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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 8
In the Matter of Monarch
Consulting, Inc., et al.,
            Respondents,
        v.
National Union Fire Insurance
Company of Pittsburgh, PA,
            Appellant.
---------------------------------
In the Matter of National Union
Fire Insurance Company of
Pittsburgh, PA,
            Appellant,
        v.
Priority Business Services, Inc.,
formerly known as Inland Valley
Staffing Services, &c.,
            Respondent.
---------------------------------
In the Matter of National Union
Fire Insurance Company of
Pittsburgh, PA,
            Appellant,
        v.
Source One Staffing, LLC.,
            Respondent.
             Peter D. Keisler, for appellant.
             Jeffrey E. Glen, for respondents.
             United Policyholders; Dave Jones, amici curiae.
STEIN, J.:
             In order to resolve whether the parties' disputes
pertaining to certain workers' compensation insurance Payment
Agreements should be submitted to arbitration, we must make a
threshold determination of whether the McCarran-Ferguson Act (15
USC § 1011 et seq.) precludes application of the Federal

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                               - 2 -                             No. 8

Arbitration Act (9 USC § 1 et seq. [FAA]) in relation to
California Insurance Code § 11658.     We conclude that, because
application of the FAA does not "invalidate, impair, or
supersede" (15 USC § 1012 [b]) section 11658, the McCarran-
Ferguson Act is not implicated, and the FAA applies to the
parties' Payment Agreements.   Further, under FAA rules of
severability, the question of the enforceability of the Payment
Agreements and the arbitration clauses contained therein should
be submitted to arbitration.   We, therefore, reverse the
Appellate Division order.
                                I.
          Three statutes are at the crux of this dispute -- the
FAA, the McCarran-Ferguson Act, and California Insurance Code §
11658.
                   The Federal Arbitration Act
          The FAA was enacted by Congress "in response to
widespread judicial hostility to arbitration" (American Express
Co. v Italian Colors Restaurant, 570 US ___, ___, 133 S Ct 2304,
2308-2309 [2013]), and it aims to "ensure judicial enforcement of
privately made agreements to arbitrate" (Dean Witter Reynolds,
Inc. v Byrd, 470 US 213, 219 [1985]).     Under the FAA, an
arbitration provision contained in any contract involved in
interstate commerce "shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract" (9 USC § 2).    "This text


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reflects the overarching principle that arbitration is a matter
of contract" and, "consistent with that text, courts must
'rigorously enforce' arbitration agreements according to their
terms" (American Express Co., 570 US at ___, 133 S Ct at 2309,
quoting Dean Witter Reynolds Inc., 470 US at 221; see
Rent-A-Center, West, Inc. v Jackson, 561 US 63, 67 [2010]).
Typically, "the FAA pre[e]mpts state laws [that] 'require a
judicial forum for the resolution of claims which the contracting
parties agreed to resolve by arbitration'" (Volt Information
Sciences, Inc. v Board of Trustees of Leland Stanford Jr. Univ.,
489 US 468, 478-479 [1989], quoting Southland Corp. v Keating,
465 US 1, 10 [1984]; see Preston v Ferrer, 552 US 346, 349-350
[2008]; Allied-Bruce Terminix Cos. v Dobson, 513 US 265, 272
[1995]).
                     The McCarran-Ferguson Act
           In certain circumstances, however, the
McCarran-Ferguson Act exempts state laws from FAA preemption (see
15 USC § 1012 [b]; see generally CompuCredit Corp. v Greenwood,
565 US ___, ___, 132 S Ct 665, 669 [2012]).   In 1944, the United
States Supreme Court held that the federal government has the
power, under the Commerce Clause, to regulate the insurance
industry (see United States v South-Eastern Underwriters Assn.,
322 US 533, 553 [1944]).   Prompted by concern that the Supreme
Court's ruling in South-Eastern Underwriters would interfere with
state regulation of the business of insurance, Congress enacted


