American Tr. Ins. Co. v Nexray Med. Imaging PC

[*1] American Tr. Ins. Co. v Nexray Med. Imaging PC 2023 NY Slip Op 50953(U) Decided on September 8, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 8, 2023
Supreme Court, Kings County

American Transit Insurance Company, Petitioner,

against

Nexray Medical Imaging PC d/b/a Soul Radiology, a/a/o Carlos Colon, Respondent.



Index No. 531377/2022



Larkin Farrell LLC, New York City (Anthony Troise of counsel), for Petitioner.

Roman A. Kravchenko, Garden City, for Respondent.
Aaron D. Maslow, J.

The following numbered papers were read on this petition:

Submitted by Petitioner

NYSCEF Doc No. 1: Petition

NYSCEF Doc No. 2: Notice of Petition

NYSCEF Doc No. 3: Exhibit A — Arbitration Award

NYSCEF Doc No. 4: Exhibit B — Master Arbitration Award

NYSCEF Doc No. 5: Exhibit C — Respondent's Arbitration Request Form and Arbitration Submission

NYSCEF Doc No. 6: Exhibit D — Petitioner's Arbitration Submission and Master Arbitration Appeal

NYSCEF Doc No. 7: Statement of Authorization for Electronic Filing

NYSCEF Doc No. 8: Request for Judicial Intervention

NYSCEF Doc No. 9: Proof of Service

NYSCEF Doc No. 10: Statement of Authorization for Electronic Filing

NYSCEF Doc No. 11: Affidavit of Service

NYSCEF Doc No. 12: Statement of Authorization for Electronic Filing

Submitted by Respondent

NYSCEF Doc No. 13: Notice of Cross-Petition

NYSCEF Doc No. 14: Cross-Petition

Submitted by Petitioner

NYSCEF Doc No. 15: Affirmation in Opposition to Cross-Motion and in Reply in Support of Petition

NYSCEF Doc No. 16: Exhibit A — Order & Judgment in Kings Co. Index No. 530086/22

Respondent's reply affirmation in support of the cross-petition (NYSCEF Doc No. 17) filed on September 7, 2023 (19 days after oral argument while the matter was sub judice, is not considered inasmuch as it was not timely filed and no application to accept it or proffer explaining its untimeliness was submitted to this Court (see CPLR 402, 2214, 3012; 22 NYCRR 202.8, 202.9; Aneke v Parks, 197 AD3d 601 [2d Dept 2021]; Garner v Rosa Coplon Jewish Home & Infirmary, 189 AD3d 2105 [4th Dept 2020]; Evans v Perl, 19 Misc 3d 1119[A], 2008 NY Slip Op 50775[U], *5 n 2 [Sup Ct, NY County 2008]; cf. Wilcox v Newark Valley Cent. School Dist., 107 AD3d 1127 [3d Dept 2013]).

Introduction

Petitioner American Transit Insurance Company ("ATIC") submitted a notice of petition and petition via an Article 75 proceeding under the CPLR. ATIC requests the Court to vacate the Master Arbitrator's award in a No-Fault insurance arbitration in favor of the Respondent herein, Nexray Medical Imaging PC ("Nexray"). (See NYSCEF Doc No. 1, Petition; NYSCEF Doc No. 2, Notice of Petition.)

Background

ATIC seeks to vacate the $1,790.67 award rendered by Master Arbitrator A. Jeffrey Grob, Esq., in American Arbitration Association ("AAA") Case No. 99-20-1166-0711, in favor of Nexray (see NYSCEF Doc No. 1, Petition ¶ 3; NYSCEF Doc No. 2, Notice of Petition at 1). Nexray had performed MRIs (lumbar spine on July 13, 2019, and left shoulder on July 19, 2019) on policyholder Carlos Colon ("Assignor") to diagnose any injuries resulting from a motor vehicle accident on May 2, 2019 (see NYSCEF Doc No. 5, Nexray's Arbitration Request Form and Arbitration Submission at 12-15 [Form NF-3 claim form re lumbar spine MRI], 16-19 [Form NF-3 claim form re left shoulder MRI]). ATIC denied payment of the No-Fault insurance medical bills for the said services (see NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Appeal at 3-4 [Form NF-10 denial of claim re lumbar spine MRI], 5-6 [Form NF-10 denial of claim re left shoulder MRI]).

