On 21 September 2003, a motor vehicle accident occurred at approximately 10:00 p.m. The victim was reportedly hit by a car while in front of 7420 13th Avenue in Brooklyn. According to the police accident report, the accident was witnessed by the husband, both of whom are listed as residing at the same address. The witness told the police officer that the driver of the vehicle and the victim were having a verbal dispute; that when the victim approached the vehicle, the driver sped away, apparently striking the victim, who fell onto the pavement and struck her head. The driver of the vehicle left the scene, but the witness reported the license plate number, V272LZ, to the police officer. The police accident report does not set forth any insurance information for the victim. Thereafter, the license plate was traced to an individual residing in Staten Island and that the vehicle is insured by an insurance company.
Beginning on or about 26 September 2003, the victim underwent medical treatment for her injuries from respondent. Respondent submitted claims to the insurance company which issued a denial on 1 December 2003, based on its investigation that the alleged driver was not involved in the loss. It is unclear whether petitioner was aware of the denial at that time. On 10 December 2003, the victim completed a “Notice of Intention to Make Claim” to the petitioner, in which she avers that her injury is not covered by insurance. She also completed an “Affidavit of No Insurance”, in which she states that she was a passenger in a vehicle insured by an insurance company; the victim swore under penalty of perjury that: on the date of the accident, she maintained no insurance which would provide coverage to her for the accident, and no person residing in her household owned an automobile or maintained such insurance.
Respondent submitted bills to petitioner totaling $4,302.79 for services. Petitioner denied the claim, since the vehicle that was reported was insured.
Meanwhile, the victim commenced a personal injury action for the head injury she suffered against the driver in Supreme Court, Kings County. According to petitioner, after depositions, the driver moved for summary judgment; the Brooklyn victim failed to oppose the motion, so the motion was granted on default. The Lower Arbitrator states that the case was dismissed because the victim failed to provide disclosure.
On 1 June 2007, respondent then filed a claim for arbitration with the American Arbitration Association against both petitioner and the insurance company.
Under the Lower Arbitrator’s decision, it was found that the alleged driver was not the person involved in the accident. Therefore, the claims were dismissed against the insurance company on the ground that the insurance company’s insured was not involved in the accident. The Lower Arbitrator then tamed to whether petitioner was required to provide benefits to the victim. Petitioner requested an adjournment to determine whether or not another insurance policy existed. However, the arbitrator rejected such request on the ground that petitioner failed to exercise due diligence for nearly four years. The arbitrator denied the request for a stay and found petitioner responsible for payment of first party benefits to the victim. The arbitrator found that petitioner failed to issue any denial of the claim within thirty (30) days of receipt of the Notice of Claim, as required or failed to otherwise seek to toll the thirty-day time period by seeking a request for verification. The arbitrator determined that petitioner was precluded from asserting a defense that the treatment was not medically necessary, and found that of the $4,302.79 claimed, respondent was entitled to payment of $2,337.85 for the victim’s treatment, with interest at the rate of 2% per month, together with attorneys’ fees.
Thereafter, the decision was appealed to the Master Arbitrator who affirmed the said decision. The Master Arbitrator found that the award was not irrational, biased, arbitrary, capricious, or incorrect as a matter of law. The Master Arbitrator rejected petitioner’s contention that they were under no obligation to investigate whether another insurer was responsible unless and until it was determined that the insurance company was not responsible; that he found petitioner’s contention that it had no duty to investigate to be inconsistent with the purpose and intent of both Article 51 and Article 52 of the Insurance Law.
Hence, the instant appeal.
The petitioner was created by the Legislature, pursuant to Article 52 of the Insurance Law, to pay damages for bodily injuries to innocent victims of motor vehicle accidents cause by uninsured motorists. To recover benefits, the injured individual must be eligible. Insurance Law defines a qualified person as a resident of this state, other than an insured or the owner of an uninsured motor vehicle and his spouse when a passenger in such vehicle.
Here, if in fact the victim had valid insurance coverage at the time of the accident, she is not a qualified person. Until it was clear that the insurance company was not responsible, petitioner had no reason to investigate whether the victim may have given false information on the petitioner’s forms as to whether or not she was insured. The essence of petitioner’s argument is that this is a lack of coverage issue, since the victim would not be covered by petitioner if she has other insurance.
Moreover, the case relied upon by the Master Arbitrator is inapposite. In that case, the issue was whether the injured party’s claim was fully submitted on 23 June 2003, in which case petitioner’s denial, issued on 7 October 2003, would be untimely, or whether the injured party first qualified on 30 of September, in which case a denial issued on 7 of October would be timely. The only issue in that case was the timeliness of the rejection.
However, the issue here is whether there is lack of coverage, and when petitioner was reasonably put on notice that it needed to investigate whether the victim was not insured. Petitioner had no reason to believe that the insurance company was not responsible for payment until the time of the hearing, when the insurance company submitted evidence that the alleged driver was not the actual driver of the vehicle.
As a rule, courts are reluctant to disturb the decisions of arbitrators lest the value of the method of resolving controversies be undermined.
Here, petitioner presented some evidence to the Lower Arbitrator that there was an issue of possible lack of coverage, and requested an adjournment of the November 2007 hearing, after three adjournments had been granted on behalf of the insurance company. While petitioner contends that it was entitled to rely on the police report that showed the other vehicle had coverage and had no duty to act to investigate the accuracy of the victim’s claim of lack of coverage, the herein court does not condone petitioner’s failure to promptly investigate whether or not the victim was otherwise covered by insurance. The primary purpose of petitioner is to promptly pay the claims of those uninsured individuals who have legitimate claims. Therefore, since lack of coverage goes to the heart of whether a claim is legitimate, the issue of lack of coverage may be raised at any time. Under these unique factual circumstances, the arbitrator’s failure to grant petitioner’s request is deemed to constitute an abuse of discretion constituting misconduct within the meaning of the rules, since it resulted in the foreclosure of the presentation of pertinent and material evidence.
Therefore, the Lower Arbitrator’s failure to allow petitioner to fully explore this claim, despite their failure to do so promptly, warrants a remand for a new hearing.
A disclaimer based on lack of coverage is not a denial that must be asserted within the thirty-day period, since the essence of a claim of lack of coverage is that there is no policy in effect. Since petitioner was not afforded an opportunity to fully explore the issue of lack of coverage, the matter must be remanded for a new hearing.
Additionally, petitioner learned that approximately one year before the accident, the victim commenced an uncontested matrimonial action in New York County against defendant, who is listed as her husband on the police accident report. The court records that petitioner obtained from eLaw show that the plaintiff in the matrimonial proceeding is listed under the same name of the herein victim and that she had a policy with another insurance company covering the date of loss. Thus, petitioner is entitled to present this information during the arbitration proceeding.
Undoubtedly, there is sufficient information to remand the matter for a new hearing and petitioner is allowed to present evidence to show that the victim is not entitled to petitioner’s benefits because she is otherwise insured.
Accordingly, the decisions of the Lower Arbitrator and Master Arbitrator are vacated; those portions of the decisions that determined that the insurance company is not responsible shall remain in full force and effect; and the matter is remitted to the arbitrator for further proceedings.
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