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holding that wrongful-death claim was required to be arbitrated under decedent's arbitration agreement even though claim was independent in nature
Summary of this case from Richmond Health Facilities-Kenwood, LP v. NicholsOpinion
No. 01SC744.
June 9, 2003. Rehearing Denied June 30, 2003.
Certiorari to the Colorado Court of Appeals, Court of Appeals Case No. 00CA1624.
JUDGMENT AFFIRMED.
No. 01SC744 — Allen v. Pacheco: Arbitration — Construction of Contract Language — Wrongful Death — Federal Preemption — Federal Supremacy — Insurance Law
After Karen Pacheco's husband died, Pacheco filed a wrongful death claim alleging negligence by her husband's health care providers. The providers sought to submit the claim to binding arbitration pursuant to an arbitration provision contained in the contract between Pacheco's husband and his HMO.
The trial court found that the arbitration agreement was binding on Pacheco. The court of appeals reversed, holding that the agreement did not apply to wrongful death actions filed by an HMO member's non-party spouse.
The supreme court affirms the court of appeals on different grounds, holding that although the arbitration provision extends to wrongful death actions filed by a member's non-party spouse, Pacheco is not bound by the arbitration provision because it fails to comply with the specific disclosures mandated by the Colorado Health Care Availability Act ("HCAA"). Sections 13-64-403(3) and (4) of the HCAA govern the arbitration provision in this case because they protect HMO policyholders and thus are statutes "regulating the business of insurance" under the meaning of the McCarran-Ferguson Act, 15 U.S.C. § 1012(b) (1997). Because the McCarran-Ferguson Act permits states to regulate the business of insurance, sections 13-64-403(3) and (4) of the HCAA are exempt from federal preemption by the Federal Arbitration Act, 9 U.S.C. § 2 (1999).
Pryor, Johnson, Montoya, Carney Karr, P.C. Elizabeth C. Moran, Greenwood Village, Colorado, Attorneys for Petitioners.
Law Offices of Gary S. Cohen Gary S. Cohen Christine Van Coney, Denver, Colorado, Attorneys for Respondent.
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.
Pacheco's claims against the treating hospital and other physicians were ultimately dismissed.
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"; (3) a wrongful death cause of action under the Colorado Wrongful Death Act, §§ 13-21-201 to 203.7, 5 C.R.S. (2002), is a wholly separate action not covered by the terms of the Kaiser agreement; and (4) generally, the broad language of the Kaiser agreement does not extend to non-party spouses bringing wrongful death claims. Pacheco, 55 P.3d at 143-44. In so holding, the court of appeals found it unnecessary to reach the issue of federal preemption.
We granted certiorari to determine whether Pacheco is bound by the arbitration clause and now affirm the judgment of the court of appeals on different grounds. We hold that although the scope of the arbitration provision does include wrongful death actions filed by a member's non-party spouse, Pacheco nevertheless is not bound by the provision because the provision does not comply with the statutory requirements set forth in the Colorado HCAA. Sections 13-64-403(3) and (4) of the HCAA govern the arbitration provision in this case because the McCarran-Ferguson Act exempts these sections of the HCAA from federal preemption.
We granted certiorari on the following two issues:
1. Whether plaintiff wife is required to arbitrate her claim for the wrongful death of her husband, where her husband's agreement with his health maintenance organization (HMO) includes a provision requiring the arbitration of all claims for medical malpractice, including claims for "death," and claims by a "Member's heir or personal representative," where plaintiff wife is not a party to the agreement.
2. Whether, notwithstanding the court of appeals' failure to reach this issue, the Federal Arbitration Act (FAA) preempts the restrictive provisions of § 13-64-403, 5 C.R.S. (2002), and requires enforcement of the arbitration provision.
III. Analysis 1. The Arbitration Agreement Binds a Non-Party Spouse Asserting a Wrongful Death Claim
Before addressing the statutory preemption issues raised in this case, we first explain why the scope of the Kaiser arbitration provision includes wrongful death actions filed by a member's non-party spouse.