Nexray initiated arbitration, claiming entitlement to $1,790.67 for the medical care rendered to Assignor (see NYSCEF Doc No. 5, Nexray's Arbitration Request Form and Arbitration Submission at 1-1422). ATIC submitted its papers in opposition for the arbitration (see NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Appeal at 1-192).

Bernadette Connor, Esq. was assigned to arbitrate the matter by the AAA. She awarded Nexray the $1,790.67 at issue in its billing. She noted that each of the two bills was denied on several grounds by ATI" target="_blank">Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011]). However, ATIC failed to prove that Assignor did not attend the IMEs, she found. Besides the principal sum of $1,790.67 as No-Fault medical benefits, Arbitrator O'Connor awarded Nexray interest, attorney's fees, and return of the arbitration filing fee. (See NYSCEF Doc No. 3, Arbitration Award at 1-6.)

ATIC filed with the AAA for a master arbitrator to review the issues, and Master Arbitrator A. Jeffrey Grob, Esq. upheld Arbitrator Connor's arbitration award (see NYSCEF Doc No. 1, Petition ¶¶ 3, 83).

After ATIC commenced this Article 75 proceeding, Nexray filed a cross-petition in support of Master Arbitrator Grob's award (see NYSCEF Doc No. 13, Notice of Cross-Petition; NYSCEF Doc No. 14, Cross-Petition). Nexray sought confirmation of the arbitration award and attorney's fees, costs, and disbursements with respect to this proceeding.

Petitioner ATIC's Arguments

Petitioner ATIC argues that the master arbitrator's award should be vacated as a matter of law. ATIC states the award issued to Nexray by Arbitrator Connor and later upheld by Master Arbitrator Grob is faulty, and relies upon Matter of Petrofsky [Allstate Ins. Co.] (54 NY2d 207 [1977]) for the argument that an arbitration award should be overturned when it is arbitrary and capricious, irrational or without a plausible basis (see NYSCEF Doc No. 1, notice of petition ¶ 34). It cited to various other court decisions ruling on the standard of review of No-Fault arbitration awards (see generally NYSCEF Doc No. 1, Petition).

ATIC asserts the award should be vacated as Nexray's claims (both bills) were properly denied. ATIC argues that the arbitrator and master arbitrator issued awards that conflicted with well-settled law. The denials of claim were appropriate as ATIC had reason to believe Assignor was working when the accident occurred. As such, Worker's Compensation became primary. (See NYSCEF Doc No. 1, Petition ¶¶ 42-59.) Furthermore, "The Worker's Compensation Board has exclusive jurisdiction to determine whether workmen's [sic] compensation benefits are available to the claimant, and it is inappropriate for the arbitrators to express an opinion. . . ." (id. ¶ 55). The Appellate Term recognizes that the Worker's Compensation Board must determine workers' eligibility, and a No-Fault insurer must show evidence of "potential merit" that a Workers' Compensation defense exists (see id. ¶ 56, citing A.B. Med. Servs. v American Tr. Ins. Co., 8 Misc 3d 127[A], 2005 NY Slip Op 50959[U] [App Term, 2d & 11th Dists 2005]). Here, ATIC argues there were reasons to believe that the claimant was employed when the injury occurred (see NYSCEF Doc No. 1, Petition ¶ 43). "The arbitrator's decision was arbitrary and capricious, without rational basis and incorrect as a matter of law because the arbitrator ignored Petitioner's evidence and/or well settled legal precedent in order to justify a determination in favor of Applicant" (NYSCEF Doc No. 1, Petition ¶ 57).

