Aaron MADALENA, Plaintiff-Appellant, v. ZURICH AMERICAN INSURANCE COMPANY and Gallagher Bassett Services, Inc., Defendants-Appellees.
Court of Appeals No. 21CA1780
Colorado Court of Appeals, Division IV.
06 April 2023
532 P.3d 776, 2023 COA 32
Opinion by JUDGE LIPINSKY
Bisset Law Firm, Jennifer E. Bisset, Denver, Colorado; Friedman Rubin, PLLP, Roger S. Davidheiser, Kenneth Friedman, Seattle, Washington, for Plaintiff-Appellant. Wheeler Trigg O‘Donnell LLP, Frederick R. Yarger, Teresa G. Akkara, Denver, Colorado; Ayers & Ayers, Deanne C. Ayers, Colleyville, Texas, for Defendants-Appellees.
532 P.3d 776
2023 COA 32
Aaron MADALENA, Plaintiff-Appellant,
v.ZURICH AMERICAN INSURANCE COMPANY and Gallagher Bassett Services, Inc., DefendantsAppellees.
Court of Appeals No. 21CA1780
Colorado Court of Appeals, Division IV.
Announced April 6, 2023
Bisset Law Firm, Jennifer E. Bisset, Denver, Colorado; Friedman Rubin, PLLP, Roger S. Davidheiser, Kenneth
Friedman, Seattle, Washington, for Plaintiff-Appellant
Wheeler Trigg O‘Donnell LLP, Frederick R. Yarger, Teresa G. Akkara, Denver, Colorado; Ayers & Ayers, Deanne
C. Ayers, Colleyville, Texas, for Defendants-Appellees
Opinion by JUDGE LIPINSKY[*781]
I. Background and Procedural History
¶ 1 “It is a fundamental principle of American law that every person is entitled to his or her day in court.” Tice v.
Am. Airlines, Inc. , 162 F.3d 966, 968 (7th Cir. 1998). But this principle does not mean that a party who lost
after receiving his or her day in court is entitled to a second day in the courthouse. In re Weiss , 235 B.R. 349,
360 (Bankr. S.D.N.Y. 1999) (“[E]very party is entitled to have a day in court, but, with respect to any given issue,
only one day.“), aff‘d , 255 B.R. 115 (S.D.N.Y. 2000).
litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting
judicial economy by preventing needless litigation.” Parklane Hosiery Co. v. Shore , 439 U.S. 322, 326, 99 S.Ct.
645, 58 L.Ed.2d 552 (1979) ; see Currier v. Virginia , 585 U.S. ––––, ––––, 138 S. Ct. 2144, 2156, 201 L.Ed.2d 650
(2018) (noting that the reference to judicial economy in Parklane Hosiery applies to both claim and issue
preclusion).
¶ 3 While the doctrine of issue preclusion “prevents the re-litigation of discrete issues,” the doctrine of claim
preclusion “prevents the perpetual re-litigation of the same claim or cause of action.” Foster v. Plock , 2017 CO
39, ¶¶ 12–13, 394 P.3d 1119, 1122–23. “Claim preclusion prevents parties from relitigating claims that were or
that could have been litigated in a prior proceeding.” Gale v. City & Cnty. of Denver , 2020 CO 17, ¶ 14, 500
P.3d 351, 354.
workers’ compensation proceeding concerning issues other than compensability and benefits are binding on an
insurance company in the injured worker‘s subsequent bad faith breach of an insurance contract claim against
that insurer. (In this case, the worker, Aaron Madalena, characterized his bad faith claim as one for breach of
the covenant of good faith and fair dealing.)
¶ 5 Madalena asserts that the workers’ compensation insurer, Zurich American Insurance Company (Zurich),
and its claims administrator, Gallagher Bassett Services, Inc. (Gallagher Bassett), are barred from relitigating
certain of the findings of fact and conclusions of law entered in Madalena‘s favor in his workers’ compensation
proceedings (the administrative determinations). (The parties refer to Zurich and Gallagher Bassett as a single
entity, as though they performed the same functions throughout the claim administration process. While we
cannot tell from the record whether this is factually accurate, we refer to Zurich and Gallagher Bassett jointly as
the “Zurich defendants.” In doing so, we do not intend to suggest they are not separate legal entities.)
points has preclusive effect in his bad faith insurance case. For this reason, we affirm the judgment entered
against him in this case.
