Opinion
No. C0-97-2016.
Filed May 5, 1998.
Appeal from the District Court, Hennepin County, File No. 975210.
William M. Hart, Richard L. Pemberton, Jr., Meagher Geer, P.L.L.P., (for appellant).
Mark A. Karney, Karney Theiler, (for respondent).
Considered and decided by Davies, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellant State Farm Mutual Automobile Insurance Company, a no-fault insurer, suspended the no-fault benefits of respondent Linda O'Leary after she refused to attend an independent medical examination (IME). O'Leary petitioned for arbitration to recover no-fault benefits. The arbitrator found that O'Leary had not unreasonably refused to attend the IME and ordered her benefits reinstated. The district court then denied State Farm's motion to vacate an arbitration award. Because the district court did not err in refusing to vacate the arbitrator's award, we affirm.
DECISION
"In the area of automobile reparation, arbitrators are limited to deciding issues of fact, leaving the interpretation of law to the courts." Johnson v. American Family Mut. Ins. Co ., 426 N.W.2d 419, 421 (Minn. 1988). However, an award will only be vacated where the arbitrator has clearly exceeded their powers. National Indem. Co. v. Farm Bureau Mut. Ins. Co. , 348 N.W.2d 748, 750 (Minn. 1984) (citing Hilltop Const., Inc. v. Lou Park Apts., 324 N.W.2d 236, 239 (Minn. 1982); Minn. Stat. § 572.19, subd. 1(3) (1996). However, "the scope of judicial review of an arbitration award is extremely narrow ." State, Office of the State Auditor v. Minnesota Ass'n of Professional Employees , 504 N.W.2d 751, 755 (Minn. 1993). The court makes "[e]very reasonable presumption" in favor of the finality and validity of the arbitrator's award. Id. at 754 (citing National Indem. Co. v. Farm Bureau Mut. Ins. Co., 348 N.W.2d 748, 750 (Minn. 1984)).
In arguing the district court erred in refusing to vacate the arbitration award, State Farm contends that: (1) the no-fault act does not require pre-payment of a claimant's outstanding medical expenses as a prerequisite to that claimant's attendance at an IME; and (2) O'Leary's failure to attend the IME because of her unpaid medical bills did not constitute a "reasonable" explanation. Under these circumstances, State Farm argues that suspension of benefits was proper and the arbitrator exceeded his authority by ordering an award.
[D]uring the arbitration process, the parties may produce evidence of either the reasonableness of the refusal to attend the IME so as to warrant the reinstatement of benefits, in the case of the claimant, or the appropriateness of the suspension of benefits for the claimant's lack of cooperation within the terms of the insurance contract * * *
Neal v. State Farm Mut. Ins. Co ., 529 N.W.2d 330, 333 (Minn. 1995). Based on the evidence, the arbitrator can decide whether to reinstate benefits or suspend them due to lack of cooperation by the claimant or prejudice to the insurer. Neal , 529 N.W.2d at 333. Although a court may vacate an award where the arbitrator has exceeded their powers, * * * the fact that the relief was such that it could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm the award.
Minn. Stat. § 572.19, subd. 1(5) (1996). The burden of proving that an arbitrator exceeded their powers rests with the party seeking to vacate the award. Hilltop Const., Inc. v. Lou Park Apts. , 324 N.W.2d 236, 239 (Minn. 1982). Furthermore, Minnesota courts have held that the interests of justice and the purpose of arbitration are best served when an award is not subject to vacation on grounds that it was based on an error of law. Ramsey County v. American Fed'n of State, County Mun. Employees, Council 91, Local 8 , 309 N.W.2d 785, 789-90 (Minn. 1981).
In denying State Farm's motion to vacate the award, the district court concluded that the arbitrator's award specifically, "takes into account that the claimant's refusal to attend the IME was reasonable," as required by Neal .
Although State Farm argues that Minn. Stat. § 65B.56, subd. 1 (1996) is controlling in determining whether the district court erred in upholding the arbitration award. We disagree. In no-fault cases, arbitrators are authorized to decide issues of fact, thus, our scope of review is limited to determining whether the district court erred in deciding whether the arbitrator exceeded his authority. National Indem. Co ., 348 N.W.2d at 750.
Here, the record reveals that State Farm availed itself of the sanction available in Neal when it suspended O'Leary's no-fault benefits after she failed to attend the IME. However, upon review of the evidence, the arbitrator determined that O'Leary's refusal to attend the IME was reasonable, and an arbitration award was ordered. This determination was a factual finding fully within the arbitrator's authority. See Neal , 529 N.W.2d at 333 (allowing arbitrator to receive evidence to determine whether to suspend or reinstate benefits). Because the arbitrator did not exceed his authority and the district court did not err in refusing to vacate the arbitration award, we affirm.