Additionally, ATIC argues that they have met their burden of proving that medical necessity for the MRIs was not present through the peer review conducted by Dr. Peter Chiu, M.D. As such, the burden shifted to Nexray, who had to prove by a preponderance of the evidence that the services were medically necessary and reasonable. ATIC alleges that Nexray failed to meet its burden as it did not rebut the findings and conclusions set forth in Dr. Chiu's peer review report. Nexray's failure to refute said findings and conclusions went against well-[*3]settled law which requires a health service provider to affirmatively prove medical necessity. As the fact finder, the arbitrator did not have evidence to weigh when determining if the services were medically necessary; and due to the absence of evidence from Nexray, the arbitrator should have found in ATIC's favor. ATIC argues that both arbitrators went against well-settled law in favoring Nexray, resulting in an arbitrary and capricious decision, being without rational basis and incorrect. (See id. ¶¶ 60-82.)

Finally, ATIC argued also that it was arbitrary and capricious, irrational, and without plausible basis to reject its defense to the subject bills relying on Assignor's failure to attend IMEs (see id. ¶¶ 35-41). Arbitrator Connor had found that ATIC "did not provide any evidence to establish that the Assignor failed to appear for the examinations" (id. ¶ 37, citing NYSCEF Doc No. 3, Arbitration Award at 4). Yet there was evidence, maintained ATIC. It was in the form of an affidavit from Tracy Simpson. Although it was hearsay it should have been accepted since strict conformity to the rules of evidence is not necessary in arbitration. (See id. ¶¶ 37-38.)

Respondent Nexray's Arguments

Here, Respondent Nexray asserts that the arbitration award should be confirmed as "the '[s]tandard of review of decisions in mandatory arbitration proceedings is whether the decision lacks rationality" (NYSCEF Doc No. 14, Cross-Petition, citing Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917 [2d Dept 1985]). Referencing an arbitrator acting inapposite to settled law when there is a defense that benefits should come from Workers' Compensation, Nexray disagrees with the arbitration outcome, as ATIC failed to provide evidence that Assignor was on duty or carrying a passenger at the time of the incident. Also, the denials of claim were late. Therefore, Workers' Compensation is not an appropriate defense, and ATIC must pay the award. (See NYSCEF Doc No. 14, Cross-Petition ¶¶ 18, 40-45.)

Additionally, it was not within the scope of Nexray's burden to rebut ATIC's peer review of Dr. Chiu because the defense was nullified. Nexray mailed bills for dates of service July 13, 2019 and July 19, 2019; these bills were received by ATIC on August 5, 2019 and August 2, 2019 respectively. ATIC failed to respond with its IME requests within the 30-day window thereafter, as mandated per Neptune Med. Care, P.C. v Ameriprise Auto & Home Ins. (48 Misc 3d 139[A], 2015 NY Slip Op 51220[U] [App Term, 2d, 11th & 13th Dists 2015]), thereby nullifying the defense of lack of medical necessity. (See NYSCEF Doc No. 14, Cross-Petition ¶¶ 13-16, 18, 35, 49-51.) Also, there is a presumption of medical necessity that attaches to a claim form. ATIC is mistaken in averring that the evidence proved the MRIs were not medically necessary. (See id. ¶¶ 36-39, 49-51.)

As for the IME no-show defense, it too was nullified by the late issuance of ATIC's denials of claim, argued Nexray (see id. ¶¶ 48-51). And moreover the arbitrator found that ATIC failed to prove that Assignor failed to appear (see id. ¶¶ 18, 57).

According to Nexray, the arbitrator's award, followed by the affirmance of the master arbitrator, was rational and based on well-settled law. ATIC failed to meet its burden in this proceeding of proving otherwise.

Should the Court find for Nexray, it asks for a reasonable attorney's fee to be awarded pursuant to 11 NYCRR 65-4.10 (j) (4).

Discussion

A special proceeding, such as one commenced pursuant to CPLR 7511 to vacate an arbitration award, "is a civil judicial proceeding in which a right can be established or an obligation enforced in summary fashion. Like an action, it ends in a judgment (CPLR 411), but [*4]the procedure is similar to that on a motion (CPLR 403, 409). Speed, economy and efficiency are the hallmarks of this procedure." (Vincent C. Alexander, Prac Commentaries, McKinney's Cons Laws of NY, CPLR C401:01.)

