Chapter 10 - § 10.8 APPLICABILITY OF ARBITRATION CLAUSES TO WRONGFUL DEATH CLAIMS

• Jurisdiction: Colorado

§ 10.8 APPLICABILITY OF ARBITRATION CLAUSES TO WRONGFUL DEATH CLAIMS

§ 10.8.1 In Wrongful Death Action Arising out of Medical Malpractice Claim, Arbitration Clause that Does Not Comply with Provisions of Colorado Health Care Availability Act (HCAA) Is Unenforceable

Allen v. Pacheco, 71 P.3d 375 (Colo. 2003), was a wrongful death action arising out of a medical malpractice claim. Karen Pacheco's husband died in 1997 after being hospitalized for pancreatitis. Pacheco brought a wrongful death action against several doctors employed by the Colorado Permanente Medical Group, P.C., which provides contract medical services to members of Kaiser Foundation Health Plan of Colorado, a health maintenance organization (HMO). Pacheco's husband was a party to the HMO contract, but Pacheco was not. The HMO contract contained an arbitration clause that provided that any claim of medical malpractice, including claims for death arising from rendering or failure to render medical services, was subject to binding arbitration. The arbitration clause stated that it applied to any claims by a member's heir or personal representative. The trial court held that the arbitration clause was enforceable against Pacheco as an "heir." The case was then arbitrated, and the arbitrator ruled against Pacheco. The trial court subsequently denied Pacheco's motion to vacate the arbitration award.

Pacheco appealed, and in Pacheco v. Allen, 55 P.3d 141 (Colo. App. 2001), the court of appeals held that the arbitration clause was not enforceable against Pacheco. Specifically, the court of appeals held that the arbitration clause could not bind a non-party to the contract; Pacheco was not her husband's heir, as that term is used in the context of wrongful death claims; a wrongful death action is a separate action not covered by the terms of the HMO contract; and the broad arbitration language in the HMO contract does not extend to spouses who make wrongful death claims. Allen, 71 P.3d at 377.

The supreme court affirmed the court of appeals' decision to reverse the trial court's order refusing to vacate the arbitration award, but did so for different reasons. The supreme court held that the arbitration clause in the HMO contract applied to wrongful death claims brought by a spouse who was not a party to the HMO contract. However, the court found that the arbitration clause was invalid and unenforceable because it did not comply with the requirement of the Colorado Health Care Availability Act (HCAA) that an arbitration provision in a medical service agreement contain specific language and a notice in bold-faced type. In addition, the supreme court ruled that the Federal Arbitration Act (FAA), 9 U.S.C. § 2, did not preempt the HCAA. The court found that the HCAA is a statute that regulates the business of insurance and therefore is not subject to federal preemption pursuant to the McCarran-Ferguson Act, 15 U.S.C. § 1012(b).

The first issue the court addressed was whether the arbitration clause applied to Pacheco's wrongful death claim. The court noted that an arbitration agreement is a contract and its interpretation is governed by principles of contract interpretation. However, if an arbitration clause is ambiguous, doubts about the scope of the arbitration clause must be resolved in favor of arbitration. The court recognized that a court...