$481.30 Awarded on a $62,830.97 No-Fault Claim -- Coronary Bypass Surgery and Related Hospital Services Found Unrelated to the MVA

NO-FAULT – CAUSATION – CORONARY BYPASS SURGERY – AAA ARBITRATION DECISION

Matter of United Health Services Hospital  aao JK and Preferred Mutual Ins. Co.
(AAA Case No. 17-18-1089-4199, issued 11/23/2020)

78-year old man passes out driving and crashes.  At the hospital, he is found to have suffered a myocardial infarction and severe coronary artery disease.  Eight days, one coronary bypass surgery and $62,830.97 later, he goes home.  A few weeks later, the hospital bills the man's no-fault insurer, Preferred Mutual, for the cost of the heart surgery and related services.  Preferred Mutual obtains a cardiologist's peer review opinion and denies payment.  Approximately four years and 100% in interest later, the hospital demands AAA arbitration of the denial. 

After a hearing, AAA Arbitrator Fred Lutzen concluded:

After reviewing the entire peer review and the submitted records, I find the peer provides a satisfactory medical rationale and relies on the facts present, so that Respondent has met its burden and proven, prima facie, that the hospital services and surgery related to his heart condition were unrelated to the motor vehicle accident. 

The arbitrator did award the hospital a total of $481.30 for the ER charge and a CT scan.  

Ryan Mura of this office ably defended Preferred Mutual's denial position in this arbitration.  Nice job, Ryan.   

No-Fault Insurer's Denial Based on Rate Evasion Upheld in Arbitration

NO-FAULT – RATE EVASION – AAA ARBITRATION DECISION

Matter of Classic Medical Diagnostic Rehab, P.C.  aao SI and State Farm Fire & Cas. Co.
(AAA Case No. 17-18-1095-2802, issued 1/7/2020)

Here's another AAA award/decision that upholds our client's denial of no-fault benefits based on the assignor's proven rate evasion:

In its written submission, Respondent submitted the following evidence and made the following contentions in support of its position: 

* * * * *  

6. Assignor appeared for an EUO on 12/11/17 at which she testified that she lived in Albany, New York with her three children, two of whom attend school in Brooklyn, but that she could not remember if they had a different residence listed for their school in Brooklyn. Assignor testified that she moved to Albany in 2015 but that she and her children commute to Brooklyn four or five days per week and that they drive about 2 1/2 hours "coming and going." Assignor testified that she presently works full-time in Brooklyn, and that her previous jobs were also located in Brooklyn. The Albany address which she provided in her application for insurance benefits and at which she stated she lived in her deposition is a home owned by her aunt to whom she pays rent. Assignor testified that the home is in the middle of the block, she could not recall its color, and stated that there was a covered porch in the front of the house. Respondent revised her testimony on the errata sheet to reflect that the house is on the corner and that there is no porch. Assignor could not fully describe the route she takes from Brooklyn to Albany on her commute. Assignor is registered to vote at her old address in Brooklyn and voted in the last election at a school in Brooklyn.

At the hearing of this matter, counsel for Applicant asserted that the EUO transcript alone is not sufficient to substantiate the alleged discrepancies contained therein without additional information, and further asserted that Assignor stated that she was in fact living in Albany New York. I am not convinced by Applicant's position, however.  Assignor provided sworn testimony under oath. Assignor subsequently amended her testimony with respect to the location of the house in which she purportedly resides in Albany, and whether it had a porch. Respondent submitted a form NF 2 executed by Assignor which lists her address in Brooklyn, New York. Likewise, the Assignment of Benefits form executed by Assignor on 10/24/17 lists an address in Brooklyn, New York. In addition, I find that Applicant's testimony that she drives 4 to 5 days per week from Albany to Brooklyn to get to her job in Brooklyn and to bring her children to school in Brooklyn is not credible, given the distance such a commute would involve, as described in Respondent's submission.

Upon consideration of the arguments of counsel and upon a review of the evidence submitted in this case, I find that Respondent has submitted sufficient evidence to meet its burden of demonstrating that Assignor made material misrepresentations in the procurement of the underlying automobile insurance policy. Applicant's claims for reimbursement are therefore denied. 

In this case, the assignor's EUO, which my office conducted, proved to be key in supporting the insurer's rate evasion-based denial of first-party benefits.

