Opinion ID: 1297060
Heading Depth: 2
Heading Rank: 4

Heading: the constitutionality of the limited review under subsection 22-10-17.1(m)

Text: Having upheld the constitutionality of compulsory arbitration in general, we turn now to the specific issue of whether a litigant's right to a fair hearing is adequately protected by the limited judicial review provided in Subsection 22-10-17.1(M): The decision of the independent arbitrator shall be final and binding on both parties and shall be nonappealable except where the decision was procured by corruption, fraud, deception or collusion, in which case it may be appealed to the court of appeals.... Arbitrary or capricious action is not a ground for appeal under the statute, nor can a decision be reviewed to determine if it is legally sound and supported by substantial evidence. The Illinois Supreme Court has said: As a general rule, delegation to administrators or agencies of the quasi-judicial power to adjudicate rights or to revoke privileges such as licenses is not invalid so long as there is an opportunity for judicial review of the administrative action. Such judicial review normally permits an aggrieved party to contest the fairness of the procedure used, the constitutionality of the substance of the regulatory statute and implementing rules and regulations, the correctness of the administrator's interpretation of the statute under which he operates, and whether or not his decision was arbitrary. In short, if the judiciary is given an adequate opportunity to review what has been done, the principle of separation of powersor due process of law, if you willis generally satisfied. City of Waukegan v. Pollution Control Bd., 57 Ill.2d 170, 311 N.E.2d 146, 152 (1974) (quoting George D. Braden & Rubin G. Cohn, Illinois Constitution: An Annotated and Comparative Analysis 104-05 (1969)). Thus, review of an administrative adjudication must be sufficient to allow the judiciary an adequate opportunity to evaluate whether the litigant received a fair hearing and whether the law was correctly applied. The New York Court of Appeals has similarly ruled that, in statutorily compelled arbitrations, Due process of law requires ... that the [decision of] the arbitrator under the power conferred by statute have a basis not only in his good faith, but in law and the record before him. Mount St. Mary's, 311 N.Y.S.2d at 873, 260 N.E.2d at 515 (citations omitted). We agree that due process, together with separation of powers considerations, requires that parties to statutorily mandated arbitration be offered meaningful review of the arbitrator's decision. In order for review of the arbitrator's decision to be meaningful, the court must determine whether the litigant received a fair hearing before an impartial tribunal, whether the decision is supported by substantial evidence, and whether the decision is in accordance with law. The provision in Subsection 22-10-17.1(M) limiting judicial review of the arbitrator's decision to cases where the decision was procured by corruption, fraud, deception or collusion does not permit meaningful review of the arbitrator's decision by the court. We therefore strike this provision as a violation of due process and as an unconstitutional delegation of judicial power. See 1986 N.M.Laws, ch. 33, § 35 (unconstitutional parts of § 22-10-17.1 may be severed from remainder of statute). The provision in Section 22-10-17.1 permitting review of the arbitrator's decision remains intact; we only strike the limitations on review as inadequate. The question remains, what standard of review is to be applied to the arbitrator's decision under Section 22-10-17.1, now that the provision in Subsection 22-10-17.1(M) delimiting the scope of review has been severed from the remainder of the statute? The scope of review constitutionally required for compulsory arbitration is the review required for administrative adjudications. In Regents of the University of New Mexico v. Hughes, 114 N.M. 304, 838 P.2d 458 (1992), we held that  any judicial review of administrative action, statutory or otherwise, requires a determination whether the administrative decision is arbitrary, unlawful, unreasonable, capricious, or not based on substantial evidence. Id. at 309, 838 P.2d at 463; see also State ex rel. Harris v. Annuity & Pension Bd., 87 Wis.2d 646, 275 N.W.2d 668, 671 (1979) (common law review of administrative action includes whether board proceeded under correct theory of law, whether action was arbitrary or unreasonable, whether action was supported by evidence). We note that this scope of review is essentially the same as the review of the State Board's decisions required by this Court in McCormick, 58 N.M. at 661, 274 P.2d at 307, and statutorily mandated by the legislature in 1973 as compiled in NMSA 1953, Section 77-8-17, and NMSA 1978, Section 22-10-20. The district court therefore may review the arbitrator's decision pursuant Section 22-10-17.1 using the standard of review appropriate to an administrative adjudication. See Llano, Inc. v. Southern Union Gas Co., 75 N.M. 7, 11-12, 399 P.2d 646, 649 (1964) (discussing scope of review of decisions of administrative agencies). Harrell urges us to adopt a de novo standard of review for both the administrator's factual findings and his legal conclusions. We decline to do so. Review of factual findings for substantial evidence (on the whole record) protects the interests of the litigants while supporting the purposes of the compulsory arbitration provisionto provide an inexpensive and efficient method for resolution of disputes. To subject factual findings made by arbitrators under [the compulsory arbitration statute] to de novo review by the court would, in many cases, make those proceedings merely way stations to the courts, and would thereby create the very risks that the compulsory arbitration provision was designed to avoid. Chmielewski v. Aetna Casualty & Sur. Co., 218 Conn. 646, 591 A.2d 101, 109 (1991). We hold that due process is satisfied by de novo review of questions of law and substantial-evidence review of findings of fact. See id. 591 A.2d at 110 (applying Mathews v. Eldridge factors and concluding that no due process violation is involved in subjecting factual findings to a substantial evidence test under a statute requiring arbitration of disputes).