Am. Transit Ins. Co. v. U.S. Med Supply Corp.

• Docket Number: Index No. 502532/2023
• Decision Date: 09 June 2023
• Citation: 2023 NY Slip Op 50560 (U)
• Parties: American Transit Insurance Company, Petitioner, v. U.S. Med Supply Corp., A/A/O Mahendra Singh, Respondent.
• Court: New York Supreme Court

2023 NY Slip Op 50560(U)

American Transit Insurance Company, Petitioner, v. U.S. Med Supply Corp., A/A/O Mahendra Singh, Respondent.

Index No. 502532/2023

Supreme Court, Kings County

June 9, 2023

Unpublished Opinion

Larkin Farrell LLC, New York City (David Fair of counsel), for petitioner.

Aaron D. Maslow, J.

The following numbered papers were read on this 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)

Email (NYSCEF Doc No. 9)

Affidavit of Service (NYSCEF Doc No. 10)

Statement of Authorization for Electronic Filing (NYSCEF Doc No. 11)

Issue Presented

Must a health service provider seeking No-Fault insurance compensation for providing post-surgery services establish that a prior arbitration award was affirmed by a master arbitrator, confirmed by a court, and not subject to de novo review as a prerequisite to arguing that the award constituted collateral estoppel on the issue of medical necessity for the surgery?

Background

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 Richard B. Ancowitz Esq. (dated November 7, 2022), which affirmed the arbitration award of Jan Chow, Esq. (dated July 24, 2022) granting Respondent U.S. Med Supply Corp.'s ("U.S. Med") claim for No-Fault insurance compensation for post-surgery medical supplies provided or rented. ^[1], ^[2] Arbitrator Chow awarded $4,000.00 to U.S. Med as compensation for (a) the rental of a non-knee continuous passive motion ("CPM") exercise device (HCPCS Code E0936 $2,700.00) from October 7, 2020-November 4, 2020; (b) the provision of a synthetic sheepskin pad (HCPCS Code E0188 $100.00) on October 7, 2020; (c) the provision of a fluid circulating cold pad with pump (HCPCS Code E0218, $1,000.00) and (d) an unknown miscellaneous service (HCPCS Code E1399; $200.00). These services were provided to Mahendra Singh, who claimed to have been injured in a motor vehicle accident on June 21, 2019. He assigned his No-Fault insurance benefits to U.S. Med, and is denoted as "Assignor." ^[3] (NYSCEF Doc No. 2, Notice of Petition; NYSCEF Doc No. 1 Petition ¶¶ 2-3, 16, 23; NYSCEF Doc No. 6, Petitioner's Arbitration Submission and Master Arbitration Brief at 17.) ^[4]

Respondent U.S. Med has not filed any papers in opposition to ATIC's petition herein. The petition came before the undersigned for oral argument on June 2, 2023. At that time, ATIC 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. 17-21-1197-7083 ^[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]

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 insurance 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, the accident, the subject insurance policy, the billing health service provider, diagnoses, and projected treatment, 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 3, 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 one claim form in the amount of $4,000.00 ^[13] submitted to ATIC for payment. This was in accordance with the procedure for the submission of claims for No-Fault compensation, as summarized above. The Form NF-10 denial of claim by ATIC was timely inasmuch as it was issued within 30 days after the receipt of 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 denial of claim was dated December 31, 2020. The denial of claim was predicated on a four-page peer review dated December 28, 2020 ("four-page peer review"), prepared by Dr. Raghava Polavarapu, who opined that the subject supplies were not medically necessary. (NYSCEF Doc No. 6, Petitioner's Arbitration Submission and Master Arbitration Brief at 4-7, 12-15, 17.)

Arbitrator Jan Chow's Award

The record evidence reveals further that on July 22, 2002 Arbitrator Jan Chow, Esq., conducted a hearing at which Kevin Griffiths, Esq., from Odierno Law Firm P.C., appeared for U.S. Med, and Michelle Rozenblyum, Esq., appeared for ATIC (NYSCEF Doc No. 3, Arbitration Award, at numbered p 1).

In her award, Arbitrator Chow noted that the subject medical supplies were provided following right shoulder surgery performed on Assignor on October 6, 2020. The parties stipulated to U.S. Med's prima facie case and the burden shifted to ATIC to substantiate its defense of lack of medical necessity. Citing to Healing Hands Chiropractic, P.C. v Nationwide Assur. Co. (5 Misc.3d 975 [Civ Ct, NY County 2004]), Arbitrator Chow stated, "In the event an insurer relies on a peer review report to support its lack of medical necessity defense, the peer reviewer's opinion must set forth a factual basis and medical rationale for denying the claim" (NYSCEF Doc No. 3, Arbitration Award at numbered p 2). She then wrote that the burden of production fell on ATIC as the insurer and, if it was established, the burden shifted to U.S. Med, citing to Bronx Expert Radiology, P.C. v Travelers Ins. Co. (13 Misc.3d 136 [A], 2006 NY Slip Op 52116[U] [App Term 1st Dept 2006]) (id.).

Regarding Dr. Polavarapu's four-page peer review, Arbitrator Chow wrote that he "first asserted that the underlying right shoulder surgery was not medically necessary rendering all derivative services including these post-operative supplies to be not medically necessary. He then discussed the issue of medical necessity regarding the CTU, DVT and shoulder orthosis devices." ^[14] (Id.)

At the hearing, U.S. Med argued as follows in opposition to Dr. Polavarapu's four-page peer review, per Arbitrator Chow's award: "Applicant asserted that collateral estoppel applies to the peer reviewer's assertion regarding the medical necessity of the underlying right shoulder surgery. He noted that Arbitrator Mitchell Lustig did not uphold this same peer report in Surgicore Surgical Center LLC v. American Transit, AAANo.: 17-21-1194-7180 when addressing the facility fee for this right shoulder surgery. Applicant also argued that the peer report did not address the disputed CPM involved in this case." (Id.)

Arbitrator Chow determined the issue presented as follows:

After careful consideration and weighing of both parties' evidence and arguments, the undersigned finds for the Applicant.

Regarding Applicant's collateral estoppel argument, the doctrine of collateral estoppel precludes a party from re-litigating an issue that was clearly decided in a prior action against that party. This doctrine applies when two requirements are met. The first, that both cases involve identical issues, and second, that the party against whom the estoppel is being asserted had a full and fair opportunity to contest the issue in the prior action. Schwartz v Pub.

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