## Facts

- Physicians contracted with managed-care organizations to provide services to covered patients.
- The physicians sued PacifiCare-related entities and United-related entities, alleging systemic underpayment for medical services.
- The complaint asserted claims under RICO, ERISA, federal and state “prompt-pay” statutes, and common-law theories (including breach of contract and unjust enrichment).
- The provider contracts contained arbitration clauses requiring arbitration of disputes arising out of the agreements.
- The arbitration clauses barred awards of “punitive damages” (and in some contracts “exemplary damages”).
- The physicians opposed arbitration of the RICO claims, arguing RICO’s treble-damages remedy would be unavailable in arbitration due to the punitive-damages prohibition.

## Issues

1. Whether courts may deny motions to compel arbitration of RICO claims because a contract’s bar on “punitive damages” might be read to preclude RICO treble damages.
2. Whether it is premature for a court to decide enforceability when it is unclear how an arbitrator will construe the contract’s remedial limitation.

## Decision

- The Supreme Court reversed the Eleventh Circuit and remanded.
- The Court held it was unclear whether the “no punitive damages” language actually prevented an arbitrator from awarding RICO treble damages.
- Because the scope of the remedial limitation depended on contract interpretation and was uncertain, deciding enforceability at that stage was too speculative.
- The Court directed that the proper course was to compel arbitration, allowing the arbitrator to construe the remedial limitation in the first instance.

## Legal Principles

- When an arbitration agreement’s damages limitation is ambiguous as to whether it excludes a statutory remedy, a court should not refuse to compel arbitration based on a predicted denial of “meaningful relief.”
- RICO treble damages have been characterized in precedent as at least partly remedial, making it not self-evident that parties used “punitive damages” to include treble damages.
- Where enforceability questions turn on unresolved interpretation of contractual remedial limits, compelling arbitration is appropriate before addressing whether any statutory remedy is impermissibly restricted.

## Conclusion

The Court required arbitration because the contracts’ punitive-damages bars did not clearly exclude RICO treble damages, and it was premature for courts to invalidate arbitration agreements based on uncertain predictions about how an arbitrator would interpret the remedial limitation.


PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (2003)