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                                 - 4 -                            No. 8

the McCarran-Ferguson Act to limit congressional preemption in
that arena (see Humana Inc. v Forsyth, 525 US 299, 306 [1999];
Department of Treasury v Fabe, 508 US 491, 500 [1993]).     The
McCarran-Ferguson Act declared that "the continued regulation and
taxation by the several States of the business of insurance is in
the public interest, and . . . silence on the part of the
Congress shall not be construed to impose any barrier to the
regulation or taxation of such business by the several States"
(15 USC § 1011).    Thus, under the McCarran-Ferguson Act, "[n]o
Act of Congress shall be construed to invalidate, impair, or
supersede any law enacted by any State for the purpose of
regulating the business of insurance . . . unless such Act
specifically relates to the business of insurance" (15 USC § 1012
[b]).   Stated otherwise, "when Congress enacts a law specifically
relating to the business of insurance, that law controls," but
the McCarran-Ferguson Act precludes application of -- or, in
other words, reverse preempts -- a federal law in the face of a
state law regulating the business of insurance where "the federal
measure does not 'specifically relat[e] to the business of
insurance,' and would 'invalidate, impair, or supersede' the
State's law" (Humana Inc., 525 US at 306, 307, quoting Department
of Treasury, 508 US at 501; see 15 USC § 1012 [b]).
                   California Insurance Code § 11658
           California law requires most employers to maintain
workers' compensation insurance (see Cal Lab Code § 3700).        The


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                                 - 5 -                         No. 8

insurers that provide workers' compensation coverage to employers
are regulated by the California Department of Insurance (the
Department), its Commissioner, and the Workers' Compensation
Insurance Rating Bureau of California (WCIRB) (see Cal Ins Code
§§ 11750.3, 11751, 12921).    The WCIRB, among other things,
provides statistics and rating information, formulates rules and
regulations in connection with insurance rates, and "examine[s]
policies, daily reports, endorsements or other evidences of
insurance for the purpose of ascertaining whether they comply
with the provisions of law and . . .     make[s] reasonable rules
governing their submission" (Cal Ins Code § 11750.3 [e]; see Cal
Ins Code § 11750.3 [a] - [d]).
          Of particular relevance here, under California
Insurance Code § 11658 (a),
          "[a] workers' compensation insurance policy
          or endorsement shall not be issued by an
          insurer to any person in [California] unless
          the insurer files a copy of the form or
          endorsement with the rating organization
          [WCIRB] . . . and 30 days have expired from
          the date the form or endorsement is received
          by the commissioner from the rating
          organization without notice from the
          commissioner."
In other words, workers' compensation insurers must file copies
of their policies, endorsements, and forms with the WCIRB prior
to issuing the policies; after performing an initial review, the
WCIRB sends the policies to the Department for the Commissioner's
review (see Cal Ins Code § 11750.3 [e]; Cal Code Regs, tit 10 §§
2218, 2509.30; see also Cal Ins Code § 11735).     If, within 30

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                               - 6 -                           No. 8

days, the Commissioner rejects a policy, form, or endorsement as
failing to comply with the requirements of the Insurance Law, "it
is unlawful for the insurer to issue any policy or endorsement in
that form" (Cal Ins Code § 11658 [b]).   California regulations
also provide that "[n]o collateral agreements modifying the
obligation of either the insured or the insurer shall be made
unless attached to and made a part of the policy" (Cal Code Regs,
tit 10 § 2268).
          Sometime before 2011, the Department became aware that
workers' compensation insurers were entering into agreements with
their insureds after the initial policy agreements, and that
these subsequent agreements were not being filed with the WCIRB
or the Department.   As reflected in a February 2011 letter
written by a Department staff attorney to the president of the
WCIRB, the Department took the position that these agreements
were required by law to be filed with the State.   The Department
also expressed its view that arbitration provisions contained in
unfiled agreements may be considered unenforceable absent proof
that the insured expressly agreed to arbitration when it
initially entered into the policy agreement.
          In apparent accordance with that view, in 2011, the
California Legislature enacted California Insurance Code §
11658.5 (see Stats 2011, ch 566 [S.B.684], § 2).   That statute
provides that arbitration provisions in workers' compensation
policies or endorsements must be disclosed to each potential


