Recitation as per CPLR §§2219(a) and 3212(b) of Papers considered on Review of Motion: NYSCEF Doc #s 1-9 by Petitioner NYSCEF Doc #s 11-12 Respondent’s Opposition NYSCEF Doc # 13 Petitioner’s Reply DECISION/ORDER Upon the foregoing cited papers and after oral argument on March 29, 2023, Petitioner’s application to Vacate the Decision of Master Arbitrator Jonathan Hill is DENIED. Master Arbitrator Hill vacated an award in favor of Petitioner for medical bills, interest, costs and attorneys’ fees against Respondent. Petitioner also sought reinstatement of the underlying arbitration award in favor of Petitioner. PROCEDURAL HISTORY Petitioner alleged that on August 26, 2020, Respondent’s bus struck him and caused him to suffer injury. Petitioner received medical treatment resulting in charges totaling $7,710.73, which the medical provider attempted to collect from Respondent as a result of Petitioner’s No- Fault Claim. Respondent issued denial letters to the medical provider, claiming that its bus was not involved in any accident with Petitioner. Consequently, pursuant to 11 N.Y. Comp. R. & Regs. Tit. 11 R §65-4.2 (“Initiation of optional arbitration procedures under section 5106[b] of the insurance law arbitrations filed with an organization designated by the superintendent on and after December 1, 1999″) (“11 NYCRR §65-4.2″), Petitioner filed an arbitration request with the American Arbitration Association (“AAA”), designated by the NYS Department of Financial Services to coordinate mandatory arbitration provisions of Insurance Law §5106(b). By letter dated May 17, 2021, the AAA informed the parties that Respondent (insurer) “must provide their position in writing along with supporting documentation…by Wednesday, June 16, 2021. Documents received after this date will be marked ‘late submission’ and may not be considered by the arbitrator.” Under AAA Case No. 17-21-1203-6010, the arbitration was assigned to Arbitrator Jeffrey Held. Arbitrator Held’s June 6, 2022 award determination noted Respondent failed to make any submissions until November 4, 2021, the day before the first hearing on November 5, 2021, despite AAA’s letter directing Respondent to provide documentation by June 16, 2021. See NYSCEF Doc # 2. After the November 5, 2021 hearing date, Held informed the parties that he would reserve decision on precluding Respondent’s defense that its bus had not been involved in the accident given the untimely submission, thus resulting in prejudice to Petitioner. On November 5, 2021, Arbitrator Held requested that Respondent make “a responsive argument/proof…to support a ‘good faith’ basis for consideration of the late submission.” NYSCEF Doc # 2 at page 4. Held’s decision confirmed that Respondent failed to timely provide its position in writing, despite Held’s directive to do so, resulting in Respondent’s submission being precluded from the arbitration record pursuant to 11 NYCRR §65-4.2(b)(3)(ii)1. More specifically, Arbitrator Held made a finding that Respondent failed to establish a “good faith” basis for consideration of its late submission and that he would “rely on a finding of prejudice to Applicant [Petitioner]“. See NYSCEF Doc # 2 at 5. Arbitrator Held wrote that “[i]mplicit in my holding is my rejection of the argument that the submission is not subject to preclusion insofar as it raises a coverage defense….I find that the evidence…bears on the issue of ‘proof of fact’ [and is precludable] as evidence to support Respondent’s broad non-involvement defense.” See id. Arbitrator Held also found that the Petitioner’s submission after November 5 was “sufficient to support a finding of standing.” See id. The decision awarded Petitioner $7,710.13 together with interest, costs and attorneys’ fees against Respondent. See NYSCEF Doc #s 1, 2. Pursuant to 11 NYCRR §65-4.10(d)(2), Respondent requested a review by a master arbitrator. Under AAA Case No. 99-21-1203-6010, Master Arbitrator Jonathan Hill was assigned. By decision dated September 20, 2022, Hill vacated Arbitrator Held’s award and remanded the case for a new hearing before a new arbitrator. See NYSCEF Doc #s 1, 3. In his decision, Hill wrote, inter alia, “that the Arbitrator may have erred when they precluded the Respondent’s Arbitration submission…[and] that the Arbitrator may have treated the Applicant differently [than] they treated the Respondent,” concluding that on November 4, 2021 Arbitrator Held asked both sides for submissions and when both made submissions the next day, only Respondent’s filings were rejected. See NYSCEF Doc # 3. In pointing to another example of what Hill identified as disparate treatment of the parties, Held allowed Petitioner to untimely submit his assignment of benefits revocation which conferred standing on the EIP (“eligible injured person”) without which the EIP would not have had standing. See id. Master Arbitrator Hill also took issue with the arbitrator’s finding that Petitioner was prejudiced by Respondent’s late filing when Petitioner had approximately six months (from November 2021 to May 2022) to reply to Respondent’s filing. See id. Hill determined that cumulatively these examples, “especially as to untimely submissions,…had