Source: http://www.gabrielshapiro.com/publications/new-york-law-journal-92013/
Timestamp: 2019-04-25 12:08:04+00:00

Document:
In response to the dramatic influx of new no-fault arbitration filings, the American Arbitration Association hired a bevy of new arbitrators and support staff. A majority of the new arbitrators possess an extensive background in no-fault insurance law and were hired directly from firms handling no-fault matters. All arbitrators are required to hear the cases the day they are scheduled and are disinclined to adjourn or continue cases, unless a party would suffer undue hardship or prejudice. This practice is both welcome and necessary as it will ultimately prevent the creation of a backlog which plagued the American Arbitration Association years ago.
Due to the high volume of cases, hundreds of arbitration decisions are issued every month. The purpose of this article is to highlight certain arbitration decisions of interest in order to inform the no-fault arbitration practitioner of how arbitrators have been ruling on the most common issues. This month the focus will be on three questions: 1) Should the so-called “rocket docket” rule prohibiting the consideration of late arbitration submissions be strictly enforced? 2) What impact will the recent Alrof and Bright Medical decisions have on the arbitration forum? and 3) Is an arbitrator “inherently biased” and prohibited from hearing no-fault cases simply because of their prior affiliations and dealings?
Pursuant to the No-Fault Regulations, once an applicant submits its documents and respondent is advised of the submission the “respondent shall, within 30 calendar days after the mailing of such advice, provide all documents supporting its position on the disputed matter. Such documents shall be submitted to the applicant at the same time. The respondent may, in writing, request that the designated organization provide an additional 30 calendar days to respond based upon reasonable circumstances that prevent it from complying.” Thereafter, “the written record shall be closed upon receipt of the respondent’s submission or the expiration of the period for receipt of the respondent’s submission. Documents submitted by either party after the record is closed shall be marked “late” and not considered by the arbitrator unless such submission is made with the approval of the arbitrator.
Most arbitrators strictly enforce this rule, but others contend there must be a showing of prejudice.However, in an area of law governed by timeframes, the “prejudice rule” seems to contradict the prevailing case law and purpose of the no-fault regulations. Indeed, the very goal of the No-Fault Regulations is the “prompt” payment of claims. The submission of claims, verification requests and denials all carry stringently enforced time limitations in order to effectuate this goal. There is no reason why this section of the regulations should be treated any different. The rule is not set forth by the American Arbitration Association, but rather, the Insurance Department. Since the terms of the statute are plain and unambiguous, it must be construed to effectuate the plain meaning of the words contained therein. The legislative intent of a statute must be “ascertained from the words and language used, and the statutory language is generally construed according to its natural and most obvious sense, without resorting to an artificial or forced construction.” The New York Court of Appeals has spoken on the importance of following statutory timeframes and the peril that will follow for those who choose to ignore such rules.
Similarly, the timeframes regarding the submission of no-fault arbitration documents are not options and do not require a showing of prejudice based upon a plain reading of the statute. Therefore, the application of “rocket docket” should be strictly enforced.
A medical provider is required to submit to examinations under oath (hereinafter referred to as “EUO”) when requested by the insurer as a condition precedent to payment of a claim.However, this alleged noncompliance must be established by demonstrating the requests were mailed and the party did not appear. For many years, the burden placed upon insurance carriers by the Appellate Courts to demonstrate a failure to appear was de minimis. This has now changed and the Appellate Term has abandoned its minimalist approach for a more stringent standard.