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                                 - 7 -                         No. 8

insured contemporaneously with any quote for insurance coverage,
together with a notice that choice of law or venue and forum-
selection clauses in the policies may dictate a jurisdiction
other than California, and that such terms are negotiable (see
Cal Ins Code § 11658.5 [a] [1]).    If the insurer fails to comply
with the disclosure requirements, the remedy is "a default to
California as the choice of law and forum for resolution of
disputes arising in California" (Cal Ins Code § 11658.5 [c]).
Critically, however, this section applies only to insurance
policies "issued or renewed on or after July 1, 2012" (Cal Ins
Code § 11658.5 [e]).   Prior to the enactment of section 11658.5,
and during all times relevant to this appeal, the California
Insurance Code and regulations were silent with respect to
arbitration provisions in workers' compensation insurance
policies and endorsements.
                                  II.
          Turning to the facts of the appeal before us, National
Union Fire Insurance Company of Pittsburgh, Pennsylvania, is an
insurance company licensed in Pennsylvania, with its principal
place of business in New York.    At various times between 2003 and
2010, National Union issued workers' compensation policies to
three different California-based employers -- Monarch Consulting,
Inc.,1 Priority Business Services, Inc., and Source One Staffing,


     1
        Monarch Consulting Inc., as referenced herein, includes
Elite Management, Inc., Brentwood Television Funnies, Inc.,

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                               - 8 -                           No. 8

LLC.   After the execution of the policies -- which were filed
with the WCIRB and the Commissioner of Insurance without
objection -- National Union and the insureds, respectively,
entered into various "Payment Agreements."   In accordance with
the Agreements, National Union would extend credit to the
insureds by deferring payments due under the policies in return
for the provision of collateral on behalf of the insureds.    The
Payment Agreements set forth the particulars of that arrangement
and what would occur in the event of a default.    National Union
concedes that these Payment Agreements were never filed with the
State of California.   Nevertheless, the parties operated under
the Agreements for several years.
           Central to this dispute, the Payment Agreements
contained arbitration clauses requiring that disputes arising out
of the Agreements, if not resolved internally, be submitted to
arbitration before a panel of three arbitrators with certain
qualifications and experience in the insurance industry.
Significantly, the parties agreed that the arbitrators would
"have exclusive jurisdiction over the entire matter in dispute,
including any question as to its arbitrability."    The Payment
Agreements and Addenda required that court proceedings concerning




Professional Employer Options, Inc., Recurrent Software
Solutions, Ahill, Inc., The Accounting Group, LLC, and PES
Payroll, IA Inc.

                               - 8 -
                               - 9 -                          No. 8

arbitration be commenced in New York.2
           By early 2011, disputes arose between National Union
and each of the insureds under the Payment Agreements.
Ultimately, three separate proceedings were initiated in Supreme
Court, involving a petition or cross petition by National Union
to compel arbitration in each case, and a petition by Monarch
Consulting to stay arbitration.   In the Monarch Consulting and
Priority Business proceedings, Supreme Court granted National
Union's petitions to compel arbitration and denied Monarch
Consulting's petition to stay arbitration.   In the Source One
matter, Supreme Court denied National Union's petition to compel
arbitration, and held that the Payment Agreements were
unenforceable.
           National Union, Monarch Consulting, and Priority
Business appealed their respective adverse orders.   Consolidating
the appeals, the Appellate Division, with two Justices
dissenting, reversed the orders compelling Monarch Consulting and
Priority Business to arbitrate, and affirmed the order denying
arbitration in the Source One matter (123 AD3d 51, 54 [1st Dept
2014]).   The Appellate Division majority determined that, under
California law, National Union was required to file the Payment
Agreements with the State and that the appropriate penalty for
its failure to do so was to decline to enforce the arbitration