An arbitration agreement is a contract, the interpretation of which is a matter of law that we review de novo. See State Farm Mut. Auto. Ins. Co. v. Stein, 940 P.2d 384, 387 (Colo. 1997) (addressing insurance policies generally). To determine whether the parties have agreed to submit the issue in question to arbitration, we follow state law principles governing contract formation. City County of Denver v. Dist. Ct., 939 P.2d 1353, 1361 (Colo. 1997). We must construe the terms of the agreement in a manner that allows each party to receive the benefit of the bargain, and the scope of the agreement must faithfully reflect the reasonable expectations of the parties. Id. at 1361, 1363. In other words, we must interpret the agreement in a manner that best effectuates the intent of the parties. Id. at 1361.
We ascertain the parties' intent by looking to the plain language of the agreement. State Farm, 940 P.2d at 387. We will enforce the agreement as written unless there is an ambiguity in the language; courts should neither rewrite the agreement nor limit its effect by a strained construction. Id. Thus, like any contract, an arbitration agreement must be given effect according to the plain and ordinary meaning of its terms. Id.
In determining whether an ambiguity exists, we must ask whether the disputed provision is reasonably susceptible on its face to more than one interpretation. Id. We also evaluate the agreement as a whole and construe the language in harmony with the plain and generally accepted meaning of the words employed, unless the intent of the parties, as expressed in the contract, indicates that an alternative interpretation is intended. Id.
If ambiguities are found in the arbitration agreement, we must afford the parties a presumption in favor of arbitration and resolve doubts about the scope of the arbitration clause in favor of arbitration. See City County of Denver, 939 P.2d at 1364. More specifically, we must compel arbitration unless we can say "with positive assurance" that the arbitration clause is not susceptible of any interpretation that encompasses the subject matter of the dispute. Id. (citations omitted). Moreover, a "broad or unrestricted" arbitration clause makes the strong presumption favoring arbitration apply with even greater force. Id. (citations omitted).
Although the court of appeals correctly stated that ambiguities in an insurance contract generally are construed against the drafter, see Pacheco, 55 P.3d at 144 (citing State Farm, 940 P.2d at 390), the court of appeals failed to recognize this court's clear holding in City County of Denver, 939 P.2d at 1364, that courts must afford ambiguities in arbitration agreements a presumption in favor of arbitration.
In short, as we examine whether Kaiser and Pacheco's husband, via the contract between them, intended the scope of the arbitration agreement to include both (1) wrongful death claims and (2) non-party spouses, we must look to the plain and ordinary meaning of the agreement itself and construe any ambiguities in favor of arbitration.
In applying the above legal guidelines to this case, we look first to the plain language of the arbitration agreement. The contract in this case states, in pertinent part:
It is understood that any claim of medical malpractice including any claim that medical services were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered or omitted, will be determined by submission to binding arbitration . . .
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, mental disturbance, bodily injury or economic loss arising from the rendition or failure to render services . . . 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 construing this agreement, the court of appeals concluded that the above provisions do not apply to wrongful death claims brought by non-party spouses such as Pacheco. We disagree. In interpreting the words of the agreement in accord with their plain and ordinary meaning, we find that the agreement applies not only to (1) wrongful death claims as claims for "death," but also to (2) non-party spouses as "heirs."
First, the arbitration agreement plainly applies to "any claim of medical malpractice" and any claim brought "[f]or any reason, including, but not limited to, death . . . ." The plain and ordinary meaning of this wording reveals a clear intent to include wrongful death claims within the scope of claims that must be submitted to binding arbitration. Even if we were to characterize the provision as ambiguous due to the fact that the exact term "wrongful death" is not used in the agreement, the language of the agreement as a whole is very broad. Because the presumption in favor of arbitration is strongest where the language of the agreement is "broad or unrestricted," City County of Denver, 939 P.2d at 1364, the arbitration provision in this case is best construed as one that includes wrongful death claims.
Despite the contract's highly inclusive reference to claims brought "[f]or any reason, including, but not limited to, death," the court of appeals held that wrongful death claims are not covered by the terms of the agreement because under the Colorado Wrongful Death Act, §§ 13-21-201 to 203.7, 5 C.R.S. (2002), a wrongful death cause of action "is wholly separate and distinct from any action [Pacheco's] husband might have maintained." Pacheco, 55 P.3d at 143 (citing Fish v. Liley, 120 Colo. 156, 208 P.2d 930 (1949); Rowell v. Clifford, 976 P.2d 363 (Colo.App. 1998)). Although it is true that a wrongful death claim is separate and distinct from a cause of action the deceased could have maintained had he survived, this observation is not helpful in determining whether separate wrongful death claims are in fact included within the plain and ordinary meaning of the agreement. Because the plain language of the agreement in this case refers to "all claims" including those brought for "death," and because we must apply a strong presumption in favor of arbitration, we find that the arbitration agreement applies to wrongful death claims.
