Opinion
Index No. 655236/2020 Motion Seq. No. 001
07-22-2024
COUNTRY-WIDE INSURANCE COMPANY Petitioner, v. PREFERRED MEDICAL, PC, Respondent.
Unpublished Opinion
MOTION DATE 10/13/2020
DECISION + ORDER ON MOTION
HON. ANAR RATHOD PATEL, JUDGE
The following e-filed documents, listed by NYSCEF document number (Motion 001) 1-7, 9-13, 16-20 were read on this motion to/for VACATE - DECISION/ORDER /JUDGMENT/AWARD.
Relevant Factual and Procedural History
This is a special proceeding, pursuant to CPLR Article 75, commenced by Petitioner Country-Wide Insurance Company ("Petitioner") seeking an order and judgment vacating master arbitration award of Robyn D. Weisman (dated July 22, 2020), which affirmed the no-fault arbitration award of Dinsmore Campbell (dated May 21, 2020) granting Respondent Preferred Medical, P.C.'s ("Respondent"), as assignee of Zashanelle M. Farrow, claim for no-fault insurance compensation for health service expenses. Pursuant to a hearing held on May 13, 2020, Arbitrator Campbell awarded the amount of $3,226.23, together with interest, attorney's fees, and additional fees, sought by Respondent for providing services to its assignor, who claimed to have been injured in a motor vehicle accident on April 30, 2018.
Petitioner commenced the present action by filing a Notice of Petition and Petition on October 13, 2020. NYSCEF Doc. Nos. 1, 2. This matter was initially assigned to Judge Debra James and was reassigned subsequently to this Court.
Discussion
The standard of review in Article 75 proceedings depends on the amount awarded by the arbitrator. Where the amount in contention does not exceed five thousand dollars ($5,000.00), courts grant deference to the findings of the arbitrators. "In cases of compulsory arbitration, this court has held that CPLR article 75 'includes review ... of whether the award is supported by evidence or other basis in reason.' This standard has been interpreted to import into [A]rticle 75 review of compulsory arbitrations the arbitrary and capricious standard of [A]rticle 78 review." Matter of Petr of sky (Allstate Ins. Co.), 54 N.Y.2d 207, 211 (1981) (quoting Mount St. Mary's Hosp, of Niagara Falls v. Catherwood, 26 N.Y.2d 493, 508 (1970)). Thus, if the amount awarded in arbitration is less than the statutory amount, the judiciary is restricted by the findings of the arbitrators. Only when review has basis in an enumerated ground in CPLR § 7511, or the court finds that the arbitration award is a result of arbitrary or capricious determinations by the arbitrators, may the court interject.
"Further, 'a court is bound by the arbitrator's factual findings and interpretations of the contract,' and it 'cannot examine the merits of an arbitration award and substitute its judgment for that of the arbitrator simply because it believes its interpretation would be the better one.' The 'arbitrator's award will not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice.'" Metro. Transp. Auth. v. Westfield Fulton Ctr., LLC, No. 2023-03965, 2024 WL 2853484, at *1 (1st Dept. 2024) (internal citations omitted).
As the amount at issue, $3,226.23, is less than the statutory amount, this Court will review the arbitrator's award under an arbitrary and capricious standard. This Court will only vacate the award if it was granted as a result of arbitrary and capricious determinations by the arbitrators or if there is basis in an enumerated ground in CPLR § 7511(b). "[J]udicial review of arbitration awards is extremely limited. An arbitration award must be upheld when the arbitrator 'offer[s] even a barely colorable justification for the outcome reached.'" Wien &Malkin LLP v. Helmsley-Spear, Inc., 6 N.Y.3d 471, 479 (2006).
A party seeking to vacate or modify an arbitrator's award must bring an Article 75 proceeding within 90 days of the delivery of the award. CPLR § 7511(a). Petitioner initiated this action on October 13, 2020, which is within 90 days of receiving the master arbitrator's award.
Petitioner initiated this action to vacate the arbitration award pursuant to CPLR § 751 l(b)(1)(i), (iii) and (iv). There is no argument or support in the record to find that the award was procured by "corruption, fraud or misconduct" beyond Petitioner's statement that the action was pursuant to CPLR § 751 l(b)(1)(i). Similarly, there is no argument or support in the record to find that the rights of Petitioner were prejudiced by "failure to follow the procedure of this article." CPLR § 751 l(b)(1)(iv).
Petitioner contends that the hearing arbitrator's award "was not rationally based upon the evidence presented below and was arbitrary and capricious." NYSCEF Doc. No. 1 at ¶ 9 (Petition). Petitioner asserts two arguments to support a finding that the hearing arbitrator erred in awarding payment of healthcare services: (1) In failing to appear for two scheduled Independent Medical Examinations ("IME"), the assignor/claimant failed to satisfy a condition precedent to payment- submitting to the IMEs-such that Petitioner may properly deny Respondent's claim for no-fault benefits pursuant to Insurance Regulation 68, see id. at ¶¶ 25-26; and (2) due to a declaratory judgment decision against Respondent and their assignor/claimant, Respondent is collaterally estopped from bringing the instant action. See NYSCEF Doc. 13 at ¶¶ 12-15 (Reply).
Claimant's Appearance at IMEs
The hearing arbitrator determined, based on a review of the evidence, that:
The applicant contends however that the respondent cannot sustain its IME no-show defense as the affidavit contemplating the non-appearances lack personal knowledge. Indeed, the applicant submits that the affidavit of Annie Persaud, the respondent's Administrative Assistant at the Medical Evaluations Unit fails to show whether she was actually present at the location at the time when the IMEs were scheduled.