In Matter of FIA Card Servs. v Thompson (18 Misc 3d 1146[A], 2008 NY Slip Op 50450[U] [Dist Ct, Nassau County 2008], the court discussed a petitioner's burden when commencing a special proceeding to confirm an arbitration award. The court's analysis would likewise apply to special proceedings to vacate an arbitration award. "In evaluating the proof offered by a petitioner in support of the foregoing, it must be kept in mind that 'the standards governing motions for summary judgment are applicable to special proceedings generally (Matter of Port of New York Auth. [62 Cortlandt St. Realty Co.], 18 NY2d 250, 255, cert denied sub nom. McInnes v. Port of New York Auth., 385 U.S. 1006)[.]' Brusco v. Braun, 199 AD2d 27, 31 (1st Dept. 1993) aff'd84 NY2d 674 (1994); See also: CPLR 409(b); Friends World College v. Nicklin, 249 AD2d 393 (2nd Dept. 1998); Bahar v. Schwartzreich, 204 AD2d 441 (2nd Dept. 1994). Accordingly, to prevail, a petitioner must submit proof in evidentiary form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065 (1979)[.] A petitioner's failure to do so will result in the denial of the petition, regardless of the sufficiency of any papers in opposition. Winegrad v. New York University Medical Center, 64 NY2d 851 (1985); Delgado v. Butt, [48] AD3d [735] (2nd Dept. 2008) Martinez v. 123-16 Liberty Ave. Realty Corp., 47 AD3d 901 (2nd Dept. 2008)[.]" (Matter of FIA Card Servs., 18 Misc 3d 1146[A], 2008 NY Slip Op 50450[U], *5 [parallel citations omitted].)

In the instant Article 75 proceeding, Nexray did not raise an issue as to the sufficiency of ATIC's papers, i.e., the notice of petition, petition, and supporting exhibits. This Court, however, did at oral argument. Returning to the relief sought in ATIC's Notice of Petition, this Court notes that ATIC sought an order and judgment "VACATING the arbitration award issued by Arbitrator Bernadette Connor, Esq. and/or Master Arbitrator A. Jeffrey Grob, Esq. under Article 75 of the CPLR" (NYSCEF Doc No. 2, Notice of Petition at 1). That A. Jeffrey Grob was the master arbitrator who issued the master arbitration award sought to be vacated was indicated in ATIC's petition (see NYSCEF Doc No. 1, Petition ¶¶ 3, 31, 83).

In order to assess ATIC's arguments in support of the petition herein this Court needed to be presented with a copy of Master Arbitrator Grob's award. ATIC did not include same as an exhibit. Rather, it included the master arbitration award in Matter of Arbitration of Rutland Med., PC v American Tr. Ins. Co. a/a/o "SC" (AAA Case No. 99-20-1175-4211 [July 25, 2022]), which coincidentally was the subject of this Court's decision, order, and judgment in American Tr. Ins. Co. v Rutland Med, PC (79 Misc 3d 1236[A], 2023 NY Slip Op 50814[U] [Sup Ct, Kings County 2023]). Clearly the wrong master arbitration award was submitted in ATIC's papers herein.

"[A]s a general matter, a court should not examine the admissibility of evidence submitted in support of a motion for summary judgment unless the nonmoving party has specifically raised that issue in its opposition to the motion (see Rosenblatt v St. George Health & Racquetball Assoc., LLC, 119 AD3d at 55), for "[w]e are not in the business of blindsiding litigants, who expect us to decide their appeals on rationales advanced by the parties, not arguments their adversaries never made" (Misicki v Caradonna, 12 NY3d 511, 519 [2009]).

ATIC was not blindsided by this Court's observation at oral argument that it failed to include a copy of Master Arbitrator Grob's award. During argument, ATIC proceeded to offer its arguments as to why its petition to vacate should be granted, going into the details of the [*5]issues in the arbitration, but, after this Court raised the issue of the wrong master arbitration award being submitted, conceded that it was aware of the error since earlier in the morning. For its part, Nexray was not aware of the error when it submitted its notice of cross-petition and cross-petition.

