IN RE: AMERIPRISE INSURANCE COMPANY (2020)

Order, Appellate Term, First Department, entered January 2, 2018, which reversed an order of the Civil Court, New York County (Erika M. Edwards, J.), entered on or about November 30, 2016, denying the petition to vacate a master arbitrator's award and confirming the award, and remanded the matter to Civil Court for a framed issue hearing on whether the policy limit was exhausted before petitioner became obligated to pay respondent's claims, unanimously affirmed, without costs.

Generally, courts will not set aside an award where “there is a rational view to support it” (Country–Wide Ins. Co. v. May, 282 A.D.2d 298, 298, 723 N.Y.S.2d 355 [1st Dept. 2001];  see also Matter of Carty v. Nationwide Ins. Co., 212 A.D.2d 462, 622 N.Y.S.2d 947 [1st Dept. 1995]).  However, in addition to irrationality, an award may be vacated if the arbitrator exceeds his or her power (see CPLR 7511[b][1][iii]).  An arbitrator exceeds his/her power if the award is “beyond the policy limits” (Matter of Brijmohan v. State Farm Ins. Co., 92 N.Y.2d 821, 823, 677 N.Y.S.2d 55, 699 N.E.2d 414 [1998];  see also e.g. Countrywide Ins. Co. v. Sawh, 272 A.D.2d 245, 708 N.Y.S.2d 862 [1st Dept. 2000]).

Respondent contends that its claims were complete before the policy issued by petitioner was exhausted.  This argument is unavailing.  The Court of Appeals has interpreted the word “claims” in 11 NYCRR 65–3.15 to mean “verified claims” (Nyack Hosp. v. General Motors Acceptance Corp., 8 N.Y.3d 294, 300, 832 N.Y.S.2d 880, 864 N.E.2d 1279 [2007]), i.e., claims as to which the healthcare provider has submitted additional information requested by the insurer (see id. at 297–298, 300–301, 832 N.Y.S.2d 880, 864 N.E.2d 1279).  Petitioner requested verification in the form of an examination under oath (EUO).  Since respondent never appeared for an EUO, its claims were never verified.  The defense that an award exceeds an arbitrator's power is so important that a party may introduce evidence for the first time when the other party tries to confirm the award (see Brijmohan, 92 N.Y.2d at 822–823, 677 N.Y.S.2d 55, 699 N.E.2d 414).

Respondent may also raise on appeal the purely legal argument that Appellate Term lacked the power to remand to Civil Court for a framed issue hearing (see generally Branham v. Loews Orpheum Cinemas, Inc., 31 A.D.3d 319, 323 n 2, 819 N.Y.S.2d 250 [1st Dept. 2006], affd 8 N.Y.3d 931, 834 N.Y.S.2d 503, 866 N.E.2d 448 [2007]).  On the merits, however, this argument is unavailing (see Allstate Prop. & Cas. Ins. Co. v. Northeast Anesthesia & Pain Mgt., 2016 N.Y. Slip Op. 50828 [U], 51 Misc.3d 149 [A], 2016 WL 3063431 [Appellate Term, 1st Dept. 2016];  Allstate Ins. Co. v. Demoura, 2011 N.Y. Slip Op. 50430 [U], 30 Misc.3d 145 [A], 2011 WL 1107134 [Appellate Term, 1st Dept. 2011]).

In view of the foregoing, respondent is not entitled to the attorneys' fees it requested.