The undersigned agrees.NYSCEF Doc. No. 3 at 4 (No-Fault Arbitration Award). Petitioner argues that it submitted an affidavit of Petitioner's IME clerk, Annie Persaud, ("Persaud Affidavit") that establishes Claimant failed to appear for two IMEs. In relevant part, the Persaud Affidavit states, "I can attest that FARROW, ZASHANELLE did not appear for the scheduled IMEs because the claimant's name was not on the claimant sign-in log sheet for 09/06/2018 and 10/04/2018." NYSCEF Doc. No. 5 at 37 (Petitioner's Master Arbitration Brief). Contrary to Petitioner's assertion, Ms. Persaud does not have "personal knowledge of the claimant's failure to attend the two properly, scheduled IMEs." See NYSCEF Doc. No. 1 at ¶ 29. Rather, Ms. Persaud relies on a review of specific sign-in sheets that were not provided as evidence to the hearing arbitrator. "It is within the province of the lower arbitrator to determine what evidence to accept or reject and what inferences should be drawn based on the evidence." Community Med. Imaging P.C. v. American Transit Ins. Co., 206 N.Y.S.3d 919 (N.Y. Cnty. Sup. Ct. 2024). Accordingly, the factual determinations of Arbitrator Campbell are not actions that exceed the hearing arbitrator's authority.
This Court must defer to factual determinations as made by the hearing arbitrator. Likewise, the master arbitrator is limited to the factual record presented to and determinations made by the hearing arbitrator. A master arbitrator does not have "the power to review, de novo, the matter originally presented to the arbitrator. A master arbitrator exceeds his statutory power by making his own factual determination, by reviewing factual and procedural errors committed during the course of arbitration, by weighing the evidence . . ." Matter of Allstate Ins. Co. v. Keegan, 201 A.D.2d 724, 725 (2d Dept. 1994) (internal citations omitted). Further, a "master arbitrator shall only consider those matters which were the subject of the arbitration below or which were included in the arbitration award appealed from." 11 NYCRR § 65-4.10(c)(6). Considering these restraints on the master arbitrator's scope of review, the master arbitrator was correct to rely on the factual determinations of the hearing arbitrator and affirm the No-Fault Arbitration Award in its entirety. See NYSCEF Doc. No. 6 at 1-2 (Master Arbitration Award). Accordingly, these actions do not support finding that the master arbitrator exceeded his authority.
Declaratory Judgment Against Claimant
Petitioner argues that there is a declaratory judgment against Claimant in the Supreme Court of New York County captioned Country-Wide Insurance Company v. Zashanelle Farrow, et al. (Index No. 651756/2019). In said action, the court granted a default judgment as to each of the defendants in relation to the April 30, 2018 loss, Claim No.: 00336284-002. Respondent is a party to said action, which involves the same set of events.
"An arbitration award may be vacated as barred by the preclusive effect of a judgment or settlement entered in prior litigation." Tokio Marine &Fire Ins. Co. v. Allstate Ins. Co., 778 N.Y.S.2d 315 (2nd Dept. 2004); see also Country-Wide Ins. Co. v. NYC Cmty. Med. Care, PC, 2021 NY Slip Op 30156(U) (N.Y. Cnty. Sup. Ct. 2021). "Ordinarily a default judgment in a declaratory judgment action will have res judicata effect barring any action [or arbitration] to recover no-fault benefits." Country-Wide Ins. Co. v. Avalon Radiology, PC, 2017 NY Slip Op 30606(U) (N.Y. Cnty. Sup. Ct. 2017); see also Hereford Ins. Co. v. Iconic Wellness Surgical Servs., LLC, 115 N.Y.S.3d 796 (App. Term 1st Dept. 2019) ("While the preclusive effect of a prearbitrationjudicial decision may be sufficient to vacate an arbitral award, a post-arbitration judicial determination concerning the insurer's liability is not one of the limited grounds for vacating an arbitration award."). On March 26, 2019, Petitioner commenced a suit against Farrow and Respondent-among others-by filing a Summons and Complaint with the New York County Supreme Court. See Country-Wide Ins. Co. v. Zashanelle Farrow, el al. (Index No. 651756/2019). All defendants, including Respondent here, failed to appear in that action. Country-Wide Ins. Co. v. Farrow, 2020 WL 805885 (N.Y. Cnty. Sup. Ct. 2020). As such, Default Judgment was issued against Respondent on February 11, 2020, by the Hon. Nancy M. Bannon. Id. In said order, Judge Bannon wrote, "[Petitioner] is not obligated to pay no-fault benefits to the Defendant Zashanelle Farrow for injuries that she allegedly sustained in a motor vehicle accident on April 30, 2018, or to defendants . . . Preferred Medical PC ... to reimburse them for treatment they rendered or medical equipment they provided to the individual defendant. . ." Id. To date, Judge Bannon's Default Judgment Order has not been vacated by any party. Nonetheless, Respondent demanded arbitration approximately two months after Judge Bannon's decision. To allow Respondent to now recover would be to grant Respondent immunity from the law and the courts. Court orders would be relegated to a suggestion prone to circumvention, directly attacking the powers of the judiciary. Accordingly, the Arbitrators' determinations are inapposite to the final determination of the court and incorrect as a matter of law. Thus, vacatur of the arbitration award is warranted.
Conclusion
Based on the foregoing, Petitioner has established that the arbitration award at issue requires vacatur as inapposite to the court's prior determination. Thus, the Court grants Petitioner Country-Wide Insurance's Petition seeking to vacate the arbitration award in this matter. As such, it is hereby
ORDERED that the Petition is granted and the arbitration award rendered in favor of Petitioner and against Respondent is vacated; and it is further
ORDERED and ADJUDGED that the lower Arbitrator award dated May 21, 2020, and the Master Arbitrator award dated July 22, 2020, are vacated.