I. Background and Procedural History
¶ 7 Madalena worked as an installer for SunTalk Solar (the employer). In October 2015, Madalena informed the
employer that he had injured his back at work. The employer reported Madalena‘s claim to Gallagher Bassett.
Following an investigation into the facts underlying Madalena‘s injury, the Zurich defendants initially disputed
that Madalena had incurred an injury compensable under the employer‘s workers’ compensation insurance
policy and denied the claim. The Zurich defendants based thеir decision on information suggesting that
Madalena had sustained the injury while working at a second job and not while working for the employer.
Compensation Act of Colorado (the Act), sections 8-40-101 to [*782] 8-47-209, C.R.S. 2022. Two administrative
law judges (ALJs) and an Industrial Claim Appeals Office (ICAO) panel presided over Madalena‘s workers’
compensation proceedings. The ALJs and the ICAO panel issued five orders.
¶ 9 In the first proceeding, the ALJ concluded that Madalena was injured “in the course and scope of his
employment,” and that the Zurich defendants were “liable for medical treatment reasonably necessary to cure
or relieve [Madalena] from the effects of the injury,” including the cost of surgery. In addition, the ALJ awarded
Madalena temporary total disability benefits. After the ICAO panel affirmed the ALJ‘s decision in the first
proceeding, the Zurich defendants accepted liability for Madalena‘s claim by general admission.
second workers’ compensation proceeding. At the conclusion of that proceeding, the second ALJ ruled that
Madalena was entitled to permanent total disability payments “for the rest of [his] natural life.” By final
admission, the Zurich defendants did not challenge the ALJ‘s determinations in the second proceeding.
¶ 11 Madalena then sued the Zurich defendants in district court for acting in bad faith by unreasonably denying
him workers’ compensation benefits and delaying the payment of benefits to him. He asserted that the Zurich
defendants contemporaneously knew their position in the workers’ compensation proceedings was
unreasonable, or recklessly disregarded whether their position was unreasоnable, and that the Zurich
defendants’ bad faith resulted in damages to Madalena separate and apart from the amount of benefits the ALJs
had awarded to him.
defendants. The jury found that the Zurich defendants had unreasonably denied, or delayed in, providing
Madalena with workers’ compensation benefits to which he was entitled, either knowingly or in reckless
disregard of his right to compensation, and that Madalena had damages. But the jury further found that the
Zurich defendants’ “denials and/or delays” did not cause Madalena‘s damages. The court entered judgment in
favor of the Zurich defendants based on the verdict.
II. Analysis
¶ 13 Although the jury found that Madalena suffered losses as a consequence of his injuries, and that the Zurich
defendants unreasonably delayed or denied him benefits, the jury also concluded that the delays or denials did
not cause any of his losses. Thus, we focus on Madalena‘s appellate arguments through the lens of causation. We
consider his causation arguments first.
A. Issues Relating to Causation in the Bad Faith Case
¶ 14 Four of Madalena‘s arguments raise alleged errors that he contends impacted the jury‘s finding of lack of
causation: (1) the trial court should have given preclusive effect to the administrative determinations; (2) the
court erred by not admitting three of the ALJs’ orders and the order of the ICAO panel (collectively, the
administrative orders) into evidence; (3) the court erred by excluding evidence that he had asked the Zurich
defendants to cover the costs of the surgery; and (4) the court erred by excluding certain expert testimony.
1. Issue Preclusion
¶ 15 We now turn to Madalena‘s contention that the trial court erred by refusing to give preclusive effect to the
determinations reflected in the administrative orders.
