Justia Insurance Law Opinion Summaries

The Supreme Court reviewed an unpublished appeallate court decision to determine whether: the court of appeals erred under Colorado's collateral source doctrine when it admitted evidence of the amounts paid by Respondent State Farm Mutual Automobile Insurance Company for medical expenses that Petitioner Jack Sunahara incurred as a result of a car accident; and whether the court of appeals erred in affirming the trial court's ruling that portions of State Farm's claim file and information used by the company to generate reserves and settlement authority were not discoverable. The Court held that the appellate court erred in affirming the admission of evidence of the amounts paid for Petitioner's medical expenses because the pre-verdict evidentiary component of Colorado's collateral source rule prohibits the admission. The Court affirmed the appellate court in excluding portions of State Farm's claim file from admission.

This case arose from the negligence action Plaintiff Donald Smith filed against Defendant Michael Jeppsen after the parties were involved in a car accident. Plaintiff sought to recover, among other things, the cost of past and future medical expenses resulting from the crash. Defendant admitted liability, and the parties agreed that the proper measure of Plaintiff's medical expense damages should be the necessary and reasonable value of the medical services rendered. However the parties disagreed as to whether the trial court, in determining reasonable value, could consider evidence of the amounts billed to and paid by Plaintiff's insurance company (a collateral source). Upon review, the Supreme Court concluded the trial court was correct in applying 10-1-135 C.R.S. (2011) in this case because the statute pertained to cases pending recovery as of August 11, 2010. Furthermore, the Court held that the trial court correctly excluded from evidence the amount of the insurance company's payments because section 10-1-135(10)(a) codifies the common law pre-verdict evidentiary component of the collateral source rule and unambiguously required the exclusion.

The class certification issue presented in this case arose from a dispute concerning the payment of medical bills under the Colorado Automobile Accident Reparations Act (No-Fault Act). Plaintiffs Pauline Reyher and Dr. Wallace Brucker filed suit against State Farm Mutual Automobile Insurance Company (State Farm) alleging that it failed to pay full, reasonable amounts in medical expenses in violation of the No-Fault Act and its own contracts. Plaintiffs subsequently moved to certify two classes that included all insureds and providers, respectively, who submitted medical bills to State Farm and were reimbursed for less than the full amounts. The trial court denied the motion for certification on grounds that Plaintiffs failed (among other things) to establish the "predominance" requirement. The appellate court reversed and remanded the case to enter an order certifying the class. State Farm appealed, arguing that the appellate court's finding of "predominance" was made in error. Upon review, the Supreme Court affirmed the trial court's decision and reversed the appellate court.

In June 2002, Codiejo Apodaca and her stepsister (the Insureds) were injured in an automobile accident. At the time of the accident, the Insureds were covered as resident relatives under an auto policy and a personal umbrella policy both issued by Respondent Allstate Insurance Company (Allstate). The policy included uninsured and underinsured motorist coverage in addition to bodily injury coverage. The umbrella policy provided excess liability for "occurrences" arising out of, among other things, "occupancy of a land vehicle by an insured for personal transportation." Allstate did not offer separate UM/UIM coverage in connection with the umbrella policy. The Insureds brought suit against Allstate for reformation of the umbrella policy to include UM/UIM coverage. In their view, Colorado law required Allstate to offer UM/UIM coverage in connection with the umbrella policy because the policy included automobile liability coverage. As such, the Insureds contended that UM/UIM coverage should have been incorporated into the umbrella policy as a matter of law. The trial court granted Allstate's motion to dismiss the suit, finding that only liability policies expressly linked to a specific, licensed Colorado vehicle were required to include mandatory UM/UIM insurance. The appellate court affirmed the trial court, and on appeal, the Insureds argued that both the trial and appellate courts misread both the policy and Colorado law. Upon review, the Supreme Court held that an umbrella policy is not an "automobile liability or motor vehicle liability policy" as specified by Colorado law. Therefore, the Court affirmed the appellate court's decision.

Respondent Lincoln General Insurance Companyâs insured drove a rental car under the influence of methamphetamines, and led police on a high-sped car chase that ended when he struck a vehicle containing Petitioner Julie Bailey and her son. Her son was killed. The insured pled guilty to five felonies, including second-degree murder. The insured assigned his rights to Petitioner to collect on a $1 million excess-insurance policy issued by Lincoln General. Lincoln General denied coverage for damages caused by the insured, relying on an exclusion in the rental agreement that voided coverage if the car was used to commit a crime that could be charged as a felony. The trial court and the court of appeals held that the criminal-acts exclusion of the policy was enforceable. The Supreme Court affirmed the lower courtsâ decisions to uphold the criminal-acts exclusion of the insurance policy, finding that Lincoln Generalâs use of the exclusion was a proper exercise of its freedom to contract and provide coverage or damages caused by fortuitous events instead of for damages caused by intentionally criminal acts.