The No-Fault Automobile Insurance Act’s mandatory arbitration requirement of claims for $10,000 or less is now confirmed to be constitutional, according to the judgment delivered recently by the Court of Appeals of Minnesota in Unger v. AAA Ins. Co., No. A14-1885 (Minn. Ct. App. Aug. 10, 2015).
Ruth and Amanda Unger were injured in a car accident after which they received chiropractic care and physical therapy. A few months later, however, AAA Insurance Company seized payment of on-going benefits and sent a letter whereby it agreed to an arbitration, if the amount in dispute was $10,000 or less, by virtue of Minnesota Stat. 65B.525. Both victims filed a petition for arbitration claiming approximately $9,000 for medical and income loss benefits and a no fault award of about $11,500 was issued at the end. During the arbitration proceedings, the appointment of the sole arbitrator was unsuccessfully challenged — an issue which was then later raised in front of the district court and the Court of Appeal as well. In reviewing the partiality challenge, the Court of Appeal refused to vacate the award on the ground that none of the arbitrator’s disclosures were considered significant enough to affect the arbitrator’s impartial judgment.
One of the most interesting findings of the appellate judge in this decision was the underlying judgment pertaining to the constitutionality challenge of the NFAIA’s provision for mandatory and binding arbitration of certain types of no fault claims. The appellant argued that the mandatory arbitration requirement of the NFAIA is in breach of the constitutionally protected rights to a jury trial, due process, and a certain and complete remedy. The appellate judge reiterated its position in Neal, 509 N.W.2d and stated that NFAIA’s mandatory requirement was constitutional and did not violate the right to a jury trial.
As a general principle, statutes are presumed to be constitutional unless – and until otherwise – evidenced, and judges should pay high attention when declaring a statute unconstitutional. The burden of proof lies with the party challenging the constitutionality of a statute, which is expected to be proved beyond any doubt. In this matter, the appellant failed to meet its burden and in that way produce enough evidence in order to convince the judge, beyond any reasonable doubt, about the unconstitutionality of the NFAIA’s mandatory arbitration provision.
More specifically, the court was not convinced that the parties were bound to arbitrate the claim because of the NFAIA. The appellant failed to produce a copy of the insurance policy and the court was thus unable to ascertain whether there had been an arbitration agreement in place when the dispute arose. Interestingly, it did hold that given the wording in the appellant’s letter inviting for an arbitration of claims of $10,000 or less and the statutory arbitration requirement of the NFAIA included in the standard personal injury protection (PIP) automobile policy, appellant’s policy provides for arbitration of claims. The court reached the conclusion that the appellant failed to prove violation of its constitutional rights, thus applying a strict approach of the burden of proof for constitutionality challenges.