     2
        No party to this appeal raises any challenge to the
jurisdiction of New York courts.

                               - 9 -
                              - 10 -                          No. 8

provisions.   In the majority's view, this result did not
contravene the FAA because the McCarran-Ferguson Act precluded
its application inasmuch as requiring arbitration would impair
and undermine the goals of California Insurance Code § 11658.
          The dissenting Justices would have compelled
arbitration in each case.   The dissent posited that the
McCarran-Ferguson Act did not reverse preempt the FAA because the
California Insurance Code did not regulate the use of arbitration
clauses in workers' compensation insurance policies and
endorsements and, consequently, application of the FAA would not
"impair" California law (id. at 79 [Gische, J. dissenting].      In
addition, the dissent would have held that, under the FAA, the
arbitrators, not the court, should determine whether the Payment
Agreements were required to be filed -- and any consequences for
National Union's failure to do so -- because the insureds
challenged the arbitration clauses on a ground that would
invalidate the Payment Agreements in their entirety.
          National Union now appeals to this Court as of right
(see CPLR 5601 [a]).   Echoing the views of the dissent below,
National Union argues that the McCarran-Ferguson Act does not
reverse preempt the FAA -- which National Union contends would
mandate arbitration -- because application of the FAA does not
interfere with, or undermine, California Insurance Code § 11658.
Assuming we agree, National Union further asserts that the
insureds' challenge to the enforceability of the Payment


                              - 10 -
                              - 11 -                            No. 8

Agreements is premised upon the validity of those Agreements as a
whole and, therefore, must be determined by arbitration.
           In response, the insureds -- joined by the California
Commissioner of Insurance as amicus curiae -- argue that the
Payment Agreements and the arbitration clauses are illegal and
unenforceable because National Union failed to file them in
accordance with California Insurance Code § 11658.   The insureds
contend that compelling arbitration pursuant to an arbitration
clause in an unfiled insurance agreement would undermine the
California filing statute and, consequently, the McCarran-
Ferguson Act reverse preempts the FAA.   Thus, the insureds argue,
the courts may decline to enforce the arbitration provisions in
the Payment Agreements.   The insureds also claim that, even if
the FAA applies, the question of whether the arbitration
provisions are enforceable is one for the courts, not
arbitrators, to decide.
                              III.
           To resolve the parties' contentions, we must first
determine whether the McCarran-Ferguson Act reverse preempts the
FAA.   The relevant analysis is a three-part test, pursuant to
which the McCarran-Ferguson Act applies if: (1) the federal
statute in question does not specifically relate to insurance;
(2) the state law at issue was enacted to regulate the business
of insurance; and (3) the federal statute at issue would
invalidate, impair, or supersede the state law (see 15 USC § 1012


                              - 11 -
                              - 12 -                           No. 8

[b]; Humana Inc., 525 US at 307).     Here, the first two prongs of
this test are satisfied -- namely, the FAA does not specifically
relate to insurance (see Kong v Allied Professional Ins. Co., 750
F3d 1295, 1303 [11th Cir 2014]; Munich American Reins. Co. v
Crawford, 141 F3d 585, 590 [5th Cir 1998]; Stephens v American
Intl. Ins. Co., 66 F3d 41, 44 [2d Cir 1995]) and California
Insurance Code § 11658 was enacted to regulate the business of
insurance (see generally Rush Prudential HMO, Inc. v Moran, 536
US 355, 373 [2002]; Union Labor Life Ins. Co. v Pireno, 458 US
119, 129 [1982]).   Thus, whether the McCarran-Ferguson Act
applies turns on whether application of the FAA -- assuming that
it would mandate arbitration here -- would "invalidate, impair,
or supersede" California Insurance Code § 11658 (15 USC § 1012
[b]).
          As the Supreme Court explained in Humana Inc., "[t]he
term 'invalidate' ordinarily means 'to render ineffective,
generally without providing a replacement rule or law'" and "the
term 'supersede' ordinarily means 'to displace (and thus render
ineffective) while providing a substitute rule'" (525 US at 307
[internal citations omitted]).   The Supreme Court has interpreted
the term "impair" more broadly to mean "'[t]o weaken, to make
worse, to lessen in power, diminish, or relax, or otherwise
affect in an injurious manner'" (id. at 309-310, quoting Black's
Law Dictionary 752 [6th ed. 1990]).    Although the term "impair"
broadens the reach of the McCarran-Ferguson Act beyond federal


