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Allen v. Pacheco6/9/2003
JUDGMENT AFFIRMED
EN BANC
JUSTICE KOURLIS dissents, and JUSTICE BENDER joins in the dissent.
I. Introduction
In this wrongful death case, we address the question of whether the respondent Karen Pacheco is bound by an arbitration provision contained in her deceased husband's agreement with his health maintenance organization ("HMO"). The court of appeals held that Pacheco was not bound by the arbitration agreement because the agreement does not apply to wrongful death actions filed by a member's non-party spouse. Pacheco v. Allen, 55 P.3d 141, 143-44 (Colo. App. 2001). We affirm the court of appeals on different grounds, holding that although the arbitration provision in the HMO contract does extend to wrongful death actions filed by a member's non-party spouse, Pacheco is not bound by the arbitration provision because it does not comply with the Colorado Health Care Availability Act ("HCAA"), §§ 13-64-403(3) and (4), 5 C.R.S. (2002). The HCAA governs the arbitration provision in this case because the McCarran-Ferguson Act, 15 U.S.C. § 1012(b) (1997), exempts sections 13-64-403(3) and (4) of the HCAA from federal preemption by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 2 (1999).
II. Facts and Procedural History
The Kaiser Foundation Health Plan of Colorado ("Kaiser") is an HMO that provides health care services and health care insurance to its enrollees. Pacheco's husband was a Kaiser member, but Pacheco herself never became a party to the Kaiser contract. The contract between Kaiser and Pacheco's husband contained an arbitration clause requiring "any claim of medical malpractice" to be submitted to binding arbitration. The clause included claims for "death" asserted by "a Member's heir or personal representative":
Claims . . . shall be submitted to binding arbitration if the claim is asserted: By a Member, or by a Member's heir or personal representative, or by a person claiming that a duty to him or her arises from a Member's relationship with Health Plan, Hospitals or Medical Group incident to this Agreement . . . For any reason, including, but not limited to, death . . . Against one or more of the following: Health Plan, Hospitals, Medical Group, Any Physician, or Any employee or agent of the foregoing. (emphasis added).
In 1997, Pacheco's husband died after extended hospitalization for pancreatitis. Pacheco subsequently filed a wrongful death action against Dr. Lawrence S. Allen, Dr. Timothy R. Collins, Dr. Michael K. Miller, and their employer, the Colorado Permanente Medical Group, P.C. ("CPMG") (collectively, "the providers"). CPMG is a professional medical corporation that contracts with Kaiser to provide medical services to Kaiser members.
The trial court concluded that the arbitration clause in the contract between Kaiser and Pacheco's husband was enforceable against Pacheco because a surviving spouse is an "heir" under the plain and ordinary meaning of the agreement. The trial court also concluded that the arbitration provision was enforceable even though the provision failed to comply with the Colorado HCAA, because the FAA federally preempted the statute. Pacheco's case was then sent to arbitration, where the arbiter entered an award in favor of the providers. The trial court subsequently denied Pacheco's motion to vacate the award and Pacheco appealed, arguing that the trial court erred by binding her to the arbitration agreement.
The court of appeals reversed, holding in a published opinion that the arbitration clause was not enforceable against Pacheco because (1) a contract cannot bind a non-party to an agreement; (2) Pacheco was not her husband's "heir"; (
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