907 F.3d 1230
10th Cir.2018Background
- Jeffrey Allen was injured in a May 2013 auto accident and sought reimbursement under his wife’s USAA auto policy for medical expenses arising from the accident.
- The USAA policy provided medical-payments coverage up to $100,000 but included a clause limiting payment to expenses incurred within one year of the accident; USAA had previously notified the insured of a reduction from three years to one year in 2006.
- In 2012 USAA sent a four-page “Summary Disclosure Form” stating medical payments cover “reasonable health care expenses” and instructing insureds to read the policy for complete details; the form also stated it was not a policy and directed readers to the actual policy.
- USAA paid about $18,000 under the policy within the one-year window; Allen continued treatment after the year elapsed and USAA refused further payments based on the contractual time limit.
- Allen sued USAA in Colorado federal court (class action), alleging the one-year limit was unenforceable under (1) Colorado’s reasonable-expectations doctrine based on the 2012 disclosure form and (2) Colorado’s MedPay statute (Colo. Rev. Stat. § 10-4-635). The district court granted summary judgment for USAA; the Tenth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2012 summary disclosure unlawfully created a reasonable expectation of time-unlimited MedPay coverage (reasonable-expectations doctrine) | Allen: the disclosure’s statement that MedPay pays “reasonable health care expenses” would lead an ordinary insured to expect coverage for all reasonable accident-related expenses regardless of timing | USAA: the summary expressly disclaimed being a policy, told insureds to read the policy for details, and the one-year limit is clearly and accessibly stated in the policy | Held for USAA: the disclosure was not deceptive; the policy’s one-year limit was clear and not hidden, so reasonable-expectations doctrine does not void it |
| Whether Colorado’s MedPay statute forbids insurers from imposing time limits on medical-payments coverage | Allen: the statute’s purpose and certain provisions (including presumptive coverage if insurer fails to offer) imply time-unlimited coverage or prohibit time limits | USAA: the statute’s plain text is silent about time limits and does not prohibit contractual time limitations; insurer freedom to contract controls absent statutory inhibition | Held for USAA: the MedPay statute’s text contains no prohibition on time limits; under Colorado law courts may not add language to statute to create such a prohibition |
Key Cases Cited
- Bailey v. Lincoln General Insurance Co., 255 P.3d 1039 (Colo. 2011) (articulates Colorado reasonable-expectations doctrine and requirement of extrinsic evidence of deception)
- Davis v. M.L.G. Corp., 712 P.2d 985 (Colo. 1986) (unfair deceptive drafting—exclusion invalidated where insurer hid terms in tiny, hard-to-read type)
- Coats v. Dish Network, LLC, 350 P.3d 849 (Colo. 2015) (refused to add limiting language to statute; courts should not engraft text onto clear statutory language)
- Chacon v. American Family Mutual Insurance Co., 788 P.2d 748 (Colo. 1990) (in absence of statutory inhibition, insurers may include contract terms consistent with public policy)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard: genuine dispute exists if reasonable jury could return verdict for nonmoving party)