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                              - 13 -                            No. 8

statutes that directly conflict with a state law regulating
insurance, "when application of the federal law would not
frustrate any declared state policy or interfere with a State's
administrative regime, the McCarran-Ferguson Act does not
preclude its application" (id. at 310).
          Applying the above definitions here, the McCarran-
Ferguson Act does not reverse preempt the FAA with respect to
California Insurance Code § 11658.     This is so because neither
section 11658 -- nor any other California law which has been
brought to our attention -- would be invalidated, superceded or
impaired by application of the FAA inasmuch as California law did
not, at the relevant times, prohibit, limit, or regulate the use
or form of arbitration clauses in insurance contracts.    The
clearest example of a scenario in which reverse preemption occurs
is where state law expressly prohibits arbitration of insurance
related disputes (see e.g. McKnight v Chicago Title Ins. Co.,
Inc., 358 F3d 854, 857-589 [11th Cir 2004]; Standard Sec. Life
Ins. Co. of New York v West, 267 F3d 821, 823 [8th Cir 2001];
Mutual Reins. Bureau v Great Plains Mut. Ins. Co., Inc., 969 F2d
931, 935 [10th Cir 1992]; see also Stephens, 66 F3d at 42).     As
noted previously, at the times in question here, California law
did not -- and still does not -- prohibit arbitration in the
insurance context.   Nor have the parties alerted us to any
California statutes or regulations granting that state's courts
or administrative agencies exclusive jurisdiction over insurance


                              - 13 -
                               - 14 -                          No. 8

disputes (compare State Dept. of Transp. v James River Ins. Co.,
176 Wash 2d 390, 400, 292 P3d 118, 123 [2013]; Washburn v
Corcoran, 643 F Supp 554, 556 [SD NY 1986]).
          As the insureds point out, California courts have
consistently found the FAA to be reverse preempted by the
McCarran-Ferguson Act with respect to arbitration agreements in
health care service plans (see Zolezzi v PacifiCare of
California, 105 Cal App 4th 573, 588 n 11 [Cal Ct App 2003];
Imbler v PacifiCare of California, Inc., 103 Cal App 4th 567, 573
[Cal Ct App 2002]; Smith v PacifiCare Behavioral Health of
California, Inc., 93 Cal App 4th 139, 143 [Cal Ct App 2001]).
However, the result in those cases was compelled by the existence
of a California statute mandating that certain disclosures be
contained in arbitration provisions in health care plans (see Cal
Health & Saf Code § 1363.1).   Thus, in those cases, application
of the FAA would have "absolutely preclude[d]" enforcement of the
statute "to regulate the wording and organization of . . .
arbitration clauses" (Imbler, 103 Cal App 4th at 573; see Cal
Health & Saf. Code § 1363.1; Smith, 93 Cal App 4th at 143).     By
contrast, in the workers' compensation insurance context,
California insurance law did not mandate a specific form or
content of arbitration clauses, or otherwise restrict their use.3
          Moreover, although California Insurance Code § 11658

     3
        We express no opinion as to whether a different result
would be compelled in a case implicating the later-enacted
California Insurance Code § 11658.5.

