Amy Fischer and Roger Fischer, Plaintiffs-Appellees, v. Colorow Health Care, LLC; QP Health Care Services, LLC, d/b/a Vivage; Beverly Cole; Michael Reinhardt; and Travis Young, Defendants-Appellants.
Court of Appeals No. 15CA1252
COLORADO COURT OF APPEALS
September 8, 2016
2016COA130
JUDGE WEBB
Montrose County District Court No. 14CV30176. Honorable Mary E. Deganhart, Judge. Division II. Ashby and Márquez*, JJ., concur. Announced September 8, 2016. Laszlo &
¶ 1 In deciding the enforceability of an agreement to arbitrate under the Health Care Availability Act (HCAA), should the test be strict compliance or substantial compliance
¶ 2 Plaintiffs, Amy Fischer and Roger Fischer, pleaded tort claims arising from the death of Charlotte Fischer (the decedent). Defendants, Colorow Health Care, LLC, QP Health Care Services, LLC, d/b/a Vivage, Travis Young, Beverly Cole, and Michael Reinhardt, appeal the trial court‘s order denying their motions to compel arbitration. Applying the strict compliance test, we conclude that because the arbitration agreement did not satisfy the bold-faced type requirement, it is unenforceable. Therefore, we affirm.
I. Facts and Procedural History
¶ 3 Colorow Health Care, LLC, and its management company, QP Health Care Services, LLC, d/b/a Vivage, operate a long-term health care facility. When the decedent was admitted to the facility, her daughter, acting under a power of attorney, signed an arbitration agreement. The decedent passed away while a resident of the facility. The circumstances of her death are disputed.
¶ 4 After plaintiffs brought this action, defendants moved to compel arbitration. Plaintiffs opposed the motions based on discrepancies between the wording and typography of the arbitration agreement and the requirements of
¶ 5 Following that hearing and additional briefing, the court reversed itself. It noted that while the arbitration agreement included most of the language required by
¶ 6 Defendants then filed this interlocutory appeal as of right under
II. Preservation and Standard of Review
¶ 7 The parties’ motions, briefs, and arguments below preserved the issue of the validity of the arbitration agreement.
¶ 8 Statutory interpretation is subject to de novo review. Lewis v. Taylor, 2016 CO 48, ¶ 14.
III. The Statute
¶ 9
IV. The Arbitration Agreement
¶ 10 The arbitration agreement between defendants and the decedent‘s daughter, as her representative, covers two-and-a-half pages. The first page and two-thirds of the second page define the claims and the parties subject to the agreement. Next, the agreement parrots the required language from
¶ 11 After the
NOTE: BY SIGNING THIS AGREEMENT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED NY [sic] NEUTRAL BINDING ARBITRATION RATHER THAN [sic] JURY OR COURT TRAIL [sic]. YOU HAVE THE RIGHT TO SEEK LEGAL COUNSEL AND YOU AND [sic] RIGHT TO RESCIND THIS AGREEMENT WITHIN NINETY DAYS FROM THE DATE OF SIGNATURE BY BOTH PARTIES UNLESS THE AGREEMENT WAS SIGNED IN CONTEMPLATION OF HOSPITALIZATION IN WHICH CASE YOU HAVE NINETY DAYS AFTER DISCHARGE OR RELEASE FROM THE HOSPITAL TO RESCIND THIS AGREEMENT.
Except as noted, this language nearly mirrors the text required by
V. Validity of the Arbitration Agreement
¶ 12 Defendants concede that the text required by
¶ 13 Plaintiffs respond that the arbitration agreement must strictly comply with
A. Statutory Construction Principles
¶ 14 When interpreting a statute, a court‘s primary goal is to discern the legislature‘s intent. See Pinnacol Assurance v. Hoff, 2016 CO 53, ¶ 48. “To divine this intent, our first recourse is the plain language of the statute, and we refrain from rendering judgments that are inconsistent with the intent evidenced by such language.” Colo. Motor Vehicle Dealer Bd. v. Freeman, 2016 CO 44, ¶ 8. A court may discern the legislature‘s intent by examining the plain language “within the context of the statute as a whole.” Lewis, ¶ 20.
