Justia Insurance Law Opinion SummariesArticles Posted in Colorado Supreme Court
Harvey v. Centura, No.
Peggy Harvey and Eileen Manzanares were injured in separate car accidents when their cars were struck by other drivers. Each was then taken to a Centura-affiliated hospital (along with Centura Health Corporation, “Centura”) for treatment. At the time they were treated by Centura, both women’s health insurance was solely through Medicare and Medicaid. And both women’s injuries resulted in hospital stays. In addition to Medicare and Medicaid, both women had automobile insurance whose policies included medical payment ("Med Pay") coverage for medical bills incurred as a result of a motor vehicle accident. In addition, the third-party tortfeasors who caused Harvey’s and Manzanares’s injuries also had automobile insurance. Both Harvey and Manzanares advised Centura of all of the available health and automobile insurance policies. Centura then assigned the women’s accounts to a collection agency, Avectus Healthcare Solutions, for processing; Avectus submitted Centura’s medical expenses to each of the automobile insurers involved, including the automobile insurers for Harvey, Manzanares, and the third-party tortfeasors. Within two weeks after submitting these charges to the various automobile insurers (and within two months of the women’s respective discharges from their hospital stays), Centura filed hospital liens against both of the women. Centura conceded it did not bill either Medicare or Medicaid before filing their respective liens. Both Harvey and Manzanares subsequently brought suit, alleging that Centura had violated the Lien Statute by not billing Medicare for the services provided to the women prior to filing the liens. The parties disputed whether when, as here, Medicare was a person’s principal source of health coverage, Medicare could be considered a “primary medical payer of benefits” under the Lien Statute (such that a hospital must bill Medicare before asserting a lien), or if such an interpretation was barred by the Medicare Secondary Payer statute, which designated Medicare as a “secondary payer.” The Colorado Supreme Court concluded that when Medicare was a patient’s primary health insurer, the Lien Statute required a hospital to bill Medicare for the medical services provided to the patient before asserting a lien against that patient. "Hospital liens are governed by state, not federal, law, and merely enforcing our Lien Statute does not make Medicare a primary payer of medical benefits in violation of the MSP Statute." View "Harvey v. Centura, No." on Justia Law
Gill v. Waltz
In December 2015, Joseph Gill was injured in an on-the-job car accident when he was struck by a truck owned by Swift Transportation Company, LLC (“Swift”), driven by Christopher Waltz. As a result of the injuries he suffered in the accident, Gill obtained workers’ compensation benefits through Pinnacol Assurance (“Pinnacol”) to cover his medical expenses. Gill’s medical providers produced bills totaling $627,809.76 for the services he received. However, because Colorado’s workers’ compensation scheme caps the amount that medical providers can charge, Pinnacol satisfied all of Gill’s past medical expenses for significantly less. Pinnacol then pursued, and ultimately settled, its subrogation claim with Swift. Gill and his wife subsequently sued Swift and Waltz for damages resulting from the accident, and the case was removed from state court to the U.S. District Court for the District of Colorado. Swift sought partial summary judgment , relying on case law which, in applying Colorado’s workers’ compensation law, concluded that an injured employee lacked standing to pursue damages for services that were covered by workers’ compensation after the insurer had settled its subrogated claims with the third-party tortfeasor. While the federal district court was considering Swift’s motion, the Colorado Court of Appeals issued its opinion in Scholle v. Delta Air Lines, Inc., 2019 COA 81M, in which a divided court disagreed with the case law. Instead, it determined that a plaintiff-employee could seek damages for medical services covered by workers’ compensation insurance if the billed amounts were higher than the paid amounts, even after the insurer had settled its subrogation claim. The Colorado Supreme Court reversed, finding that a settlement between a workers’ compensation insurer and a third-party tortfeasor for all past medical expenses paid as a result of an on-the-job injury extinguished the plaintiff-employee’s claim to recover damages for those past medical expenses from the third-party tortfeasor. "As a result, while Joseph Gill may still pursue his claims for noneconomic damages and any economic damages not covered by his workers’ compensation insurer, he no longer has any claim to recover economic damages based on services paid for by workers’ compensation. There is consequently no reason to present evidence of either the amounts billed or the amounts paid for those services, and the collateral source rule is not implicated in this case." View "Gill v. Waltz" on Justia Law