the appearance of partiality even if no partiality existed.” Id. Master Arbitrator Hill disagreed with Arbitrator Held’s preclusion of Respondent’s non-coverage defense, holding that “coverage cannot be created where none exists.” Id. Following the master arbitrator vacatur of the arbitrator’s award, this petition was filed alleging that the master arbitrator’s decision was “arbitrary, capricious, irrational, in violation of No-Fault law and within the scope of CPLR §7511(b)(1(iii).” See id. PARTIES’ POSITIONS Petitioner avers Arbitrator Held correctly found it established a prima facie case that Respondent’s bus was involved in the subject accident and therefore Respondent is responsible. Petitioner further claimed that the Arbitrator Held properly precluded Respondent’s opposition papers on lateness grounds, thereby precluding Respondent’s “coverage defense.” Petitioner asserts that Master Arbitrator Hill’s determination that Respondent’s submission was not untimely was unsupported by the record, which showed that Respondent failed to meet a June 16, 2021 filing deadline. Petitioner claims that Arbitrator Held correctly precluded Respondent’s submission as it was a precludable “non-coverage” defense as opposed to a non-precludable “non-involvement” defense.2 Petitioner also argues that the Master Arbitrator’s finding that the arbitrator gave “an appearance of partiality even if no partiality existed” is not a permissible basis for vacating an arbitration award since Article 75 requires evidence of actual partiality. Respondent counters that Arbitrator Held acted so disparately in favor of Petitioner (namely precluding Respondent’s defense on lateness grounds while allowing Petitioner to make late filings) that the decision was arbitrary and capricious as a matter of law. Respondent argues that the master arbitrator’s determination met the “reasonable hypothesis” standard set forth in Motor Veh. Acc. Indem. Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 224 (1996) and accordingly was neither arbitrary nor capricious. Respondent further claims that Master Arbitrator’s Hill’s determination that it may have been error to preclude Respondent’s defense and that Held “may have treated [Petitioner] differently than they [sic] treated the Respondent” (NYSCEF Doc # 3 at page 3) was a sufficient basis for Hill to vacate Held’s award. In its reply, Petitioner contends that Respondent confuses the applicable standards of review of an arbitrator’s decision and of a master arbitrator’s decision, respectively. Petitioner argues that Respondent is incorrect in stating that the master arbitrator’s decision should be upheld if it is based on a reasonable hypothesis and that “reasonable hypothesis” is the proper standard for upholding an arbitrator’s decision, but not a master arbitrator’s decision.3 DISCUSSION First, the following is a summary that distinguishes the standards of review for decisions by arbitrators and master arbitrators. With respect to a hearing arbitrator’s decision, the master arbitrator must determine whether the decision was arbitrary and capricious, irrational, or without a plausible basis, or incorrect as a matter of law. See Matter of Petrofsky, 54 N.Y.2d 207, 211 (1981); Matter of Acuhealth Acupuncture, P.C. v. Country-Wide Ins. Co., 149 A.D.3d 828, 829 (2nd Dep’t 2017); Am. Transit Ins. Co. v. Pda NY, 2023 NYLJ LEXIS 2380 at 24 (Maslow, J., Supreme Ct., Kings County, Sept. 11, 2023); see also Matter of Erin Constr. & Dev. Co., Inc. v. Lumbermans Mut. Cas. Co., 58 A.D3d 729, 729-730 (2nd Dep’t 2009) (providing basis upon which an arbitration award can be vacated: “if it is clearly violative of a strong public policy, if it is totally or completely irrational, or if it manifestly exceeds a specific, enumerated limitation on the arbitrator’s power”). This standard of review allows a master arbitrator to apply the law to a given set of facts even if his or her conclusion on the law differs from that of the arbitrator. See, e.g., Matter of Allstate Ins. Co. v. Wilen, 111 A.D3d 824 (2nd Dep’t 2013); Martinez v. Metropolitan Prop. & Liab. Ins. Co., 146 A.D.2d 610 (2nd Dep’t 1989). It also allows for vacatur of a hearing arbitration decision if the master arbitrator finds the underlying proceeding was “one-sided” and thus fundamentally unfair. See, e.g., State Farm Mut. Auto Ins. Co. v. Provus, 149 A.D.2d 498, 499 (2nd Dep’t 1989) (where claimant had only previously provided medical reports that showed effects of accident would recede in time, claimant’s production at arbitration hearing of expert who testified to far more serious permanent injury and whose report was not provided, arbitrator’s refusal to allow insurer adjournment so that it could examine claimant was misconduct warranting vacatur of award). On the other hand, if the hearing arbitrator’s determination is based upon a factual error, the master arbitrator must uphold the determination if it has a rational basis. See Matter of Acuhealth Acupuncture, P.C. v. Country-Wide Ins. Co., 149 A.D.3d at 829; Matter of Erin Constr., 58 A.D.3d at 729-730; Matter of Richardson v. Prudential Prop. & Cas. Ins. Co., 230 A.D.2d 861 (2nd Dep’t 1986); see