Etherton v. Owners Insurance Company
829 F.3d 1209
| 10th Cir. | 2016Background
- In December 2007 Etherton was rear-ended and later underwent three back surgeries; he had a $1,000,000 UIM policy with Owners and recovered $250,000 from the tortfeasor, seeking the remaining $750,000 from Owners.
- Etherton filed a UIM claim in July 2009; Owners repeatedly sought more information and ultimately offered $150,000 citing causation concerns; suit filed March 2010 alleging breach of contract and unreasonable delay/denial under Colo. Rev. Stat. §§ 10-3-1115 & 1116.
- Owners moved to exclude Etherton’s causation expert, Dr. Joseph Ramos, under Daubert/Rule 702; Judge Krieger excluded him after hearings, later recused; Judge Brimmer reconsidered and admitted Ramos’s testimony.
- Six-day jury trial resulted in verdicts for Etherton on both claims and damages findings exceeding the remaining policy limit; district court awarded $1,500,000 (breach $750,000 + statutory double-penalty $750,000) then amended judgment to $2,250,000 ($750,000 + 2 x $750,000).
- Owners appealed: (1) admission of expert testimony (abuse of Rule 702 gatekeeping), (2) JMOL arguing Owners acted reasonably so statutory claim fails, and (3) district court’s statutory interpretation permitting recovery of covered benefit plus double penalty under § 10-3-1116.
- Tenth Circuit affirmed: upheld admissibility of Dr. Ramos (no abuse of discretion), held jury could find Owners unreasonably delayed/denied benefits (fair-debatable is relevant but not dispositive), and construed § 10-3-1116 to allow a plaintiff to recover the covered benefit via contract and two times that benefit as a separate statutory penalty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Dr. Ramos under Fed. R. Evid. 702/Daubert | Ramos used a three-step, medically accepted causation methodology (plausibility, temporality, differential diagnosis) reliably applied to Etherton | Methodology unreliable: unsupported generalization, correlation = causation, incomplete differential diagnosis, district court should have reviewed cited literature | Affirmed—district court did not abuse discretion: methodology sufficiently reliable and fit the case; alternative-cause analysis adequate; review of literature discretionary |
| JMOL on Colo. Rev. Stat. § 10-3-1115 (unreasonable delay/denial) | Owners unreasonably delayed/denied claim; evidence showed poor investigation and inconsistent bases for offer | Owners had a reasonable basis to dispute causation; claim was fairly debatable and it complied with industry/regulatory standards | Affirmed—reasonable jury could find Owners acted unreasonably; fair-debatability is relevant but not dispositive; compliance with minimum regulations not dispositive |
| Interpretation of Colo. Rev. Stat. § 10-3-1116 (scope of remedies) | Statute provides penalty equal to two times the covered benefit in addition to any separate recovery (e.g., breach of contract) | Recovery under § 10-3-1116 should be limited to two times the covered benefit and not permit separate recovery of the covered benefit (no double recovery) | Affirmed—§ 10-3-1116 is a statutory penalty measured by the covered benefit and does not displace a separate breach-of-contract recovery; plaintiff may recover both |
| Whether insurer’s fairly debatable position shields statutory liability | Etherton: fairness/debatability is not an absolute shield; jury can find conduct unreasonable despite disputability | Owners: fairly debatable denial/reasonable belief in no coverage defeats § 10-3-1115 liability | Court: fair-debatability is a relevant factor but not outcome-determinative; insurer may still be liable if conduct lacked reasonable basis |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial court gatekeeping on expert reliability)
- Gen. Elec. Co. v. Joiner, 522 U.S. 136 (1997) (abuse-of-discretion review of Daubert rulings)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert standards apply beyond purely scientific testimony)
- Hollander v. Sandoz Pharm. Corp., 289 F.3d 1193 (10th Cir. 2002) (deference to district court’s Daubert determinations)
- Goebel v. Denver & Rio Grande W. R.R. Co., 346 F.3d 987 (10th Cir. 2003) (district court discretion in assessing expert reliability)
- Bitler v. A.O. Smith Corp., 400 F.3d 1227 (10th Cir. 2004) (differential diagnosis can be reliable; experts must explain elimination of alternatives)