Sunday, September 27, 2009

New location for this Blog

I have relocated this blog to the following URL:

Please let me what you think of the new site..

Thursday, September 17, 2009

A default that is more than meets the eyes

The one thing that we can all say about Second Department practice, whether it be at the Appellate Term or the Appellate Division, is that the decision/orders of these courts never elucidate upon the facts of a given matter. This is not necessarily a bad thing, especially when you are on the losing side of a case. But when a case has lived an interesting life, it would be nice to know what happened.

While the Appellate Division’s decision tells a different story, a review of the record of appeal in Mercury Cas. Co. v. Surgical Center at Milburn, LLC, 2009 N.Y. Slip Op. 06516 (2d Dept. 2009), shows us that this is not your every day run of the mill “default” case.

This case started as a $12,000 no-fault AAA arbitration, where the Defendant sought to recover for surgery services performed on its Assignor. Plaintiff denied the claim on the basis that the surgery was not causally related to the motor vehicle accident. In support of this defense, Plaintiff presented the report of a radiologist who, upon a review of the applicable MRI films, found that the injuries were pre-existing, degenerative and not related to the underlying motor vehicle accident.

The lower arbitrator, upon a review of the record, did not find the Plaintiff's proof convincing and awarded Defendant the principle sum of $12,000, along with interest, costs and attorney fees. It is not uncommon these days for an insurance carrier to lose in arbitration.

Plaintiff, as would be expected, filed a master arbitral demand and perfected its master arbitral brief. Similarly, Defendant proceeded to perfect his master arbitral brief. Following due deliberation, the master arbitrator upheld the award of the lower arbitrator, finding that the award was not defective as a matter of law. This decision was probably correct.

Since the amount in controversy, however, exceeded $5,000, Plaintiff sought a trial de-novo. In this regard, a summons and complaint, fashioned as an action seeking a declaration that the surgery was not related to the motor vehicle accident, was filed with the Supreme Court and served upon Defendant. The action seeking a declaratory judgment spelled out the procedural history and the nature of the defense to the underlying no-fault claim.

Defendant failed to timely answer or move, and Plaintiff moved for leave to enter a default judgment against Defendant. Defendant opposed the motion, but failed to set forth a reasonable excuse or any evidence to support a potentially meritorious defense. All Defendant attached to his answering papers were the proofs he presented at the lower arbitration. In order to raise a potentially meritorious defense, Defendant would have had to obtain a radiology review that contradicted, point by point, Plaintiff’s own film review. As to the proof necessary to defeat a causation defense predicated upon a radiology review, please see my prior posts.

The Supreme Court denied Plaintiff's motion. A notice of appeal was promptly filed. At the Appellate Division, Plaintiff moved to stay the Supreme Court case, pending the outcome and determination of the appeal. This motion was granted. The appeal was then perfected. Following due deliberation, the order of the Supreme Court was reversed and Plaintiff’s motion was granted. Consequently, the matter was remitted to the Supreme Court for the purpose of entering a judgment, declaring that the surgery was not causally related to the motor vehicle accident.

Here are a few thoughts. First, it would appear that the collateral estoppel consequences of this type of a decision are huge, as I have opined in previous posts. The second thing, and one of a practical matter, is that a demand for a trial de-novo, in this type of proceeding, should be commenced as a declaratory judgment type of action. There are other ways to commence a trial de-novo, but these methods are not as effective or efficient as commencing it through a declaratory judgment action.

Friday, August 28, 2009

The failure to serve a demand for master arbitral review in the manner set forth in the regulations will foreclose review of the underlying award

Matter of Progressive Northeastern Ins. Co. v Seaport Orthopedic Assn. 2009 NY Slip Op 31915(U)(Sup Ct NY Co. 2009)

In this case, a master arbitrator failed to consider the merits of the insurance carrier’s appeal since there was insufficient proof as to whether the demand for master arbitral review was sent via certified mail, return receipt requested, in accordance with 65-4.10. Petitioner commenced an Article 75 proceeding in Supreme Court, New York County, to vacate the award of the master arbitrator.