A court must always review a motion for summary judgment to determine if the movant has made out a prima facie case in the first instance. "A motion for summary judgment shall be supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions. The affidavit shall be by a person having knowledge of the facts; it shall recite all the material facts; and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit." (CPLR 3212 [b].) The party moving for summary judgment must present a prima facie case of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact, and the failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see CPLR 3212 [b]; Smalls v AJI Industries, Inc., 10 NY3d 733 [2008]; Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). "[I]nconsistencies which appear on the face of plaintiff's own papers prohibit the granting of summary judgment, despite the inadequacy of the opposing papers" (Bank of NY v McLean, 116 AD2d 546, 547 [2d Dept 1986], citing to Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

Article 75 proceedings have evidentiary and substantive requirements similar to summary judgment motions (see Worldwide Asset Purch., LLC v Karafotias, 9 Misc 3d 390, 394 [Civ Ct, Kings County 2005], citing Brusco v Braun, 199 AD2d 27, 31-32 [1st Dept 1993], affd on other grounds 84 NY2d 674 [1994]; accord Matter of Port of NY Auth. (62 Cortlandt St. Realty Co.),18 NY2d 250, 255 [1966], cert denied sub nom. McInnes v Port of NY Auth., 385 US 1006 [1967] [condemnation proceeding]).

Therefore, a court determining an Article 75 special proceeding seeking vacatur of an arbitration award must review it in order to assess whether the petitioner made out a prima facie case in support of the requested relief, just as it would do the same when presented with a summary judgment motion.

Even if ATIC was not aware of its error, this Court, in the absence of Master Arbitrator Grob's award being in the record, would not be able to determine whether he erred as a matter of law and, if so, whether it was so irrational as to require vacatur (see Matter of Smith [Firemen's Ins. Co.], 55 NY2d 224, 232 [1982]; Matter of Liberty Mut. Ins. Co. v Spine Americare Med., P.C., 294 AD2d 574 [2d Dept 2002]), or whether he exceeded his powers (see Matter of Allstate Ins. Co. v Keegan, 201 AD2d 724 [2d Dept 1994]).

Failing to attach a copy of the arbitration award in an Article 75 proceeding denudes the petition of a prima facie case (see Amica Mut. Ins. Co. v City of NY, 2019 WL 4274334 [Sup Ct, NY County, Sept. 5, 2019, No. 652663/2019]). "As an initial matter, petitioner fails to attach the arbitration award as an exhibit to its petition, which necessitates denial on that ground alone" (Countrywide Ins. Co. v American Tr. Ins. Co., 2021 WL 939010 [Sup Ct, NY County, Mar. 9, 2021, No. 654011/20]).

This Court denies ATIC's petition to vacate Master Arbitrator A. Jeffrey Grob's award as ATIC failed to make a prima facie showing. It failed to attach the master arbitration award as an exhibit to its October 17, 2022 petition, and the master arbitration award which was submitted was inconsistent with ATIC's notice of petition and petition.

Attorney's Fee

As mentioned supra at 5, Nexray sought an attorney's fee in the event it prevailed in having the master arbitration award of A. Jeffrey Grob confirmed.

11 NYCRR 65-4.10 [j] [4] in the New York No-Fault Insurance Regulations provides, "The attorney's fee for services rendered . . . in a court appeal from a master arbitration award and any further appeals, shall be fixed by the court adjudicating the matter" (see also Global Liberty Ins. Co. of NY v North Shore Family Chiropractic, PC, 178 AD3d 525 [1st Dept 2019]; GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2d Dept 2017]).

While technically Nexray has prevailed in the within Article 75 proceeding, it did not do so on any ground it advanced. Nexray overlooked ATIC's error in not submitting Master Arbitrator Grob's award. Not only that, its boilerplate nature cross-petition — significant components of it have been used in past Article 75 proceedings — misdescribed the arbitration award as being dated March 10, 2022, instead of April 11, 2022 (see NYSCEF Doc No. 14, Cross-Petition ¶ 3; NYSCEF Doc No. 3, Arbitration Award at 6). Nexray referred to the master arbitration award in this case as being dated July 25, 2022, when that was the date of the erroneously submitted master arbitration award in Matter of Arbitration of Rutland Med., PC v American Tr. Ins. Co. a/a/o "SC" (see NYSCEF Doc No. 14, Cross-Petition ¶ 4; NYSCEF Doc No. 4, Master Arbitration Award at 4). The same dates of March 10, 2022 and July 25, 2022 were erroneously set forth respectively for the arbitration award and the master arbitration award, in Nexray's Notice of Petition (see NYSCEF Doc No. 13, Notice of Petition at 1).