¶ 15 If a statute is ambiguous, a court may examine its legislative history to discern legislative intent. United Guar. Residential Ins. Co. v. Dimmick, 916 P.2d 638, 641 (Colo. App. 1996). Wherever possible, a statute should be construed “in a manner that gives effect to all its . . . policy objectives, and not in a way that renders one or more of its . . . goals inoperative.” Copeland v. MBNA Am. Bank, N.A., 907 P.2d 87, 90 (Colo. 1995). But in all events, a court must avoid an interpretation that “leads to an absurd result.” Concerned Parents of Pueblo, Inc. v. Gilmore, 47 P.3d 311, 313 (Colo. 2002).
¶ 16 These principles are familiar. But applying them to
B. Application
¶ 17 According to plaintiffs, the arbitration agreement fails because it did not strictly comply with
¶ 18 The initial contention raises two related questions of first impression. Colorado courts have not decided whether
1. Whether Section 13-64-403 Demands Strict Compliance
a. Plain Language
¶ 19
¶ 20 “The word ‘shall’ connotes a mandatory requirement.” Willhite v. Rodriguez-Cera, 2012 CO 29, ¶ 17. Colorado courts have held that mandatory statutory language requires strict compliance with its terms. See, e.g., E. Lakewood Sanitation Dist. v. Dist. Court, 842 P.2d 233, 236 (Colo. 1992) (“The presence of the word ‘shall’ in the clause . . . dictates th[e] unambiguous reading[,]” which is strict compliance.); Postlewait v. Midwest Barricade, 905 P.2d 21, 23-24 (Colo. App. 1995) (concluding that a party must strictly comply with a statute that uses “shall“); see also 3 Norman J. Singer & J.D. Shambie Singer, Sutherland Statutory Construction § 57:12 (7th ed. 2012) (“The effect of holding a statute mandatory is to require strict compliance with its letter in order to uphold proceedings or acts pursuant thereto or to enable persons to acquire rights under it.“).2
¶ 21 Undaunted, defendants cite several Colorado cases holding that statutes containing mandatory language required only substantial compliance. But none of these cases interpreted
¶ 22 Continuing with the plain language of the statute,
jurisdiction over all the questions that are submitted to arbitration, pending the conclusion of arbitration.” City & Cty. of Denver v. Dist. Court, 939 P.2d 1353, 1370 (Colo. 1997). Thus,
¶ 23 At the same time, as defendants point out,
¶ 24 Confirming our understanding of “shall” and the jurisdictional implications,
b. Context
¶ 25 Turning to other subsections of
Even where it complies with the provisions of this section, such an agreement may nevertheless be declared invalid by a court if it is shown by clear and convincing evidence that . . . [t]he agreement failed to meet the standards for such agreements as specified in this section[.]
Plaintiffs read this language as providing an exception to enforcing an arbitration agreement.
¶ 26 True enough, Colorado cases have pointed out that a statutory exception suggests that outside the scope of the exception, strict compliance is required. See, e.g., Grandote Golf & Country Club, LLC v. Town of La Veta, 252 P.3d 1196, 1201 (Colo. App. 2011) (noting that the existence of a good cause exception suggests strict compliance in the absence of good cause). Unlike the good cause exception in Grandote, however,
¶ 27 Thus, this subsection could be read as creating unbridled discretion to enforce an arbitration agreement, despite its deficiencies. Such a reading would favor substantial compliance over strict compliance.
¶ 28 But this reading misses the larger point —
c. Statutory Purpose
¶ 29 Assessing the purpose of
¶ 30 First, consider that the overall purpose of the HCAA is to “assure the continued availability of adequate health care services to the people of this state by containing the significantly increasing costs of malpractice insurance for medical care institutions and licensed medical care professionals . . . .”
¶ 31 Next, consider the more specific objective that “an arbitration agreement be a voluntary agreement between a patient and a health care provider . . . .”