The Supreme Court confirmed the award of the master arbitrator. The Court found the following:

“Courts are reluctant to disturb the decisions of arbitrators lest the value of this
method of resolving controversies be undermined.” Goldfinger v. Linger, 68 N.Y.2d 225,230 (1986)(citations omitted). The Notice failed to set forth compliance with 11 N.Y.C.R.R. 65-4.10(d)(3) in that it failed to set forth the manner of service. There is no basis to vacate the award under CPLR § 7511. From the face of the Notice, the Master Arbitrator was within his power to hold that service was improper, and refuse to reach the merits of the decision of the lower arbitrator.”

The above rationale appears to be based upon the more deferential standard that applies to non-compulsory arbitrations, as opposed to the Article 78 standard that applies to the review of PIP arbitrations. It also appears that the Appellate Division, First Department, in Travelers Indem. Co. v. Rapid Scan Radiology, P.C., 61 A.D.3d 466 (1st Dept. 2009), already held that the failure to comply with certain service provisions in 65-4.10, is deemed de minimus, as recognized below:

“The master arbitrator did not exceed his authority and his determination was not arbitrary or capricious. As to petitioner's claim that respondent did not comply with the filing requirements of 11 NYCRR 65-4.10 (d) (2) because it failed to state the nature of the claim and grounds for review and failed to include a copy of the lower arbitrator's award, this was not the basis of their challenge before the master arbitrator. Further, no prejudice has been shown since the parties submitted memoranda fully apprising the master arbitrator of the issues at hand and of the lower arbitrator's decision

While it is conceded that Rapid Scan served its request by regular mail, not certified mail as required by 11 NYCRR 65- *467 4.10 (d) (3), as the Supreme Court found, petitioner participated in the master arbitrator's review and recognized in its own submission that the defect could be viewed as “de minimus and/or harmless.”

Hopefully, Progressive preserved the argument set forth in Rapid Scan and will appeal this decision since it is contrary to established First Department precedent.

Robbing someone while they are chaging a tire is considered use and operation in Florida

In light of the dearth of no-fault cases, I have devoted this week's postings to interesting issues that have arisen in Florida no-fault law. Today's case is from the Florida Supreme Court, and was decided in 1999. It should be noted that the issue of "use and operation" in New York is one that has created numerous conflicts between the Second Department and Third Department.

But, this case is really interesting in seeing how expansive the phrase "use and operation" of a motor vehicle is in Florida.

Blish v. Atlanta Causalty Company
, 736 So.2d 1151 (Fla. 1999)

Karl Blish left work on January 6, 1995, drove a coworker home, spent a few minutes at the coworker’s house, and then headed home himself. Blish’s pickup truck had a blowout on U.S. 1 in Brevard County and he pulled over to change the tire. He jacked up the truck and was loosening the lug nuts when he was attacked from behind by several assailants. The men choked and beat him (he testified that he “might have went unconscious”) and stole between eighty and a hundred dollars from his pocket. After the attack, Blish recovered his glasses, did his best to finish changing the tire, and drove home (“I just barely got the tire on and I drove home.“). He did not go to the hospital or call police because he did not think that he had been hurt badly enough (“I was just going to write it off as a loss, I guess.“).

A week later, he experienced severe abdominal pain, was rushed to the hospital in an ambulance, and was diagnosed as suffering from a ruptured spleen, which doctors removed.

Under these circumstances, the actual source of the injury-causing blow is not dispositive--whether it came from a negligent driver in a passing vehicle or a violent group of passing thugs is not decisive. It was the use and maintenance of the truck that left Blish stranded and exposed to random acts of negligence and violence, and he was in the very act of performing emergency maintenance on the vehicle when he was injured.

Acts of violence are an ageless and foreseeable hazard associated with the use of a vehicle--for once a person sets out in a vehicle, he or she is vulnerable. The highwaymen and desperados of bygone times preyed on the wayfarer, and these villains are with us still. Each Floridian today, when he or she gets behind the wheel, faces a variety of dangers: a car-jacking at a stoplight, or a strong-arm robbery at a deliberately staged rear-end collision, or a road rage assault in rush hour traffic, or even a random shooting by an anonymous sniper from an overpass.