"In determining what is reasonable compensation for an attorney, the court may consider a number of factors, including, inter alia, the time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented, the lawyer's experience, ability, and reputation, the customary fee charged for similar services, and the results obtained (see RMP Capital Corp. v Victory Jet, LLC, 139 AD3d at 839; Diaz v Audi of Am., Inc., 57 AD3d 828, 830 [2008]). The determination of reasonable attorney's fees is generally left to the discretion of the trial court, which is often in the best position to determine those factors integral to the fixing of a reasonable fee (see RMP Capital Corp. v Victory Jet, LLC, 139 AD3d at 840; Miller Realty Assoc. v Amendola, 51 AD3d at 990)." (Diggs v Oscar De La Renta, LLC, 169 AD3d 1003, 1004-1005 [2d Dept 2019]; accord Matter of Freeman, 34 NY2d 1 [1974]; Lancer Indem. Co. v JKH Realty Group, LLC, 127 AD3d 1035, 1035-1036 [2d Dept 2015]).

Nexray's counsel has not attested to how much time was involved in preparing the papers opposing ATIC's petition. The issues presented in the petition were neither difficult nor novel. This Court recalls that Nexray's counsel has dealt with medical necessity on various occasions (e.g. American Tr. Ins. Co. v Rutland Med., PC, 79 Misc 3d 1236[A], 2023 NY Slip Op 50814[U] [Sup Ct, Kings County 2023]). He dealt with a Workers' Compensation defense too (see American Tr. Ins. Co. v Nexray Med. Imaging PC, 79 Misc 3d 1206[A], 2023 NY Slip Op 50538[U] [Sup Ct, Kings County 2023]. Counsel did not submit anything to elaborate on his experience, ability, and reputation, or to establish the customary fee charged for similar services.

Most significantly, with respect to results obtained, the last factor in determining an attorney's fee, Nexray's counsel failed to notice that ATIC did not attach a copy of the master arbitration award of A. Jeffrey Grob, Esq., which was sought to be vacated. Hence, Nexray's counsel's work did not provide the basis underpinning the reasoning utilized by this Court in denying the petition.

Even had Nexray not filed a cross-petition, ATIC's petition would have been denied and the master arbitration award confirmed. Nonetheless it did go through the formality of making a [*6]cross-motion for purposes of confirming Master Arbitrator Grob's award, so a nominal attorney's fee of $100.00 is awarded.

Conclusion

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

(1) ATIC's petition to vacate the master arbitration award of A. Jeffrey Grob in AAA Case No. 99-20-1166-0711 is denied and this proceeding is dismissed.

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

(3) Said master arbitration award is confirmed.

(4) Nexray is awarded the principal amount of $1,790.67 as No-Fault insurance medical benefits.

(5) Nexray is awarded simple interest (i.e., not compounded) on the said principal amount at two per cent per month on a pro rate basis using a 30-day month, computed in accordance with the provisions of Insurance Law § 5106 (a) and 11 NYCRR 65-3.9 and 65-4.5 (s) (3).[FN1]

(6) After calculating the sum total of the said principal amount plus the interest thereon, ATIC shall pay Nexray an attorney's fee equal to 20 percent of that sum total, subject to a maximum fee of $1,360.00, in accordance with Insurance Law § 5106 (a) and 11 NYCRR 65-3.10 and 65-4.5 (s) (2).

(7) ATIC shall pay Nexray the $40.00 arbitration filing fee.

(8) ATIC shall pay Nexray an attorney's fee in connection with the master arbitration if one was awarded by the master arbitrator.[FN2]

(9) ATIC shall pay Nexray an attorney's fee of $100.00 for work performed by counsel in this Article 75 proceeding.