Do you know the color of your home and where it sits on its street/block?

Denial of No-Fault Benefits to Assignee of Rate Evader Upheld in Arbitration

NO-FAULT – RATE EVASION – AAA ARBITRATION DECISION

Matter of Bronx Chiropractic Health Services, PC aao SB and State Farm Fire & Cas. Co.
(AAA Case No. 17-18-1114-9479, issued 8/23/2019)

This morning my office received this AAA award/decision, upholding our client's denial of no-fault benefits based on the assignor's proven rate evasion:

The EUO on the EIP/insured took place on October 29, 2018. The information that was provided based upon the testimony of the insured is that there was no real connection to the state of Maine, the policy under which the car was insured. The EIP's driver's license was NY and she was employed at Columbia Hospital. There was no real nexus between the EIP and Maine. The Respondent therefore provided the affidavit of Christina XXXX and [sic] underwriter for the Respondent. Had the Respondent been aware of the false information the policy would never had been issued. 

Applicant has not submitted any evidence to rebut the contentions made by the Respondent. 

Based upon the facts herein and the evidence provided, I find that Respondent has demonstrated by a preponderance of the evidence as a matter of law that EIP made material misrepresentations as to the facts surrounding the issuance of the policy. 

Applicant's claim is therefore denied.

In this case, the assignor's EUO, which my office conducted, proved to be key in supporting the insurer's rate evasion-based denial of first-party benefits. 

Court of Appeals Declines to Disturb SUM Arbitration Award Despite Arbitrator's Refusal to Give Collateral Estoppel Effect to Prior No-Fault Arbitration Award

SUM – NO-FAULT – COLLATERAL ESTOPPEL – VACATING ARBITRATION AWARD
Matter of Falzone v. New York Cent. Mut. Fire Ins. Co.
(Ct. Apps., decided 10/21/2010)

Falzone arbitrated New York Central Mutual's denial of no-fault benefits and won.  She then arbitrated her related SUM claim against NYCM before a different arbitrator and lost on the ground that her injuries were not caused by the accident.  Contending that the second arbitration decision was inconsistent from the first, and that NYCM was collaterally estopped in the SUM arbitration from relitigating the issue of causation with respect to her injuries, Falzone commenced this CPLR article 75 special proceeding to vacate or modify the SUM arbitration award.  Supreme Erie granted petitioner's motion to vacate the SUM award and NYCM appealed.

In a 3-2 split decision, the Fourth Department, Appellate Division, reversed the order and confirmed the SUM arbitration award, the three-justice majority noting that "[t]he fact that a prior arbitration award is inconsistent with a subsequent award is not an enumerated ground in either subdivision (b) or (c) of CPLR 7511 for vacating or modifying the subsequent award[.]"

In 6-1 split decision, the New York Court of Appeals AFFIRMED the Appellate Division's decision, the six-judge majority holding: 

It is well settled that a court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power (see Matter of New York City Tr. Auth. v Transport Workers' Union of Am., Local 100, AFL-CIO, 6 NY3d 332, 336 [2005]; Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, 79 [2003]; CPLR 7511 [b] [1] [iii]).  Even where an arbitrator has made an error of law or fact, courts generally may not disturb the arbitrator's decision (see Transport Workers' Union of Am., Local 100, AFL-CIO, 6 NY3d at 336 ["[C]ourts are obligated to give deference to the decision of the arbitrator.  This is true even if the arbitrator misapplied the substantive law in the area of the contract (citations omitted)."]).  Here, petitioner's claim —- that the arbitrator erred in failing to apply collateral estoppel to preclude litigation of the causation issue in the SUM arbitration — falls squarely within the category of claims of legal error courts generally cannot review.

* * * * *

Here, the prior (no-fault) arbitration award involved the same parties, the same accident, the same injuries, and resolution of the same issue (causation) as the subsequent (SUM) arbitration award. Respondent insurer, a party to the prior arbitration, lost on the causation issue. Petitioner, the prevailing party on that issue in the prior arbitration, reasonably argued that collateral estoppel should apply to bar relitigation of the causation issue in the subsequent SUM arbitration. The SUM arbitrator rejected petitioner's argument, had the parties relitigate the causation issue and, contrary to the no-fault arbitrator's determination, found in respondent insurer's favor on the causation issue.