Having established that the scope of the agreement includes wrongful death actions, we now determine whether the scope of the agreement also includes non-party spouses. We hold that the arbitration agreement does apply to non-party spouses because (a) a non-party may be bound by the terms of an agreement if the parties so intend and because (b) a spouse is an "heir" under the meaning of the agreement.
The court of appeals reasoned that the arbitration clause does not apply to a non-party such as Pacheco because a non-party to a contractual agreement cannot be bound by its terms. Pacheco, 55 P.3d at 143. This statement of the law is inaccurate. Although it is true that in general, only the parties to a contract are bound by its terms, a non-party may fall within the scope of the agreement if the parties so intend. Jefferson County Sch. Dist. No. R-1 v. Shorey, 826 P.2d 830, 843 (Colo. 1992); Parker v. Ctr. For Creative Leadership, 15 P.3d 297, 298 (Colo.App. 2000); Everett v. Dickinson Co., Inc., 929 P.2d 10, 12 (Colo.App. 1996); Eychner v. Van Vleet, 870 P.2d 486, 489 (Colo.App. 1993).
In City County of Denver, 939 P.2d at 1370, this court stated generally that "[a] non-party to an agreement containing an ADR clause may not be compelled to use the ADR procedures." City County of Denver did not, however, involve an ADR provision specifically addressing non-parties. See id. at 1359. Here, in contrast, we construe an arbitration provision expressly purporting to bind not only the signatory, but also certain non-parties who are in privity with the signatory, namely an "heir or personal representative or . . . a person claiming that a duty to him or her arises from a Member's relationship with [Kaiser]."
In this case, the arbitration agreement binds not only claims brought by signatory members, but also claims brought 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 [Kaiser] incident to this Agreement." The contract clearly does not require that these heirs, personal representatives, or persons claiming special duties actually sign and become parties to the contract before they can fall within the scope of the arbitration agreement. Because the contract reflects the intent of the parties to bind claimants other than signatory members, the fact that Pacheco is a non-party does not by itself exempt her from the arbitration agreement. So long as she is within the category of heirs, personal representatives, or persons claiming special duties, she is bound by the arbitration agreement.
In this case, Pacheco is her husband's "heir" under the meaning of the agreement. To reach this conclusion, we follow the same legal analysis used above: we look first to the plain and ordinary meaning of the agreement and then construe any ambiguities in favor of arbitration. Here, the term "heir" as used in the arbitration agreement is ambiguous because the term may or may not include spouses — as we explain below, the term is reasonably susceptible on its face to more than one interpretation. See State Farm, 940 P.2d at 387.
The trial court did not find ambiguity, stating, "interpreting the words of the agreement in accord with their plain and ordinary meaning mandates that the word `heir' be read to include a surviving spouse."
On one hand, it is well-established that the definition of "heirs" as used in the Colorado Wrongful Death Act, §§ 13-21-201 to 204, 5 C.R.S. (2002) does not include spouses. See, e.g., Hindry v. Holt, 24 Colo. 464, 468, 51 P. 1002, 1004 (1897); Whitenhill v. Kaiser Permanente, 940 P.2d 1129, 1131 (Colo.App. 1997) (the term "heirs" under the Wrongful Death Act refers only to lineal descendants of the deceased). The court of appeals in this case relied on the Wrongful Death Act's definition of "heirs" when it refused to characterize Pacheco as an "heir" under the meaning of the arbitration agreement. Pacheco, 55 P.3d at 143.
As used in the Wrongful Death Act, section 13-21-201(1), 5 C.R.S. (2002), the term "heirs" designates which class of persons may file a wrongful death claim if the spouse has not already filed a claim within one year of the decedent's death:
(a)In the first year after such death:
(I) By the spouse of the deceased;
(II) Upon the written election of the spouse, by the spouse and the heir or heirs of the deceased;
(III) Upon the written election of the spouse, by the heir or heirs of the deceased; or
(IV) If there is no spouse, by the heir or heirs of the deceased.