also 11 NYCRRR §65.17(a) (procedural or factual errors committed in the underlying arbitration are not a basis to vacate the decision) and 11 NYCRRR §410(a) (“Grounds for Review”); see also Am. Transit Ins. Co. v. Pda NY, 2023 NYLJ LEXIS 2380 (citing Matter of Allstate v. Keegan, 201 A.D.2d 724 [2nd Dep't 1994]). The standard under an Article 75 analysis of a master arbitrator’s review of a hearing arbitrator’s award is different and not whether the master arbitrator’s decision on the law was incorrect as mere errors of law are insufficient to reverse the master arbitrator. See, e.g., Matter of Advanced Orthopaedics, PLLC. v. Country-Wide Ins. Co. 204 A.D.2d 787, 788 (2nd Dep’t 2022); Am. Transit Ins. Co. v. Pda NY, 2023 NYLJ LEXIS 2380 at 24. If the master arbitrator vacates an arbitrator’s award upon a finding that the arbitrator erred on ‘a rule of substantive law’, the master arbitrator’s decision to reverse the arbitrator must be upheld by a court, even if incorrect, unless it is irrational. See, e.g., Matter of Advanced Orthopaedics, 204 A.D.2d at 788 (quoting Acuhealth Acupuncture, PC v. County-Wide Ins. Co., 170 A.D.3d 1168 [2nd Dep't 2019]); Matter of Acuhealth Acupuncture, P.C. v. Country-Wide Ins. Co., 149 A.D.3d at 829. Further, upon judicial review of a master arbitrator’s factual determination in an arbitration appeal, the Court is limited to whether the master arbitrator exceeded his or her power, for instance by impermissibly weighing the credibility of a witness, by reconsidering the hearing arbitrator’s factual determination, or by reviewing medical reports de novo. See, e.g., Am. Transit Ins. Co. v. Pda NY, 2023 NYLJ LEXIS 2380 at 24-25. Based on the aforementioned criteria, this Court is tasked with determining whether to vacate the master arbitrator’s decision. Matter of Acuhealth Acupuncture, P.C. v. Country-Wide Ins. Co., involved a decision by an arbitrator who considered a carrier’s defense that an acupuncture provider was fraudulently incorporated. See 149 A.D.3d at 829. Said arbitrator precluded the defense on grounds that it was untimely. See id. The master arbitrator in turn vacated the arbitrator’s award on grounds that the arbitrator’s preclusion was an error of substantive law. See id. After the Supreme Court in turn vacated the master arbitrator’s determination, the Appellate Division reversed the Supreme Court, holding that the master arbitrator’s decision did not rise to the level of being irrational. See id. The parties also raised the issue of whether the Respondent’s defense was one of “noncoverage” or “non-involvement” (i.e. “not our bus”). This Court need not determine this issue to decide whether to vacate the master arbitrator’s decision. In the instant matter, Arbitrator Held precluded Respondent from introducing evidence of its defense. Based on Rosa v. Torres, 2014 N.Y. Misc. LEXIS 4501 and N.Y. & Presbyterian Hosp. v. Allstate Ins. Co., 194 Misc. 2d 384, supra, this Court distinguishes that Respondent’s interposing defense was a non-involvement defense and not a non-coverage defense. While it also appears that only a non-coverage defense would be precludable pursuant to the 30-day pay or deny no-fault regulatory scheme,4 such a determination by the Court appears to run counter to the arbitrator’s statutory power to determine what evidence is admissible in an arbitration proceeding on both procedural (e.g., lateness) or evidentiary grounds. See generally 11 NYCRR §§65-4.5(o)(1), 65-4.2(b)(3)(ii) and 65.17(a). A conclusion that the hearing arbitrator’s determination on the admissibility of evidence is more determinative of the outcome than whether a defense is precludable allows the master arbitrator the option to reverse said hearing arbitrator’s decision upon a finding that the arbitrator erred on “a rule of substantive law.”5 When Master Arbitrator Hill wrote that he “agree[d] with the Respondent/Appellant’s contention that its non-coverage defense should not have been precluded as coverage cannot be created where none exists”, he was vacating the hearing arbitrator’s award upon a finding of an error of substantive law. See NYSCEF Doc # 3 at page 3. The issue to be determined by this Court then becomes whether the master arbitrator’s decision, even if incorrect on an issue of law6, was irrational. See, e.g., Matter of Advanced Orthopaedics, 204 A.D.2d at 788; Acuhealth Acupuncture, PC v. County-Wide Ins. Co., 170 A.D.3d 1168; Matter of Acuhealth Acupuncture, P.C. v. Country-Wide Ins. Co., 149 A.D.3d at 829.7 Based on the standard of review provided by the Appellate Division, it cannot be concluded that the master arbitrator exceeded his power. For example, he did not impermissibly weigh the credibility of a witness, reconsider the hearing arbitrator’s factual determination, or review the medical report. See, e.g., Am. Transit Ins. Co. v. Pda NY, 2023 NYLJ LEXIS 2380 at 24-25. Thus, the master arbitrator’s decision was not arbitrary, capricious or irrational. The Court is constrained by the standard of review outlined by the Appellate Division in reviewing master arbitration decisions.8 This constitutes the Decision and Order of the Court. Dated: September 29, 2023
