In reversing a trial court's decision to confirm an arbitration award, a Hawaii appellate court held that where an arbitrator fails to disclose an ongoing professional relationship with a party to the arbitration in which the arbitrator is soliciting charitable donations from that party, a reasonable impression of bias exists and the award will be vacated.

In Kay v. Kaiser Foundation Health Plan, Inc., No. 27581, 2008 WL 4757264 (Haw. Ct. App. Oct. 31, 2008), Kay brought a medical malpractice claim against Kaiser for failing to timely diagnose his brain tumor. After a Medical Claim Conciliation Panel found Kay's claim to be actionable, Kay demanded arbitration of his claims pursuant to an arbitration agreement he had signed with Kaiser.

The parties decided on three arbitrators, and Dr. Tom was the only physician on the arbitral panel. The majority (including Dr. Tom) of arbitrators concluded that although Kaiser was negligent in its treatment of Kay, Kaiser's negligence was not a cause of Kay's injuries. Thus, the panel issued an award in favor of Kaiser.

Kay moved to vacate the award, arguing evident partiality on behalf of Dr. Tom. Dr. Tom had not disclosed that she was a high-ranking fundraiser for the American Diabetes Association (ADA). Dr. Tom solicited donations from Kaiser in her capacity as an ADA-fundraiser, and had various other interactions with Kaiser doctors and other personnel. Her contacts with Kaiser occurred not only in the several years leading up to the Kay-Kaiser arbitration, but also during the pendency of the arbitration.

The trial court confirmed the award, holding that the relationship was not "so intimate as to cast serious doubt on Dr. Tom's impartiality." Kay appealed.

On appeal, the Court held that evident partiality exists not only where there is actual bias, but also "when undisclosed facts show a reasonable impression of partiality." The Court then noted that the Ninth Circuit and other Hawaii courts have generally employed a "relatively broad interpretation of a 'reasonable impression of partiality.'"

Accordingly, the Court held that although Dr. Tom received no direct financial benefit from her involvement with ADA, it was a significant professional activity that brought her public recognition and an enhanced reputation in the medical profession. Thus, the Court held that regardless of Dr. Tom's charitable purpose, "an arbitrator cannot, as part of a long-standing and on-going activity, ask for and receive money from a party during an arbitration, without disclosing that fact to the other party. However innocent in the mind of the arbitrator, such conduct creates 'an impression of possible bias' from the objective view of the other party."

The Court held that Dr. Tom's personal contact with Kaiser for several years continuing through the pendency of the arbitration proceeding showed evident partiality, and consequently reversed the lower court and vacated the arbitration award.