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The premature submission of a dispute to mandatory arbitration will not be treated differently from other compulsory arbitration filings, according to a Queens, N.Y., Supreme Court justice who ruled in a case of first impression. Justice Patricia P. Satterfield reasoned that while an insurance policyholder who filed a claim subject to mandatory arbitration may have submitted the case to arbitration as a voluntary act, New York State’s Insurance Law subjected the filing to the rules of compulsory arbitration. As a result, Satterfield refused to set aside an arbitrator’s decision dismissing an insurance claim because a three-year statute of limitations had run out. In this case, the policyholder, a New York limousine service whose driver was injured on the job, filed the insurance claim before a dispute was resolved over whether the injured driver should get workers’ compensation from the service. The court’s decision subjects the arbitrator’s ruling to a more stringent standard of review than if it had been submitted to arbitration in a purely voluntary manner. “This court rejects [the] argument that an otherwise compulsory arbitration is transmuted into a voluntary arbitration simply because of procedural defects,” Satterfield wrote. The insurance dispute in Tel-A-Car of New York v. Providence Washington Insurance Co., 10306/00, stemmed from injuries sustained by a driver affiliated with Tel-A-Car of New York when he was involved in an accident with a garbage truck while en route to picking up a passenger. Tel-A-Car is a company licensed by the New York City Taxi and Limousine Commission to provide dispatching and billing services to drivers of “black cars.” One of those drivers, Neil George, was injured in a collision while responding to a Tel-A-Car dispatch. George filed a claim for workers’ compensation coverage, which Tel-A-Car opposed on the grounds that the driver was not an employee but an independent contractor. George’s accident occurred on March 29, 1996. Tel-A-Car filed a claim against its insurance company, Providence Washington Insurance Co., on Aug. 10, 1999, in anticipation of being held liable to pay workers’ compensation benefits to the driver. In its petition, Tel-A-Car was seeking indemnification from its insurer, Providence Washington Insurance Co., filing for loss transfer arbitration, which is mandatory under the state Insurance Law. The New York State Workers’ Compensation Board decided on Dec. 2, 1999, that George was an employee of Tel-A-Car, and that he could be entitled to benefits. In February 2000, the arbitrator denied Tel-A-Car’s claim for loss transfer arbitration on the ground that the statute of limitations had run out. The arbitrator said the loss transfer claim was filed more than three years after George’s injury. But the insurance dispute had been filed before the Workers’ Compensation Board reached its decision, and, thus, before Tel-A-Car had any obligation to pay a workers’ compensation claim. SETTING ASIDE AWARDS A mandatory arbitration may be set aside where the award is arbitrary or capricious. On the other hand, since the court favors settlement of disputes, a voluntary arbitration award will only be set aside if it is the product of fraud, corruption or other misconduct. The question before Satterfield is whether, because the matter was submitted to compulsory arbitration prematurely, the standard of review for voluntary arbitration should apply. Due process requires stricter scrutiny of mandatory arbitration awards, the court said, since arbitration is required by statute. “The standard of review of an arbitrator’s award after compulsory arbitration thus is significantly more stringent than that of voluntary arbitration,” Satterfield wrote. Even though she subjected the arbitrator’s decision to the stricter standard, Satterfield declined to vacate the award. Applying the mandatory arbitration standard, Satterfield said the arbitrators’ decision that the limitations period had run out was not arbitrary and capricious and was based on competent evidence. Pike & Pike in Bellmore, N.Y., represented Tel-A-Car. Representing Providence Washington Insurance was Bruce A. Torino of Torino & Bernstein in Mineola, N.Y.

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