Am. Transit Ins. Co. v. Nexray Med. Imaging PC
| Citation | 2023 NY Slip Op 50538 (U) |
| Docket Number | Index No. 530898/2022 |
| Decision Date | 28 May 2023 |
| Parties | American Transit Insurance Company, Petitioner, v. Nexray Medical Imaging PC D/B/A Soul Radiology, A/A/O Ronald Simpson, Respondent. |
| Court | United States State Supreme Court (New York) |
Unpublished Opinion
Larkin Farrell LLC, New York City (David Fair of counsel), for petitioner.
Roman A. Kravchenko, Garden City, for respondent.
The following numbered papers were read on this petition and cross-petition:
Petition (NYSCEF Doc No. 1)
Notice of Petition (NYSCEF Doc No. 2)
Exhibit A - Arbitration Award (NYSCEF Doc No. 3)
Exhibit B - Master Arbitration Award (NYSCEF Doc No. 4)
Exhibit C - Respondent's Arbitration Request Form and Arbitration Submission (NYSCEF Doc No. 5)
Exhibit D - Petitioner's Arbitration Submission and Master Arbitration Brief (NYSCEF Doc No. 6)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 7)
Request for Judicial Intervention (NYSCEF Doc No. 8)
Affidavit of Service (NYSCEF Doc No. 9)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 10)
Affidavit of Service (NYSCEF Doc No. 11)
Notice of Cross-Petition (NYSCEF Doc No. 12)
Cross-Petition (NYSCEF Doc No. 13)
Stipulation of Adjournment (NYSCEF Doc No. 14)
Statement of Authorization for Electronic Filing (NYSCEF Doc No. 15)
Affirmation in Opposition to Cross-Petition and Reply in Support of Petition (NYSCEF Doc No. 16) [1]
Where a No-Fault insurer initially denies payment of bills on the grounds that the injured person was acting in the course of employment while driving and, therefore, the bills should be submitted to the Workers' Compensation insurer instead and thereafter the Workers' Compensation Board finds that the injured person was not working while employed, should a defense of lack of medical necessity asserted in a second subsequent denial of claim be considered?
Petitioner American Transit Insurance Company ("ATIC") commenced this CPLR Article 75 proceeding by notice of petition, seeking an order and judgment vacating a No-Fault insurance master arbitration award of Joseph J. O'Brien Esq. (dated July 23, 2022), which affirmed the arbitration award of Matthew K. Viverito, Esq. (dated March 26, 2022) granting Respondent Nexray Medical Imaging PC's ("Nexray") claim for No-Fault insurance compensation for health service expenses. [2] [3] Arbitrator Viverito awarded $2,450.73 to Nexray as compensation for performing left shoulder, cervical, and lumbar MRIs on Ronald Simpson, its assignor [4] ("Assignor"), who claimed to have been injured in a motor vehicle accident on August 6, 2019. (NYSCEF Doc Nos. 2 Notice of Petition; 1, Petition.)
Respondent Nexray has opposed ATIC's petition to vacate the master arbitration award and it cross-petitioned for a judgment confirming the master arbitration award and awarding $2,450.73 as principal, statutory interest, the $40.00 arbitration filing fee, attorney's fees, and costs and disbursements (NYSCEF Doc Nos. 12, Notice of Cross-Petition; 13, Cross-Petition).
The petition and cross-petition came before the undersigned for oral argument on May 12, 2023. At that time, both parties appeared by counsel.
The underlying arbitration which is the subject of this proceeding was organized by the American Arbitration Association ("AAA"), which assigned Case No. 17-21-1191-9817 [5] to it. The AAA has been designated by the New York State Department of Financial Services to coordinate the mandatory arbitration provisions of Insurance Law § 5106 [b], which provides:
Every insurer shall provide a claimant with the option of submitting any dispute involving the insurer's liability to pay first party ["No-Fault insurance"] benefits, or additional first party benefits, the amount thereof or any other matter which may arise pursuant to subsection (a) of this section to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.