The danger is particularly acute when the motorist is stranded as the result of a disabled vehicle. The scenario in the present case is every motorist’s nightmare. Losses resulting from a violent encounter with this ageless road hazard--i.e., the highwayman or opportunistic thug--might reasonably be said to be very much in the contemplation of Florida consumers when they are contracting to purchase auto insurance. The motivation of the assailant--whether it be to “possess or use” the vehicle, or to steal the victim’s wallet or purse, or simply to harm the victim--is a nonissue to the consumer.

, e.g., Hammond v. GMAC Ins. Group 56 AD3d 882 (3d Dept. 2008); Matter of Manhattan & Bronx Surface Transit Operating Authority, 71 AD2d 1004 (2d Dept. 1979). But see, Mazzarella v. Paolangeli, 63 AD3d (3d Dept. 2009); 1420Trentini v. Metropolitan Property and Cas. Ins. Co., 2 AD3d 957 (3d Dept. 2003).

Many thanks

I would like to thank Roy Mura at coverage counsel for including this blog in his google search. The irony is that you never really know who is reading your blog until you come across something like that, while reading their blog.

As to Dave Gottlieb's beard from nofaultparadise, my vote is for him to keep the shaved head, non-facial hair look. That beard is a public health hazard. Please leave your comments on his blog as to what you think...

Tuesday, August 25, 2009

May a peer report be performed after the 30-day claims determination period?

The District Court of Appeal, Third Division answered this question in the affirmative.

In the matter of Millennium Diagnostic Imaging Ctr., Inc. v. United Auto Ins. Co., 975 So. 2d 1149 (Fla. 3d DCA 2009), the Court held the following:

The language in section 627.736(4)(b) pertains to PIP benefits that are “due” under the policy. If a medical bill is submitted for treatment that is not reasonable, related, or necessary, there can possibly be no benefits “due” under the policy, and therefore, that claim cannot be deemed “overdue.” Section 627.736(4)(b) provides that the insurer can assert, “at any time, including . . . after the 30-day time period for payment,” that “the claim was unrelated, was not medically necessary, or was unreasonable.”

Based on the unambiguous language of section 627.736(4)(b) and applicable case law, we answer the certified question, as phrased by the trial court, in the affirmative, and conclude that the thirty-day time period set forth in section 627.736(4)(b) does not apply to claims for unrelated, unreasonable, or unnecessary treatment. Therefore, an insurer may challenge such treatment at any time, and is permitted to rely on a report, obtained pursuant to section 627.736(7)(a), even if the report is obtained more than thirty days after the claim was submitted. The insurer, however, must keep in mind that if its challenge fails, it will be liable for interest and attorney’s fees.

Oh I forgot to add that I was referencing Florida law. Compare, Bronx Expert Radiology, P.C. v. New York Cent. Mut. Fire Ins. Co. 24 Misc.3d 134(A)(App. Term 1st Dept. 2009); Dilon Medical Supply Corp. v. New York Cent. Mut. Ins. Co., 18 Misc.3d 128(A)(App. Term 2d Dept. 2007).

Tuesday, August 18, 2009

The timeliness of follow-up additional verification requests will be argued before the Appellate Division, Second Department

The issue involving whether a premature follow-up additional verification request may be deemed valid is now before the Appellate Division, Second Department. The case of “Infinity Health Products v. Eveready Insurance Company”, is slated for oral arguments on September 11, 2009.

Thursday, August 13, 2009

The best evidence rule under fire

Madison-68 Corp. v Malpass 2009 NY Slip Op 06154 (1st
Dept. 2009)

“Plaintiff's objection, made under the best evidence rule, to the admission of the lease rider was properly overruled because it had offered into evidence a copy of the same document.”

First, we saw the end of the New York rule. Now, we have a curtailment of the Best Evidence rule. I am not sure we can cite to Prince Richardson, the Farrell edition, in order to fully understand New York evidence law. Henry David Thoreau said it best: “Any fool can make a rule, and any fool will mind it.”

