Pacificare Health Sys., Inc. v. Book,
No. 02-215 (U.S. Apr. 7, 2003)

Several physicians sued managed care organizations (MCOs) that refused to reimburse them for care that they provided, alleging that the MCOs violated the Racketeer Influenced Corrupt Organizations Act (RICO). The MCOs moved to have the claims arbitrated, but the physicians countered that the arbitration clause in the parties' agreement should not apply because it prohibited punitive damages and would, therefore, prohibit the arbitrator from awarding the treble damages that are available under RICO. The Supreme Court of the United States held that arbitration was appropriate since it was not clear that treble damages under RICO are punitive. The Court stated that whether or not treble damages are punitive was a matter for the arbitrator to decide. The Court implied that if the arbitrator determines that treble damages are punitive, and thus bars treble damages under the arbitration clause, the physicians might have an argument that the arbitration clause is unenforceable.