¶ 32
¶ 33 Defendants do not explain how substantial compliance either directly furthers voluntariness or indirectly advances it by increasing understanding. Nor do we see that they could make either showing. To the contrary, for the following reasons, substantial compliance creates a greater risk of misunderstanding than does strict compliance.
¶ 34 Of course, substantial compliance could sometimes achieve the same level of understanding as strict compliance. Still, because understanding is subjective, a substantial compliance test would burden a patient or the patient‘s representative to show that for lack of complying language and typography, the effect of an arbitration agreement was not understood. Thus, substantial compliance inflicts the costs and uncertainty of litigating understanding, as a proxy for voluntariness, on the patient or representative. And the patient or representative would have to carry that burden in the face of language — albeit noncompliant with the statute — describing the agreement‘s effect. Cf. In re Rosen, 198 P.3d 116, 119 (Colo. 2008) (“[W]e cannot say, as a matter of law, that no reasonable fact finder could be unconvinced by the circumstantial evidence of the respondent‘s subjective intent.“).
¶ 35 Even worse, resolving understanding on a case-by-case basis under a substantial compliance standard could lead to inconsistent results. For example, one trial court might conclude that regular-faced type, but in sixteen-point font, substantially complies with
¶ 37 As well, the results would be consistent: if
¶ 38 Given all this, the General Assembly‘s stated purpose — voluntariness of arbitration agreements — is better served by demanding strict compliance with
¶ 39 In sum, based on these three factors — plain language, context, and purpose — we conclude that
2. Whether Lack of Bold-Faced Type Dooms the Agreement
a. Absurd Results
¶ 40 Defendants’ argument that invalidating an agreement based on a lack of bold-faced type leads to an absurd result — because the arbitration agreement still contained the requisite wording and in a typographically prominent format — misses the mark.
¶ 41 Defendants begin with a false analogy: a strict compliance standard would invalidate otherwise adequate agreements where, for example, the agreement substituted synonyms for statutorily required words. To avoid this absurd result, they continue, strict compliance must excuse minor departures from statutory requirements that could have had no practical effect on the reader. And according to defendants, this same rationale applies to the absence of bold-faced type: to avoid an absurd result, this anomaly too must be excused, even under a strict compliance standard, where it had no practical effect on the reader.
¶ 42 Not so fast. This analogy equates substituting a synonym in an agreement with failing to use a required typeface. But we know that by definition, substituting a synonym could not have any effect. See Webster‘s Third New Int‘l Dictionary 2320 (2002) (“A [synonym is a] word having the same meaning as another word.“). The opposite is true for the failure to use bold-faced type. See Caspe v. Aaacon Auto Transp., Inc., 658 F.2d 613, 616 (8th Cir. 1981) (noting that bold-faced type allows language to “stand out and attract the reader‘s attention“); Stauffer Chem. Co v. Curry, 778 P.2d 1083, 1092 (Wyo. 1989) (acknowledging that bold-faced type allows words to “stand out prominently from surrounding words“).
¶ 43 In the absence of any authority holding that strict compliance with a bold typeface requirement produces an absurd result, we reject defendants’ contention.
b. Public Policy
¶ 44 Finally, defendants’ argument that Colorado‘s “strong public policy in favor of
¶ 45 To begin, the HCAA recognizes this policy. But it also acknowledges that noncompliant agreements are inconsistent with public policy. See
¶ 46 As well, the policy favoring arbitration is a tie-breaker used to “construe any ambiguities.” BFN-Greeley, LLC v. Adair Grp., Inc., 141 P.3d 937, 940 (Colo. App. 2006). But the discrepancies between the arbitration agreement and the statutory requirements do not involve ambiguities. Nor do defendants cite, and we have not found in Colorado, authority holding that that the policy favoring arbitration tilts the playing field on which courts decide the threshold question of whether an arbitration agreement is valid. Thus, we conclude Colorado‘s policy in favor of arbitration does not change our conclusion.
VI. Conclusion
¶ 47 That the arbitration agreement entirely lacked bold-faced type is undisputed, and we have concluded that
¶ 48 The order of the trial court denying the motions to compel arbitration is affirmed.
JUDGE ASHBY and JUDGE MÁRQUEZ concur.