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Permissible De Novo Actions To Adjudicate No-Fault Disputes
By: Charles W. Benton, Esq.

FOR THE DEFENSE


Permissible De Novo Actions To Adjudicate No-Fault Disputes
Under Insurance Law Section 5106(c)

By: Charles W. Benton, Esq.
Bruno, Gerbino & Soriano, LLP
Melville, New York


Insurance Law Section 5106(c) states that a no-fault award by an arbitrator for first-party benefits and/or additional first-party benefits is binding except where vacated or modified by a master arbitrator. This section of the Insurance Law provides further that if the amount of a master arbitrator=s award is $5,000.00 or greater, exclusive of interest and attorney=s fees, the insurer or the claimant may institute a court action to adjudicate the dispute de novo. 11 NYCRR Section 65.19(I) further states that if an award of a master arbitrator is $5,000.00 or greater, exclusive of interest and attorney=s fees, either party may, in lieu of a CPLR Article 75 proceeding to review the award, institute a court action to adjudicate the dispute de novo.

Insurance Law Section 5106(c) expressly provides for de novo court adjudication where the amount of a master arbitrator=s award is $5,000.00 or greater. When a master arbitrator merely affirms an arbitrator=s award of $5,000.00 or greater, de novo court review of that award is permissible. State Farm v. Becker, 118 Misc.2d 806, 461 N.Y.S.2d 675 (Sup. Ct. Nassau County. 1983)

Wipf v. American Transit Insurance Company, 196 Misc.2d 919, 768 N.Y.S.2d 156 (Sup. Ct. N.Y. City. 2003) concerned a Section 5106(c) de novo action to contest the amount of interest paid on a no-fault award. The insurance company had previously paid the full amount of the master arbitrator=s award, and the only issue related to the amount of interest due. The court found that Insurance Law Section 5106(c) did not authorize a de novo action to contest the amount of interest added to the principal by reason of an insurer=s failure to timely pay a claim. The court opined that, had the insurance company challenge the original award which exceeded $50,000.00 in no-fault benefits; it would have been entitled to de novo adjudication.

Under Insurance Law Section 5106(c), a master arbitrator=s award of $5,000.00 or more is necessary to obtain de novo court review of the award. Thus, when a master arbitrator merely concludes that an arbitrator had correctly decided that the injury complained of arose out of the use of an automobile, and no monetary award been made, there is no basis for de novo review. Aetna v. Duthie, 107 A.D.2d 1009, 486 N.Y.S.2d 537 (A.D. 4th Dept. 1985) In the same vein, a master arbitrator=s decision denying an insurer=s request for review of the arbitration award on the ground that the insurer failed to comply with applicable no-fault insurance regulations in seeking the master arbitrator=s review was not subject to de novo court review. General Accident v. Avlonitis, 156 A.D.2d 424, 548 N.Y.S.2d 543 (A.D. 2nd Dept. 1989).


The Avlonitis case is of particular importance to the no-fault defense bar. All necessary procedural steps relating to the review of an arbitrator=s award by a master arbitrator must be taken prior to any application for de novo court review under Insurance Law Section 5106(c). See 11 NYCRR '65.19. Failure to do so will preclude de novo relief.

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