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

Dated: September 8, 2023
HON. AARON D. MASLOW
Justice of the Supreme Court of the State of New York Footnotes

Footnote 1:"Pursuant to Insurance Law §5106(a), interest accrues on overdue no-fault insurance claims at a rate of 2% per month. A claim is overdue when it is not paid within 30 days after a proper demand is made for its payment [citations omitted]." (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217 [2009].) If an applicant prevails in whole or in part on its claim, the arbitrator shall direct the insurer to "in an award of interest, compute the amount due for each element of first-party benefits in dispute, commencing 30 days after proof of claim therefor was received by the insurer and ending with the date of payment of the award, subject to the provisions of section 65-3.9(c) of this Part (stay of interest)" (11 NYCRR 65-4.5 [s] [3]). "If an applicant does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken" (11 NYCRR 65-3.9 [c]). This provision of the No-Fault Regulations applies to untimely-issued denials as well as to timely ones, and results in interest being tolled until arbitration is requested (see LMK Psychological Services, P.C., 12 NY3d 217; see also East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202 [2d Dept 2009]). In the case at bar, Nexray did not request arbitration within 30 days after receipt of ATIC's two denials appurtenant to the bills for which compensation was awarded. Hence, there are actually two periods of interest, the first of which commences 30 days from when the insurer received proof of claim and ends on the date it issued its denial, and the second of which commences on the date arbitration was commenced and ends on the date of payment of the claim. (See State Farm Mut. Auto Ins. Co. v Pfeiffer, 95 AD2d 806 [2d Dept 1983].) In calculating interest, the date of accrual in both periods shall be excluded from the calculation (see General Construction Law § 20 ["The day from which any specified period of time is reckoned shall be excluded in making the reckoning."]). Where a motor vehicle accident occurs after April 5, 2002, interest shall be calculated at the rate of two percent per month, simple, calculated on a pro rata basis using a 30-day month (see 11 NYCRR 65-3.9(a); Gokey v Blue Ridge Ins. Co., 22 Misc 3d 1129[A], 2009 NY Slip Op 50361[U] [Sup Ct, Ulster County 2009]).

The $912.00 claim awarded for date of service July 13, 2019 was denied on September 19, 2019, following ATIC's receipt of proof of claim on August 5, 2019 (see NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Appeal at 4). The denial of claim was found late by the arbitrator. Therefore, payment became overdue 30 days after receipt of proof of claim. The 30th day thereafter ("overdue date") was September 4, 2019. Issuance of the late denial of claim tolled interest until arbitration was commenced on May 22, 2020 (see NYSCEF Doc No. 5, Nexray's Arbitration Request Form and Arbitration Submission at 1). With respect to this claim, therefore, ATIC shall pay Nexray interest computed from September 4, 2019 to September 19, 2019, but excluding September 4, 2019 from being counted within the period of interest; and from May 22, 2020 to the date of payment of the award, but excluding May 22, 2020 from being counted within the period of interest. The $878.67 claim awarded for date of service July 19, 2019 was denied on September 19, 2019, following ATIC's receipt of proof of claim on August 5, 2019 (see NYSCEF Doc No. 6, ATIC's Arbitration Submission and Master Arbitration Appeal at 6). The denial of claim was found late by the arbitrator. Therefore, payment became overdue 30 days after receipt of proof of claim. The 30th day thereafter ("overdue date") was September 4, 2019. Issuance of the late denial of claim tolled interest until arbitration was commenced on May 22, 2020 (see NYSCEF Doc No. 5, Nexray's Arbitration Request Form and Arbitration Submission at 1). With respect to this claim, therefore, ATIC shall pay Nexray interest computed from September 4, 2019 to September 19, 2019, but excluding September 4, 2019 from being counted within the period of interest; and from May 22, 2020 to the date of payment of the award, but excluding May 22, 2020 from being counted within the period of interest. The interest rate shall be two percent per month, simple (i.e., not compounded), on a pro rata basis using a 30-day month.

Footnote 2:In the absence of Master Arbitrator Grob's award being submitted, this Court has no information whether he awarded an arbitration appeal attorney's fee.