Delta Air Lines, Inc. v. Scholle
William Scholle worked for United Airlines, Inc., driving luggage tugs from the terminal to waiting planes, loading or unloading the bags, and returning to the terminal. In June 2012, Scholle was stopped at a stop sign on a return trip to the terminal when he was rear-ended by Daniel Moody, an employee of Delta Air Lines, Inc. Scholle applied for and received workers’ compensation insurance benefits from United, a self-insured employer. United covered all medical expenses resulting from Scholle’s on-the-job injuries, as well as a portion of his lost wages. Scholle’s medical providers produced bills for the services he received that reflected costs in excess of what is permitted by the workers’ compensation fee schedule, though they never tried to collect amounts beyond those permitted by statute. United exercised its subrogation right and sued Delta and Moody to recover the payments it made to and on behalf of Scholle. Scholle separately sued Delta and Moody for negligence, seeking to recover compensation for damages as a result of the collision. Eventually, Delta settled United’s subrogation claim; Scholle’s claims against Moody were later dismissed, leaving only Scholle and Delta as parties. Delta admitted liability for the accident, and the case went to trial on damages. In pretrial motions in limine, Scholle argued that the collateral source rule should preclude Delta from admitting evidence of the amount paid by Scholle’s workers’ compensation insurance to cover the medical expenses arising from his injuries. Instead, Scholle contended, the higher amounts billed by his medical providers reflected the true reasonable value of the medical services provided to him and should have been admissible at trial. The trial court disagreed, reasoning that when Delta settled with United, it effectively paid Scholle’s medical expenses, such that amounts paid for those expenses were no longer payments by a collateral source. The court further noted that, under the workers’ compensation statute, any amount billed for medical treatment in excess of the statutory fee schedule was “unlawful,” “void,” and “unenforceable.” The Colorado Supreme Court concluded that when, as here, a workers’ compensation insurer settles its subrogation claim for reimbursement of medical expenses with a third-party tortfeasor, the injured employee’s claim for past medical expenses is extinguished completely. "Because the injured employee need not present evidence of either billed or paid medical expenses in the absence of a viable claim for such expenses, the collateral source rule is not implicated under these circumstances. The court of appeals therefore erred in remanding for a new trial on medical expenses based on a perceived misapplication of that rule." View "Delta Air Lines, Inc. v. Scholle" on Justia Law
Ryser v. Shelter Mutual Insurance
The issue this case presented for the Colorado Supreme Court's review centered on whether an injured passenger riding in a vehicle negligently driven by one co-worker and owned by another co-worker, when all three were acting within the course and scope of their employment, could recover UM/UIM benefits under the vehicle owner’s insurance policy. Although the parties disputed the meaning of the phrases “legally entitled to recover” and “legally entitled to collect” under section 10-4-609, C.R.S. (2020) the Court did not resolve that dispute here because, assuming without deciding that plaintiff Kent Ryser’s interpretation was correct, the Court concluded that he still could not prevail. Specifically, the Court found an injured co-worker was barred by operation of the Workers’ Compensation Act's (“WCA”) exclusivity and co-employee immunity principles from recovering UM/UIM benefits from a co-employee vehicle owner’s insurer for damages stemming from a work-related accident in which another co-employee negligently drove the owner’s vehicle and the injured party was an authorized passenger. Though the Court's reasoning differed from the appellate court's judgment, it affirmed the outcome: summary judgment was properly entered in favor of the insurance company. View "Ryser v. Shelter Mutual Insurance" on Justia Law
Persichette v. Owners Ins. Co.
