WHEN NO-FAULT INSURER'S DENIAL IS LATE, ARBITRATOR CANNOT REFUSE
AWARD DUE TO LACK OF MEDICAL NECESSITY
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
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.