2309 - again

Andromeda Med. Care, P.C. v Utica Mut. Ins. Co., 2009 NY Slip Op 51629(U)(App. Term 2d Dept. 2009)
“The affidavits proffered by defendant in support of its motion for summary judgment were executed out of state. Although the affidavits were accompanied by documents that purported to be certificates of conformity, the certificates did not comply with Real Property Law § 299-a and, thus, the affidavits did not comply with CPLR 2309 (c)”

Another case involving CPLR § 2309(c). Read my previous comments on this topic.

Personal knowledge as to EUO non-appearences has become a lot less personal

W & Z Acupuncture, P.C. v Amex Assur. Co. 2009 NY Slip Op 51732(U)(App. Term 2d Dept. 2009)
“In opposition to plaintiff's motion and in support of its cross motion for summary judgment, defendant submitted the affirmation of a partner in the law firm retained by defendant to conduct plaintiff's EUO. Counsel alleged facts sufficient to establish that plaintiff's owner had failed to appear at counsel's law office for duly scheduled EUOs”

This case is interesting because a supervisor at a law firm may lay the appropriate foundation to satisfy the Fogel personal knowledge requirement , even though the supervisor had nothing to do with the scheduling and non appearances at the attempted EUOs. Again, a well drafted and copiously detailed affidavit, similar to that of a mailing affidavit, is a prerequisite to utilizing this method to demonstrate the Fogel personal knowledge requirement.

Wednesday, August 12, 2009

Claims office failure is excusable in certain instances

Urban Radiology, P.C. v American Tr. Ins. Co. 2009 NY Slip Op 51734(U)(App. Term 2d Dept. 2009)

"In the case at bar, defendant's no-fault supervisor, who was also the claims representative who handled the instant claims, submitted an affidavit in which he stated that defendant had lost the file containing the summons and complaint and had not found out about the default until June 25, 2007. The record also indicates that defendant's attorney initiated the instant motion to vacate the default judgment promptly in July 2007."

It is nice to see the courts allowing the claims offices some leeway in vacating defaults. The law in the Second Department used to be that claims office failure was always fatal to the vacatur of a default. The law has steadily evolved, and now under appropriate circumstances, claims office failure may form the basis to vacate a default.

What troubled me, however, was that the default was only partially vacated. Thus, if someone brought a multisuit with many assignors, the default would be vacated only as to the causes of action where there was a meritorious defense. This makes sense in the abstract. But since the causes of action would most likely be severable had a timely answer been interposed, a defendant’s default in answering appears to give the plaintiff an inordinate advantage through promoting the joining of unrelated actions, in the first instance.

Identity fraud in the procument of the insurance policy

Alexander Alperovich, M.D., P.C. v Auto One Ins. Co., 2009 NY Slip Op 51721(U)(App. Term 2d Dept. 2009)

They say many times that the devil is in the details. In this case, the defense to the payment of no-fault claims was that there was some type of misrepresentation or “fraud” in the procurement of the insurance policy. We learned last week that the Appellate Term, First Department in the misrepresentation context stated that the misrepresentations must be intentional. We also saw that settled Appellate Division case law holds that a material misrepresentation may be unintentional.

Except for the Kaplan case that was discussed awhile back, the appellate courts have not discussed the extent of third-party liability in relation to “misrepresentations” or other “fraud” in the procurement of an insurance policy.

While Plaintiff prevailed in this case, I would call this a victory for the insurance carriers. The Appellate Term has now framed the issue as to whether “plaintiff's assignor participated in or was aware of such a fraudulent scheme.”

The defense is now proved if the carrier can show participation or awareness in the so-called scheme. Prior to this case, the standard for third-party liability appeared to be “intentional” involvement in the scheme or involvement in a “conspiracy” in relation to the scheme.