On the other hand, some Colorado cases have generally referred to spouses as "heirs." See, e.g., Binkley v. Switzer, 75 Colo. 1, 3, 223 P. 757, 758 (1923) (stating that a decedent left "his widow as his heir"); Tanski v. Tanski, 820 P.2d 1143, 1144 (Colo.App. 1991) (referring to a surviving spouse as an "heir at law"); Clint v. Stolworthy, 144 Colo. App. 597, 600, 357 P.2d 649, 651 (1960) (referring to "heirs other than the widow"). Moreover, the commonly understood notion of the term "heir" is very broad, loosely defined as "a person who inherits real or personal property." Black's Law Dictionary 727 (7th ed. 1999). Also, the arbitration agreement here is not limited to wrongful death claims — the agreement requires "all claims" to be submitted to binding arbitration. Therefore, there is no automatic connection between the definition of "heirs" as used in the Wrongful Death Act and the definition of "heir" as used in this agreement. Thus, we may reasonably interpret the term "heir" as a term that includes spouses.
As with any ambiguity in an arbitration agreement, we must resolve doubts about the scope of the arbitration agreement in favor of arbitration. City County of Denver, 939 P.2d at 1364. We must compel arbitration unless we can say "with positive assurance" that the arbitration clause is not susceptible of any interpretation that encompasses the subject matter of the dispute. See id. Because the term "heir" as used in the arbitration agreement is ambiguous and is susceptible of an interpretation that encompasses spouses, we construe the term inclusively and hold that spouses are within the scope of the agreement.
Our inclusive interpretation not only adheres to the presumption in favor of arbitration, but also avoids an absurd result. In this case, an exclusion of spouses from the term "heirs" would run counter to the arbitration agreement's otherwise broad terms. If spouses are not "heirs," a member's husband or wife would not need to arbitrate any claims whatsoever, let alone claims asserting wrongful death. Meanwhile, the member, the member's children, the member's personal representative, and any person claiming a special duty must still arbitrate "all claims" brought "[f]or any reason." Given the broad terms of the arbitration agreement, we find it highly unlikely that the parties intended to exclude spouses in such a sweeping manner.
In sum, we reject the court of appeals' analysis and agree with the trial court that the arbitration agreement applies to both (1) wrongful death actions and (2) non-party spouses. Nevertheless, we affirm the court of appeals' holding that the arbitration agreement is unenforceable against Pacheco, because the agreement does not comply with the requirements set forth in the Colorado HCAA.
2. The McCarran-Ferguson Act Exempts the Colorado HCAA from Federal Preemption by the FAA
The parties do not dispute that the arbitration agreement in this case does not comply with the regulations set forth in the Colorado HCAA, or Health Care Availability Act. Sections 13-64-403(3) and (4) of the HCAA mandate specific language and typeface requirements for arbitration provisions contained in medical services agreements. The General Assembly enacted these regulations with the express intent "that an arbitration agreement be a voluntary agreement between a patient and a health care provider." § 13-64-403(1), 5 C.R.S. (2002). In this case, the arbitration agreement between Kaiser and Pacheco's husband lacks the language and bold-faced type notice required by the HCAA. Normally, this non-compliance alone would render the agreement unenforceable against Pacheco.
Here, however, the parties have raised the issue of whether the HCAA is federally preempted by the FAA, or Federal Arbitration Act. The FAA upholds the validity of arbitration agreements contained in any "contract evidencing a transaction involving commerce." 9 U.S.C. § 2. If the FAA preempts the HCAA, the HCAA will not govern the arbitration agreement and the agreement is enforceable against Pacheco. If the HCAA is not preempted, Kaiser's non-compliance with the HCAA is fatal and Pacheco is not bound by the agreement.
Typically, when a state enacts arbitration statutes of general applicability and the statute is inconsonant with the FAA, the FAA preempts that state law. See, e.g., Doctor's Assoc., Inc. v. Casarotto, 517 U.S. 681, 687-88 (1996); Hart v. Orion Ins. Co., 453 F.2d 1358, 1360 (10th Cir. 1971) (finding preemption where the arbitration statute was one of general application); Hamilton Life Ins. Co. of N.Y. v. Republic Nat'l Life Ins. Co., 408 F.2d 606, 611 (2d Cir. 1969) (finding preemption where the arbitration statute applied generally to all contracts). The Colorado HCAA is not a statute of general applicability because it targets only arbitration agreements contained in medical services contracts. Its detailed arbitration regulations clearly conflict with the FAA, which broadly states that agreements to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." See 9 U.S.C. § 2. The Federal District Court for the District of Colorado has held that because sections 13-64-403(3) and (4) of the HCAA and the FAA are "inconsonant," the state regulations are preempted. Morrison v. Colo. Permanente Med. Group, 983 F. Supp. 937, 943 (D.Colo. 1997).
