Matter of 563 Grand Medical, P.C. v Country-Wide Ins. Co.
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Brief Summary
This no-fault insurance case addressed whether a medical provider that ultimately prevailed in compulsory arbitration could recover statutory compound interest for the entire period after an earlier arbitration dismissal, or whether interest had to be suspended because the provider unreasonably delayed pursuing its claims.
The Supreme Court, in a proceeding under CPLR article 75 [procedure for confirming or vacating arbitration awards], confirmed the master arbitration award, denied Country-Wide's request to stay, vacate, or modify the award, and entered judgment for $4,999 plus statutory compound interest from September 10, 2003 totaling $597,733.63.
The Appellate Division modified the judgment by deleting the award of compound interest for the period from September 10, 2003 through November 6, 2018, denied confirmation of that portion of the master arbitration award, granted modification of the award to exclude that period from the interest calculation, and remitted for recalculation and appellate attorneys' fees.
Although the court upheld the arbitrators' determination that Grand Medical was entitled to no-fault benefits and that former 11 NYCRR 65.15(h) [former no-fault regulation providing for compound interest on claims] applied, it held that 11 NYCRR 65-3.9(d) [interest will not accumulate if the applicant unreasonably delays the arbitration or court proceeding] barred interest during the long period in which Grand Medical did not properly advance the arbitration, and the contrary determination lacked evidentiary support and a rational basis.
Background
563 Grand Medical, P.C. sought no-fault benefits for treatment provided to its assignor after an August 3, 1999 motor vehicle accident. An arbitrator dismissed the initial arbitration without prejudice on September 10, 2003. Grand Medical then pursued a Civil Court action, but that action was dismissed under Roggio v Nationwide Mut. Ins. Co. because Grand Medical had elected arbitration as its forum. After the dismissal was affirmed on November 2, 2018, Grand Medical restarted arbitration on November 6, 2018. The arbitrator awarded $4,999 in benefits and compound interest at 2% per month under 11 NYCRR 65-3.9(a) [no-fault regulation setting interest on overdue benefits at 2% per month], running from September 10, 2003. A master arbitrator affirmed on May 10, 2023, and Grand Medical then sought confirmation in court.
Lower Court Decision
The Supreme Court, Kings County, granted the petition to confirm the master arbitration award and denied Country-Wide's cross-petition to stay the proceeding, vacate the award, or alternatively modify the interest component. Judgment was entered for Grand Medical in the principal amount of $4,999 plus $597,733.63 in statutory compound interest running from September 10, 2003.
Appellate Division Reversal
The Appellate Division dismissed the appeal from the intermediate order because the right to directly appeal that order terminated upon entry of judgment. On the appeal from the judgment, the court held that the award of benefits and the use of the former compound-interest regulation were rational and supported by the record. However, it ruled that interest could not accrue from September 10, 2003 through November 6, 2018 because Grand Medical had unreasonably delayed the proceeding within the meaning of 11 NYCRR 65-3.9(d). The matter was remitted for recalculation of interest, determination of additional attorneys' fees on appeal under 11 NYCRR 65-4.10(j)(4) [regulation authorizing additional attorneys' fees for litigation of an appeal], and entry of an amended judgment.
Legal Significance
The decision reinforces the limited judicial review applicable to compulsory no-fault arbitration awards, which are upheld unless arbitrary, capricious, irrational, or lacking a plausible basis. It also clarifies that even where a provider is substantively entitled to overdue no-fault benefits and compound interest under the older regulation applicable at the time of the accident and claim submission, interest must be tolled during periods of unreasonable delay by the applicant.
A no-fault provider may win both benefits and compound interest, but not for years in which it unreasonably delayed pursuing the claim; under 11 NYCRR 65-3.9(d), those periods must be excluded from the interest calculation.