The Colorado Supreme Court has ruled that insurers have a duty not to unreasonably delay or deny payment of covered benefits, even though other components of an insured's claim still may be reasonably in dispute.
The Case
An underinsured motorist struck a car driven by Dale Fisher, causing Mr. Fisher injuries requiring over $60,000 in medical care. Mr. Fisher was not at fault, and he was covered under multiple underinsured motorist (“UIM”) insurance policies issued by State Farm Mutual Automobile Insurance Company.
State Farm agreed that Mr. Fisher's medical bills were covered under the UIM policies, but it disputed other amounts Mr. Fisher sought under the policies, including lost wages.
State Farm refused to pay Mr. Fisher's medical bills without first resolving his entire claim. Mr. Fisher sued, alleging that State Farm had unreasonably delayed paying his medical expenses.
In response, State Farm argued that it had no duty to make piecemeal payments, even for Mr. Fisher's undisputed medical expenses, when it disputed the rest of Mr. Fisher's UIM claim.
A jury returned a verdict in Mr. Fisher's favor, deciding that State Farm had unreasonably delayed paying Mr. Fisher's medical expenses and had violated Section 10-3-1115, C.R.S., which provides that an insurer “shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party [insured] claimant.”
The trial court entered a judgment of the UIM policy limit ($400,000), plus double medical expenses ($122,250.32), which was the penalty under Section 10-3-1116 when an insurer unreasonably delayed or denied payment of a covered benefit under Section 10-3-1115.
A division of the court of appeals affirmed, and the case reached the Colorado Supreme Court.
The Colorado Supreme Court's Decision
The court affirmed, holding that insurers must not unreasonably delay or deny payment of covered benefits, even though other components of an insured's claim still may be reasonably in dispute.
In its decision, the court found that Section 10-3-1115's language was “clear” and that it imposed the duty it said it imposed: an insurer cannot unreasonably delay or deny paying a covered benefit without a reasonable basis for doing so.
According to the court, nothing in the statute required or supported withholding payment of undisputed covered benefits simply because other portions of an insured's UIM claim remained disputed.
The court pointed out that it was “undisputed” that Mr. Fisher's medical expenses were a covered benefit under the State Farm UIM policies. Under the statute's plain language, the court ruled, “State Farm had a duty not to unreasonably delay or deny paying [Mr.] Fisher's medical expenses.”
Nevertheless, the court noted, State Farm did not pay the undisputed covered benefits and instead proceeded to trial.
The Colorado Supreme Court concluded that the court of appeals had properly upheld Mr. Fisher's jury award.
The case is State Farm Mutual Automobile Ins. Co. v. Fisher, No. 15SC472 (Colo. May 21, 2018). Attorneys involved include: For Petitioner: Hall & Evans, L.L.C., Alan Epstein, Denver, Colorado, Frank Patterson & Associates, P.C., Franklin D. Patterson, Greenwood [**2] Village, Colorado, Sweetbaum Sands Anderson PC, Jon F. Sands, Denver, Colorado. For Respondent: Bachus & Schanker, LLC, J. Kyle Bachus, Denver, Colorado. For Amici Curiae Colorado Civil Justice League, American Insurance Association, Property Casualty Insurers Association of America, and National Association of Mutual Insurance Companies: Wheeler Trigg O'Donnell LLP, Terence M. Ridley, Evan Stephenson, Kayla Scroggins, Denver, Colorado. For Amicus Curiae Colorado Defense Lawyers Association: Ruebel & Quillen, LLC, Jeffrey Clay Ruebel, Westminster, Colorado.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].