It is not for us to decide whether the SUM arbitrator erred in not applying collateral estoppel (i.e., not giving preclusive effect to the no-fault arbitrator's determination on the issue of causation). Because the SUM arbitration award was not patently irrational or so egregious as to violate public policy, the instant SUM arbitration award (and whether the SUM arbitrator erred or exceeded his authority) is beyond this Court's review powers.

As I observed when posting about the Fourth Department's decision, although some practitioners may regard this decision as standing for the proposition that collateral estoppel no longer attaches to no-fault arbitration awards in New York, the ruling is much more narrow than that.  The Fourth Department's majority reversed the trial judge and confirmed the award not because they believed collateral estoppel could or did not apply to preclude NYCM from relitigating injury causality, but because they (and the dissent) adhered to the rule that collateral estoppel is not a basis on which Supreme Court may, under CPLR 7511, vacate an arbitration award.  On that procedural basis the Court of Appeals agreed and declined to disturb the arbitrator's award. 

Announcing a New Blog -- Arbiters of NY No-Fault

Dave Gottlieb's got three.  Now I have two.  Blogs, that it. 

Over this past weekend I created a new blog that will post and discuss just New York no-fault arbitration awards/decisions and issues.  Announcing Mura & Storm's second venture into the blogosphere -- Arbiters of NY No-Fault, which can be found at the easy-to-remember domain http://nynofaultarbitration.com.  My associates, Bethany Mazur and Scott Mancuso (awaiting admission), will be the primary authors of this new blog, and I'll chime in from time to time.  Our hope is to provide digests of interesting and important arb awards, as well as to track and report stats on each AAA no-fault arbitrator and master arbitrator.  Over time, our database of awards by arbitrators and issues should be a resource to our no-fault insurer clients.  Please let us know in what ways we can make this new blog most useful to you who work in the New York no-fault arbitration arena. Check back in a few weeks when we hope to have a decent amount of materials uploaded to the new blog, which is hosted on a WordPress platform and has several, very easy ways of subscribing to content. 

DJ Action Doesn't Trump Untimely Commenced CPLR Article 75 Special Proceeding

AUTO – SUM – CPLR § 7503(C) – 20-DAY SOL TO COMMENCE SPECIAL PROCEEDING FOR STAY
State Farm Ins. Cos. v. DeSarbo
(3rd Dept., decided 6/5/2008)

File this in the "nice try but no cigar" category.

State Farm commenced a special proceeding to stay DeSarbo's SUM arbitration. The motion court granted State Farm's petition for a permanent stay and the claimant appealed. During the pendency of that appeal, State Farm commenced this DJ action, contending that DeSarbo breached the policy and voided SUM coverage by having failed to cooperate and provided false information to State Farm.

State Farm moved for summary judgment in this DJ action. While that motion was pending, the Third Department reversed the stay of arbitration that had been granted to State Farm in the special proceeding on the ground that State Farm's application for the stay had been untimely (not commenced within 20 days as required by CPLR § 7503[c]). Supreme Court, noting that the Third Department's decision did not address the issues raised in plaintiff's motion for summary judgment in the declaratory judgment action, granted State Farm's motion.

The Third Department REVERSED, holding:

Here, a valid agreement to arbitrate underinsurance claims exists under the policy. The issue of defendant's compliance with terms of that agreement had to be raised by seeking a stay within 20 days of service of the intent to arbitrate. We have previously held that plaintiff failed to properly seek a stay within 20 days. Plaintiff cannot now circumvent the arbitration requirements by asserting in a declaratory judgment action an issue it failed to assert in a timely fashion when faced with a demand for arbitration.

UM Arbitration Stayed

UM – STAY OF ARBITRATION – POLICE REPORT SUBMISSION – PRIORITY OF COVERAGE
Matter of GEICO v. Coppolino
(Sup.Ct., Nassau Co., decided 4/15/2008)

Coppolino, a GEICO insured, was injured in an MVA while driving a vehicle insured by State Farm. According to the police accident report, the tortfeasor Kent's offending vehicle was insured by Hartford. For reasons not clear from the court's decision, Coppolino demanded arbitration of his UM claim with GEICO, rather than pursuing Kent. GEICO then commenced this special proceeding for a stay of that arbitration, naming Hartford and State Farm as proposed additional respondents.

