Manfredi v. Blue Cross & Blue Shield of Kansas City
2011 Mo. App. LEXIS 186
| Mo. Ct. App. | 2011Background
- Manfredi is a licensed chiropractor who signed an Allied Provider Network Agreement with BCBS in 2002, which included a mandatory arbitration clause drafted by BCBS.
- BCBS notified providers in 2004 that it would stop covering electrical stimulation modalities (ESM) by reclassifying them as investigational.
- Manfredi filed a Petition for Declaratory Judgment and Injunctive Relief in 2005 seeking to restore ESM as a covered service and to declare the arbitration clause unconscionable.
- The circuit court denied BCBS’s motion to compel arbitration, finding the arbitration clause unconscionable and that BCBS had waived arbitration by not pursuing it within the time limit.
- The court treated interstate commerce as triggering FAA preemption of MUAA, and ultimately held the arbitration clause generally unconscionable and not severable, affirming denial of arbitration.
- Separate concurring opinions discuss § 9.6.3’s effect on scope and remedy, and the possibility that discretionary determinations may be immune from arbitral review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the dispute falls within the arbitration clause’s scope | Manfredi argues scope includes his claims; arbitration should proceed | BCBS contends scope is broad and covers the issues | Dispute falls outside scope due to discretionary-determination exclusion (9.6.3) and cannot be compelled to arbitrate |
| Whether the arbitration clause is procedurally unconscionable | The form contract was adhesive with high bargaining power disparity | Procedural unconscionability not proven by alone; not enough to void clause | Procedural unconscionability established given adhesion and lack of negotiation |
| Whether the arbitration clause is substantively unconscionable | Provisions unreasonably limit arbitration, immunize BCBS from enforcement | Arbitration clause is standard and enforceable | Clause substantively unconscionable due to unilateral amendment power and remedies limitations |
| Whether the unconscionable provisions can be severed and remaining arbitration enforced | Unconscionable parts severable to preserve arbitration | 9.6.3 exclusions are not severable from the remainder | Not severable; entire arbitration clause unenforceable |
| Whether BCBS waived arbitration by failing to initiate within one year | Waiver not relevant since clause is unconscionable | Time-bar issue remains, but clause already invalidated | Need not resolve waiver due to overall unconscionability; denial of arbitration affirmed |
Key Cases Cited
- Woods v. QC Fin. Servs., Inc., 280 S.W.3d 90 (Mo.App. E.D.2008) (review of arbitration issues; unconscionability considerations)
- Ruhl v. Lee's Summit Honda, 322 S.W.3d 136 (Mo. banc 2010) (scope and enforceability of arbitration clauses; remedial limitations)
- Brewer v. Missouri Title Loans, Inc., 323 S.W.3d 18 (Mo. banc 2010) (substantive unconscionability; class-action and damages limitations explored)
- Kansas City Urology, P.A. v. United Healthcare Servs., 261 S.W.3d 7 (Mo.App. W.D.2008) (arbitration scope and enforceability in MUAA/FAA context)
- Whitney v. Alltel Commc'ns., Inc., 173 S.W.3d 300 (Mo.App. W.D.2005) (preemption and enforceability of arbitration provisions in telecom context)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., — (—) ((cited for consent and fundamental arbitration principles))