William Persichette, through Franklin D. Azar & Associates, P.C., brought an underinsured-motorist (“UIM”) action against Owners Insurance Company (“Owners”) for allegedly handling his insurance claim unreasonably and in bad faith. About three months later, Persichette retained Mark Levy of Levy Law, P.C. (collectively “Levy Law”) as co-counsel. Owners promptly moved to disqualify Levy Law pursuant to Colo. RPC Rule 1.9(a) on the ground that Levy Law was Owners’ longtime former counsel and had a conflict of interest. The district court denied the motion, finding that Levy Law’s representation of Persichette was not “substantially related” to Levy Law’s decade-plus representation of Owners. Owners then filed a C.A.R. 21 petition invoking the Colorado Supreme Court's original jurisdiction. The Supreme Court concluded the district court erred in denying Owners’ motion to disqualify, and reversed. View "Persichette v. Owners Ins. Co." on Justia Law
Amica Life Insurance Company v. Wertz
The Tenth Circuit Court of Appeals certified a question of law to the Colorado Supreme Court. The certified question arose from a dispute in which plaintiff Amica Life Insurance Company sought a declaratory judgment that it was not required to pay defendant Michael Wertz benefits under a life insurance policy naming Wertz as the beneficiary. The policy, which was issued in compliance with a standard enacted by the Interstate Insurance Product Regulation Commission (the “Commission”), contained a two-year suicide exclusion, and the insured committed suicide more than one year but less than two years after Amica had issued the life insurance policy to him. Wertz contended that the policy’s two-year suicide exclusion was unenforceable because it conflicted with Colorado statute, section 10-7-109, C.R.S. (2019). Wertz asserted that the Colorado General Assembly could not properly delegate to the Commission the authority to enact a standard that would effectively override this statute. After review, the Colorado Supreme Court agreed with Wertz, and accordingly, answered the certified question narrowly: the General Assembly did not have the authority to delegate to the Commission the power to issue a standard authorizing the sale of life insurance policies in Colorado containing a two-year suicide exclusion when a Colorado statute prohibited insurers doing business in Colorado from asserting suicide as a defense against payment on a life insurance policy after the first year of that policy. View "Amica Life Insurance Company v. Wertz" on Justia Law
Owners Ins. v. Dakota Station II Condo. Ass’n
A condominium association, Dakota Station II Condominium, filed two claims with its insurer, Owners Insurance Company, for weather damage. The parties couldn’t agree on the money owed, so Dakota invoked the appraisal provision of its insurance policy. The parties each selected an appraiser, putting the rest of the provision’s terms into motion. Ultimately, the appraisers submitted conflicting value estimates to an umpire, and the umpire issued a final award, accepting some estimates from each appraiser. Dakota’s appraiser signed onto the award, and Owners paid Dakota. Owners later moved to vacate the award, arguing that Dakota’s appraiser was not “impartial” as required by the insurance policy’s appraisal provision and that she failed to disclose material facts. The trial court disagreed and “dismissed” the motion to vacate. A division of the court of appeals affirmed. In its review, the Colorado Supreme Court interpreted the policy’s impartiality requirement and determined whether a contingent-cap fee agreement between Dakota and its appraiser rendered the appraiser partial as a matter of law. The Court concluded the plain language of the policy required appraisers to be unbiased, disinterested, and unswayed by personal interest, and the contingent-cap fee agreement didn’t render Dakota’s appraiser partial as a matter of law. Accordingly, the Court affirmed the judgment of the court of appeals with respect to the contingent-cap fee agreement, reversed with respect to the impartiality requirement, and remanded for further proceedings. View "Owners Ins. v. Dakota Station II Condo. Ass'n" on Justia Law
Colo. Dept. of Labor & Emp. Div. of Workers’ Comp. v. Dami Hosp.
