APPEAL OF ARBITRATION AWARD

APPEAL OF ARBITRATION AWARD

Country-Wide Ins. Co. v TC Acupuncture, P.C. 2016 NY Slip Op 05104 http://www.nycourts.gov/reporter/3dseries/2016/2016_05104.htm

Provider commenced an arbitration against insurance company.  Insurer, relying on State Farm Mut. Auto Ins. Co. v Mallela (4 NY3d 313 [2005]), asserted that it could withhold payment because provider was fraudulently incorporated. The lower arbitrator awarded provider full reimbursement, and found that insurer failed to meet its burden of providing clear and convincing evidence showing that respondent was fraudulently incorporated. On appeal, the master arbitrator affirmed the arbitration award and rejected petitioner’s argument that its burden of proof on its Mallela defense should have been preponderance of the evidence.

The Supreme Court reversed and found in favor of the the insurer the Appellate Division reversed and affirmed the Master, saying:

Supreme Court erred in vacating the master arbitrator’s award on the ground that the master arbitrator mistakenly applied the wrong burden of proof to petitioner’s Mallela defense. Even assuming, without deciding, that the master arbitrator applied the wrong burden of proof, the award is not subject to vacatur on that ground (Matter of New York State Correctional Officers & Police Benevolent Assn. v State of New York, 94 NY2d 321, 326 [1999]). Nor is there any other basis for vacating the award (see id.; see also CPLR 7511[b][1]).

Once again, although the Court did not cite Petrofsky, it is well established that unless an arbitrator’s award is so irrational that it is not subject to the same reviews a trial court would be subject to.

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