American Tr. Ins. Co. v PDA NY Chiropractic, P.C.

[*1] American Tr. Ins. Co. v PDA NY Chiropractic, P.C. 2023 NY Slip Op 50938(U) Decided on September 1, 2023 Supreme Court, Kings County Maslow, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 1, 2023
Supreme Court, Kings County

American Transit Insurance Company, Petitioner,

against

PDA NY Chiropractic, P.C., A/A/O Leonidis Rodriguez, Respondent.



Index No.: 504957/2023


Larkin Farrell LLC, New York City, for Petitioner. Aaron D. Maslow, J.

The following numbered papers (submitted by Petitioner) were read on this 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 ("PDA's Arbitration Request Form & Submission") (NYSCEF Doc No. 5)
Exhibit D — Petitioner's Arbitration Submission and Master Arbitration Appeal ("ATIC'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)

Issue Presented

Is it incorrect as a matter of law and irrational for a No-Fault insurance master arbitrator [*2]to affirm a hearing arbitrator's [FN1] award determining that (1) a health service provider met its obligation to submit additional verification requested by the insurer under a standard of "substantial compliance," (2) an insurer's seeking sign-in sheets was not reasonable when "medical documentation" was submitted, and (3) an insurer's seeking information as to whether Workers' Compensation benefits were available was not necessary when the assignor testified that he was not working and the insurer did not issue denials of claim based on a Workers' Compensation defense?

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. Hershdorfer, Esq. (dated December 21, 2022), which affirmed the arbitration award of John Kannengieser, Esq. (dated September 26, 2022) granting Respondent PDA NY Chiropractic P.C.'s ("PDA") claim for No-Fault insurance compensation in the amount of $4,150.27 for chiropractic treatment reflected in a total of eight bills.[FN2] ,[FN3] The services at issue were provided to Leonidis Rodriguez, who claimed to have been injured in a motor vehicle accident on February 2, 2020. He assigned his No-Fault insurance benefits to PDA, and is denoted as "Assignor."[FN4] (See NYSCEF Doc No. 1, Petition ¶¶ 1-3, 16-[*3]24.)

Respondent PDA did not submit any papers in opposition. The petition came before the undersigned for oral argument on July 20, 2023. At that time, neither party appeared. This Court has considered the petition on the papers submitted (see Buckley v Zoning Bd. of Appeals of City of Geneva, 189 AD3d 2080, 2081 [4th Dept 2020]; Matter of Dandomar Co., LLC v Town of Pleasant Val. Town Bd., 86 AD3d 83 [2d Dept 2011]; Matter of Javarone, 76 Misc 2d 20, 21 [Fulton County Ct 1973] ["special proceeding "may be summarily determined by the court solely on the pleadings and other papers submitted"], affd 49 AD2d 788 [3d Dept 1975]). A court should review an Article 75 petition to vacate an arbitration award even in the absence of opposing papers (see American Tr. Ins. Co. v NextStep Healing, Inc., 79 Misc 3d 1203[A], 2023 NY Slip Op 50521[U] [Sup Ct, Kings County 2023]).

The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association ("AAA"), which assigned Case No. 17-21-1198-7980 [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):

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] or "personal injury protection (PIP) benefits."[FN8]

In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations was 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 [*4]which encompass the following topics: prescribed policy endorsements (11 NYCRR Subpart 65-1), rights and liabilities of self-insurers (11 NYCRR Subpart 65-2), claims for personal injury protection benefits (11 NYCRR Subpart 65-3), arbitration (11 NYCRR Subpart 65-4), and unauthorized providers of health services (11 NYCRR Subpart 65-5). Part 65 is also known as Insurance Regulation 68.

Generally, the claims process for health service bills [FN9] for No-Fault insurance 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).[FN10] Besides providing information regarding the injured person, the accident, the subject insurance policy, the billing health service provider, diagnoses, and projected treatment, 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 whereby 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.[FN11] ,[FN12] The insurer must then 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 [FN13] explaining why the bill was not paid. (See Insurance Law § 5106 [a]; Viviane Etienne Med. 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 eight claim forms covering services for a period of February 19, 2020-September 29, 2020, as per the Form AR Arbitration Request Form (see NYSCEF Doc No. 5, PDA's Arbitration Request Form & Submission at 6).[FN14] The following chart provides pertinent information concerning the eight bills and how Respondent dealt with them:

Dates of Service

Amount

Respondent's Actions

2/19/20-2/28/20

$285.94

Issued additional verification requests 4/1/20 & 5/6/20, seeking examination under oath ("EUO") of Assignor, sign-in sheets from dates of service, and letter of medical necessity. Reminder of non-provision of requested additional verification 7/20/20. No denial of claim issued.

3/2/20-3/23/20

$739.84

Issued additional verification requests 4/15/20 & 5/20/20, seeking EUO of Assignor, sign-in sheets from dates of service, and letter of medical necessity. Reminder of non-provision of requested additional verification 5/27/20 & 7/20/20. No denial of claim issued.

4/7/20

$26.41

Denial of claim asserted untimely proof of claim ("45-day rule").

[*5]5/4/20-5/28/20

$647.36

Issued additional verification requests 6/16/20 & 7/21/20, seeking EUO of Assignor, information from Assignor to determine eligibility for Workers' Compensation independent livery fund coverage,[FN15] sign-in sheets from dates of service, chiropractic re-evaluation report, and letter of medical necessity. No denial of claim issued.

6/1/20-6/30/20

$1017.28

Issued additional verification requests 7/20/20 & 8/24/20, seeking EUO of Assignor, information from Assignor to determine eligibility for Workers' Compensation independent livery fund coverage, sign-in sheets from dates of service, chiropractic re-evaluation report, and letter of medical necessity. Reminder of non-provision of requested additional verification 9/24/20. No denial of claim issued.

[*6]7/1/20-7/30/20

$739.84

Issued additional verification requests 8/17/20 & 9/21/20, seeking EUO of Assignor, information from Assignor to determine eligibility for Workers' Compensation independent livery fund coverage, sign-in sheets from dates of service, chiropractic re-evaluation report, and letter of medical necessity. No denial of claim issued.

8/3/20-8/31/20

$462.40

Denial of claim asserted lack of medical necessity based on Dr. John Iozzio's independent medical examination ("IME") report.

9/3/20-9/29/20

$231.20

Denial of claim asserted lack of medical necessity based on Dr. John Iozzio's IME report.