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                              - 15 -                           No. 8

may have required the filing of the Payment Agreements, the
purpose of the filing rule is to ensure that the insurance
documents comply with the Insurance Code and accompanying
regulations -- none of which pertained to the use or form of
arbitration provisions.   Neither the goal of the statute nor its
administrative scheme is undermined by applying the FAA.    Should
the FAA mandate arbitration, the arbitrators can competently
determine the question of whether the Payment Agreements,
generally, and the arbitration provisions, specifically, are
enforceable under California law despite the fact that they were
not filed with the state.
          We disagree with the insureds' assertion that
application of the FAA would undercut the Department's authority
to review insurance agreements and incentivize violations of the
filing requirement.   Significantly, the determination of whether
California Insurance Code § 11658 applies to the Payment
Agreements -- and, if so, the consequences of the failure to file
them -- will be made pursuant to California law regardless of
whether arbitration is compelled.   Further, whether this issue is
resolved by a court or by arbitrators, the question of whether
the failure to file invalidates the Payment Agreements will not
be determined by the Department, itself.   However, should it be
so inclined, the Department may pursue an enforcement action
against National Union.   Thus, permitting arbitration will not
undermine the authority of the WCIRB or the Commissioner (cf.


                              - 15 -
                              - 16 -                           No. 8
Preston, 552 US at 358 [rejecting argument that arbitration of
private dispute would undermine role of agency in enforcing
statute]).4   Rather, the insureds' contention that permitting
arbitration would somehow frustrate the filing requirement or
allow National Union to escape the consequences of its failure to
comply with section 11658 is based on nothing more than their
apparent hostility to arbitration.
          Our conclusion that the McCarran-Ferguson Act does not
reverse preempt the FAA is supported by the weight of the
relevant precedent.   At least two courts in California have held
that the McCarran-Ferguson Act is not triggered by the
interaction between the FAA and California Insurance Code § 11658
with respect to arbitration agreements in unfiled insurance
documents because the California Insurance Code "does not address
the topic of arbitration or provide a procedural framework for
resolution of disputes" (Grove Lumber & Bldg. Supply, Inc. v
Argonaut Ins. Co., 2008 WL 2705169, *7 [CD Cal July 7, 2008]; see
Adir Intl. LLC v Travelers Indemnity Co. of Connecticut, No.


     4
        Indeed, the California Department of Insurance instituted
an enforcement action against Zurich American Insurance Company
and Zurich American Insurance Company of Illinois alleging
similar violations of California Insurance Code § 11658 by
Zurich's failure to file certain "Deductible Agreements." That
action was settled in 2013 with no penalties or admissions of
wrongdoing. Zurich agreed to submit future Deductible Agreements
to the Department of Insurance and allow insureds a one-time opt
out of the arbitration provisions in the Agreements for certain
disputes. The Settlement Agreement did not, however, prohibit
the use of arbitration clauses in filed agreements in the future.


                              - 16 -
                             - 17 -                            No. 8
BC575513 [Cal Super. Ct, August, 21, 2015]).   Likewise, the
District Court of the Southern District of New York has held that
the McCarran-Ferguson Act does not reverse preempt the FAA in
relation to California Insurance Code § 11658 because the state
law and the FAA "address completely different matters" (Matter of
Arbitration Between Nat. Union Fire Ins. Co. of Pittsburgh, P.A.
v Personnel Plus, Inc., 954 F Supp 2d 239, 248 [SD NY 2013]).
The Eighth Circuit reached a similar conclusion in a dispute
involving a filing requirement contained in Texas insurance laws,
holding that the enforceability of the unfiled agreement was a
question of the underlying merits and the Texas insurance laws
were not impaired by enforcement of the agreement to arbitrate
(see St. Paul Fire and Marine Ins. Co. v Courtney Enterprises,
Inc., 270 F3d 621, 625 [8th Cir 2001]; see also American Heritage
Life Ins. Co. v Orr, 294 F3d 702, 709 [5th Cir 2002]).   We find
these cases to be persuasive, and the insureds' reliance to the
contrary on the unpublished decision in Ceradyne, Inc. v Argonaut
Ins. Co. to be unavailing in light of that court's focus on the
merits of the parties' substantive arguments and its failure to
address the applicability of the McCarran-Ferguson Act (2009 WL
1526071, *11 [Cal Ct App June 2, 2009]; see also American Zurich
Ins. Co. v Country Villa Serv. Corp., 2015 WL 4163008, *16 [CD
Cal July 9, 2015]).
          Accordingly, we hold that the McCarran-Ferguson Act
does not prevent application of the FAA to the Payment Agreements


