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Allen v. Pacheco6/9/2003
II. The Federal Arbitration Act
The next step in the analysis, however, involves the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et. seq. (1999). I agree with the Majority that the FAA would apply to this contract, but because I would also hold that it is the focal or dispositive statute, I expand upon the Majority's discussion somewhat. The FAA states that:
A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2.
The purpose of the FAA is to "overcome courts' refusals to enforce agreements to arbitrate" and is grounded in Congress' powers under the Commerce Clause. Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 270 (1995). In enacting the FAA, Congress "declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). Generally, then, the FAA preempts state law that conflicts with it, by operation of the Supremacy Clause. U.S. Const. art. VI, cl. 2.
The agreement here pertains to transactions involving commerce, in that it provides for medical services in other states to its Colorado members. See Grohn v. Sisters of Charity Health Svcs. Colo., 960 P.2d 722, 725-26 (Colo. App. 1998) (hospital's business activities, which include payment of out-of-state medical costs of in-state insureds, and receipt of goods and services from out-of-state vendors constitute transactions "involving commerce" within the ambit of the FAA). Hence, the only question is whether the FAA would otherwise apply to invalidate the specific proscriptions of the HCAA and render the arbitration agreement enforceable even though it does not comply with the HCAA.
The FAA establishes federal substantive law that governs issues of enforceability for all arbitration agreements that involve commerce. Perry v. Thomas, 482 U.S. 483, 489 (1987); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). To the extent that any state law conflicts with the FAA, that state law is preempted by operation of the Supremacy Clause of the United States Constitution. See U.S. Const. art. VI, cl. 2; Southland Corp., 465 U.S. at 16; Doctor's Assoc., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
An arbitration clause almost identical to the one at issue here was held enforceable by the United States District Court for the District of Colorado in Morrison v. Colorado Permanente Medical Group, P.C., 983 F. Supp. 937 (D. Colo. 1997). In that case, the court viewed Doctor's Associates as dispositive. The Supreme Court, in Doctor's Associates, held that the FAA preempted a Montana statute, which also required arbitration agreements to contain a special notice, in underlined capital letters. The Court held:
By enacting § 2, we have several times said, Congress precluded States from singling out arbitration provisions for suspect status, requiring instead that such provisions be placed "upon the same footing as other contracts." Montana's § 27-5-114(4) directly conflicts with § 2 of the FAA because the State's law conditions the enforceability of arbitration agreements on compliance with a special notice requirement not applicable to contracts generally. The FAA thus displaces the Montana statute with respect to arbitration agre
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