GEICO established a prima facie case sufficient to warrant a temporary stay of the UM arbitration by submitting a police accident report that listed the Kent vehicle as insured by Harford and Coppolino's vehicle as insured by State Farm. As there was a "presumption of coverage" arising from the police report' s insurance code designation, the court found that GEICO had met its initial burden of presenting some evidence to establish that the allegedly offending vehicle was insured on the date of the accident. With GEICO having done so, the burden then shifted to Hartford to show that no such policy was in effect or applicable at the time of the occurrence.

In addition to ordering that Coppolino's UM arbitration be temporarily stayed, the court ordered that this proceeding be consolidated with a similar one that State Farm had previously commenced in relation to the UM claim of a passenger of the vehicle Coppolino was driving.

It sometimes happens that vehicle occupants file and pursue UM claims against the vehicle's insurer rather than contesting the coverage denial of the offending vehicle's insurer. We have even seen instances in which claimants have pursued UM coverage and demanded arbitration after the offending vehicle's insurer merely denies tort liability of the driver/owner, rather than coverage. In those instances, UM insurers should consider commencing a timely special proceeding under New York CPLR article 75 to stay arbitration, naming all involved insurers as additional repondents so that the coverage rights and responsibilities of all insurers may be determined and declared.

Fourth Department Coverage Decisions -- April 25, 2008

UM COVERAGE – VENUE OF ARBITRATION HEARING
Matter of the Arbitration Between Erie Ins. Co. and Malcolm
(4th Dept. decided 4/25/2008)
The venue of an uninsured motorists coverage arbitration may not be held more than 100 miles from the insured's residence.
In Matter of the Arbitration Between Erie Ins. Co. and Malcolm, the court granted the insurer's CPLR article 75 petition to change the venue of the insured UM arbitration from Kings County to Erie County. In originally granting the insured's request to change the venue from Erie County to Kings County, the AAA arbitrator violated that AAA's own rule that an arbitration hearing may not be held more than 100 miles from an insured's residence. The insured's listed residence was in West Seneca, Erie County.

SUBROGATION – WAIVER OF SUBROGATION
American Motorists Ins. Co. v. Louis Ciminelli Construction Co.
(4th Dept. decided 4/25/2008)
In American Motorists Ins. Co. v. Louis Ciminelli Construction Co., the court affirmed the lower court's granting of summary judgment to the general contractor and sprinkler system subcontractor based on the waiver of subrogation provision of the general contract. The court also rejected the subrogating insurer's contention that the waiver of subrogation provision does not apply to postconstruction losses.

CGL – COINSURANCE – ADDITIONAL INSURED – PRIORITY OF COVERAGE
B.F. Yenny Construction Co. v. OneBeacon Ins. Grp.
(4th Dept. decided 4/25/2008)
In B.F. Yenny Construction Co. v. OneBeacon Ins. Grp., the court ruled that the lower court erred in relying on construction subcontract language rather than the language of the two insurance policies to determine the priority of coverage between those policies. Pursuant to the "other insurance" and "method of sharing" provisions of those policies, both One Beacon (which insured the GC as an additional insured) and Selective (which insured the GC as a named insured) were found obligated to provide primary coverage and to share equally in the costs of the GC's defense and indemnification in the underlying action.

CGL – GARAGE LIABILITY POLICY – "YOUR CUSTOMERS" – WHO IS AN "INSURED"
Graphic Arts Mutual Ins. Co. v. Russell
(4th Dept. decided 4/25/2008)
In Graphic Arts Mutual Ins. Co. v. Russell, the court affirmed the lower court's ruling that Graphic Arts Mutual was obligated to defend and indemnify defendant who was test driving a vehicle owned by the plaintiff's car dealership insured. The Graphic Arts garage liability policy excluded by definition from coverage customers of the dealership who had liability insurance of at least mandatory minimum limits. The court rejected Graphic Arts Mutual's argument that the defendant was its named insured dealership's "customer", holding that the defendant, who had had no contact with the dealership and transacted no business with the dealership, could not be construed to fall within the "[y]our customers" language of the garage liability policy.