Karmilowicz v. Allstate Insurance
The petitioner was injured in a 1977 motor vehicle accident, leading to a no-fault insurance claim. Following an arbitration award, the petitioner moved to confirm and the respondent cross-moved to vacate, arguing the arbitrator erred by not allowing a Social Security benefits setoff for the petitioner's wife and child. The Supreme Court confirmed the award. On appeal, the court found the Supreme Court applied an incorrect standard of review for compulsory arbitration. The appellate court concluded that the arbitrator's failure to apply the mandated Social Security offset, as per Insurance Law § 671 and 11 NYCRR Part 65, lacked a rational basis and would create an unintended windfall for the petitioner. Consequently, the judgment was modified, denying the confirmation of the arbitration award, partially granting the cross-application to vacate, and remanding the case for recomputation of the award, while affirming the attorney's fees.