In Alrof v. Safeco, the Appellate Term held, “a conclusory statement from an attorney which fails to demonstrate his or her personal knowledge is insufficient to support summary judgment.” A review of the record on appeal revealed that the affidavit indicated the attorney possessed “personal knowledge based upon a file review”, which was found to be insufficient. Thereafter, the Appellate Term reaffirmed its new position in Bright Medical Supply, Co. v. IDS Property and Casualty Ins. Co., by rejecting the affidavit of an attorney who swore he was “present” at the location of the scheduled EUO and “would likely have been the attorney assigned to conduct said EUO” if the individual would have appeared. This was more than a mere file review, but was still insufficient to establish nonappearance. The Appellate Term gives little guidance as to what would be sufficient, but based upon a review of the rejected affidavits it is apparent the standard is stringent. The ruling has a rational basis since finding that an individual failed to comply with the terms of an insurance policy can be as drastic as terminating the ability to recover benefits retroactively to the date of loss, and therefore, the highest standard of proof should apply in both litigation and arbitration.
In both instances the arbitrators may have misapplied the holding of Alrof. The application of the Alrof decision does not involve a strict application of the rules of evidence. The Court inAlrof did not find the affidavit was not in admissible form. Rather, the Court stated the affidavit was insufficient to establish nonappearance as a matter of law. Similarly, at the arbitration there was no issue with the admissibility of the affidavit; this was a pure issue of fact and law. The affidavit was indisputably part of the record without objection. The question was whether the content of the affidavit was in compliance with the recent change in the rule of law regarding nonappearance. Unfortunately, this question was not addressed, but should have been answered in the negative as both affidavits were on all fours with the affidavits in Alrof and Bright Medical.
By challenging the impartiality of an arbitrator, the carrier is indirectly challenging the integrity of the entire appointment process and the American Arbitration Association. Based upon such logic the majority of arbitrators would not be allowed to hear any cases due to their prior affiliations. Of course, the carrier did not challenge any decisions from arbitrators that once worked for insurance carriers where the “bias” would turn in its favor.
Presently, it is unclear if the Respondent’s challenge to the arbitrator was a last ditch effort to preserve a case it had neglected to actually defend or a true feeling within some segment of the No-Fault community that arbitrators should have no experience in the insurance industry.
With as many arbitrators and as many filings as the American Arbitration Association has, there will be disagreement over how cases and calendars are handled. It is incumbent upon the practitioners appearing at hearings to understand that each arbitrator will have their own way of handling matters and to prepare accordingly. Arbitrators must also make an effort to be versed in the law and follow it.
In the three instances presented herein it would seem that the law is well settled and there should be uniformity of application. However, there continues to be divergent thought. A strict application of “rocket docket” fits squarely into the case law and purpose of the no-fault regulations. Failing to enforce the rules creates more work and causes undue delay, which frustrates the purpose of arbitration. The Alrof decision presents a more complicated problem for arbitrators in that the standard has undoubtedly changed, but while Alrof indicates what is insufficient it gives little guidance on what would be sufficient. Finally, there seems to be irrefutable proof that the past work experience of the arbitrators has little to do with how they will rule. The proof is that many arbitrators have a background working for insurance carriers, yet applicants continue to file in ever increasing numbers.
 Comprehensive Psychological Evaluation, P.C. v. Ocean Harbor Cas. Ins. Co., 412012074409 (2013); Get Well Acupuncture, P.C. v. Country-Wide Ins. Co., 412012128624 (2013); Inwood Hill Medical, P.C. v. Allstate Ins. Co., 412010012628 (2010).
 Patrolmen’s Benevolent Assn. of City of N.Y. v. City of New York, 41 N.Y.2d 205 (1976).
 See generally, Miceli v. State Farm Mutual Automobile Ins. Co., 3 N.Y.3d 725 (2004); See also,Brill v. City of New York, 2 N.Y.3d 648 (2005); Kihl v. Pfeffer, 94 N.Y.2d 118 (1999).
 Ozone Park Chiropractic, P.C. v. State Farm Mut. Auto Ins. Co., AAA 412012103128 (2013).
 KJP Acupuncture, P.C. v. State Farm Mut. Auto. Ins. Co., AAA 412012097007 (2013).
Michael C. Rosenberger is a partner at Rapuzzi, Palumbo & Rosenberger, P.C. Jason A. Moroff is a partner at Gabriel & Shapiro, LLC. Steven Miranda assisted in the preparation of this article.

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