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.