Supreme Court Rules on Health Care Statute’s Compliance Standard

Question of first impression turned on a lack of boldface type in arbitration agreement

The Colorado Supreme Court has answered a question of first impression about arbitration agreements under the Health Care Availability Act’s compliance standard. The vehicle? A case involving a lack of boldface type.

In Colorow Health Care v. Fischer, the court ruled Section 13-64-403, governing arbitration agreements, of the HCAA requires substantial compliance rather than strict compliance in order for the agreements to be valid. Subsection 4 requires arbitration agreements to contain a four-paragraph notice in boldface type and at least 10-point font. Its purpose is to make patients understand entering the agreements is voluntary.

In the underlying case, Roger and Amy Fischer filed a wrongful death claim in Montrose County for the death of their mother and grandmother, Charlotte Fischer, in a health care facility operated by Colorow Health Care after she was assaulted by an employee. Charlotte’s daughter, Judith Cooper, had signed admissions paperwork on Charlotte’s behalf, including an agreement compelling arbitration for any dispute related to Charlotte’s relationship with the health care facility. When filing the wrongful death claim in court, the Fischers claimed the arbitration agreement’s lack of required language in boldface type invalidated it. 

The trial court sided with the Fischers and denied the health care facility’s motion for arbitration. The Court of Appeals affirmed the decision and concluded 13-64-403 requires strict compliance. On June 11, the Supreme Court reversed the decision. The court had granted certiorari on two questions: What level of compliance 13-64-403 requires, and whether a lack of boldface type invalidates an otherwise compliant arbitration agreement under the statute.

Plaintiffs’ attorneys Mike Laszlo and William Rhett Meyer said they plan to petition the Supreme Court for rehearing by June 25. While Laszlo said he does not expect the court to reverse course on the substantial compliance standard it has set, he and Meyer said the court did not fully answer the question presented to it. The court only ruled the particular agreement in this case complies despite its lack of boldface type. 

But Laszlo said the agreement was not actually otherwise compliant because it also contained typographical errors, a contention Justice Melissa Hart addressed in her dissent. The majority opinion did not answer the question of whether the agreement’s typographical errors rendered it invalid, stating it would not address the issue because it had not been asked to. Meyer said the court should have considered how the totality of circumstances affects compliance with the statute, including the typographical errors, instead of only the boldface type.

“So I have a problem here, because the court answers a question not based on the question in front of it. The question doesn’t ask whether the arbitration agreement here is valid or not,” Laszlo said. “It asks whether an otherwise compliant arbitration agreement complies, and the court just … makes a total leap and says this one complies.”

Attorneys for Colorow Health Care did not respond to requests for comment on the decision.

In addition, Laszlo said, the opinion contains factual errors. It identifies plaintiff Roger Fischer as Charlotte Fischer’s grandson-in-law, but he is her son, according to Laszlo. He said the court also incorrectly stated Cooper’s voluntariness signing the agreement is an undisputed fact by the parties. 

On the contrary, Laszlo said, because the arbitration agreement did not meet the statutory requirements of 13-64-403, Cooper could not have entered into it voluntarily.

“The statute says in order for it to be voluntary, you have to do these things,” he said. “And because the arbitration agreement didn’t do those things, our argument has been for the last three-and-a-half, almost four years that it wasn’t voluntary.”

Because Subsection (4) in 13-64-403 serves to ensure patients enter arbitration agreements voluntarily, the Supreme Court concluded the legislature did not intend “to elevate form over function. And function — that is, notice to the patient consumer of services — is better served by the flexibility substantial compliance affords,” stated the opinion. The court used factors set by a 1994 precedent, Bickel v. City of Boulder, to determine the Colorow Health Care case’s arbitration agreement substantially complied with the HCAA’s formatting requirements.

The court determined the extent of Colorow’s noncompliance was minimal despite the lack of boldface type because the arbitration agreement contained the required language and was set apart in all capital letters in font larger from the rest of the text. The court also concluded the agreement met Section 13-64-403’s purpose of voluntariness despite technical noncompliance. And the court stated a reasonable inference on the part of Colorow to comply with the statute. 

“The facility may have been careless, but that does not necessarily mean it acted in bad faith,” wrote Justice William Hood in the opinion. “We perceive no effort to mislead, such as by burying the required text in fine print or by using a type of script that is unusually difficult to read.”

Laszlo said he does not believe the court’s weighing in on bad faith has a place in the ruling, since the statute does not mention the agreement drafter’s intent. “[The court] wasn’t asked to find bad faith,” he said. “That, to me, is startling, and I think will lead to a ton of litigation for years to come.”

The Supreme Court also overturned the Court of Appeals’ ruling that the HCAA is a jurisdictional statute. Because jurisdictional statutes require strict compliance, the Court of Appeals ruled in favor of that standard. But the Supreme Court ruled because Subsection (4) of 13-64-403 does not contain language “expressly or by necessary implication limiting a court’s jurisdiction,” otherwise broadly vested upon courts by the Colorado Constitution, the proper standard of should instead be determined by the provision’s purpose.

Laszlo took issue with the Supreme Court’s ruling that the HCAA is not jurisdictional. He said he believes Subsection (1.5) makes it jurisdictional because it defines the district court’s authority over arbitration proceedings. Subsection (1.5) states exemplary damages can be awarded in the proceedings, but can also be modified by a district court if petitioned to challenge the amount as either excessive or inadequate.

He said he believes the court’s analysis could lead to confusion and subsequent litigation over which statutes are or are not jurisdictional.

“And this opinion, written as it is, applies to the entire 403, not just 403(4). Whether or not 403(4) is jurisdictional, because it’s a notice requirement, it applies to the entire statute,” Laszlo said. “So that’s very critical. So that’s why I think this opinion is going to lead to a lot of litigation.”

Justice Melissa Hart wrote a dissent that Justice Richard Gabriel joined. She said she believes the structure and language of 13-64-403 plainly suggests the legislature intended strict compliance.

“Use of the term ‘shall’ in subsections 403(3) and 403(4) is one important piece of evidence that the legislature intended health care providers to use the specific language, set out in the specific typography provided in the statute,” she wrote. “We have never found that this kind of legislative specificity — the provision of specific and detailed language that must be included in a notice in order to comply with the law — required only substantial compliance.”

Hart also took issue with the majority declining to address how the Colorow agreement’s typographical errors factored into the question of compliance. She wrote the errors make the arbitration agreement different from the language required by 13-64-403. 

“Does this constellation of errors nonetheless permit the conclusion that the notice provided here met a substantial compliance standard?” she wrote. “I am not at all convinced that it does. It certainly does not meet the strict compliance standard that I believe the legislature intended.” Hart said she believes adopting the substantial compliance standard will increase litigation.

“The decision guts the statute of the formatting requirements,” Laszlo said. “Doctors and health care facilities can really get creative now and do whatever you want.”

—Julia Cardi

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