(See NYSCEF Doc No. 5, PDA's Arbitration Request Form & Submission at 6, 8-33; NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Brief at 19-38, 40-43.) Hearing Arbitrator's Award

The record evidence reveals further that on August 26, 2022, Arbitrator John Kannengieser, Esq. ("hearing arbitrator"), conducted a hearing at which George T. Lewis Jr., Esq., from George T. Lewis, Jr., P.C., appeared for PDA, and Megan Harris appeared for ATIC (see NYSCEF Doc No. 3, Arbitration Award at numbered p 1).

The American Arbitration Association maintains an online platform for documents filed by parties to No-Fault insurance arbitrations. It is called Modria.[FN16] The submissions for the arbitration at issue are contained in NYSCEF Doc Nos. 5 and 6 submitted by ATIC.

With respect to the bill for date of service April 7, 2020, which was denied on the asserted ground of late proof of claim, the hearing arbitrator found credible PDA's claim that the [*7]bill was timely mailed (see NYSCEF Doc No. 3, Arbitration Award at numbered p 2). This determination has not been challenged by ATIC.

With respect to the bills for dates of service August 3, 2020-August 31, 2020 and September 3, 2020-September 29, 2020, the hearing arbitrator found that Dr. John Iozzio's IME report made out a prima facie case of lack of medical necessity for further treatment, but that PDA's medical records and reports documenting continued pain, reduced range of motion, muscle spasm, and subluxations were sufficiently credible enough to prove medical necessity. Therefore he awarded compensation as billed. (See id. at numbered pp 2-3.)

Finally, with respect to the five remaining bills — covering dates of service February 19, 2020-February 28, 2020; March 2, 2020-March 23, 2020; May 4, 2020-May 28, 2020; June 1, 2020-June 30, 2020; and July 1, 2020-July 30, 2020 — the hearing arbitrator noted that no denials of claim were issued. Rather, ATIC delayed the bills in order to seek additional verification. He took note that an EUO of Assignor was sought, as well as certain medical documentation, information pertaining to livery fund coverage (as potential Workers' Compensation benefits), and PDA's dates of service sign-in sheets. (See id. at numbered p 2.)

Responses to the requests for medical documentation were acknowledged by ATIC, wrote the hearing arbitrator. The EUO of Assignor was conducted. Since Assignor "clearly testified" at his EUO that he was not working at the time of the accident, there was no need for the information pertaining to Workers' Compensation through the livery fund. "[ATIC]'s request for sign-in sheets is not a reasonable request, as medical documentation for each of the [dates of service] at issue has been provided." (Id.) For the affected five bills pended for additional verification, the amounts billed were awarded, as the hearing arbitrator denied ATIC's defense that the bill claims were premature in the absence of additional verification being provided (see id.).

Altogether the hearing arbitrator awarded $4,150.27 as No-Fault insurance benefits to PDA. He also awarded interest of 2% per month, an attorney's fee, and return of the $40.00 filing fee (see id. at numbered pp 4-5; Insurance Law § 5106 [a]; 11 NYCRR 65-4.5 [s]).

Master Arbitrator's Award

ATIC filed for master arbitration to appeal the hearing arbitrator's award. It presented two arguments.

(A) Rebutting the IME Report

The first contention on appeal by ATIC was that the hearing arbitrator erred as a matter of law and his award was irrational because when he assessed ATIC's defense of lack of medical necessity with respect to the two bills denied on that ground, he did not take into account well settled case law concerning the need for a medical claimant to meaningfully rebut and discuss the conclusions of the insurer's expert (citing Innovative Chiropractic, P.C. v Mercury Ins. Co., 25 Misc 3d 137[A], 2009 NY Slip Op 52321 [2d, 11th & 13th Dists 2009]), and other decisions (see NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Brief at 138-140).

Master Arbitrator Victor J. Hershdorfer, Esq. ("master arbitrator") summarized this first issue in dispute as follows: "Was the arbitrator's determination that the applicant met its burden as to medical necessity irrational and/or incorrect as a matter of law?" (NYSCEF Doc No. 4, Master Arbitration Award at 1.)

The master arbitrator noted that the medical necessity issue was determined in PDA's favor by the hearing arbitrator. The latter had "found that the IME by Dr. Iozzio shifted the [*8]burden," and that while PDA "submitted no direct rebuttal to the IME but relied upon medical records and reports," PDA's evidence was "sufficient . . . to meet its burden of proving the medical necessity of the health services at issue" (id. at 2).

Having summarized the hearing arbitrator's analysis, the master arbitrator concluded with his own:

Insurance Law §5102 provides for reimbursement for all medically necessary expenses on account of personal injuries arising out of the use or operation of a motor vehicle.Unfortunately, neither the statute nor the regulations interpreting the stature define what is "necessary". That determination is almost ultimately one of fact to be determined by the arbitrator or a court on a case-by-case basis. See opinion of the Office of General Counsel of the Superintendent of Insurance, www.ins.ny.us/rg000111.htm (January 11, 2000).The role of the master arbitrator is to review the determination of the no-fault arbitrator to be sure that the arbitrator reached a decision in a rational manner and that the decision was not irrational, arbitrary or capricious. Petrofsky v. Allstate Insurance Co., 54 NY2d 207 (1981).A master arbitrator exceeds his statutory power by making his own factual determination, by reviewing factual and procedural errors committed during the course of the arbitration, by weighing the evidence, or by resolving issues such as the credibility of witnesses. Matter of Allstate Insurance Co. v. Keegan, 201 AD2d 724 (2d Dept., 1994); Mott v. State Farm Insurance Co., 55 NY2d 224 (1982). See also Metro Pain Specialist, P.C., Matter of Country-Wide Ins. Co., 2020 NY Slip Op. 50014 (App. Term, 2nd Dept., 9th, 10th Jud. Dists. 1/2/2020.)The arbitrator is free to choose between the experts' testimony and evaluate the evidence. Bilotta v. Chevrolet-Tonawanda Division GMC, 81 AD2d 718 (3d Dept., 1981).. . .The determination as to medical necessity is not irrational or incorrect as a matter of law.
(B) ATIC's Additional Verification Requests

ATIC's second contention on appeal was that the hearing arbitrator erred as a matter of law in rejecting ATIC's arguments with respect to the five bills pended for additional verification. In pertinent part, ATIC argued:

The 30 day period under 11 NYCRR § 65-3.3 in which a no-fault insurer must either pay or deny a claim for first party benefits may be extended by the insurer's timely requests for verification of the claim, and, until the insurer receives verification of the claim, the 30-day period is tolled and the insurer need not pay or deny the claim. See, New York Hosp. v. Country-Wide, 295 AD2d 583, 744 N.Y.S.2d 201 (2d Dep't 2002); Westchester County Medical Center v. New York Central Mut. Fire Ins. Co., 262 AD2d 553, 692 N.Y.S.2d 665 (2d Dep't 1999).. . .Where a plaintiff has not provided verification of all the relevant information requested by the insurer, a no-fault action will be dismissed as premature. See, Infinity Health Products, Ltd. v Eveready Ins. Co., 67 AD3d 862, 865, 890 N.Y.S.2d 545 (2d Dep't 2009); New York Hosp. v Country-Wide, supra.. . .Since to this day, the Respondent has not received the records it needs to take a position [*9]on the claim, this matter should have been dismissed.The NFA's conclusion that since the Applicant stated at his EUO that he was not injured in the course of his employment no response was required, lacks a rational basis. . . .In any event, the claimant's self-certified conclusion that he is entitled to PIP and not Workers' Compensation is obviously not dispositive of the issue.Accordingly, the order appealed from should be reversed.(See NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Brief at 135-137.)

