Wisconsin Court of Appeals rules insurance rider is not procedurally unconscionable.

Byline: David Ziemer

A rider to a health insurance policy, excluding coverage not only for a pre-existing condition, but all conditions in a particular part of the body, is not unconscionable, the Wisconsin Court of Appeals held on June 13. In 2000, after the health insurance premiums rose substantially for Thomas and Mary Aul, they looked for coverage from other insurers, including Golden Rule Insurance Company. Patricia advised her insurance agent that she had a pre-existing condition -- a noncancerous cyst that was being monitored. Golden Rule issued a policy containing the following rider: "This policy/certificate does not cover any loss incurred by Patricia Aul resulting from any disease or disorder of the breasts, including treatment or operation therefor and complications therefrom. This rider also excludes reconstructive surgery and complications therefrom." Twenty-two months later, in June 2002, Patricia was diagnosed with cancer, and submitted a claim for coverage, which Golden Rule denied pursuant to the rider. The Auls brought suit against Golden Rule, but Waukesha County Circuit Court Judge James R. Kieffer granted summary judgment in favor of Golden Rule. The Auls appealed, but the court of appeals affirmed, in a decision written by Judge Neal Nettesheim, and joined by Judge Richard S. Brown. Judge Daniel P. Anderson dissented. To be unconscionable, a contract provision must be both procedurally and substantively unconscionable. The circuit court found that the contract was substantively unconscionable because the rider was not medically justified, but found that the rider was not procedurally unconscionable. The court of appeals did not address whether the rider was substantively unconscionable, but only whether it was procedurally unconscionable, and agreed that it was not. The court distinguished the case from Coady v. Cross Country Bank, Inc., 2007 WI App 26, 729 N.W.2d 732, in which the court held that a credit agreement's arbitration clause was procedurally unconscionable, because the bank solicited customers who, due to their financial circumstances, credit histories and weak bargaining position, were unlikely to refuse one of the few sources of available credit merely because of an arbitration clause. Distinguishing the access of the plaintiffs in Coady to credit, and the Auls' access to insurance, the court acknowledged, "there may have been a dearth of other sources of easily affordable health insurance, but that is...