Thursday, July 30, 2009

Back to Workers Compensation

One of the most intriguing things about this area of law is that in a matter of 6 months, the same court can make pronouncements that are apparently inconsistent with each other. Some of these inconsistencies are subtle. Some of them are more pronounced.
An example of a sublte change is the pronouncement that an uncertified police report may under certain circumstances be considered admissible evidence in accord with CPLR 4518(a). People v. Hunter, 62 A.D.3d 1207 (3d Dept. 2009); Westchester Medical Center v. State Farm Mut. Auto. Ins. Co., 44 A.D.3d 750 (2d Dept. 2007) Compare, CPLR § 4518(c).
Another subtle change involves the proof necessary to demonstrate intoxication in a civil case. A proper certified hospital record or police record will now suffice. Six months prior, it did not suffice. Compare, Westchester Medical Center v. Progressive Cas. Ins. Co., 51 A.D.3d 1014 (2d Dept. 2008)(“A blood alcohol test result, as set forth in a certified hospital record, constitutes prima facie evidence of the test result pursuant to CPLR 4518(c) Thus, the blood alcohol test results contained in a certified hospital record from Sound Shore would be sufficient to make a prima facie showing that Forthmuller was intoxicated at the time of the accident”), with Westchester Medical Center v. State Farm Mut. Auto. Ins. Co., 44 A.D.3d 750 (2d Dept. 2007)(“the defendant was unable to establish, prima facie, that Gjelaj was intoxicated at the time of the accident. The result of a blood alcohol test may be admitted on the issue of intoxication in litigation involving an exclusion in a no-fault policy provided that a proper foundation is laid. At bar, the defendant failed to lay a proper foundation for admission of the BAC report by proffering any evidence regarding the care in the collection of Gjelaj's blood sample and its analysis.”)
Then there is the question: what is a prima facie case? I will not even go there, but a NYLJ article that will be published next week will gloss on that issue.
Now we have the workers compensation defense issue. Specifically, is the workers compensation defense one of standing or is it an exclusion. Notice that I left out the word “coverage”. Coverage, as we learned in Fair Price, is only implicated in rare instances. Workers Compensation issues do not implicate coverage.
Last month, the Appellate Division, Second Department, told us that the workers compensation defense is an exclusion that needs to be preserved in a timely denial. The Appellate Term, Second Department, followed suit under principles of stare decisis. I discussed this in prior posts.
The case that triggered this post is LMK Psychological Serv., P.C. v American Tr. Ins. Co. 2009 NY Slip Op 06004 (2d Dept. 2009). The pertinent portion of the opinion is as follows:
“There has been no determination by the Workers' Compensation Board as to whether the assignors are entitled to Workers' Compensation benefits for their injuries. The Workers' Compensation Board has primary jurisdiction to determine factual issues concerning coverage under the Workers' Compensation Law. Where "a plaintiff fails to litigate that issue before the Board, the court should not express an opinion as to the availability of compensation but remit the matter to the Board'"
It is not clear whether the Appellate Division has now decided that the compensation defense is now a standing issue (id), or is precludable as was set forth in Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009). Without resort to the record on appeal, it is hard to tell what exactly happened here.

Thursday, July 23, 2009

Intentional loss - preponderence and not fraud

AA Acupuncture Serv., P.C. v Safeco Ins. Co. of Am.,

2009 NY Slip Op 29311 (App. Term 1st Dept. 2009)

This was a really interesting decision. It is so rare that the Appellate Term, First Department writes a lengthy decision about any topic, let alone one involving a no-fault case. The law announced in this case represents established law. An insurance carrier may disclaim all no-fault benefits or other first-party benefits as to a party who makes material misrepresentations in the procurement of an insurance policy.

There was an interesting line in there, which I am not sure represents settled law:

This evidence was [*2]sufficient to establish prima facie that the insured intentionally misrepresented her address in order to obtain insurance at reduced premiums, and that the misrepresentation was material, since defendant would not have issued the policy under the same terms had it known that the insured resided in Brooklyn

Yet, the Appellate Division last year stated the following in Precision Auto Accessories, Inc. v. Utica First Ins. Co., 52 AD3d 1198 (4th Dept. 2008):

Defendant's president further stated in his affidavit that, “if [defendant] had been aware of plaintiff's true *1201 loss history ... [defendant] would not have issued a policy of insurance to plaintiff.” Contrary to plaintiff's contention, defendant is correct that it need not establish that the misrepresentations were willful in order to rescind the contract. Insurance Law § 3105(b) does not specify that a misrepresentation must be willful, and “[w]hether or not plaintiff intended to provide inaccurate statements or misrepresentations at the time [it] filled out the application is irrelevant”

Besides the above, Justice McKeon’s concurring opinion was interesting. He made an interesting observation, one I always joke about. Specifically, have you ever wondered whether the registrants of out of state vehicles, registered in non no-fault states, really reside in those states?