This second issue was summarized by the master arbitrator as follows: "Should the arbitrator's determination that the applicant had substantially complied with the verification requests be reversed" (NYSCEF Doc No. 4, Master Arbitration Award at 1)?

The master arbitrator's analysis of the hearing arbitrator's consideration of the additional verification issue was as follows:

The argument was that the verification sought, if provided, would have allowed the appellant to take a position as to whether the claim was covered by the no-fault policy or by Workers' Compensation Insurance.. . .The arbitrator found that the testimony of the EIP clearly established that he was not working at the time of the accident and that after reviewing the various requests for verification and the responses provided that the applicant has substantially complied with the verification requests and that the claims at issue are overdue.The arbitrator is the judge of the relevance and materiality of the evidence offered. 11 NYCRR 65-4.5(o)(1).The question as to whether the applicant's obligations to provide verification have been met is almost always one of fact. 11 NYCRR §65-3.5(o) requires an applicant to submit ". . . all such verification under the applicant's control or possession providing reasonable justification for the failure to comply . . ." .It is then up to the arbitrator to determine whether the applicant has met the test set forth in the regulation.In this case, the arbitrator found for the applicant.. . .The arbitrator's determination that the applicant had substantially complied with the verification requests is not incorrect as a matter of law.(NYSCEF Doc No. 4, Master Arbitration Award at 3-4 [emphasis added].)
(c) Master Arbitration Outcome

The master arbitrator affirmed the hearing arbitrator's award in its entirety.

(NYSCEF Doc No. 4, Master Arbitration Award at 3.) ATIC's Petition to Vacate

(A) Introductory Allegations

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 John Kannengieser, Esq. failed to follow well settled law" (id. ¶ 37). "An arbitration award must be vacated by the Master Arbitrator if the decision was incorrect as a matter of law. (id. ¶ 36). It also made reference to the grounds set forth in CPLR 7511 (b) (1) for vacating an arbitration award:

The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate 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.(See NYSCEF Doc No. 1, Petition ¶ 33.) (B) Rebutting the IME Report

The petition argued that the hearing arbitrator "failed to follow well settled law with respect to the medical necessity issue" (id. ¶ 62). Two bills at issue "for dates of service August 3, 2020-September 29, 2020 were properly and timely denied for lack of medical necessity" (id. ¶ 63). ATIC's evidence submitted to the hearing arbitrator (Dr. Iozzio's IME report) "clearly satisfied its burden" (id. ¶ 65). Ultimately the health service provider—PDA in this instance—had to prove by a preponderance of the evidence that its services were medically necessary, claimed ATIC; the petition to vacate cited to 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]), and Park Slope Med. and Surgical Supply, Inc. v Travelers Ins. Co. (37 Misc 3d 19, 22 n [App Term, 2d Dept, 2d, 11th & 13th Dists 2012]) (see NYSCEF Doc No. 1, Petition ¶ 66). "In order for an applicant to prove that the services were medically necessary, it must meaningfully refer to, or rebut, the conclusions set forth in the peer review," maintained the petition, which cited to Pan Chiropractic, P.C. v Mercury Ins. Co. (24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d Dept, 2d, 11th & 13th Dists 2009]) (NYSCEF Doc No. 1, Petition ¶ 67). PDA failed to offer any rebuttal at all, and certainly did not meaningfully refer to the IME report, as was required by Pan Chiropractic, P.C. and the more than 100 published decisions citing to it, insisted ATIC (see id. ¶ 68).

ATIC reiterated in several paragraphs of its petition that a health service provider seeking No-Fault medical expense compensation must meaningfully refer to and rebut an insurer's peer reviewer's and IME doctor's conclusions (id. ¶¶ 72-76). "This proposition is widely accepted as 'well settled' law in the industry" (id. ¶ 76). "In this case the arbitrator also ruled for Respondent [PDA] despite the fact that there was no rebuttal. In doing so the arbitrator failed to follow well settled law. As such, this Court should vacate the arbitration award for the same reasons the Appellate Term reversed the trial courts in Pan Chiropractic, Eastern Star Acupuncture, Jaga Med. Servs., P.C. and High Quality Medical." (Id. ¶ 79)

"This decision was arbitrary and capricious, without rational basis and incorrect as a matter of law because zero evidence simply cannot outweigh evidence" (id. ¶ 81). The petition concluded by asserting that the hearing arbitrator ignored ATIC's "evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant [PDA]" (id. ¶ 83).

(C) ATIC's Additional Verification Requests

With respect to the additional verification issue, ATIC argued that claims "for dates of service February 19, 2020-July 30, 2020 [were] not paid because [ATIC] timely and properly [*10]requested verification and [PDA] failed to comply with [ATIC]'s request"[FN17] (id. ¶ 42). The No-Fault Regulations at 11 NYCRR 65-3.5 (b) and 3.6 (b) permit a health service provider to request additional verification (see id. ¶ 43). ATIC took issue with the hearing arbitrator's having awarded compensation "despite the fact that [PDA] failed to provide the requested verification" (id. ¶ 49). The hearing arbitrator "even acknowledged that items were not provided, disregarded the request for sign in sheets and failed to apply the well settled law to justify an award in favor of [PDA]" (id.). No-Fault benefits are not payable "until all verification is received pursuant to 11 NYCRR 65-3.8(a)(1)" (id. ¶ 50), and "the 30 days in which to pay or deny the claim is tolled and does not begin to run" (id. ¶ 51). Since PDA did not provide all that was sought its claim was premature (see id.).

