259 P.3d 521
Colo. Ct. App.2011Background
- Timm, an insured employee, claimed long-term disability benefits from Prudential under a plan administered by Prudential.
- Prudential denied benefits, and after administrative remedies were exhausted, Timm filed a federal suit seeking benefits and alleging insurance bad faith under Colorado law.
- In 2007, a federal declaratory judgment vacated Prudential's decision and remanded for a determination of benefits, with the court declining to assess amount or duration.
- In 2009, Timm filed suit in Colorado state court seeking benefits and asserting a state-law bad-faith claim; Prudential moved to dismiss on multiple grounds including ERISA preemption and claim/preclusion theories.
- The trial court dismissed, holding ERISA preempts the bad-faith claim and granting relief on other grounds, prompting Timm's appeal.
- The Colorado Court of Appeals affirmed in part, reversed in part, and remanded for further proceedings consistent with its analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ERISA preemption of bad-faith claim | Timm argues ERISA does not preempt the state bad-faith claim under 10-3-1116(1). | Prudential contends ERISA conflict preempts the bad-faith claim and related relief under state law. | ERISA conflict preempts the statutorily created bad-faith claim. |
| Claim preclusion impact on ERISA claim | Timm contends ERISA relief is not barred by prior federal judgment. | Prudential asserts claim preclusion bars ERISA benefits claims based on pre-judgment conduct. | Partial preclusion affirmed; ERISA claim for enforcement remains viable for post-judgment conduct. |
| Ripeness of ERISA claim | Timm asserts delay in decision and futility excused exhaustion render the claim ripe. | Prudential argues lack of exhaustion/ripe timeframe should defeat the claim. | ERISA claim deemed ripe; exhaustion excused given Prudential's delay and post-judgment posture. |
| Exhaustion/futility defense | Timm argues exhaustion should be excused due to futility from delayed decision. | Prudential contends exhaustion is required and futility is not shown. | Futility/excused exhaustion principle recognized; discretionary path open on remand. |
| Attorney fees under ERISA on appeal | Timm seeks fees given some success on appeal. | Prudential contends fees should be considered at action's conclusion and based on factors. | Fees award to be determined after action concludes; remand for that determination. |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (U.S. 2004) (ERISA conflict preemption of state law remedies that duplicate ERISA's exclusive remedies)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (U.S. 1987) (ERISA's remedial scheme is exclusive and preempts conflicting state remedies)
- Kidneigh v. UNUM Life Ins. Co., 345 F.3d 1182 (10th Cir. 2003) (Colorado bad-faith claim preempted by ERISA conflict preemption)
- Barber v. UNUM Life Ins. Co., 383 F.3d 134 (3d Cir. 2004) (state bad-faith statute preempted by ERISA where it supplements remedies)
- Conover v. Aetna U.S. Health Care, Inc., 320 F.3d 1076 (10th Cir. 2003) (ERISA conflict preemption guidance on preemption where insurance affects remedies)
- Held v. Mfrs. Hanover Leasing Corp., 912 F.2d 1197 (10th Cir. 1990) (ERISA ripeness and exhaustion considerations in related context)