Thursday, July 16, 2009

The standard to rebut a peer review was raised a few notches

Pan Chiropractic, P.C. v Mercury Ins. Co.
2009 NY Slip Op 51495(U)(App. Term 2d Dept. 2009)

Sensing the belief that no-fault actions were starting to follow the trend in Ins Law 5102(d) actions (the no-fault threshold statute), the Defendant appealed the order finding that Plaintiff’s affidavit of merit was sufficient to raise a triable issue of fact, in opposition to Defendant’s summary judgment motion.

Factually, this case involved $660 worth of diagnostic testing. Defendant’s peer review set forth numerous reasons and cited to various authorities for the proposition that the diagnostic testing was either never necessary or not necessary in relation to the patient’s presented symptomology.

Plaintiff relied on the reports annexed to Defendant’s papers and concluded that the services were indeed medically necessary. There was no meaningful disagreement with Defendant’s doctor’s medical rationale for finding that the services lacked medical necessity.

The Court in applying the meaningful disagreement standard found in 5102(d) causation cases rightly found that Plaintiff failed to rebut the inference that the services lacked medical necessity.

I would opine that a provider, in successfully opposing this type of motion, is going to have to send these cases to their own peer doctor to perform a utilization review in their own right in order to raise a triable issue of fact in opposition to a defendant’s motion for summary judgment. This should be interesting.

Standing. All rise.

Davydov v Progressive Ins. Co.
2009 NY Slip Op 29299 (App. Term 2d Dept. 2009)

The concept of standing has numerous meanings. In Civil Procedure, it refers to the existence of a case or controversy, which is a precondition to allowing a Court to hear a case. In Criminal Procedure, it addresses the ability to contest a Fourth Amendment search and seizure violation. As a matter of common law and statutory law, it involves the ability of a party to prosecute an action, even though there is a case or controversy. I would be remiss if I did not include the statement that in English parlance, standing means to be on one’s feet in an upright, vertical position. If you were playing Password and someone said, in that funny opposite like voice “sitting”, the answer would be “standing”.

In regards to the common law notion of standing, there appears to have developed two different types of standing issues. The first is a statute or a regulation vesting or stripping a party of so-called standing. For instance, 65-3.16, the regulation that Malella is predicated upon, states that improperly formed corporations, and most likely their assignors in a direct first-party suit, do not have standing to prosecute overdue no-fault healthcare-expense bills. This “standing” rule also involves corporations prosecuting actions on behalf of independent contractors; and I would argue that 65-3.19 strips a health care provider’s ability to prosecute bills where a worker’s compensation carrier is deemed “primary”. But see, Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009).

As to an example of a statute that vests standing, where it would not otherwise exist, one should look to GBL 349. Prior to the amendments promulgated years ago, the attorney General was the only official who could prosecute a GBL 349 (consumer fraud) claim.

The second notion of standing represents so-called technical standing. The Courts have over the last decade deemed technical standing issues, mainly as to valid assignments, to fall within this category. As to technical standing issues, the deficiencies in the assignment forms in the no-fault scenario are deemed waived if not properly addressed during the claim stage, and in non no-fault actions, the defect is waived if not properly pleaded in an answer or a pre-answer motion. See, e.g., Wells Fargo ]Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 241-243 (2d Dept. 2008)

Judge Golia’s dissent is only too logical. On a blank slate, it is correct. The type of technical defect in this matter, i.e., an assignment that assigns a claim to another entity should be a bar to a prima facie case in any type of action. This is a true standing issue, although deemed technical in nature. This statement would not hold true for issues such as missing signatures and other hyper-technical issues, where the intent to assign a claim to the proper entity may be inferred from the document. The issue of true standing should never be waivable since it addresses the fundamental right to access the courts. But the Appellate Courts have seemed to reject untimely challenges to technical defects, involving the nature of true standing.