Our preemption analysis, however, does not end here. A critical issue not addressed in Morrison but raised by Pacheco in this case is the question of whether the McCarran-Ferguson Act "reverse-preempts" the FAA preemption of the HCAA arbitration regulations. The McCarran-Ferguson Act provides, in relevant part:
No Act of Congress shall be construed to invalidate, impair or supersede any law enacted by any State for the purpose of regulating the business of insurance . . . unless such Act specifically relates to the business of insurance. Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended . . . shall be applicable to the business of insurance to the extent that such business is not regulated by State law.
15 U.S.C. § 1012(b) (emphasis added).
In other words, under the first clause of section 1012(b), the McCarran-Ferguson Act exempts a state statute from federal preemption if the state law is enacted "for the purpose of regulating the business of insurance" and if the federal statute does not specifically "relate to the business of insurance." It is undisputed here that the FAA does not relate to the business of insurance. Therefore, the remaining issue left for us to resolve is whether sections 13-64-403(3) and (4) of the Colorado HCAA are state laws enacted "for the purpose of regulating the business of insurance" under the meaning of the McCarran-Ferguson Act. If so, the FAA will not preempt the HCAA and the arbitration agreement in this case is unenforceable.
The United States Supreme Court has decided two key cases clarifying when a state law has been enacted "for the purpose of regulating the business of insurance" under the meaning of the McCarran-Ferguson Act. In SEC v. National Securities, Inc., 393 U.S. 453, 460 (1969), the Court focused on the relationship between the insurance company and the policyholder and held that any state statute "aimed at protecting or regulating this relationship," either directly or indirectly, is a law regulating the "business of insurance" under the meaning of the Act.Id. More recently, the Supreme Court re-emphasized the National Securities principle in United States Dep't of Treasury v. Fabe, 508 U.S. 491 (1993), maintaining that the essence of regulating the business of insurance is to regulate the relationship between the insurance company and the policyholder. See id. at 501. Under this principle, a federal law must yield to a state statute to the extent that the state statute "furthers the interests of policyholders." Id. at 502.
Other cases addressing the meaning of "business of insurance" in an ERISA context are similar to McCarran-Ferguson cases, but the Supreme Court has recently made clear that the two inquiries are separate and distinct. Kentucky Ass'n of Health Plans, Inc. v. Miller, 123 S.Ct. 1471, 1479 (2003).
In Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982), the Supreme Court identified three specific, but non-determinative, considerations to be weighed when determining whether certain practices by private actors constitute the "business of insurance." These criteria include whether the practice: (1) has the effect of transferring or spreading a policyholder's risk; (2) is an integral part of the policy relationship between the insurer and the insured; and (3) is limited to entities within the insurance industry. Id. (citing Group Life Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979)). We do not specifically rely on the Pireno and Royal Drug factors because these factors arise from cases seeking to characterize conduct by private actors in the antitrust context under the second clause of section 1012(b). See United States Dep't of Treasury v. Fabe, 508 U.S. 491, 504-05 (1993). These factors do not apply directly to the broader issue, under the first clause of section 1012(b), of whether a state law has been enacted for the "purpose of regulating the business of insurance."Id.; see also Miller, 123 S.Ct. 1471.
In this case, the trial court incorrectly framed the Pireno factors as a mandatory three-part test, of which all three factors had to be met before the law could be characterized as regulating the "business of insurance."
Following Fabe, the Tenth Circuit Court of Appeals has similarly focused the "business of insurance" test on whether the state statute in question was enacted for the purpose of protecting policyholders.Davister Corp. v. United Republic Life Ins. Co., 152 F.3d 1277, 1281 (10th Cir. 1998) (finding that McCarran-Ferguson exempted a state court's blanket stay order from FAA preemption because the stay "manifests a purpose of protecting policyholders" in a liquidation setting). Davister is consistent with a line of cases focusing on whether the state law directly regulates the contractual relationship between an insurer and insured. See, e.g., Mutual Reinsurance Bureau v. Great Plains Mut. Ins. Co., Inc., 969 F.2d 931, 933 (10th Cir. 1992) (holding that a Kansas statute expressly invalidating an arbitration agreement contained in an insurance contract is a statute that touches the core of the `business of insurance' under the meaning of McCarran-Ferguson); Cox v. Woodmen of the World Ins. Co., 556 S.E.2d 397, 401-02 (S.C.Ct.App. 2001) (a South Carolina statute barring arbitration in an insurance contract is "an integral part of the policy relationship between the insurer and the insured" because it places limits on the enforceability of an agreement to spread risk).