Insurance Law Article 51 provides for the payment of basic economic loss incurred by persons injured in motor vehicle accidents. Included within basic economic loss are first-party benefits for medical and other professional health services. [6] First-party benefits are more commonly known as "No-Fault benefits." [7] Notably, and relevant in the instant case, is that first-party benefits are reduced by, among other things, Workers' Compensation benefits where an injured person in a motor vehicle accident was acting in the course of employment (see Insurance Law § 5102 [b] [2]).
In furtherance of the statutory scheme, a comprehensive set of No-Fault Regulations were promulgated by the Superintendent of Insurance (presently Superintendent of Financial Services). They are contained at 11 NYCRR Part 65. Said part is subdivided into five subparts which encompass the following topics: prescribed insurance policy endorsements, rights and liabilities of self-insurers, claims for benefits, arbitration, and unauthorized providers of health services. Part 65 is also known as Insurance Regulation 68.
Generally, the claims process for health service bills [8] for No-Fault compensation begins with the submission by a health service provider of a claim form (usually, but not always, a Form NF-3 verification of treatment by attending physician or other provider of health service). [9] Besides providing information regarding the injured person, diagnoses, projected treatment, etc., the claim form includes a bill for services performed. The claim form can be submitted directly by the injured person to the No-Fault insurer but over many decades a practice developed by which the health service providers submit the claim forms. As noted in footnote 4, they possess standing to do so by virtue of having received signed assignments of benefits from the injured persons. [10], [11]
The insurer must then either pay or deny the bill within 30 days, or seek additional verification within 15 business days. If it denies payment, it must issue a Form NF-10 denial of claim [12] explaining why the bill was not paid. (See Insurance Law § 5106 [a]; Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 N.Y.3d 498, 505 [2015].)
The record evidence submitted in this Article 75 proceeding revealed that the underlying arbitration involved three Form NF-3 claim forms (bills) submitted by Nexray to ATIC for payment. This was in accordance with the procedure for the submission of claims for No-Fault compensation, as summarized above. ATIC received two bills for date of service September 6, 2019 (right shoulder and cervical MRIs) on September 26, 2019, and one bill for date of service October 11, 2019 (lumbar MRI). After requesting additional verification, and receiving it on January 30, 2020, ATIC issued Form NF-10 denials of claim on February 24, 2020. These claim denials were timely inasmuch as they were issued within 30 days after the receipt of the requested additional verification (see Liberty Queens Med., P.C. v Tri-State Consumer Ins., 188 Misc.2d 835, 839 [Dist Ct, Nassau Co. 2001] [once verification has been received, an insurer has 30 days within which to make a determination on the claim].
The February 24, 2020 Form NF-10 denials of claim all asserted: (NYSCEF Doc No. 6, Petitioner's Arbitration Submission and Master Arbitration Brief, at 6, 14, 22). [13] A fee defense was also asserted in them but it was never pursued in arbitration.
Thereafter, an application was made to the Workers' Compensation Board for coverage of medical expenses under Workers' Compensation. On September 4, 2020, the Workers' Compensation Board issued a Notice of Decision, which determined the issue as follows: (Id. at 38.)
ATIC then submitted Assignor's medical records to Dr. Edward Weiland, who issued a peer review on October 5, 2020, in which he opined that the subject MRIs were not medically necessary (id. at 50-54).
Thereafter, a second, subsequent denial of claim was issued by ATIC appurtenant to each of the three bills. They were all dated October 9, 2020, and asserted, [14] (Id. at 10-13, 18-21, 26-29.)
The record evidence reveals further that on March 26, 2002 Arbitrator Viverito conducted a hearing at which Andrew Ciccaroni, Esq., from Russell Friedman & Associates LLP, appeared for Nexray, and Dianne Galluzzo, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).
In his award, Arbitrator Viverito stated that the hearing documents were contained in Modria [15]. ATIC related that it was withdrawing its defense that Workers' Compensation benefits were primary. (NYSCEF Doc No. 3, Arbitration Award, at numbered p 2.) It offered two arguments to the arbitrator as to why its October 9, 2020 denials of claim should be sustained (id.).
First ATIC argued that the owner of Nexray was indicted by the federal government for allegedly participating in a criminal scheme to exploit insurance companies. Arbitrator Viverito rejected this argument since no documentation was presented that there was a guilty...
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