dissenting:
I respectfully dissent. For the reasons explained below, I would hold unconstitutional that portion of section 143a of the Illinois Insurance Code (215 ILCS 5/143a (West 1996)) requiring arbitration.
Plaintiffs insurance policy contained an arbitration clause. Specifically, this clause provided that recovery under the uninsured-motorist provision would be subject to arbitration, if demanded by either the insurer or the insured. Where arbitration is demanded, the decision of the arbitrator is binding if the arbitration award is below a certain amount. The cut-off amount is defined in the policy as the minimum required limits for bodily injury as set forth in the Illinois Financial Responsibility Law, currently $20,000 per person. See 625 ILCS 5/7 — 100 et seq. (West 1996). Thus, in the instant case, the arbitration award would be binding if it is equal to or less than $20,000. If binding, neither party could reject the award and demand a trial. If the award exceeds $20,000, however, it is not binding. In that instance, either party may reject the award and elect to proceed to trial.
This arbitration is mandated by section 143a. Section 143a requires that all policies issued in Illinois provide uninsured-motorist coverage (see Luechtefeld v. Allstate Insurance Co., 167 Ill. 2d 148, 152 (1995)) and that disputes with respect to the amount of damages be submitted to arbitration. 215 ILCS 5/143a (West 1996). Section 143a further provides that “[a]ny decision made by the arbitrators shall be binding for the amount of damages not exceeding the limits for bodily injury or death set forth in Section 7 — 203 of the Illinois Vehicle Code.” 215 ILCS 5/143a (West 1996). The financial responsibility limit set forth in section 7 — 203 is $20,000 per person. 625 ILCS 5/7 — 203 (West 1996). Thus, section 143a itself provides that any award not exceeding $20,000 is binding on the parties. A binding award cannot be rejected in favor of a trial. In contrast, an award above $20,000 is not binding and can be rejected by either party in favor of a trial.
The appellate court struck down the arbitration provision of the statute as violative of public policy and as being unconstitutional. I would affirm the judgment of the appellate court, but only on the latter ground.
Statutes carry a presumption of constitutionality. Allegro Services, Ltd. v. Metropolitan Pier & Exposition Authority, 172 Ill. 2d 243, 250 (1996). A party challenging a statute bears the burden of proving it unconstitutional. Doe v. Gainer, 162 Ill. 2d 15, 19 (1994). It is, however, the duty of this court to protect the rights of individuals against acts beyond the scope of legislative power. Best v. Taylor Machine Works, 179 Ill. 2d 367, 378 (1997). If a statute is unconstitutional, this court must declare it invalid. Wilson v. Department of Revenue, 169 Ill. 2d 306, 310 (1996).
As noted by the majority opinion, only the due process clauses of the federal and state constitutions (U.S. Const., amend. V; Ill. Const. 1970, art. I, § 2) are implicated here. See R.W. Dunteman Co. v. C/G Enterprises, Inc., 181 Ill. 2d 153, 167 (1998). Plaintiff argues that section 143a violates her freedom to contract because it mandates that the arbitration clause discussed above be a part of her insurance policy. The right of individuals to contract as they desire arises from considerations of due process. R.W. Dunteman Co., 181 Ill. 2d at 167. In general, economic legislation meets the requirements of due process as long as it is rationally related to a legitimate governmental purpose. R.W. Dunteman Co., 181 Ill. 2d at 167, citing Regan v. Taxation With Representation, 461 U.S. 540, 547, 76 L. Ed. 2d 129, 137, 103 S. Ct. 1997, 2001 (1983). I do not believe that the arbitration provision of section 143a is rationally related to a legitimate governmental purpose.
The purpose of section 143a is to provide at least minimum insurance coverage to an insured who has been injured by an uninsured motorist. Luechtefeld, 167 Ill. 2d at 152. The arbitration clause is not rationally related to this purpose. Making awards below $20,000 binding on the insured has no relation to providing minimum insurance coverage to individuals injured by uninsured motorists.
The majority states that the legislature could have concluded that mandatory binding arbitration for “smaller claims” would help reduce litigation costs and would promote a speedy resolution of cases involving smaller claims. I disagree. As written, the arbitration clause does not eliminate only smaller claims from further litigation. The arbitration clause is not limited to those cases where a plaintiff seeks a small award. Rather, it requires arbitration in all cases, and then precludes a trial for a plaintiff who sought a higher award and who may have received an erroneous determination from the arbitrator.
A majority of courts have found that the practical effect of this type of clause is to unfairly favor insurers to the detriment of their insureds. See, e.g., Hanover Insurance Co. v. Losquadro, 157 Misc. 2d 1014, 600 N.Y.S.2d 419 (1993); Worldwide Insurance Group v. Klopp, 603 A.2d 788 (Del. 1992); O’Neill v. Berkshire Mutual Insurance Co., 786 F. Supp. 397 (D. Vt. 1992); Mendes v. Automobile Insurance Co., 212 Conn. 652, 563 A.2d 695 (1989). One court explained:
“Under the present policy language both parties are bound by a low award which an insurance company is unlikely to appeal. While high awards may be appealed by either party, common experience suggests that it is unlikely that an insured would appeal such an award. It is the insurer who, generally, would be dissatisfied with a high award. The policy provision thus presents an ‘escape hatch’ to the insurer for avoidance of high arbitration awards, whether or not the award was fair and reasonable. However, the insured, who would tend to be dissatisfied with a low award, is barred from appealing such an award, i.e., an award under financial responsibility limits.” Klopp, 603 A.2d at 791.
Moreover, the insured can usually achieve only a temporary victory in arbitration:
“The ‘bottom line’ effect of the subject clause is that an insurer who wins in arbitration (as a result of a favorable award on liability or an award that does not exceed [the financial responsibility limits]) wins, whereas a successful insured is merely moved to a second plateau, where damages will have to be established in full blown litigation. Although needless to say there are many instances where an insured will find a damage award over [the financial responsibility limits] insufficient and therefore request a trial de nova, it is clear *** that the party most likely to make such a request will be the insurer. Thus, the appearance of mutuality is an illusion.” Losquadro, 157 Misc. 2d at_, 600 N.Y.S.2d at 423.
Section 143a requires uninsured-motorist coverage in all insurance policies, and then requires that all uninsured-motorist disputes be submitted to arbitration. It further provides that certain awards are binding while others are not and does so in a manner that will generally inure to the benefit of the insurer. Plaintiff and other insureds have no choice in negotiating this aspect of the policy. Section 143a thereby operates in an arbitrary and discriminatory manner in favor of insurance companies to the detriment of insured individuals. The statute therefore violates due process.
In support of its decision, the majority relies upon a United States Supreme Court case that upheld a mandatory arbitration provision, namely, Hardware Dealers Mutual Fire Insurance Co. v. Glidden Co., 284 U.S. 151, 76 L. Ed. 214, 52 S. Ct. 69 (1931). In that case, Minnesota law required fire insurance policies to include a provision for the arbitration of disputes about the amount of the loss. The statute at issue in Hardware Dealers is distinguishable from section 143a. The mandatory arbitration provision at issue there was truly neutral in application and did not arbitrarily and discriminately favor insurance companies to the detriment of their insureds, as does the arbitration provision in section 143a.
For the foregoing reasons, I would strike that portion of section 143a requiring arbitration as violative of due process. This portion of section 143a is severable from the remainder of the statute.
JUSTICES HEIPLE and HARRISON join in this dissent.