ATIC insisted that it

"was not required to pay or deny the claim after its receipt of a partial response. See New Horizon Surgical Ctr., LLC v Travelers Ins. Co., 2019 NY Slip Op 51690(U) (App. Term, 2d Dept., 2019) (holding, 'Contrary to plaintiff's contention, defendant was not required to pay or deny plaintiff's claims upon receipt of a 'partial response' to defendant's verification requests . . .; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2004] ['A claim need not be paid or denied until all demanded verification is provided']).' (See also, Compas Med., P.C. v Travelers Ins. Co., 2016 NY Slip Op 51441(U), (App. Term, 2d Dept., 2016) (holding, 'Contrary to plaintiff's contention, defendant was not required to pay or deny plaintiff's claims upon receipt of a 'partial response' to defendant's verification requests').(Id. ¶ 53.) Moreover, the requested additional verification may be sought from someone other than the health service provider, ATIC citing to several decisions. "The need for sign in sheets is obvious, to confirm that the claimant actually showed up for the alleged services. . . . It is outside the scope of the arbitrator's authority to simply disregard a timely request." (Id. ¶ 55.)

Therefore, ATIC's rights were prejudiced by the arbitrator's partiality "and the arbitrator exceeded his/her power and failed to make a final and definite award and the decision must be vacated" (id. ¶ 84). The relief sought was vacatur of the arbitration awards that they "have no force or effect" (id. ¶ 85).

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.[FN18] 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 [*11]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.[FN19]

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 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 [*12]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).[FN20] 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]).[FN21]

Discussion

(A) Standard of Review

The proper standard of review by a No-Fault insurance master arbitrator is whether the hearing arbitrator's determination was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law; the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various [*13]medical reports, or making independent findings of fact (Matter of Petrofsky (Allstate Ins. Co.), 54 NY2d 207 [1981]).

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 was so irrational as to require vacatur (see Matter of Smith (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 869 [2d Dept 2018]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828 [2d Dept 2017]). The master arbitrator's determination of the law need not be correct, and mere errors of law are insufficient to set aside the master arbitrator's award; on questions of substantive law, the master arbitrator's determination must be upheld if there is a rational basis for his determination; if the master arbitrator's errors on a matter of law are irrational, his award may be set aside (see Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]).

Judicial review of a master arbitrator's factual determination in an arbitration appeal is limited to whether the master arbitrator exceeded his or her power, for instance by impermissibly weighing the credibility of a witness, by reviewing the hearing arbitrator's factual determination, or by reviewing medical reports de novo (see Matter of Allstate Ins. Co. v Keegan (201 AD2d 724 [2d Dept 1994].

It is important to again state that arbitration of No-Fault compensation claims is compulsory against insurers (see n 19, supra). A health service provider who possesses standing via an assignment of benefits makes the election of whether to litigate its claim in court or in arbitration, which is binding upon the insurer (see Insurance Law § 5106 [b]). Such compulsory arbitration awards are held to higher level of scrutiny (see Matter of Motor Veh. Acc. Indemn. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214 [1996]; Matter of Smith, 55 NY2d 224; Matter of Petrofsky, 54 NY2d 207; Mount St. Mary's Hosp. of Niagara Falls v Catherwood, 26 NY2d 493 [1970]; Matter of GEICO Gen. Ins. Co. v Wesco Ins. Co., 211 AD3d 729 [2d Dept 2022]).

(B) Rebutting the IME Report

As noted above, ATIC's petition to vacate the master arbitrator's award is predicated on two grounds. The first is that the hearing arbitrator failed to follow well settled law that a health service provider applicant in arbitration must meaningfully refer to, or rebut, the conclusions set forth in the health service provider's medical expert's report and, therefore, the master arbitrator's affirmance was erroneous.

This Court has previously discussed the issue raised by ATIC—whether a health service provider applicant in No-Fault insurance arbitration must submit expert medical opinion evidence which specifically refers to and either discusses or rebuts the insurer's expert medical opinion evidence. This Court held that it need not, because the case law ATIC relied upon governs summary judgment motions in court, not No-Fault arbitrations. (See American Tr. Ins. Co. v Right Choice Supply, 78 Misc 3d 890 [Sup Ct, Kings County 2023].) Assessment of medical necessity entails a factual review of evidence and this is committed to the arbitrator's discretion (id.). As this Court wrote,

In part, this Court's present determination is based on the additional provision in 11 NYCRR 65-4.10 (a) (4) which provides that "procedural or factual errors committed in the arbitration below are not encompassed within this ground." The reference to "factual errors" conveys impliedly that when it comes to assessing evidence for the purpose of fact-finding, an arbitrator has wider latitude and should not be required to comply with [*14]settled or established law concerning what specific evidence suffices to refute the opposing party's evidence. This Court also 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 Square Teachers Association v Board of Education of the Central Square Central School District, 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 International, 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."]). In light of this case law with respect to the admissibility of evidence and the determination of issues of fact in arbitration, 11 NYCRR 65-4.10 (a) (4)'s "matter of law" should be limited in its breadth.(78 Misc 3d at 909-910.)

Therefore, this Court holds that the hearing arbitrator did not err when he did not require a formal rebuttal from PDA which would have specifically referred to and either discussed or rebutted ATIC's IME report. It was within the arbitrator's discretion to find that PDA's treatment notes finding reduced range of motion, muscle spasm, and subluxations overcame the IME report and proved medical necessity. Further, when the master arbitrator conducted his review, he adhered to Matter of Petrofsky (54 NY2d 207), which restricted it to whether the hearing arbitrator's determination was arbitrary, capricious, irrational, or without a plausible basis, or incorrect as a matter of law, as the master arbitrator may not engage in an extensive factual review, which includes weighing the evidence, assessing the credibility of various medical reports, or making independent findings of fact.

As an Article 75 court, this Court finds that the master arbitrator correctly affirmed the factual findings as to medical necessity especially because PDA did not have to meaningfully refer to and either discuss or rebut the IME report. Whether services were medically necessary entails a factual determination, the hearing arbitrator assessed the facts appropriately, and the master arbitrator conducted a proper appellate review; this master arbitration review was neither irrational nor erroneous as a matter of law (see Matter of Smith, 55 NY2d 224, 232; Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828). This Court sustains this component of the master arbitrator's award, which concerned bills for dates of service August 3, 2020-August 31, 2020 and September 3, 2020-September 29, 2020.

(C) ATIC's Additional Verification Requests

This Court concludes otherwise with regard to the additional verification issue, which impacted five bills, the dates of service being February 19, 2020-February 28, 2020; March 2, 2020-March 23, 2020; May 4, 2020-May 28, 2020; June 1, 2020-June 30, 2020; and July 1, 2020-July 30, 2020.