                             - 17 -
                              - 18 -                           No. 8
at issue in this case.
                                IV.
           We must next address whether, under the FAA, the
enforceability of the Payment Agreements and their arbitration
clauses is a question that should be resolved by arbitrators, or
by the court.
           "'[A]rbitration is a matter of contract and a party
cannot be required to submit to arbitration any dispute which he
[or she] has not agreed so to submit'" (AT&T Technologies, Inc. v
Communications Workers, 475 US 643, 648 [1986], quoting United
Steelworkers v Warrior & Gulf Nav. Co., 363 US 574, 582 [1960];
see First Options of Chicago, Inc. v Kaplan, 514 US 938, 943
[1995]).   As the United States Supreme Court has stated,
"[c]hallenges to the validity of arbitration agreements . . . can
be divided into two types," namely, "challenges specifically [to]
the validity of the agreement to arbitrate" and "challenges [to]
the contract as a whole, either on a ground that directly affects
the entire agreement (e.g., the agreement was fraudulently
induced), or on the ground that the illegality of one of the
contract's provisions renders the whole contract invalid"
(Buckeye Check Cashing, Inc. v Cardegna, 546 US 440, 444 [2006]).
"[A]ttacks on the validity of the contract, as distinct from
attacks on the validity of the arbitration clause[,] itself, are
to be resolved 'by the arbitrator in the first instance, not by a
federal or state court'" (Nitro-Lift Technologies, L.L.C. v.


                              - 18 -
                             - 19 -                                No. 8
Howard, 568 US ___, ___, 133 S Ct 500, 503 [2012], quoting
Preston, 552 US at 349; see Buckeye Check Cashing, Inc., 546 US
at 444; Prima Paint Corp. v Flood & Conklin Mfg. Co., 388 US 395,
403-404 [1967]).
          The Supreme Court has also held that arbitration
agreements must be enforced according to their terms, and that
"parties can agree to arbitrate 'gateway' questions of
'arbitrability'" (Rent-A-Center, West, Inc. , 561 US at 68-69;
see Nitro-Lift Technologies, L.L.C., 568 US at ___, 133 S Ct at
503; Buckeye Check Cashing, Inc., 546 US at 445).   Such
"delegation clauses" are enforceable where "there is 'clea[r] and
unmistakabl[e]' evidence" that the parties intended to arbitrate
arbitrability issues (First Options of Chicago, Inc., 514 US at
944, quoting AT&T Technologies, Inc., 475 US at 649).      "When
deciding whether the parties agreed to arbitrate a certain matter
(including arbitrability), courts generally . . . should apply
ordinary state-law principles that govern the formation of
contracts" (First Options of Chicago, Inc., 514 US at 944).
          Further, "courts treat an arbitration clause as
severable from the contract in which it appears and enforce it
according to its terms unless the party resisting arbitration
specifically challenges the enforceability of the arbitration
clause itself" (Granite Rock Co. v Teamsters, 561 US 287, 301
[2010]; see Nitro-Lift Technologies, L.L.C., 568 US at ___, 133 S
Ct at 503; Rent-A-Center, West, Inc., 561 US at 71; Buckeye Check