¶ 16 Madalena filed a motion in limine asking the court to apply the doctrine of issue preclusion to bar “relitigation of the issues detailed in the [administrative orders].” Specifically, Madalena listed twenty-one findings
of fact and conclusions of law in the administrative orders that he said the court should have instructed the jury
to “accept ... as true for all of its decision-making in this case.” Those determinations included the cause,
severity, and compensability of Madalena‘s injury; the injury‘s occurrence “in the course and scope of his
employment“; and Madalena‘s need for surgery and the fact he did not receive it. Madalena acknowledged,
[*783] however, that the Zurich defendants could “properly refer to what they believed” during the pendency of
the workers’ compensation proceedings, “based on the evidence then in [their] possession.” See Peiffer v. State
Farm Mut. Auto. Ins. Co. , 940 P.2d 967, 970 (Colo. App. 1996) (“An insurer‘s decision to deny benefits to its
insured must be evaluated based on the information before the insurer at the time of that decision.“), aff‘d , 955
P.2d 1008 (Colo. 1998). But he nonetheless asserted that the Zurich defendants could not “argue or attempt to
prove facts cоntrary to those found” in the workers’ compensation proceedings.
insurance case—whether the Zurich defendants had breached their duty to deal with Madalena in good faith—
was distinct from the legal issue underlying the workers’ compensation proceedings—whether Madalena‘s
injury was compensable under the Act. The court explained that resolution of Madalena‘s bad faith claim did not
“depend upon the underlying workers’ compensation claim.” Accordingly, the court concluded that “presenting
findings of fact and conclusions of law from the [administrative orders], as determinative of issues raised in this
action, would preclude both parties from a full and fair opportunity to present their claims and defenses as to
[Madalena‘s] bad faith claim.”
¶ 18 On appeal, Madalena argues that this ruling improperly gave the Zurich defendants “free reign to relitigate
the underlying workers’ compensation case.” He urges us to hold that “issue preclusion applies to final
administrative orders deciding workers’ compensation benefits, including all determinations regarding
compensability and causation, in a subsequent bad faith case.”
a. Relevant Law and Standard of Review
¶ 19 The General Assembly enacted the Act “to assure the quick and efficient delivery of disability and medical
benefits to injured workers ... without the necessity of any litigation.” § 8-40-102(1), C.R.S. 2022. The Act does
not bar an employee from bringing a “tort action in state court for damages arising from bad faith in the
processing of his request” for benefits under the Act. Travelers Ins. Co. v. Savio , 706 P.2d 1258, 1271 (Colo.
1985). This is so because “an order securing benefits does not and cannot remedy separate injuries caused by a
... bad faith delay or denial of benefits.” Id. at 1268.
insurer for bad faith from relitigating certain issues decided in the workеr‘s favor in a prior workers’
compensation proceeding. See Md. Cas. Co. v. Messina , 874 P.2d 1058, 1061 (Colo. 1994) (recognizing that the
determinations of “an administrative agency, acting in a judicial capacity, may be binding on the parties in a
subsequent proceeding if the agency resolved disputed issues of fact which the parties had an adequate
opportunity to litigate,” but concluding that the workers’ compensation proceeding and the civil action at issue
did not involve identical issues) (emphasis added); Youngs v. Indus. Claim Appeals Off. , 2012 COA 85M, ¶ 52,
297 P.3d 964, 974 (“Issue preclusion applies to administrative proceedings, including those involving workers’
compensation claims.“).
¶ 21 The purpose of issue preclusion is “to bar relitigation of an issue.” Villas at Highland Park Homeowners
’ Ass‘n v. Villas at Highland Park, LLC , 2017 CO 53, ¶ 29, 394 P.3d 1144, 1152. A party seeking to bar
relitigation of an issue must show that
- (1) the issue is identical to an issue actually litigated and necessarily adjudicated in the prior
- proceeding; (2) the party against whom estoppel was sоught was a party to or was in privity with a
- party to the prior proceeding; (3) there was a final judgment on the merits in the prior proceeding;
- and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the
- issues in the prior proceeding.