(1) No-Fault Insurance Law Lacks Concept of Substantial Compliance With Verification Requests

This Court again takes cognizance of the hearing arbitrator's finding that PDA "substantially complied" with ATIC's additional verification requests — that Assignor's EUO [*15]testimony that he was not working when the accident occurred and there were no denials premised on a Worker's Compensation defense obviated the need for livery fund information, and that requesting sign-in sheets was unreasonable because medical documentation for the dates of service was provided.

"Upon receipt of one or more of the prescribed verification forms used to establish proof of claim, . . . an insurer has 15 business days within which to request any additional verification required by the insurer to establish proof of claim (11 NYCRR 65-3.5 [b]). . . . Significantly, an insurance company must pay or deny the claim within 30 calendar days after receipt of the proof of claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). If an insurer seeks additional verification, however, the 30-day window is tolled until it receives the relevant information requested (see 11 NYCRR 65-3.8 [a] [1])." (Viviane Etienne Med. Care, P.C., 25 NY3d 498, 505 [2015] [internal quotation marks and citations omitted].)

The No-Fault program "stresses the justifying of claims" (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]). Information sought as additional verification is not necessarily that which can be found on the prescribed verification forms "but any information that the carrier finds necessary to properly review and process the claim" (Westchester Med. Ctr. v Travelers Prop. & Cas. Ins. Co., 2001 NY Slip Op. 50082 [U] *3 [Sup Ct, Nassau County 2001]).

"The insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested" (11 NYCRR 3.5 [c] [emphasis added]). "A claim need not be paid or denied until all demanded verification is provided" (Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553, 554 [2d Dept 1999] [emphasis added]); accord New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]).

Case law has been consistently to the effect that a partial response to an additional verification request is insufficient. For example, in D & R Med. Supply, Inc. v Clarendon Nat. Ins. Co. (22 Misc 3d 1127[A], 2009 NY Slip Op 50306[U] [Civ Ct, Kings County 2009]), the court held that where an insurer issues a verification request seeking from the claimant an invoice, CPT codes, and medical records but only an invoice was provided and the insurer followed this up twice, seeking the CPT codes and medical records, the claimant's complaint had to be dismissed as the action was commenced prematurely.

It is manifest that an insurer is not required to pay or deny a claim upon receipt of a partial response to a verification request (see Chapa Products Corp. v MVAIC, 66 Misc 3d 16 [App Term, 2d, 11th & 13th Dists 2019]; New Horizon Surgical Ctr., LLC v Travelers Ins. Co., 65 Misc 3d 139[A], 2019 NY Slip Op 51690[U] [App Term, 2d, 11th & 13th Dists 2019]; Compas Med., P.C. v Travelers Ins. Co., 53 Misc 3d 136[A], 2016 NY Slip Op 51441[U] [App Term, 2d, 11th & 13th Dists 2016]).

"Even accepting plaintiff's assertion that it submitted certain verification documents to defendant, the record establishes that plaintiff did not fully respond to defendant's requests for additional verification, which were properly mailed to plaintiff's attorney as authorized by counsel's prior correspondence to defendant (see St. Vincent's Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338 [2002]; GNK Med. Supply, Inc. v Tri-State Consumer Ins. Co., 37 Misc 3d 138[A], 2012 NY Slip Op 52195[U] [App Term, 1st Dept 2012]). Since verification remained outstanding, the then-applicable thirty-day period to pay or deny the claims did not begin to run, the claims were not overdue, and plaintiff's action is premature (see St. Vincent [*16]Med. Care, P.C. v Country Wide Ins. Co., 80 AD3d 599, 600 [2011]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999])." (Orthoplus Prods., Inc. v Global Liberty Ins. Co. of NY, 64 Misc 3d 128[A], 2019 NY Slip Op 51003[U] *1 [App Term, 1st Dept 2019].)

Therefore, it is contrary to law to hold that a health service provider need only "substantially comply" with additional verification requests. The hearing arbitrator's determination was contrary to established law — as provided in the No-Fault Regulations at 11 NYCRR 3.5 [c] and in case law recited herein, rendering it arbitrary, capricious, and irrational (see Matter of Petrofsky, 54 NY2d 207). In No-Fault insurance law, there is no concept of "substantial compliance" with an insurer's additional verification requests; partial compliance simply does not suffice. PDA was required by law to provide the sign-in sheets and ATIC was also entitled to await Assignor's provision of information as to whether he was eligible for the livery fund's Workers' Compensation benefits instead of No-Fault insurance.

When the master arbitrator wrote, "The arbitrator's determination that the applicant had substantially complied with the verification requests is not incorrect as a matter of law" (NYSCEF Doc No. 4, Master Arbitration Award at 3), this confirmed an erroneous standard of compliance with additional verification requests. This master arbitration finding was erroneous as a matter of law — contrary to the No-Fault Regulations at 11 NYCRR 3.5 [c] and the case law recited herein — and rose to the level of being so irrational as to require vacatur (see Matter of Smith, 55 NY2d 224, 232 ("the courts are limited in their further review of the master arbitrator's resolution of that error of law, since we generally will not vacate an arbitrator's award where the error claimed is the incorrect application of a rule of substantive law . . . unless is it so irrational as to require vacatur"); Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828; Matter of Health & Endurance Med., P.C. v Deerbrook Ins. Co., 44 AD3d 857 [2d Dept 2007]).[FN22]

(2) An Assignor's EUO Testimony of Not Working Does Not Vitiate Seeking Livery Fund Information to Determine If Workers' Compensation Benefits Are Available

The hearing arbitrator excused PDA's provision of livery fund information because the Assignor "clearly testified that he was not working at the time of this accident" (NYSCEF Doc [*17]No. 3, Arbitration Award at 2). Again, this was arbitrary and capricious.

The livery fund information had been sought by ATIC from Assignor in order to determine whether he was eligible for Workers' Compensation benefits instead of No-Fault insurance. In seeking additional verification, an insurer is not limited to seeking it from the applicant (see Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 9th & 10th Dists 2007]). "Regulation § 65-3.5(c) provides that an insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification is requested. This latter section does not confine or require the insurer to seek information solely from the provider but rather contemplates that verification information may be sought from any source." (Westchester Med. Ctr. v One Beacon Ins. Co., 22 Misc 3d 1102[A], 2008 NY Slip Op 52580[U] *2 [Sup Ct, Nassau County 2008]). Verification requests to the injured person will pend bills from a medical provider who treated him (see Liberty Mut. Ins. Co. v Brutus, 76 Misc 3d 1201[A], 2022 NY Slip Op 50799[U] [Sup Ct, NY County 2022]). It was more than appropriate for ATIC, as the No-Fault insurer, to seek information from Assignor to determine his possible eligibility for Workers' Compensation insurance as an alternative.

