Calderon v. American Family Mutual Insurance Co.
2016 CO 72
| Colo. | 2016Background
- Calderon was injured by an uninsured driver and held an American Family policy with $300,000 UM/UIM limits and $5,000 MedPay; he paid separate premiums for each.
- American Family paid the $5,000 MedPay directly to Calderon’s medical providers and disputed Calderon’s UM/UIM claim.
- A jury awarded Calderon $68,338.97 on the breach-of-contract/UM claim (including medical expenses); the trial court reduced the verdict by $5,000 (MedPay setoff) and entered judgment for the reduced amount.
- The Colorado Court of Appeals affirmed, reading the statute’s “amount of the [UM/UIM] coverage available” to mean the policy limit ($300,000), allowing a MedPay setoff so long as limits weren’t reduced.
- The Colorado Supreme Court granted certiorari and reversed, holding the statute bars setoffs of MedPay from the amount of UM/UIM recovery on a particular claim (i.e., the award), not merely reduction of the policy limit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §10-4-609(1)(c)’s prohibition on reducing “the amount of the [UM/UIM] coverage available pursuant to this section” bars setting off MedPay payments from UM/UIM recovery | Calderon: phrase refers to the amount available on a particular claim (the recovery); setoff of MedPay against UM/UIM recovery is prohibited | American Family: phrase refers to the abstract policy limit; setoff is allowed so long as policy limits are unchanged | Court: phrase refers to amount available on a particular claim; MedPay setoff is barred by §10-4-609(1)(c) |
| Whether allowing a MedPay setoff would contradict UM/UIM’s goal of placing an insured in same position as if tortfeasor insured | Calderon: permitting setoff would leave insured worse off than if tortfeasor had insurance (contrary to UM purpose) | American Family: setoff avoids double recovery and follows policy language preventing duplicate payments | Court: allowing setoff would reduce insured’s recovery compared to having an insured tortfeasor; statutory text and purpose bar setoff |
| Whether overlapping benefits (MedPay and UM/UIM) constitute impermissible double recovery | Calderon: benefits overlap but are not duplicative; MedPay provides prompt payment distinct from UM/UIM | American Family: paying MedPay then full UM leads to double recovery; setoff prevents windfall | Court: overlap ≠ double recovery; setoff prohibition is meant to prevent reducing UM recovery by amounts paid under other coverages |
| Whether insurer’s policy language permitting setoff is enforceable despite statute | Calderon: statutory prohibition overrides contract clause | American Family: policy anti-duplication clauses are valid and avoid double recovery | Court: policy clause is unenforceable to extent it conflicts with statutory setoff prohibition |
Key Cases Cited
- Newton v. Nationwide Mut. Fire Ins. Co., 594 P.2d 1042 (Colo. 1979) (PIP and UM overlap but setoff of PIP from UM violates public policy)
- Barnett v. American Family Mut. Ins. Co., 843 P.2d 1302 (Colo. 1993) (SSDI benefits overlap with UM/UIM but are not deductible; UM/UIM must place insured as if tortfeasor insured)
- Krai v. American Hardware Mut. Ins. Co., 784 P.2d 769 (Colo. 1989) (legislative purpose: place insured with UM in same position as if tortfeasor insured)
- State Farm Mut. Auto. Ins. Co. v. Kastner, 77 P.3d 1256 (Colo. 2003) (insurance contract terms conflicting with statute are unenforceable)
- USAA v. Parker, 200 P.3d 350 (Colo. 2009) (discussing UM/UIM purpose to compensate insureds for losses caused by uninsured/underinsured motorists)