Dami Hospitality, LLC (“Dami”) was the owner-operator of a Denver motel that employed between four and ten people at any given time. As an employer of three or more persons, Dami was required by statute to maintain workers’ compensation insurance. Dami allowed its workers’ compensation coverage to lapse on in 2005. Upon receiving notification of the lapse from the Division of Workers’ Compensation (“DWC”), Dami conceded the violation and paid a corresponding settlement in June 2006. Dami again allowed its workers’ compensation coverage to lapse in 2006. From June 2007 to September 2010, Dami carried the proper insurance, but the company’s workers’ compensation coverage again lapsed on September 12, 2010 and went without insurance until July 9, 2014. On February 19, 2014, the DWC discovered that Dami had allowed its workers’ compensation insurance to lapse for these periods of time and issued a notice to Dami regarding this. Dami faxed a copy of workers' compensation insurance for the July 10, 2014 - July 10, 2015 period; Dami offered no such evidence for any other period, nor any explanation for the lapses. Fines accrued for noncompliance, totaling $841,200. The DWC ultimately issued an order upholding the fines. Dami appealed to the Industrial Claim Appeals Office (“ICAO”). The ICAO rejected all but Dami’s excessive fines argument. The ICAO remanded the matter to the DWC, directing it to review the constitutionality of the aggregated per diem fines assessed in accordance with the test established by the court of appeals in Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo. App. 2005). The ICAO would ultimately affirm the resulting fines, and Dami appealed to the Court of Appeals. The appellate court set aside the fines, assuming, without deciding, the Excessive Fines Clause could be applied to challenge regulatory fees imposed on a corporation. The Colorado Supreme Court concluded the proper test to assess the constitutionality of government fines under the Eighth Amendment required an assessment of whether the fine was grossly disproportional to the offense for which it was imposed. The Supreme Court thus reversed the court of appeals’ ruling and remanded to that court for return to the Division of Workers’ Compensation with instructions to, as appropriate and necessary, develop an evidentiary record sufficient to determine whether the $250–$500 fine that a business was required to pay for each day that it was out of compliance with Colorado’s workers’ compensation law is proportional to the harm or risk of harm caused by each day of noncompliance. View "Colo. Dept. of Labor & Emp. Div. of Workers' Comp. v. Dami Hosp." on Justia Law
Thompson v. Catlin
The issue this case presented for the Colorado Supreme Court's review were the insurance proceeds owed to petitioners Rosalin Rogers and Mark Thompson because of a failed property investment orchestrated by their broker-dealer, United Securities Alliance. Ten years into litigation, the issue of the amount of debt at issue has remained at issue, and unresolvable by the courts. United's insurer, Catlin Insurance, was ordered to pay petitioners under a professional liability policy; an appellate court upheld a district court's determination of attorney fees and costs that Catlin could deduct from the liability limit under the policy. The Supreme Court first addressed whether the "Thompson IV" division erred when it upheld the district court’s decision to consider new evidence on remand from Thompson v. United Securities Alliance, Inc. (Thompson III), No. 13CA2037, (Colo. App. Oct. 16, 2014). And Secondly, the Supreme Court addressed whether the Thompson IV division erred when it held that there was no legal basis for awarding prejudgment interest in a garnishment proceeding. As to the first issue, the Supreme Court affirmed the court of appeals; as to the second, it reversed and remanded for further proceedings. View "Thompson v. Catlin" on Justia Law
Schultz v. GEICO Casualty Company
Plaintiff-petitioner Charissa Schultz was injured in a 2015 car accident in which the other driver failed to stop at a stop sign. The other driver’s insurance company settled for its $25,000 policy limit, and Schultz made a demand on her own uninsured/underinsured motorist benefits under her GEICO policy, which also had a $25,000 limit. In April 2017, after months of correspondence and apparent review of an MRI performed on Schultz in April 2015, GEICO offered Schultz its full policy limit, and it did so without requesting that she undergo an independent medical examination (“IME”). Indeed, GEICO’s claim logs reveal that at the time GEICO decided to offer Schultz its policy limits, it “concede[d] peer review wouldn’t be necessary,” indicating an affirmative decision not to request an IME. A few months later, Schultz filed the present lawsuit asserting claims for bad faith breach of an insurance contract and unreasonable delay in the payment of covered benefits. GEICO denied liability, disputing the extent and cause of Schultz’s claimed injuries and asserting that causation surrounding the knee replacement surgeries was “fairly debatable” because Schultz had preexisting arthritis, which GEICO claimed may independently have necessitated her surgeries. To establish its defense, GEICO ordered the IME and the district court granted that request. The Colorado Supreme Court concluded GEICO’s conduct had to be evaluated based on the evidence before it when it made its coverage decision and that, therefore, GEICO was not entitled to create new evidence in order to try to support its earlier coverage decision. The Court also concluded the district court abused its discretion when it ordered Schultz to undergo an IME over three years after the original accident that precipitated this case and a year and a half after GEICO had made the coverage decision at issue. View "Schultz v. GEICO Casualty Company" on Justia Law