Workers' Compensation benefits are primary to those injured as a result of a motor vehicle accident while in the course of their employment (see Insurance Law § 5102 [b] [2]). It is settled law that the determination of whether someone was injured in the course of employment is more suitably made by the Workers' Compensation Board (e.g. Arvatz v Empire Mut. Ins. Co., 171 AD2d 262 [1st Dept 1991]; Dunn v American Tr. Ins. Co., 71 AD3d 629 [2d Dept 2010]; LMK Psychological Servs., P.C. v American Tr. Ins. Co., 64 AD3d 752 [2d Dept 2009]).

While a determination by an arbitrator that a No-Fault insurer failed to submit prima facie evidence that one was injured in the course of employment is a factual issue which should not be disturbed by an Article 75 court (see American Tr. Ins. Co. v North Shore Family Chiropractic PC, 78 Misc 3d 1212[A], 2023 NY Slip Op 50208[U] [Sup Ct, Kings County 2023]), here ATIC was not afforded the opportunity to deny PDA's claims with a course-of-employment defense because the hearing arbitrator would not even permit it to assemble documentation to perform the preliminary inquiry as to Assignor's status. To accept an injured person's word without permitting the No-Fault insurer to seek pertinent evidence on the issue was arbitrary and capricious.

The master arbitrator wrote, "The arbitrator found that the testimony of the EIP clearly established that he was not working at the time of the accident. . . ." (NYSCEF Doc No. 4, Master Arbitration Award at 3.) This was incorrect. The hearing arbitrator wrote, "[T]he EIP clearly testified that he was not working at the time of the accident" (NYSCEF Doc No. 3, Arbitration Award at 2). The hearing arbitrator did not make a credibility finding regarding Assignor's testimony. Testifying does not necessarily equate to establishing.

Moreover, the hearing arbitrator referenced that ATIC had not denied bills based on a Workers' Compensation defense (see NYSCEF Doc No. 3, Arbitration Award at 2). This is an arbitrary reason to deny ATIC's request for documents which might establish coverage under Workers' Compensation. A request for additional verification precedes issuance of a denial of claim — not follows it (see 11 NYCRR 65-3.8 [b] [3] [insurer shall not issue denial of claim prior to receipt of all requested verification]). An insurer is not permitted to issue a denial of claim first and then seek additional verification; doing so puts the cart before the horse.

(3) Medical Documentation is Not a Substitute for Sign-In Sheets

The hearing arbitrator found that "medical documentation" having been provided, it was "unreasonable" to request sign-in sheets (NYSCEF Doc No. 3, Arbitration Award at 2). This Court finds this to be arbitrary and capricious in light of the well established case law holding that all additional verification sought by a No-Fault insurer must be provided; incomplete responses are not acceptable (see supra at 16-18).

A heath service provider may not avoid replying to a No-Fault insurer's additional verification request seeking a specific form or document by providing something else or answering with an excuse which declines to provide what was sought. For example, a medical report stating that the assignor had signed a "separate, comprehensive Informed Consent Form which has been made a portion of the patient's chart" does not suffice to comply with an additional verification request for a signed informed consent form from the assignor (see New Horizon Surgical Ctr., L.L.C. v Travelers Ins., 62 Misc 3d 150[A], 2019 NY Slip Op 50281[U] [App Term, 2d, 11th & 13th Dists 2019]).

A medical equipment supplier fails to provide requested additional verification when, in response to a request for an initial report and letter of medical necessity from the referring physician, it merely states that the supplies at issue had been provided pursuant to a doctor's prescription and does not advise the insurer of the doctor's name or where he is located (see D & R Medical Supply v American Tr. Ins. Co., 32 Misc 3d 144[A], 2011 NY Slip Op 51727[U] [App Term, 2d, 11th & 13th Dists 2011]). In another instance of a health service provider's response being insufficient, it was held that a response of "Be further advised that this response constitutes full compliance with any purported requests and constitutes the provider's submission of all relevant documents in the provider's possession. Any further requests should be directed to the party that possesses such other information. Therefore any further requests to this provider are deemed unnecessary and in violation of 11 NYCRR §65-3.2 (c)," in response to the insurer's verification request for a "manufacturers invoice documenting the cost of the medical equipment or supplies" and "proof of payment for the medical equipment or supplies" hardly constitutes good faith; the failure to provide the additional verification warrants dismissal of the claim as premature (see Custom Orthotics, Ltd. v Government Employees Ins. Co., 25 Misc 3d 545 [Civ Ct, Queens County 2009]).

A response by a health service provider to additional verification requests which states that it is an ambulatory surgery facility and, as such, "does not possess all the medical records," and that the insurer should "request any additional information directly from the treating provider," constitutes an insufficient response, and the 30-day period to pay or deny the claim has not yet begun to run (see Excel Surgery Ctr., L.L.C. v Fiduciary Ins. Co. of Am., 55 Misc 3d 131[A], 2017 NY Slip Op. 50408[U] [App Term, 2d, 11th & 13th Dists 2017]).

Just as the foregoing cited cases establish that a response from a health service provider other than one furnishing that which was requested is insufficient, so too was "medical documentation"[FN23] in place of sign-in sheets.

If courts have sustained additional verification requests seeking wholesale invoices for furnished medical supplies and equipment (see CPM Med Supply, Inc. v State Farm Fire and [*18]Cas. Ins. Co., 63 Misc 3d 140[A], 2019 NY Slip Op 50576[U] [App Term, 2d, 11th & 13th Dists 2019] [provider's excuse that fee could be determined without wholesale invoice constitutes failure to comply]); MRI films (see Radiology Today, P.C. v New York Cent. Mut. Fire Ins. Co., 34 Misc 3d 139(A), 2011 NY Slip Op 52452[U] [App Term, 2d, 11th & 13th Dists 2011]; session notes (see Boro Medical & Psych Treatment Servs., P.C. v Country Wide Ins. Co., 2002 NY Slip Op 50538[U] [App Term, 2nd & 11th Dists 2002]); and an assignor's Social Security number (see Olympic Chiropractic, P.C. v American Tr. Ins. Co., 14 Misc 3d 129[A], 2007 NY Slip Op 50011[U] [App Term, 2d & 11th Dists 2007]), it is certainly reasonable to request sign-in sheets for the dates of service.

