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587The Rogak Report: 02 May 2005 ** No Fault - Arbitration - Vacating Award **

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  • Lawrence Rogak
    May 2, 2005

      T.S. Medical P.C. v. Country Wide Ins. Co., NYLJ 4/28/05 (Civil
      Court, Kings County 2005) (SPODEK, j)

      After petitioner was denied no-fault benefits, it filed a request for
      arbitration. The arbitrator denied petitioner's claim. Petitioner
      then requested a review of the arbitration award by a Master
      Arbitrator. The case was reviewed and the Master Arbitrator upheld
      the lower arbitration award on or around July 22, 2004. Petitioner
      filed this petition to vacate the master arbitrator's award within 90
      days thereof.

      The Civil Court began its analysis by stating the standard that a
      master arbitrator's award may be vacated if it is arbitrary and
      capricious, irrational or without a plausible basis.

      The arbitrator's award stated that the insurer's denial was late and
      improperly based on a nurse's audit." However, he concluded that the
      applicant had to prove medical necessity in its prima facie case.
      This position was upheld by the Master Arbitrator.

      The Court held that "It is well established that the burden is on the
      insurer to prove the lack of medical necessity and not on the insured
      to prove medical necessity in establishing their prima facie case."

      "It is proper to vacate the determinations of a master arbitrator who
      denied a petitioner payment for overdue no-fault benefits because it
      did not have rational basis. Clearly, in order for the decision of
      the Master Arbitrator to be rational it would have to comport with
      the established principles of law. The insurance regulations clearly
      enumerate the methods of review available to the Master Arbitrator
      including the ability to overturn an award that was incorrect as a
      matter of law. In this action, the Master Arbitrator had the power to
      correctly apply the law, but chose not to. Accordingly, this Court
      grants the petitioner's motion and finds that the Master Arbitrator's
      award should be vacated."

      Comment: For a long time, arbitrators have differed from the courts
      in no-fault suits by applying a rule that even when a no-fault denial
      is late, the applicant must still make out a prima facie case -- that
      is, to prove that the treatment was made necessary by injuries
      suffered in a covered accident. The Courts have long held that when
      a denial is late, the applicant has no such burden.

      Recently, a few arbitration awards which denied payment in such
      circumstances have been challenged in the courts, and this case is
      one such example. Thus, the "advantage" which insurers enjoy in
      arbitration can be thus nullified. And providers who have rendered
      unnecessary medical treatment are thus rewarded by the courts.

      Larry Rogak