Id. (quoting Stanton v. Schultz , 222 P.3d 303, 307 (Colo. 2010) ).
cmt. c (Am. L. Inst. 1982); accord [*784] Bebo Constr. Co. v. Mattox & O‘Brien, P.C. , 990 P.2d 78, 88 (Colo.
1999) (“We have recognized that the findings of fact and conclusions of law of an administrative agency, acting
in a judicial capacity, may be binding on the parties in a subsequent proceeding if the agency resolved disputed
issues of fact which the parties had an adequate opportunity to litigate.“).
¶ 23 The Zurich defendants challenge the applicability of the first and fourth elements of the issue preclusion
test. The first element is satisfied only “when a party properly raised the issue and a determination on thаt issue
was necessary to the judgment” in the first proceeding. In re Tonko , 154 P.3d 397, 405 (Colo. 2007). Thus, a
court cannot give preclusive effect to an adjudication that the “previous tribunal may not have taken the care
needed to adequately determine” because the issue did not “affect the disposition of the case.” Id. (quoting Bebo
Constr. Co. , 990 P.2d at 86 ). “If issues are determined but the judgment is not dependent upon the
determinations, relitigation of those issues ... is not precluded” because such decisions “have the characteristics
of dicta, and may not ordinarily be the subject of an appeal.” Messina , 874 P.2d at 1062 (quoting Restatement
(Second) of Judgments § 27 cmt. h).
had a “full and fair opportunity to litigate” in the earlier proceeding—depends on “whether the remedies and
procedures of the first proceeding are substantially different” from thosе of the second proceeding, whether the
party had sufficient incentive to “vigorously” litigate the issue, and “the extent to which the issues are identical.”
Bebo Constr. Co. , 990 P.2d at 87 ; Sunny Acres Villa, Inc. v. Cooper , 25 P.3d 44, 47 (Colo. 2001) (applying the
factors in the context of a workers’ compensation proceeding).
¶ 25 “Issue preclusion presents a question of law that we review de novo.” Villas at Highland Park Homeowners
’ Ass‘n , ¶ 26, 394 P.3d at 1151.
b. Issue Preclusion Does Not Apply to the Bad Faith Case
¶ 26 We next apply the law of issue preclusion to Madalena‘s argument that the administrative determinations
must be accorded preclusive effect in his bad faith insurance case.
i. The Administrative Determinations Do Not Bar Litigation of the Different Issues in Madalena‘s Subsequent
Bad Faith Insurance Case
¶ 27 Madalena makes the sweeping argument that all the administrative determinations are binding on the
Zurich defendants in his bad faith case. We disagree.
resolved in the prior workers’ сompensation proceeding, issue preclusion does not apply to Madalena‘s bad faith
case because there is insufficient overlap between the issues necessarily adjudicated in the two matters. “The
duty of an insurer under the Act to provide benefits and compensation is factually and analytically distinct from
its duty to deal in good faith with claimants, even though such duties necessarily involve a common underlying
physical injury.” Savio , 706 P.2d at 1270.
¶ 29 The scope of Madalena‘s first workers’ compensation proceeding was limited to whether he “suffered a
compensable on-the-job injury” and whether he was entitled to receive workers’ compensation benefits under
the Act. The ALJ found, and the ICAO panel affirmed, that Madalena had a compensable injury. The second
proceeding was limited to whether Madalena was permanently and totally disabled (PTD) because of that injury.
In determining that Madalena‘s injury was compensable under the Act, the ALJ necessarily found, among other
facts, that (1) at the time of his injury, Madalena was “performing service arising out of and in the course of
[his] employment” and (2) the injury was proximately caused by an injury “arising out of and in the course of” Madalena‘s employment. § 8-41-301(1)(b)-(c), C.R.S. 2022. The Zurich defendants did not dispute these findings
in the bad faith case.[*785]
and arrived at their coverage decisions. Thus, Madalena could not prevail on his bad faith insurance claim
unless the jury found that (1) the Zurich defendants unreasonably denied or delayed payment of workers’
compensation benefits to which Madalena was entitled; (2) the Zurich defendants knew they were acting
unreasonably or recklessly disregarded the unreasonableness of their position regarding Madalena‘s claim for
benefits; (3) Madalena suffered damages; and (4) the Zurich dеfendants’ denials or delays caused those
damages. See Schuessler v. Wolter , 2012 COA 86, ¶ 36, 310 P.3d 151, 161 ; Lorenzen v. Pinnacol Assurance ,
2019 COA 54, ¶ 22, 457 P.3d 100, 104. The Zurich defendants expressly conceded compensability and the
award of benefits before trial, thus negating any need for Madalena to assert issue preclusion to bar their
relitigation. See Villas at Highland Park Homeowners Ass‘n , ¶ 29, 394 P.3d at 1152. Instead, Madalena sought
to assert issue preclusion to bar litigation of other issues that were not necessary to the ALJs’ conclusions.