In this case, sections 13-64-403(3) and (4) of the Colorado HCAA not only directly regulate contracts between health insurance policyholders and their insurers (in this case, HMOs), but also further the interests of these policyholders. Sections 13-64-403(3) and (4) directly regulate health insurance contracts by requiring HMOs to include specific notice language, in ten-point, bold-faced type, of any arbitration agreement contained within the health insurance contract. If the HMO that drafted the insurance contract fails to give the policyholder proper notice of the arbitration agreement, the HCAA protects the policyholder by invalidating that provision of the contract. By regulating health insurance contracts drafted by the health care provider and by protecting patients who are insured by that provider, sections 13-64-403(3) and (4) of the HCAA qualify as laws enacted "for the purpose of regulating the business of insurance." Accord Smith v. Pacificare Behavioral Health of Cal, Inc., 93 Cal.App.4th 139, 161 (Cal.Ct.App. 2001) (holding that the McCarran-Ferguson Act applies to a state statute specifically regulating the words that an HMO can use when including an arbitration clause in its medical services plan).
HMOs simultaneously function as health care providers and health care insurers. See Rush Prudential HMO, Inc., v. Moran, 536 U.S. 355, 367-70 (2002); Imbler v. Pacificare of Cal., Inc., 103 Cal.App.4th 567, 573 (Cal.Ct.App. 2002). Given the modern reality that HMOs have virtually replaced traditional health care insurers, the relationship between an HMO "medical service provider" and "patient" is the relationship between a "medical insurer" and "insured."
It is irrelevant that other sections of the HCAA, outside of sections 13-64-403(3) and (4), address medical malpractice issues not involving the relationship between an insurer and insured. Fabe makes clear that a statute, "to the extent that it regulates policyholders," qualifies as a statute "enacted for the purpose of regulating the business of insurance" under the meaning of the McCarran-Ferguson Act.Fabe, 508 U.S. at 508. Moreover, the fact that sections 13-64-403(3) and (4) of the HCAA apply to "health care providers" instead of exclusively to insurers such as HMOs does not nullify our conclusion that sections 13-64-403(3) and (4) were enacted for the "purpose of regulating the business of insurance." As long as the statute is not one of general applicability, it is not necessary that the state statute relate only to insurance or that the statute be in the form of an insurance code. Great Plains, 969 F.2d at 934. Therefore, the fact that sections 13-64-403(3) and (4) of the HCAA technically include non-insurer "health care providers" such as physicians does not prevent these sections of the HCAA from qualifying as statutes enacted "for the purpose of regulating the business of insurance" under the meaning of the McCarran-Ferguson Act.
In sum, to the extent that sections 13-64-403(3) and (4) of the HCAA do specifically regulate the relationship between a health insurer and its policyholder, see National Securities, 393 U.S. at 460, and to the extent that these provisions of the HCAA do further the interests of these policyholders by ensuring adequate notice of arbitration agreements, see Fabe, 508 U.S. at 502, the HCAA is a statute "enacted for the purpose of regulating the business of insurance" under the meaning of the McCarran-Ferguson Act.
The McCarran-Ferguson Act therefore exempts sections 13-64-403(3) and (4) of the HCAA from federal preemption by the FAA, meaning that those sections of the HCAA govern the arbitration agreement in this case. Because the agreement here does not comply with sections 13-64-403(3) and (4) of the HCAA, the agreement is unenforceable and Pacheco is not required to submit her wrongful death claim to binding arbitration.
IV. Conclusion
For the foregoing reasons, we reject the analysis of the court of appeals but uphold the result it reached. We conclude that the scope of the arbitration agreement between Kaiser and Pacheco's husband includes wrongful death claims brought by non-party spouses. The arbitration agreement is unenforceable, however, because it does not comply with the Colorado HCAA. Therefore, we affirm the judgment of the court of appeals.
JUSTICE KOURLIS dissents, and JUSTICE BENDER joins in the dissent.