Court Opinion

ID: 9670752
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:25:05.19049+00
Date Added: 2024-06-11T18:16:06.290192
License: Public Domain

ANDERSON, J.
¶ 47. (dissenting). Because I disagree with the majority, majority op., ¶ 27, and the circuit court that "[i]f this court were to hold the procedural process in this case unconscionable, almost *253all insurance contracts would be procedurally unconscionable," I respectfully dissent.
¶ 48. As the majority notes, there are two components to unconscionability: substantive and procedural. Majority op., ¶ 26. "Substantive unconscionability addresses the fairness and reasonableness of the contract provision subject to challenge. Wisconsin courts determine whether a contract provision is substantively unconscionable on a case-by-case basis." Wisconsin Auto Title Loans, Inc. v. Jones, 2006 WI 53, ¶ 35, 290 Wis. 2d 514, 714 N.W.2d 155. I agree with the conclusion of the circuit court that the insurance contract was substantively unconscionable because the rider did not seem medically justified. Majority op., ¶ 27.
¶ 49. Procedural unconscionability addresses whether there has been a meeting of the minds and a formation of a contract. Wisconsin Auto Title Loans, Inc., 290 Wis. 2d 514, ¶ 34. In assessing procedural unconscionability, a court must consider a number of factors, including:
age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms would have been permitted by the drafting party, and whether there were alternative providers of the subject matter of the contract.

Id.

¶ 50. Unconscionability is determined on a case-by-case basis. Coady v. Cross Country Bank Inc., 2007 WI App 26, ¶ 26, 299 Wis. 2d 420, 729 N.W.2d 732. Unconscionability requires a mixture of substantive unconscionability and procedural unconscionability; the mixture is different for each case. Id.
*254The more substantive unconscionability present, the less procedural unconscionability is required, and vice versa. A court will weigh all the elements of unconscio-nability and may conclude unconscionability exists because of the combined quantum of procedural and substantive unconscionability. "To tip the scales in favor of unconscionability requires a certain quantum of procedural plus a certain quantum of substantive unconscionability."
Wisconsin Auto Title Loans, Inc., 290 Wis. 2d 514, ¶ 33 (footnotes omitted).
¶ 51. Having agreed with the circuit court that the contract is substantively unconscionable, I will examine the factors considered in determining procedural unconscionability. All but one of the factors are a "wash"; and, if they were the only factors, I would be tempted to agree with the circuit court that to find procedural unconscionability would require the courts to dabble in public policy already set by the legislature. However, I focus on the final factor, "whether there were alternative providers of the subject matter of the contract." This factor does not focus on the heavily regulated relationship between the insureds and the insurer; rather, it focuses on the insureds' relationship with the universe of potential health insurance companies.
¶ 52. On appeal, the Auls assert:
Golden Rule .. . restricted the Auls' choice in finding alternate health insurance by... issuing its Rider after the effective date of the Contract, and notifying the Auls of the Rider only after the Contract was issued. In addition, by placing the Rider, Golden Rule effectively created a "black mark" on the Auls' insurability with other potential insurers.
*255¶ 53. The Auls1 existing health insurance was set to expire on August 1, 2000. They submitted an application to Golden Rule on June 28, 2000, and a Rider-Amendment to the application on July 27,2000. Golden Rule issued a policy with an effective date of August 1, 2000, on August 7, 2000, the same day the Auls learned that the policy included a exclusionary rider for disease or disorder of Patricia's breasts. This timing of events ruled out one alternate source of health insurance, renewal of the Blue Cross/Blue Shield policy through the State Bar of Wisconsin, a policy that had not excluded disease or disorder of Patricia's breasts. That policy expired on August 1, 2000.
¶ 54. The timing of events made obtaining coverage from other sources of health insurance problematic. Included on the Golden Rule application was a question that asked, "12c. Has any applicant ever had an application or policy voided, declined, postponed, rated or charged an extra premium, or had coverage modified (including medical exclusion riders) by any health or life insurer? (If yes, list name and give details.)" This question is standard practice in the health insurance industry. 6A Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 89.1 (1996). The purpose of the question is to permit the insurer to rate the risk. Id. The answer is material to the risk the insurer is willing to assume. Id. at § 89.9. A truthful answer to a similar question on any other health insurer's application would highlight to that insurer that another insurance company was so concerned about Patricia's health that it excluded, for an indefinite period, any disease or disorder of her breasts; it is highly doubtful that any health insurer would provide insurance coverage for disease or disorder of Patricia's breasts. This is the "black mark" on the Auls' insurability.
*256¶ 55. The significance of the lack of meaningful and reasonable alternative sources of health insurance was explained in Discount Fabric House of Racine, Inc. v. Wisconsin Telephone Co., 117 Wis. 2d 587, 345 N.W.2d 417 (1984):
Implicit in the principle of freedom of contract is the concept that at the time of contracting each party has a realistic alternative to acceptance of the terms offered. Where goods and services can only be obtained from one source (or several sources on non-competitive terms) the choices of one who desires to purchase are limited to acceptance of the terms offered or doing without. Depending on the nature of the goods or services and the purchaser's needs, doing without may or may not be a realistic alternative. Where it is not, one who successfully exacts agreement to an unreasonable term cannot insist on the courts enforcing it on the ground that it was "freely" entered into, when it was not. He cannot in the name of freedom of contract be heard to insist on enforcement of an unreasonable contract term against one who on any fair appraisal was not free to accept or reject that term.
Id. at 601 (quoting Allen v. Michigan Bell Telephone Co., 171 N.W.2d 689, 692-94 (Mich. App. 1969)).
¶ 56. "Parties asserting unconscionability are not necessarily required to demonstrate to a factual certainty that they could not have obtained the desired product or service elsewhere under more favorable terms." Coady, 729 N.W.2d 732, ¶ 39. However, from the facts of record and the reasonable inferences, I conclude that the Auls' have demonstrated that they lacked a meaningful, alternative means to obtain health insurance of a more favorable basis. See id., ¶ 38.
¶ 57. I am not micromanaging the contract between the Auls and Golden Rule. Nor am I ignoring public policy or invading the heavily regulated health *257insurance industry.1 My conclusion that the Auls lacked an alternative source of health insurance considers the universe of health insurers and how they would react to notice that the Golden Rule policy was modified by a medical exclusion rider.
¶ 58. The Auls had nowhere to turn after August 7, 2000; they had no alternate source of meaningful and affordable health insurance. I conclude that the lack of a meaningful, alternate source of health insurance combined with the substantive unconscionability of the terms of the medical exclusion rider makes the Golden Rule health insurance policy unconscionable; therefore, I respectfully dissent.

 I note that in Wisconsin Auto Title Loans, Inc. v. Jones, 2006 WI 53, 290 Wis. 2d 514, 714 N.W.2d 155, and Coady v. Cross Country Bank, Inc., 2007 WI App 26, 299 Wis. 2d 420, 729 N.W.2d 732, neither the supreme court nor this court had any qualms about looking closely at the procedural process in the heavily regulated area of consumer credit.