What happened: A New York appellate court wiped out a medical provider’s $14,000 no-fault arbitration win
Who’s involved: Hereford Insurance Company and Orthopaedics, Spine & Sports Medicine LLP
What’s at stake: More than $14,000 in arbitration awards, now unenforceable
Why it matters: A default judgment left unchallenged in a parallel action can override an arbitration victory
Where it stands: Appellate Division unanimously reversed the lower court; provider’s claims dismissed
A medical provider won more than $14,000 in no-fault arbitration - then lost it all by ignoring a lawsuit the insurer filed first.
New York’s Appellate Division, First Department, unanimously reversed a lower court and tossed coverage claims brought by Orthopaedics, Spine & Sports Medicine LLP against Hereford Insurance Company.
The dispute started when Hereford went to court seeking a ruling that it owed nothing on claims from injuries allegedly sustained in a collision involving its insured vehicle. The medical provider never appeared. Instead, almost two months later, it filed a separate claim for arbitration.
The provider won the arbitration, taking home an award of more than $14,000. That award was affirmed on July 8, 2022.
But while the provider was winning in one room, Hereford was winning by default in another. In October 2022, the court declared Hereford had no coverage obligations. The provider tried to get that default thrown out. Denied. It did not appeal.
The coverage questions in both proceedings were identical: whether Hereford properly denied the claims on two grounds - that the alleged injuries were unrelated to the covered collision, and that the people who received treatment never signed off on their examination-under-oath transcripts, a step the policy required before any payment was owed.
When Hereford asked to have the provider’s claims dismissed in a later action, the lower court used the wrong framework. It looked at whether the specific issues had already been decided - a test that generally does not work for default judgments, because the court never actually weighed the evidence.
The Appellate Division said the right question was simpler: were these claims ones that had been raised, or should have been raised, in an earlier suit between the same parties? Both cases involved Hereford and the provider on opposite sides of the same coverage dispute. That was enough.
The provider argued the default judgment should not count because it came down after the arbitration award had already been issued and affirmed. The appellate court rejected that argument, noting Hereford filed its coverage lawsuit almost two months before the provider ever filed for arbitration.
For no-fault claims teams, the lesson is blunt: an arbitration win means nothing if a parallel coverage action quietly produces a default judgment - and no one shows up to contest it.
