Index No. 650965/2023, Motion Seq. No. 001.
Supreme Court, New York County
Motion February 22, 2023.
June 18, 2025.
DECISION + ORDER ON MOTION
JUDY H. KIM, J.S.C.
The petition to vacate the arbitration award is denied. This action arises from a motor vehicle accident on April 13, 2021, in which petitioner’s assignor, Peter Mwakajumba, sustained injuries. Petitioner sought first-party no-fault benefits reimbursement from respondent in the amount of $1,246.91 for medical treatments it rendered to Mwakajumba, which claim was denied by respondent.
Petitioner then submitted this claim to arbitration and on January 5, 2023, Arbitrator Mitchell Lustig issued an award in favor of respondent (the “Award”) concluding that “Respondent established that No-Fault benefits were exhausted before it was obligated to pay any additional amount that may be due and owing on the claim” (NYSCEF Doc No. 7, arbitration award).
Arbitrator Lustig also wrote, as pertinent here, that: While an insurer is required to show more than the mere exhaustion of benefits and must alsodemonstrate that the payments which led to the depletion of policy benefits were made incompliance with11 NYCRR § 65-3.15(Computation of basic economic loss), seeNvack Hosp. v.General Motors Acceptance Corp., 8 N.Y.3d 294 (2007);New York & Presby. Hosp. v. Allstate Ins.Co., 12 A.D.3d 579, 580 (2d Dept. 2004), 11 NYCRR § 65-3.15 does not preclude an insurer or self-insurer from paying other providers’ claims during a time that the 30-day statutory period in which topay or deny a claim is tolled pursuant to a request for additional verification, seeNyack Hosp. v.General Motors Acceptance Corp., 8 N.Y.3d 294 (2007);Mount Sinai Hosp. v. Country Wide Ins.Co., 85 A.D.3d 1136 (2d Dept. 2011),nor does it bar an insurer or self-insurer, following the timelydenial of a claim, from paying other providers’ undisputed claims pending resolution of the dispute,seeAllstate Prop. & Cas. Ins. Co. v. Northeast Anesthesia & Pain Mgt., 2016 NY Slip Op50828(U)(App Term 1st Dept. May 31, 2016); Harmonic Physical Therapy.P.C. v. Praetorian Ins.Co., 2015 NY Slip Op 50525(U)(App Term 1st Dept., April 14, 2015); integrated Medical Rehab &Diagnostic P.C. and Geico Ins. Co., AAA Case No. 412013081427, AAA Assessment No. 17 991 R25938 14 (Master arb. Victor J. Hershdorfer, May 9, 2014). In such instances, the payments aremade in compliance with the priority of paymentregulation because they were made before theinsurer or self-insurer was obligated to pay the disputed claim. Id.To the extent that the Appellate Term for the Second Department’s recent decisions in Island LifeChiropractic.P.C. v. Commerce Ins. Co., 2017 NY Slip Op 50856(U)(App Term 2d, 11th & 13th Jud
Dists. June 23, 2017);Ortho Passive Motion. Inc. v. Allstate Ins. Co., 2017 NY Slip Op50771(U)(App Term 2d, 11th & 13th Jud Dists. June 2, 2017);Alleviation Med. Servs., P.C. v.Allstate Ins. Co., 2017 NY Slip Op 27097 (App Term 2d, 11th & 13th Jud Dists. March 29, 2017),areat odds with the holdings set forth inAllstate Prop. & Cas. Ins. Co. v. Northeast Anesthesia & PainMgt., 2016 NY Slip Op 50828(U)(App Term 1st Dept. May 31, 2016); Harmonic PhysicalTherapy.P.C. v. Praetorian Ins. Co., 2015 NY Slip Op 50525(U)(App Term 1st Dept., April 14,2015), I decline to follow them
The Award was affirmed by Master Arbitrator Richard B. Ancowitz on February 6, 2023. The Master Arbitration Award stated: “Upon review of the briefing submitted by the parties, given the facts as found by thearbitrator, Icannot find the award now under review to be erroneous as a matter of law or arbitrary andcapricious. Indeed, there is a split between the Alleviation and the Harmonic lines of cases, makingthis master arbitrator’s review of the matter a close case.Indeed, the Court of Appeals holding inNyack Hosp. v. General Motors Acceptance Corp., 8 N.Y.3d294, 301 (2007)muststill control, as must the applicable regulation,11 NYCRR 65-3.15. I do find,as demonstrated in the award, that the arbitrator did consider these important authorities, albeitdifferent courts have come to different conclusions about the applicability of same.Thus, given the split of judicial authority which exists, I see no clear error of law in the award underreview. Nor doI find the award to be arbitrary and capricious or otherwise infirm.(NYSCEF Doc No. 8, master arbitration award)Petitioner now seeks to vacate the Award, pursuant to CPLR 7511 arguing that the arbitrator erredas a matter of law because “there was sufficient coverage remaining on the insurance policy whenthe billing was received, [and therefore] a policy exhaustion defense [did] not exist” (NYSCEF DocNo. 1, petition at ¶15). However, this exact argument has been repeatedly rejected by the AppellateDivision, First Department, which has stated that vacatur of an arbitration award is not appropriatewhere, as here, “petitioner does not dispute that the subject policy was exhausted prior to theunderlying arbitration, but argues that its claim for no-faultcompensation, which was submitted anddenied prior to the exhaustion of the policy, should retain priority of payment” (New Millennium Pain& Spine Medicine, P.C. v. Progressive Cas. Ins. Co.,220 AD3d 578[1st Dept 2023] [internalcitations omitted];see alsoNew Millennium Pain & Spine Medicine, P.C. v. Garrison Prop. & Cas.Ins. Co.,224 AD3d 428, 429[1st Dept 2024];LamQuan, MD, PC v. GEICO Gen. Ins. Co.,223AD3d 503, 503[1st Dept 2024]). In addition, “[t]he fact that the arbitrator followed First Departmentprecedent inHarmonic Physical Therapy, P.C. v. Praetorian Ins. Co…. rather than SecondDepartment precedentinAlleviation Med. Servs., P.C. v. Allstate Ins. Co…. does not warrantreversal” (id.).
Accordingly, it is ORDERED and ADJUDGED that the petition is denied and this special proceeding dismissed; and it is further, ORDERED and ADJUDGED that the February 6, 2023 award of Master Arbitrator Richard B. Ancowitz, in AAA Case No. 99-22-1236-0063 is confirmed; and it is further
ORDERED that respondent shall serve a copy of this decision and order, with notice of entry, upon petitioner as well as the Clerk of the Court, who is directed to enter judgment accordingly; and it is further ORDERED that such service upon the Clerk of the Court shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (accessible at the “EFiling” page on this court’s website).
This constitutes the decision, order, and judgment of the Court.