Verification of the authenticity of claims is consistent with one of the purposes underlying the adoption of new No-Fault insurance regulations which took effect in 2002 — to rein in fraud in the form of "medical mills [generating] stacks of medical bills for each passenger, detailing treatments and tests that were unnecessary or never performed" (Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854, 861 [2003] [emphasis added]). A No-Fault insurer's seeking as additional verification copies of No-Fault forms containing signatures helps insure that compensation is not paid for services not performed (see Doshi Diagnostic Imaging Servs. v Progressive Ins. Co., 12 Misc 3d 144[A], 2006 NY Slip Op 51430[U] (App Term, 9th & 10th Dists 2006); DWP Pain Free Med. P.C. v Progressive Northeastern Ins. Co., 14 Misc 3d 800 [Dist Ct, Suffolk County 2006]).

"Plaintiff's objection to the reasonableness of the request for the MRI films is unavailing. It is readily apparent that copies of any MRI films (or lack of such films) would substantiate whether the billed MRIs were, in fact, actually performed." (Lenox Hill Radiology & MIA, P.C. v Hereford Ins. Co., 72 Misc 3d 702, 712 [Civ Ct, NY County 2021].) Likewise, seeking PDA's sign-in sheets is reasonable as their provision would substantiate Assignor's actually being present for treatment.

(4) Reasonableness of Additional Verification Requests

This Article 75 Court's determination concerning the subject hearing and master arbitration awards is not to be construed as holding that an additional verification request can never be unreasonable. This Court's determination must be construed in light of the eminent reasonableness of ATIC having sought provider sign-in sheets and information as to whether Assignor might be eligible for alternative (Workers' Compensation) benefits.

While there has been case law finding certain additional verification requests unreasonable, usually these holdings concern instances of procedural abuse by No-Fault insurers as compared to the substance of the requests.

For instance, "A provider should not have to repeatedly provide documentation it has already provided unless the insurer can establish a reasonable basis and rational need for demanding this material anew" (Brownsville Advance Med., P.C. v Country-Wide Ins. Co., 33 Misc 3d 1236[A], 2011 NY Slip Op 52255[U] *3 [Dist Ct, Nassau County 2011). Moreover, an applicant provides reasonable justification for the failure to comply with an insurer's verification requests identical to each of four bills and containing 34 unnumbered and unlettered bullet point demands by showing that its objection letters challenged the requests as "unduly burdensome and abusive" and seeking further clarification, and that the insurer rebuffed the objection letters by stating that it was entitled to each item as a matter of law. "The court notes that if plaintiff wished to respond to specific verification requests, it had no method by which to refer to a specific request, since the voluminous requests were not numbered or lettered or presented in [*19]any cogent way with specificity." (Pro-Align Chiropractic, P.C. v Travelers Prop. Cas. Ins. Co., 58 Misc 3d 857, 862 [Dist Ct, Suffolk County 2017].)

However, "[J]ust as an insurer must have 'good cause' to demand verification, so too must a provider have a 'reasonable justification' for refusal to provide a response" (HKP Physical Therapy, P.C. v Government Employees Ins. Co., 67 Misc 3d 282, 300-301 [Sup Ct, NY County 2019], citing 11 NYCRR 65-3.8 [b] [3], [o]). A strong showing of good cause requires an equally compelling justification for withholding any responsive items, and responses categorizing the requests as irrelevant, unduly burdensome, or moot because they were already substantially complied with cannot prevail (see id. at 301).

In the instance of a No-Fault insurance arbitrator finding that an additional verification request was unreasonable, such determination must be assessed at first by a master arbitrator to determine whether the hearing arbitrator reached her decision in a rational manner, i.e., whether it was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law (see Matter of Petrofsky, 54 NY2d 207). Then the master arbitrator's award must be assessed by the Article 75 court in terms of whether there was an error of law which was so irrational as to require vacatur or whether the master arbitrator exceeded her power (see Matter of Smith, 55 NY2d 224, 232; Matter of Acuhealth Acupuncture, PC, 170 AD3d 1168; Matter of Acuhealth Acupuncture, P.C., 167 AD3d 869; Matter of Acuhealth Acupuncture, P.C., 149 AD3d 828; Matter of Health & Endurance Med., P.C., 44 AD3d 857; Matter of Liberty Mut. Ins. Co., 294 AD2d 574; Matter of Allstate Ins. Co. v Keegan (201 AD2d 724 [2d Dept 1994]).

However, even if an arbitrator's award finds that an additional verification request was unreasonable, such an assessment must be conducted without application of a doctrine of substantial compliance — as was the situation here — because nothing in the No-Fault Regulations or in case law construing such Regulations suggests that such a standard exists.

(5) Instant Claim Was Premature in Terms of Bills Not Denied

An insurer may deny a claim where requested additional verification has not been provided within 120 days of the initial request (see 11 NYCRR 65-3.5 [o], 65-3.8 [b] [3]). Issuance of such a "120-day denial of claim" for failure to provide requested additional verification is optional (see Island Life Chiropractic Pain Care, PLLC v Zipcar, 72 Misc 3d 141[A], 2021 NY Slip Op 50844[U] *2 [App Term, 2d, 11th & 13th Dists 2021]).

If an insurer demonstrates that it did not receive requested verification and no 120-day denial of claim was issued on that basis, and the claimant does not show that the verification had been provided to the insurer prior to the commencement of the action, the 30-day period within which the insurer was required to pay or deny the claim did not begin to run and, thus, the action is premature and should be dismissed without prejudice (see AOM Med. Supply, Inc. v Hereford Ins. Co., 69 Misc 3d 142[A], 2020 NY Slip Op 51366[U] [App Term, 2d, 11th & 13th Dists 2020]; Daily Med. Equip. Distrib. Ctr., Inc. v Interboro Ins. Co., 56 Misc 3d 135[A], 2017 NY Slip Op. 50958[U] [App Term, 2d, 11th & 13th Dists 2017]).

Here, there was no 120-day denial of claim. In the absence of ATIC having received the sign-in sheets and livery fund (possible eligibility for Workers' Compensation benefits) information, that part of PDA's claim for payment of pended bills should have been dismissed without prejudice by the hearing arbitrator as being premature. The hearing arbitrator having awarded No-Fault compensation and the award having been affirmed by the master arbitrator, the latter's award must be vacated insofar as the pended bills are concerned.

Conclusion

ATIC has successfully established herein that insofar as the master arbitration award affirmed the hearing arbitration award with respect to the bills pended for additional verification, it was arbitrary, capricious, and irrational because it contravened well settled law (see 11 NYCRR 65-4.10 [a] [4]). In that respect the master arbitrator "exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made" (CPLR 7511 [b] [1] [iii]; see Matter of Kowaleski (New York State Dept. of Correctional Servs.), 16 NY3d 85 [2010]; Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 799 [2d Dept 2019]; Matter of Global Liberty Ins. Co. v McMahon, 172 AD3d 500 [1st Dept 2019]; Matter of Liberty Mut. Ins. Co., 294 AD2d 574; Allstate Ins. Co. v Natural Healing Acupuncture, P.C., 39 Misc 3d 1217[A], 2013 NY Slip Op 50645[U] [Civ Ct, Kings County 2013]).

