In re Country-Wide Ins. Co. v. Barrios, 43 N.Y.2d 685 (1977)
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Under New York’s Insurance Law § 675, disputes over an insurer’s liability to pay first-party benefits, including reasonable attorney’s fees, are subject to arbitration at the insured’s option; arguments against entitlement to post-arbitration fees relate to the claim’s merits and are for the arbitrator to resolve.
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Summary
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Country-Wide Insurance sought to stay arbitration demanded by Barrios, its insured, regarding additional counsel fees for services in prior appeals. These appeals were from an initial arbitration award directing Country-Wide to pay first-party benefits and counsel fees to Barrios. Country-Wide argued Barrios wasn’t entitled to post-arbitration fees under Insurance Law § 675. The New York Court of Appeals held that Barrios was entitled to submit his claim for additional counsel fees to arbitration, as arguments against the claim pertain to its merits, which are for the arbitrator, not the courts, to decide.
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Facts
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Barrios, the insured, received an arbitration award directing Country-Wide Insurance to pay first-party benefits for dental services and associated counsel fees.
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Country-Wide initiated judicial proceedings, appealing the initial arbitration award to the Appellate Division and the Court of Appeals.
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After unsuccessfully appealing the initial award, Barrios sought additional counsel fees for the services rendered in the prior appeals.
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Country-Wide resisted this additional claim, and Barrios sought to submit the dispute over these additional fees to arbitration.
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Procedural History
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Country-Wide sought a permanent stay of arbitration in Supreme Court, which was denied.
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The Appellate Division reversed the Supreme Court’s decision.
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The New York Court of Appeals reversed the Appellate Division’s order and reinstated the Supreme Court’s judgment denying the stay of arbitration.
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Issue(s)
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Whether an insured is entitled to submit to arbitration a claim for additional counsel fees incurred in defending a prior arbitration award in appellate proceedings initiated by the insurer.
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Holding
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Yes, because under Insurance Law § 675, the insured has the option to submit disputes involving the insurer’s liability to pay first-party benefits, including attorney’s fees, to arbitration, and arguments against the insured’s entitlement to such fees go to the merits of the claim, which are for the arbitrator to resolve.
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Court’s Reasoning
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The court reasoned that Insurance Law § 675, as implemented by the Superintendent of Insurance’s regulations, provides the insured with the option to arbitrate disputes over first-party benefits, including attorney’s fees.
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The court emphasized that contentions regarding the insured’s entitlement to post-arbitration fees, regardless of their legal or factual basis, pertain to the merits of the claim.
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Citing CPLR 7501, the court stated that courts