 2005, which affirmed the initial arbitrator's award dated June 14, 2005. It is uncontroverted that the Petitioner properly submitted its claim to the Respondent insurer, and that the claim was untimely denied based on a peer review. In fact, the initial arbitrator's decision found that the "Respondent's denial and supporting evidence were precluded due to the untimeliness of its denial." Nevertheless, she concluded that the Petitioner had the burden to show that the medical services provided had been necessary. Because the Petitioner failed to do so, the initial arbitrator denied the Petitioner's claim. The Petitioner then

appealed to the master arbitrator who affirmed the initial

arbitrator's decision in its entirety. In upholding the initial arbitrator's award denying no-fault benefits to the Petitioner, the master arbitrator stated in his award, inter alia, that:

This argument by [claimant's] counsel raised the pivotal issue of what quantum of proof is required to establish a prima facie case. Most judges, although not all judges, would support the claimant's argument and hold that a prima facie case of necessity is made out by merely filing the notice of claim, a proper assignment and the health provider's bill which are served upon the insurer in a timely fashion. On the other hand, most arbitrators and Master Arbitrators, including this reviewer, do not accept this view of the applicable law but rather rely upon the opinion of the Insurance Department, dated 1/11/00, which instructs that the sufficiency of evidence to establish a prima facie case is purely a question of fact to be separately determined by the trier of fact in each case. The opinion letter concludes its advices by holding that merely submitting its bill without proof of necessity and causation might not be sufficient for the claimant to meet the requirements of Section 5102 of the Insurance Law which mandate that all such No Fault expenses be necessary before reimbursement is allowed. Cf. Pro Scan Imaging PC/Ponte v. Auto One Ins. Co. 17 R 991 32891 04.

The scope of judicial review of a master arbitrator's award for no-fault benefits is whether the award is arbitrary and capricious, irrational, or without a plausible basis (see, General Accident Fire and Life Assur. Corp. Ltd. v. Avery,88 AD2d 739). Moreover, a Court should not set aside an arbitrator's award "for errors of law or fact unless the award is so irrational as to require vacatur" (Hanover Insurance Company v. State Farm Mutual Automobile Insurance Co., 226 AD2d 533). With regard to matters of law, a recent New York City Civil Court decision has stated that:

the arbitrator's decision will be upheld if there is 'any reasonable hypothesis' to support it, such as where the issue is [*2]'unsettled and subject to conflicting

decisions' [See, Motor Vehicle Accident Indemnification Corp. v. Aetna Casualty and Surety Co., 89 NY2d at 224...; see also, Shand v. Aetna Insurance Co., 74 AD2d at 454...] But the award cannot be 'contrary to what could be fairly described as settled law' [see, State Farm Mutual Automobile Insurance Co. v. Lumbermens Mutual Casualty Co., 18 AD3d 762... (2d Dept. 2005). It is 'arbitrary and capricious not to follow clear precedent'. [see, State Ins. Fund v. Country-Wide Ins. Co., 276 AD2d 432].

RDK Medical PC v. General Assurance Company, 8 Misc 3d 1025(A), 806 NYS2d 448, 2005 WL 1936342 [Aug. 12, 2005].

A court, therefore, may vacate an award of a master arbitrator in a no-fault case if it did not have a rational basis (see, In the Matter of Pradip Das/NY Medical Rehab. PC v. Allstate Insurance Company, 297 AD2d 321 [App. Div., 2d Dept., 2002]). In Pradip Das(id.), the Appellate Division, Second Department affirmed an order of the Supreme Court, Richmond County (Maltese, J.) that had vacated a master arbitrator's award virtually on the same facts as those in the matter sub judice. In Pradip Das, the Petitioner sought reimbursement for medical expenses under no-fault, and the Respondent failed to timely deny the Petitioner's claim. Despite the untimeliness of the Respondent's denial, the initial arbitrator denied reimbursement because the Petitioner had failed to prove medical necessity. On Pradip Das' petition, the Supreme Court vacated the determination of the master arbitrator, holding that the master arbitrator had applied the incorrect legal standard in requiring that the health services provider prove medical necessity. The Appellate Division affirmed the lower court's decision concluding that:

Contrary to the appellant's contention, the Supreme Court properly vacated the determination of the master arbitrator which denied the petitioner payment for overdue no-fault benefits because it did not have a rational basis [see, Matter of Nyack Hosp. v.

Government Employees Ins. Co., [139 AD2d 515]; see also, Central General Hospital v. Chubb Group of Ins. Cos. 90 NY2d 195; New York and Presbyt. Hospital v. Empire Ins. Co., 286 AD2d 322; Bonetti v. Integon National Insurance Co., 269 AD2d 413; Vinings Spinal Diagnostic v. Liberty Mutual Ins. Co., 186 Misc 2d 287.

In the Matter of Pradip Das/New York Medical Rehab PC v. Allstate [*3]Insurance Company, supra .

It is the opinion of the Court herein that the master arbitrator's decision lacks a rational basis since it is contrary to the settled law based on the Appellate Division, Second Department's decision in Pradip Das, supra , as well as the clear precedent established in the line of cases holding that an insurer is precluded from raising any defense, other than lack of coverage, when it fails to comply with the rule requiring it to deny a claim within 30 days as required by Insurance Law §5106(a) and 11 NYCRR §65.15(g)(3) (see, Presbyterian Hosp. in City of New York v. Maryland Casualty Co., 90 NY2d 274; Central General Hosp. v. Chubb Group of Insurance Companies, 90 NY2d 195; New York Medical Center of Queens v. Country-Wide Ins. Co., 295 AD2d 583 [App. Div. 2d Dept. 2002]; New York & Presbyt. Hosp. v. American Tr. Insurance Company, 287 AD2d 699 [App. Div. 2d Dept., 2001]; Bonetti v. Integon National Insurance Co., supra ; RDK Medical PC v. General Assurance Co., supra ; T.S. Medical PC v. Country-Wide Insurance Company, 7 Misc 3d 1013 [A], 2005 NY Slip Op. 50581[U]; Kew Gardens Imaging v. Liberty Mutual Insurance Co., 4 Misc 3d 1027 [A]; 798 NYS2d 345, 2004 WL 2169402; Park Radiology PC v. Allstate Insurance Company, 2 Misc 3d 621, 2003 NY Slip Op. 23910; Liberty Queens Med. v. Tri-State Consumer Insurance, 188 Misc 2d 835; Yellin v. Liberty Mutual Ins. Co., 192 Misc 2d 285).

Clearly, the master arbitrator in the instant matter chose not to apply the law as cited in Pradip Das and in the other above noted cases, but rather chose to rely on an informal opinion letter issued by the Insurance Department dated January 11, 2000, which is contrary to the state of legal precedent. Since this Court is bound by the Appellate Division, Second Department's decision in Pradip Das and the settled law in the other legal precedents referenced above, the Court finds that the master arbitrator's denial of the Petitioner's claim is irrational.

Accordingly, Petitioner's application to vacate the master arbitrator's award is granted, and judgment is entered in the Petitioner's favor in the amount of $1,790.67, with statutory interest and attorney's fees as established in Insurance Law §5106(a), plus costs and disbursements of this proceeding.

Dated: January 19, 2006_______________________

J.D.C.