I lastly wonder why Davydov, M.D., was not impleaded in a third-party contribution action in this case. This would most likely address the issue of proper standing and would protect the carrier from a subsequent action that Davidof M.D., could possibly bring against the carrier.

Wednesday, July 8, 2009

Collateral Estoppel may not apply in no-fault arbitrations – so says the Fourth Department


In a very interesting case, the Appellate Division, Fourth Department held that principles of collateral estoppel do not apply in arbitration.

Matter of Falzone v New York Cent. Mut. Fire Ins. Co. 2009 NY Slip Op 05423 (4th Dept. 2009)

In this case, a Claimant initially arbitrated a no-fault claim between himself and his insurance carrier. The issue that was arbitrated involved whether Claimant’s injuries were causally related to the motor vehicle accident. A no-fault arbitrator found the injuries to be causally related to the motor vehicle accident and awarded benefits.

The Claimant after obtaining an award for no fault benefits then sought to obtain SUM benefits arising from the same loss. Accordingly, Claimant commenced a second arbitration between himself and the same carrier upon which he was awarded no-fault benefits. The insurance carrier’s defense to payment in this SUM arbitration, similar to that in the no-fault arbitration, was that there was a lack of a causal nexus between the motor vehicle accident and the alleged injuries.

Since the parties and issues to be resolved in this SUM matter were the same as that in the no-fault matter, i.e., whether the injuries were causally related to the motor vehicle accident, you would think that principles of collateral estoppel would come into play and bind the SUM arbitrator to the same decision as that of the no-fault arbitrator. As we saw in a previous post involving the matter of Lobel v. Allstate, a no-fault arbitrator’s decision on causation will collaterally estopp a party from re-litigating a previously arbitrated issue in Court. Yet, the SUM arbitrator, aware that the prior arbitrator found a causal nexus existed between the motor vehicle accident and the injuries, nonetheless ruled that there was no causal connection between the injuries and the motor vehicle accident.

An Article 75 challenge was lodged in the Supreme Court. The Supreme Court granted the petition, reversed the SUM arbitrator’s decision and properly found that the results of the no-fault arbitration collaterally estopped the parties from contesting the causal relationship between the motor vehicle accident and the injuries at the SUM arbitration. Thus, the SUM arbitratror, as a matter of law, had to find that there was a causal relationship between the motor vehicle accident and the loss. The carrier appealed and the Fourth Department surprisingly reversed the order and judgment of the Supreme Court as set forth herein:

We agree with respondent that Supreme Court erred in granting claimant's motion. The 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 (see Matter of City School Dist. of City of Tonawanda v Tonawanda Educ. Assn., 63 NY2d 846, 848). As the court properly recognized, "[i]t was within the [SUM] arbitrator's authority to determine the preclusive effect of the prior arbitration on the instant arbitration" (Matter of Progressive N. Ins. Co. v Sentry Ins. A Mut. Co., 51 AD3d 800, 801). The court erred in noting, however, that it was unable to determine whether the SUM arbitrator even considered claimant's contention with respect to collateral estoppel. Arbitrators are not required to provide reasons for their decisions (see Matter of Solow Bldg. Co. v Morgan Guar. Trust Co. of N.Y., 6 AD3d 356, 356-357, lv denied 3 NY3d 605, cert denied 543 US 1148; Matter of Guetta [Raxon Fabrics Corp.], 123 AD2d 40, 41), and thus the SUM arbitrator was not required to state that he had considered that contention. “

Two points need to be considered. First, the Fourth Department cites a 2007 Second Department case entitled Matter of Progressive N. Ins. Co. v Sentry Ins. A Mut. Co. for its rule of law. Yet, the Progressive case actually held that collateral estoppel should be given effect to prior arbitration awards involving the same parties and the same issue. Second, there was a two Justice dissent, which as a matter of right brings this case to the Court of Appeals.

For the sake of commonsense, this case should be reversed. Otherwise, there will be too many instances where inconsistent decisions will arise in post-ime cases, other policy violation cases and coverage cases, among others. It would be a fair assessment to say that no-fault and other first-party practitioners will not benefit from the uncertainty and some could say absurdity that this case could rein upon the arbitral process.