                             - 19 -
                                - 20 -                         No. 8
Cashing, Inc., 546 US at 445).    This rule of severability extends
to delegation clauses, which are severable from larger
arbitration provisions (see Rent-A-Center, West, Inc., 561 US at
71-72; Parnell v CashCall, Inc., 804 F3d 1142, 1146 [11th Cir
2015]; Brennan v Opus Bank, 796 F3d 1125, 1133 [9th Cir 2015]).
Thus, where a contract contains a valid delegation to the
arbitrator of the power to determine arbitrability, such a clause
will be enforced absent a specific challenge to the delegation
clause by the party resisting arbitration (see Rent-A-Center,
West, Inc., 561 US at 71-72).
          Here, the crux of the insureds' challenge to the
arbitration provisions is that National Union's failure to file
the Payment Agreements in accordance with California Insurance
Code § 11658 renders unenforceable the Payment Agreements and,
only by extension, the arbitration provisions.   National Union
argues that this is, at its core, a challenge to the Payment
Agreements, not to the arbitration provisions, and, therefore, is
a matter for the arbitrator to decide.   Regardless of whether the
insureds sufficiently directed their attack to the arbitration
provisions, a review of the record reveals that they did not
specifically direct any challenge to the delegation clauses
empowering the arbitrators to determine gateway questions of
arbitrability (see Rent-A-Center, West, Inc., 561 US at 71-72).
Those delegation provisions, which state that the arbitrators
"have exclusive jurisdiction over the entire matter in dispute,


                                - 20 -
                              - 21 -                           No. 8
including any question as to its arbitrability," are valid
because the parties "clearly and unmistakably" agreed to
arbitrate arbitrability (AT&T Technologies, Inc., 475 US at 649;
see First Options of Chicago, Inc., 514 US at 944; Malone v
Superior Ct., 226 Cal App 4th 1551, 1560 [Cal Ct App 2014];
Gilbert St. Developers, LLC v La Quinta Homes, LLC, 174 Cal App
4th 1185, 1192 [Cal Ct App 2009]).     As the delegation clauses are
severable from the remainder of the agreements to arbitrate, we
must enforce them according to their terms and, under these
circumstances, the question of arbitrability is one for the
arbitrators (see Rent-A-Center, West, Inc., 561 US at 71-72).
                                IV.
          In sum, we hold that the FAA applies to the Payment
Agreements because it does not "invalidate, impair, or supersede"
the California Insurance Code or any insurance regulations and,
consequently, the McCarran-Ferguson Act is not triggered (15 USC
§ 1012 [b]).   Further, because the parties clearly and
unmistakably delegated the question of arbitrability and
enforceability of the arbitration clauses to the arbitrators --
in provisions that were not specifically challenged by the
insureds -- the FAA mandates that the arbitration provisions be
enforced as written.   We, therefore, express no view on whether
National Union's failure to file the Payment Agreements rendered
the arbitration clauses unenforceable, because that question
should be determined by the arbitrators pursuant to the FAA and


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the parties' agreements to arbitrate arbitrability (see AT&T
Technologies, Inc., 475 US at 649).
            The insureds' remaining arguments are unpersuasive.
Accordingly, the order of the Appellate Division should be
reversed, with costs.    In the first captioned proceeding, Monarch
Consulting's petition to stay arbitration should be denied and
National Union's cross petition to compel arbitration should be
granted.    In the second and third captioned proceedings, National
Union's petitions to compel arbitration should be granted.
*   *   *    *   *   *   *   *     *      *   *   *   *   *   *   *   *
Order reversed, with costs, and (1) in Matter of Monarch
Consulting, Inc. v National Union Fire Insurance Company of
Pittsburgh, PA, petition to stay arbitration denied and cross
petition to compel arbitration granted; (2) in Matter of National
Union Fire Insurance Company of Pittsburgh, PA v Priority
Business Services, Inc., petition to compel arbitration granted;
and (3) in Matter of National Union Fire Insurance Company of
Pittsburgh, PA v Source One Staffing, LLC, petition to compel
arbitration granted. Opinion by Judge Stein. Judges Pigott,
Rivera, Abdus-Salaam and Fahey concur. Chief Judge DiFiore and
Judge Garcia took no part.

Decided February 18, 2016




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