2015 COA 57
Colo. Ct. App.2015Background
- Plaintiff Dale Fisher was injured in a 2010 auto collision; third‑party liability paid $25,000; Fisher had $400,000 combined UIM limits with State Farm.
- Fisher submitted a UIM claim seeking $1.35M; State Farm consented to the third‑party settlement and later offered $59,572.10, which Fisher rejected.
- Fisher sued State Farm in July 2011 alleging, inter alia, statutory claims under Colo. Rev. Stat. §§ 10‑3‑1115 and 10‑3‑1116 for unreasonable delay/ denial of payment; State Farm had not paid UIM benefits by filing.
- At trial the jury awarded Fisher $780,572 and found State Farm unreasonably delayed payment of medical expenses totaling $61,125.16; court entered judgment for policy limits ($400,000), statutory penalty (2× medical bills), attorney fees and costs.
- State Farm appealed only the portion of the judgment tied to the jury’s finding that it unreasonably delayed payment of medical benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fisher’s §10‑3‑1115 claim fails as a matter of law because benefits owed were undetermined when suit was filed | Fisher: claim was limited to medical expenses that State Farm internally had deemed reasonable and covered; those were "covered benefits" owed and State Farm unreasonably delayed payment | State Farm: no benefits were owed while the total UIM claim was "fairly debatable"; insurer had no duty to pay part of a claim piecemeal and thus directed verdict should have been granted | Court: reversed State Farm—statute covers delay/denial of a covered benefit (not only whole claim); triable issue existed and jury verdict on unreasonableness stands |
| Whether State Farm had an obligation to tender the amount of its rejected settlement offer | Fisher: he did not base his statutory claim on the rejected offer; he sought payment of medical bills that State Farm had acknowledged internally | State Farm: its initial offer was not an admission of benefits owed and no duty existed to pay that offer | Court: agreement with State Farm that insurer had no obligation to pay rejected offer; but irrelevant because that was not Fisher’s theory at trial |
| Whether an insurer can avoid §10‑3‑1115 liability by treating a claim as "fairly debatable" or refusing piecemeal payments | Fisher: statute’s plain text and legislative scheme permit liability for unreasonable delay/denial of a covered benefit even if other claim components are disputed | State Farm: "fair debatability" or policy/regulatory rules excuse withholding any payment until entire claim resolved | Court: "fair debatability" is not dispositive; statute targets delay/denial of covered benefits; insurer may be obligated to pay uncontested components (e.g., medical bills) even if other damages are disputed |
| Whether exclusion of State Farm’s insurance‑industry expert was reversible error | Fisher: expert mainly rebutted excluded opinions and offered conclusory assertions aligning State Farm with industry practice; exclusion appropriate or harmless | State Farm: exclusion was prejudicial because reasonableness requires proof of industry standards | Court: exclusion (even if erroneous) was harmless—expert’s report was conclusory, duplicated other testimony, and some proffered opinions were contrary to law |
| Whether exclusion of evidence of Fisher’s prior felony convictions (over five years old) was erroneous | State Farm: convictions were relevant to employability and lost wages; should have been admissible | Fisher: convictions barred by §13‑90‑101 and Havens; trial court excluded the evidence | Court: appellant failed to provide complete record showing basis for exclusion; presumes trial court correctly excluded the convictions and declines to reach the merits |
Key Cases Cited
- Kisselman v. Am. Family Mut. Ins. Co., 292 P.3d 964 (Colo. App. 2011) (defines unreasonableness for §10‑3‑1115 claims)
- Vaccaro v. Am. Family Ins. Grp., 275 P.3d 750 (Colo. App. 2012) (fair‑debatability is not dispositive for statutory claims)
- Sanderson v. Am. Family Mut. Ins. Co., 251 P.3d 1213 (Colo. App. 2010) (contrast between common‑law bad faith and statutory §10‑3‑1115 claims)
- Pham v. State Farm Mut. Auto. Ins. Co., 70 P.3d 567 (Colo. App. 2003) (discussion of insurer reasonableness and knowledge)
- Allen v. Am. Family Mut. Ins. Co., 102 P.3d 333 (Colo. 2004) (expert testimony not always required where statute defines standard)
- DeHerrera v. Sentry Ins. Co., 30 P.3d 167 (Colo. 2001) (policy provisions that limit statutorily mandated coverage are unenforceable)
- Jordan v. Safeco Ins. Co. of Am., 348 P.3d 443 (Colo. App. 2013) (UIM insurer’s obligation triggered by exhaustion of tortfeasor’s limits, not necessarily payment or judgment)