IN RE: 563 GRAND MEDICAL (2026)

DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to vacate a master arbitration award dated February 18, 2020, Country–Wide Ins. Co. appeals from an order of the Supreme Court, Kings County (Kathy J. King, J.), dated December 21, 2020.  The order, insofar as appealed from, granted that branch of the petition of 563 Grand Medical, P.C., which was to vacate the master arbitration award and denied the cross-petition of Country–Wide Ins. Co. to confirm the master arbitration award.

ORDERED that the order is affirmed insofar as appealed from, with costs.

563 Grand Medical, P.C. (hereinafter Grand Medical), commenced a no-fault arbitration proceeding to recover payment from Country–Wide Ins. Co. (hereinafter Country–Wide) for medical services provided to Grand Medical's assignee following a motor vehicle accident on August 3, 1999.  On September 10, 2003, an arbitrator dismissed the proceeding, without prejudice, on the ground that Grand Medical's proof was insufficient to establish that the medical services were provided by its owner or employees rather than by independent contractors and, thus, that Grand Medical had failed to prove standing to commence the proceeding.  Following civil litigation, on November 6, 2018, Grand Medical again commenced a no-fault arbitration proceeding against Country–Wide.  The arbitrator denied the claims on the ground that Grand Medical failed to prove its standing in the same manner.  In a master arbitration award dated February 18, 2020, a master arbitrator affirmed the arbitration award.

Thereafter, Grand Medical commenced this proceeding pursuant to CPLR article 75, inter alia, to vacate the master arbitration award.  Country–Wide cross-petitioned to confirm the master arbitration award.  In an order dated December 21, 2020, the Supreme Court, among other things, granted that branch of the petition and denied the cross-petition.  Country–Wide appeals.

“Since arbitration under the no-fault law is compulsory, the scope of review of the master arbitrator's award is whether it ‘was arbitrary and capricious, irrational or without a plausible basis' ” (Matter of Bay Needle Care Acupuncture, P.C. v Country Wide Ins. Co., 176 AD3d 695, 696, quoting Matter of Farrell [Allstate Ins. Co.], 232 A.D.2d 934, 935;  see Matter of Acuhealth Acupuncture, P.C. v Country–Wide Ins. Co., 176 AD3d 800, 802).  Further, “[a]n arbitration award may be vacated if the court finds that the rights of the moving party were prejudiced by ․ the arbitrator exceeding his or her power” (Matter of Banegas v. GEICO Ins. Co., 167 AD3d 873, 874;  see CPLR 7511[b] ).

“It has long been established that an arbitrator's authority extends to only those issues that are actually presented by the parties” (Matter of Joan Hansen & Co., Inc. v Everlast World's Boxing Headquarters Corp., 13 NY3d 168, 173;  see Matter of Banegas v. GEICO Ins. Co., 167 AD3d 873, 874).  As a result, “an arbitrator is precluded from identifying and considering an affirmative defense that is not pleaded by a party to the arbitration” (Matter of Fiduciary Ins. Co. v American Bankers Ins. Co. of Florida, 132 AD3d 40, 44).

Here, Country–Wide failed to assert at the arbitration proceeding that Grand Medical lacked standing.  Instead, the arbitrator impermissibly raised the issue of standing sua sponte (see Matter of Health & Endurance Med., P.C. v Deerbrook Ins. Co., 44 AD3d 857, 858;  see also Matter of Joan Hansen & Co., Inc. v Everlast World's Boxing Headquarters Corp., 13 NY3d at 173;  Matter of Banegas v. GEICO Ins. Co., 167 AD3d at 874).  On that basis, the Supreme Court properly granted that branch of the petition which was to vacate the master arbitration award and denied the cross-petition to confirm the master arbitration award (see Matter of Banegas v. GEICO Ins. Co., 167 AD3d at 874;  Matter of Health & Endurance Med., P.C. v Deerbrook Ins. Co., 44 AD3d at 858).

IANNACCI, J.P., WOOTEN, DOWLING and MCCORMACK, JJ., concur.