On the other hand, ATIC has not successfully established herein that insofar as the master arbitration award affirmed the hearing arbitration award with respect to the bills denied on the basis of Dr. John Iozzio's IME report (lack of medical necessity), it was arbitrary, capricious, and irrational because it contravened well settled law (see 11 NYCRR 65-4.10 [a] [4]). Contrary to ATIC's assertions, in that respect none of the grounds it cited from CPLR 7511 [b] [1] for vacating the master arbitration award apply.

Since none of the grounds for modifying an arbitration award pursuant to CPLR 7511 [c][FN24] apply and this Court may not partially confirm and partially vacate the master arbitration award (see Zunzurovski v Jacaranda Club, LLC, 2022 NY Slip Op. 33984[U] [Sup Ct, NY County 2022]), this Court must vacate the master arbitration award (see CPLR 7511 [b] [1] [iii]). A remand is necessary (see CPLR 7511 [d]).

It is hereby ORDERED, ADJUDGED, and DECREED that the master arbitration award of Victor Hershdorfer, Esq., dated December 21, 2022, in AAA Case No. 99-21-1198-7980, is hereby VACATED, and the within arbitration claim of Respondent PDA NY Chiropractic, P.C. is remanded in its entirety to the American Arbitration Association for a rehearing, with the within decision constituting the law of the case (see Allcity Ins. Co. v Eagle Ins. Co., 1 Misc 3d 41 [App Term, 2d & 11th Dists 2003]).

Dated: September 1, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York Footnotes

Footnote 1:The term "hearing arbitrator," referring to the arbitrator who initially conducted the hearing, is used to distinguish him from the master arbitrator, who determined the appellate arbitration.

Footnote 2:The notice of petition seeks vacatur of "the arbitration award issued by Arbitrator John Kannengieser, Esq. and/or Master Arbitrator Victor J. Hershdorfer, Esq. under Article 75 of the CPLR" (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]; see also Insurance Law § 5106 [c]). In fact, a party may not appeal from a hearing arbitration award (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 Prop. & 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]). It follows that if the hearing arbitrator's award is imperfect, this can affect 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 henceforward. 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, PDA, 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 99-21-1198-7980, which was assigned to the master arbitration appeal (see NYSCEF Doc No. 4, Master Arbitration Award at 1). The original arbitration was assigned AAA Case No. 17-21-1198-7980 (see NYSCEF Doc No. 3, Arbitration Award at numbered p 1).

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 resulting 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:The term "personal injury protection benefits" is a creature of the No-Fault Regulations (see 11 NYCRR Subpart 65-3) and does not appear in the statute.

Footnote 9: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 at issue were chiropractic office visits and treatment.

Footnote 10: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). Not every No-Fault insurance provider uses the prescribed forms; some utilize a HICF (Health Insurance Claim Form) or a UB-04 form more commonly used for inpatient and outpatient claims billed by hospitals, healthcare facilities, and surgical facilities.

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

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

Footnote 14:References to page numbers in NYSCEF filings lacking specified page numbers are to the PDF page numbers.

Footnote 15:The information specifically sought from Assignor regarding potential eligibility for Workers' Compensation independent livery fund coverage as additional verification concerning this bill and the next two was as follows:
(1) "Submit the name of the Base or Car Service at the time of accident."
(2) "List any smart phone applications or other radio bases the claimant received dispatched calls from."
(3) "Confirmation the named Base paid into the Livery Fund."
(4) "If claimant worked during period of treatment, please submit an affidavit of the date returned to work."
(5) "Please provide us with notarized copy of your social security card."
(NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Brief at 24, 27, 29, 31, 33, 35, 37, 40, 42.)

Footnote 16: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 17:PDA's bill for date of service April 7, 2020 was denied on the asserted defense of untimely proof of claim and, therefore would not be encompassed within the February 19, 2020-July 30, 2020 period applicable to bills for which additional verification was requested.

Footnote 18: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 for suing for noneconomic loss, i.e., pain and suffering.

Footnote 19: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 (see Matter of Bamond v Nationwide Mut. Ins. Co., 75 AD2d 812, 813 [2d Dept 1980], affd 52 NY2d 957 [1981]). This Court speculates that at least one reason was that No-Fault arbitration was compulsory and the Legislature desired to permit a party to an arbitration to seek review of the hearing arbitrator's award on the basis of an assertion of an error of law, which traditionally was not a basis for review in an Article 75 proceeding (see Mott v State Farm Ins. Co., 77 AD2d 488 [3d Dept 1980], revd sub nom. on other grounds Matter of Smith v Firemen's Ins. Co., 55 NY2d 224 [1982]).

Footnote 20: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.

Footnote 21:11 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 22:While substantial compliance may be acceptable in other areas of insurance law, it is not always the appropriate standard of compliance; strict compliance is sometimes required (e.g. Argo Corp. v Greater NY Mut. Ins. Co., 4 NY3d 332 [2005] [no notice of claim submitted]; Barile v Kavanaugh, 67 NY2d 392 [1986] [failure to advise insured that insurance must be maintained continuously vitiates cancellation notice]; GEICO Indem. v Roth, 56 AD3d 1244 [2d Dept 2008] [cancellation procedure]; Matter of Rue v Northeast Timber Erectors, 289 AD2d 787 [3d Dept 2001] [attempt to cancel Workers' Compensation insurance coverage ineffective since carrier failed to establish that it requested return receipt when notice of cancellation sent by certified mail]; Home Indem. Co. v de Martinez, 240 AD2d 580 [2d Dept 1997] [billing notice to policyholder failed to include advices that insured has option of remitting premium payment either through producer or directly to company so subsequent cancellation invalid]; Cohn v Royal Globe Ins. Co., 67 AD2d 993 [2d Dept 1979], affd 49 NY2d 942 [1980] [cancellation notice invalid due to type face smaller than 12 points].)

Footnote 23:The hearing arbitrator did not describe the "medical documentation." Presumably it was the reports for the dates of service.

Footnote 24:CPLR 7511 (c) provides:

Grounds for modifying. The court shall modify the award if:

1. there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or

2. the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or

3. the award is imperfect in a matter of form, not affecting the merits of the controversy.