Court Opinion

ID: 9783647
Source: CourtListenerOpinion
Date Created: 2023-08-30 19:54:28.44984+00
Date Added: 2024-06-11T07:35:28.588493
License: Public Domain

ALOKAHUJA, Judge.
As both the majority and Judge Welsh’s concurring opinion recognize, § 9.6.3 of the agreements between Blue Cross and Dr. Manfredi is plausibly construed to remove disputes like the present one from the scope of the arbitration clause. As Judge Welsh explains, without an agreement to arbitrate such disputes, the trial court had *138no power to compel arbitration, and its refusal to do so must be affirmed.
Given its wording, § 9.6.3 can also be read as a limitation on the arbitrator’s remedial authority, rather than as a limit on the range of disputes subject to arbitration. Affirmance would still be required.
Even if a matter is “committed to [Blue Cross’] discretion or medical judgment” by the parties’ agreements, Blue Cross nevertheless has an obligation to exercise its discretion in good faith. See, e.g., City of St. Jos. v. Lake Contrary Sewer Dist., 251 S.W.3d 362, 369-70 (Mo.App. W.D.2008); Mo. Consol. Health Care Plan v. Cmty. Health Plan, 81 S.W.3d 34, 46-47 (Mo.App. W.D.2002). To the extent § 9.6.3 wholly eliminates the arbitrators’ power to resolve disputes over discretionary determinations — while simultaneously denying Dr. Manfredi any other forum to address such claims — it would effectively immunize Blue Cross from liability for its bad-faith exercise of discretion or medical judgment. In the circumstances of this case, such a result would be substantively unconscionable, and therefore unenforceable.1 Numerous Missouri decisions hold that an arbitration clause which has the effect of rendering a contracting party wholly immune from liability for material breaches of its contractual obligations is substantively unconscionable.2 As the majority notes, disputes over discretionary determinations undoubtedly represent a significant share of the disagreements which could arise under the agreements at issue here, and such matters thus “go[] to the very heart” of those agreements. Given the centrality of discretionary determinations to the parties’ business relationship, *139an arbitration provision which has the effect of denying a party any remedy for the other party’s abuse of its contractual authority is oppressive, inconsistent with Dr. Manfredi’s reasonable expectations, and accordingly unenforceable.3
It is noteworthy that, in May 2006 (seven months after Dr. Manfredi filed this action), Blue Cross sought to amend § 9.6.3 to provide that the arbitrators “shall not disturb” discretionary determinations only if those decisions were “made in the good faith exercise of such discretion.” Blue Cross has not argued that this amendment is applicable here. Although inapplicable, the 2006 amendment underscores that the earlier version of § 9.6.3 immunized Blue Cross from arbitral review of its discretionary determinations, even against a claim that it had exercised its discretion in bad faith.
Blue Cross also argues that any unconscionable provisions of the arbitration clause should be severed, and the remainder enforced. Section 9.6.3, however, has the effect of excluding from arbitration a large percentage of the disputes which could arise under the agreements. Enforcing arbitration without this exclusion would fundamentally alter the nature of the parties’ agreement to arbitrate. This provision is not severable from the remainder of the arbitration clause.
Whether § 9.6.3 takes Dr. Manfredi’s claims outside the scope of the arbitration clause, or denies Dr. Manfredi any remedy for such claims, the result is the same: the circuit court properly refused to compel arbitration. I accordingly concur in the result.

. Contrary to Blue Cross' argument, this Court has the authority to interpret and apply § 9.6.3, even if it is read as a limitation on the arbitrators' remedial authority, to the extent necessary to determine the arbitration provision’s validity. See, e.g., Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir.2010) (en banc); Woods v. QC Fin. Servs., Inc., 280 S.W.3d 90, 96 (Mo.App. E.D.2008). Indeed, Brewer, Ruhl and the other cases cited in note 2 base their findings of substantive uncon-scionability on remedial limitations in the arbitration clauses at issue there: prohibitions of class arbitration of claims, or limitations on recoverable damages.

. See, e.g., Brewer v. Missouri Title Loans, Inc., 323 S.W.3d 18, 24 (Mo. banc 2010) (class-action waiver in arbitration clause substantively unconscionable where "the net result of the waiver is that the lender effectively is immunized from liability”); Ruhl v. Lee's Summit Honda, 322 S.W.3d 136, 140 (Mo. banc 2010) (finding class-action waiver in arbitration clause substantively unconscionable where enforcement of provision "would immunize Honda from individual consumer claims, ... and allow it to continue in its alleged deceptive practices ...”); Shaffer v. Royal Gate Dodge, Inc., 300 S.W.3d 556, 559-60 (Mo.App. E.D.2009) (finding class-action waiver substantively unconscionable; "Royal Gate’s arbitration agreement effectively immunizes it from liability for its allegedly improper practice of charging customers a processing fee for document preparation because the expense of pursuing a claim in individual arbitration far exceeds ... the potential damages available....”); Woods v. QC Fin. Servs., Inc., 280 S.W.3d 90, 98 (Mo.App. E.D.2008) (finding class-action waiver provision substantively unconscionable where ”[i]ndividu-alizing each claim absolutely and completely insulates and immunizes Appellant from scrutiny and accountability”); Whitney v. Alltel Communics., Inc., 173 S.W.3d 300, 314 (Mo.App. W.D.2005) (class-action waiver and limitations on punitive and consequential damages substantively unconscionable, because those provisions "would effectively strip consumers of the protections afforded to them under the Merchandising Practices Act and unfairly allow companies like Alltel to insult themselves from the consumer protection laws of this State”).
The Supreme Court’s recent decisions make clear that it is not always necessary to find aspects of both substantive and procedural unconscionability before invalidating an arbitration provision. Brewer, 323 S.W.3d at 22; Ruhl, 322 S.W.3d at 139 n. 2.

. Blue Cross does not argue that § 9.6.3 should be read as an exculpatory clause, and upheld on that basis. See Brewer, 323 S.W.3d at 24.