Appealing No Fault Arbitration Awards

11 NYCRR 65-4.10 codifies the standard of review of a No Fault Arbitration award by a Master Arbitrator. An award by an arbitrator rendered pursuant to section 5106(b) of the Insurance Law and section 65-4.4 or 65-4.5 of this Subpart may be vacated or modified solely by appeal to a master arbitrator, and only upon one or more of the following grounds:

(1) any ground for vacating or modifying an award enumerated in article 75 of the Civil Practice Law and Rules (an article 75 proceeding), except the ground enumerated in CPLR subparagraph 7511(b)(1)(iv) (failure to follow article 75 procedure);

(2) that the award required the insurer to pay amounts in excess of the policy limitations for any element of first-party benefits; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of an appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(3) that the award required the insurer to pay amounts in excess of the policy limitations for any element of additional first-party benefits (when the parties had agreed to arbitrate the dispute under the additional personal injury protection endorsement for an accident which occurred prior to January 1, 1982); provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart;

(4) that an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground);

(5) that the attorney’s fee awarded by an arbitrator below was not rendered in accordance with the limitations prescribed in section 65-4.6 of this Subpart; provided that, as a condition precedent to review by a master arbitrator, the insurer shall pay all other amounts set forth in the award which will not be the subject of the appeal, as provided for in section 65-4.4 or 65-4.5 of this Subpart.

11 NYCRR 65-4.10(a)(4) states that an arbitration award may be vacated or modified solely by appeal to a master arbitrator, when “an award rendered in an arbitration under section 65-4.4 or 65-4.5 of this Subpart, was incorrect as a matter of law (procedural or factual errors committed in the arbitration below are not encompassed within this ground).” A petition to vacate the award of a Master Arbitrator is subject to the following:

1. As arbitration pursuant to Insurance Law ยง 5105(b) is compulsory, the arbitrators determination is subject to “closer judicial scrutiny” than an arbitration conducted pursuant to a voluntary agreement (Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 674 N.E.2d 134, 9652 N.Y.S.2d 584 [1996] ). Acuhealth Acupuncture, P.C. v. New York City Transit Auth., 50 Misc. 3d 1228(A) (N.Y. Sup. Ct. 2016)

2. “Moreover, with respect to determinations of law, the applicable standard in mandatory no-fault arbitrations is whether any reasonable hypothesis can be found to support the questioned interpretation’ ” (Fiduciary Ins. Co. v. American Bankers Ins. Co. of Florida, 132 AD3d 40, 14 N.Y.S.3d 427 [2 Dept., 2015], quoting Shand v. Aetna Ins. Co., 74 A.D.2d 442, 428 N.Y.S.2d 462 [2 Dept., 1980]).

3. The grounds for vacating or modifying an arbitrator’s award by a master arbitrator shall not be limited to those grounds for review set forth in article seventy-five of the civil practice law and rules. The award of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that where the amount of such master arbitrator’s award is five thousand dollars or greater, exclusive of interest and attorney’s fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo.

The Insurance Carrier is faced with a difficult road in an attempt to vacate the decision of a master Arbitrator. As the Court stated in Singh v. Allstate Ins. Co., (137 A.D.3d 1046), “Consistent with the public policy in favor of arbitration, the grounds specified in CPLR 7511 for vacating or modifying a no-fault arbitration award are few in number and narrowly applied.”

The recent Appellate Decisions on this issue include:
Encompass Ins. Co. v. Rockaway Family Med. Care, P.C., 137 A.D.3d 582, 26 N.Y.S.3d 697 (N.Y. App. Div. 2016)
GEICO Ins. Co. v. AAAMG Leasing Corp., No. 2015-05282, 2016 WL 2890106 (N.Y. App. Div. May 18, 2016)
Glob. Liberty Ins. Co. v. Prof’l Chiropractic Care, P.C., No. 1341N, 2016 WL 3042999 (N.Y. App. Div. May 31, 2016)
Singh v. Allstate Ins. Co., 137 A.D.3d 1046, 27 N.Y.S.3d 621 (N.Y. App. Div. 2016)