Auto One Insurance Company v. Easter Island Medical Care, P.C., 2016 WL 3606938
Now that arbitration has become very prevalent, this has become more common. The insurer filed for de novo adjudication from an arbitration (affirmed by a Master) which exceeded $5000.00. The insurer also failed to appear (perhaps knowing it had this remedy) at the arbitration. The Supreme Court affirmed while the Appellate Division in this decision reversed. There were several issue decided in this case. On the issue of whether the de novo was filed timely and what the timetable for filing applies, the Court said:
The Supreme Court erred in denying that branch of the plaintiff’s motion which was for summary judgment on the complaint on the ground that the demand for a trial de novo was untimely filed (see Insurance Law § 5106[c]; CPLR 7511; 11 NYCRR 65–4.10[h]; see also Matter of Slater v. Eagle Ins. Co., 294 A.D.2d 368, 369). As this arbitration dispute was originally submitted to the American Arbitration Association (hereinafter AAA) and was not court-ordered, the 35–day timetable applied by the court pursuant to 28 NYCRR 28.12 was not applicable (see 22 NYCRR 28.2). Instead, the plaintiff had 90 days from the date the master arbitrator’s award was mailed to it to commence this action (see Insurance Law § 5106[c]; CPLR 7511; 11 NYCRR 65–4.10 [h]; see also Matter of Slater v. Eagle Ins. Co., 294 A.D.2d at 369), and the plaintiff did so. Thus, the court erred in granting the defendant’s cross motion to confirm the award of the master arbitrator on the ground that this action was not timely commenced and in denying that branch of the plaintiff’s motion which was pursuant to CPLR 3211(b) to dismiss the third affirmative defense, which alleged that the action was not timely commenced. As the plaintiff timely invoked its right to a de novo review by the Supreme Court, the defendant’s cross motion to confirm the award of the master arbitrator was rendered academic (see Allstate Ins. Co. v. Nalbandian, 89 AD3d at 649) and the defense of untimeliness was without merit (see Matter of Slater v. Eagle Ins. Co., 294 A.D.2d at 369; Matter of Abadinsky v. Aetna Cas. & Sur. Co., 250 A.D.2d 673, 673–674; Matter of Capuano v. Allstate Ins. Co., 122 A.D.2d at 138).
The carrier also failed to appear at the arbitration, before the lower arbitrator. Accordingly, the medical provider argued that the insurer had therefore, failed to exhaust its administrative remedies. The Court disagreed saying:
The defendant’s contention that the plaintiff failed to exhaust its administrative remedies or satisfy a condition precedent because the plaintiff defaulted before the master arbitrator is without merit. There is no dispute that the plaintiff timely demanded review by a master arbitrator within 21 calendar days of the mailing of the award by the AAA no-fault arbitrator (see 11 NYCRR 65–4.10[d] ). Further, the insurance regulations specifically provide that a master arbitration will proceed even if a party fails to appear or submit materials and that the master arbitrator must make a determination on the merits, not in favor of an appearing party solely on the default of the other party (see 11 NYCRR 65–4.10[d] ). Thus, the plaintiff’s failure to file a brief with the master arbitrator was not determinative of whether it satisfied a condition precedent or exhausted its administrative remedies (cf. Allstate Ins. Co. v. Nalbandian, 89 AD3d at 649). The plaintiff exhausted its administrative remedies when it filed its demand for review by a master arbitrator, and the master arbitrator issued an award which was final and binding except, as is relevant here, when a party commences a court action to adjudicate the dispute de novo when the award is $5,000 or more (see 11 NYCRR 65–4.10[h] ).