¶ 31 Because the factual and legal parameters of Madalena‘s workers’ compensation proceedings were narrowly
circumscribed, the issues “actually litigated and necessarily adjudicated” in those proceedings were not
“identical” to the issues relevant to Madalena‘s bad faith insurance claim, and the Zurich defendants thus did
not have a full and fair opportunity to vigorously litigate such issues in the workеrs’ compensation proceedings.
Villas at Highland Park Homeowners Ass‘n , ¶ 29, 394 P.3d at 1152 (quoting Stanton , 222 P.3d at 307 ). For this
reason, the first and fourth prongs of the test for issue preclusion are not satisfied.
issues beyond compensability and benefits. See § 8-43-201(1), C.R.S. 2022 (granting “[t]he director and
administrative law judges employed by the office of administrative courts in the department of personnel”
original jurisdiction over matters arising under the Act). While the parties do not dispute that the administrative
orders were “final judgments,” a tribunal‘s ruling on an issue over which it lacks subject matter jurisdiction
cannot be a “final judgment” for purposes of the third element of the issue preclusion test—“a final judgment on
the merits in the prior proceeding.” Villas at Highland Park Homeowners Ass‘n , ¶ 29, 394 P.3d at 1152 ; see
also Tonko , 154 P.3d at 406 (“The district court entered no final judgment regarding [a third party‘s] water use
rights to which thе [appellants] have succeeded, because it had no jurisdiction to do so. The third element of
issue preclusion is not satisfied.“); Messina , 874 P.2d at 1064 (“[T]he workers’ compensation case was not a
final adjudication as to [the plaintiff‘s] claim to [personal injury protection (PIP)] benefits nor does an ALJ
presiding over a workers’ compensation proceeding have the jurisdictional authority to decide the issue of
entitlement to PIP benefits.“).
¶ 33 Madalena argues that we should adopt the reasoning of Mendoza v. McDonald‘s Corp. , 222 Ariz. 139, 213
P.3d 288, 306 (Ariz. Ct. App. 2009), which, according to Madalena, holds that final administrative orders in
workers’ compensation proceedings have preclusive effect in a subsequent case against the employer for breach
of the duty of good faith and fair dealing. But the facts in Mendoza were materially different from those in
Madalena‘s bad faith case. In the Arizona case, the employer argued at the bad faith trial that the employee
“had not actually been injured at [her workplace] ..., and had perpetrated a fraud by obtaining disability and
medical benefits without suffering an actual and compensable injury.” Id. In contrast, in Madalena‘s bad faith
case, the Zurich defendants did not attempt to relitigate the determinations of compensability and benefits in
the workers’ compensation proceedings. Not only is Mendoza distinguishable, but we are not bound by out-ofstate decisions. See State ex rel. Weiser v. JUUL Labs, Inc. , 2022 CO 46, ¶ 62, ¶ 62, 517 P.3d 682, 695.
preclusive effect on the different issues the Zurich defendants actually litigated in the bad faith case.[*786]
ii. The Specific Administrative Determinations to Which Madalena Points Do Not Have Preclusive Effect in His
Bad Faith Case
¶ 35 Madalena provides three examples of administrative determinations to which hе contends the trial court
should have given preclusive effect in the bad faith case. Although our rejection of Madalena‘s general
argument on issue preclusion encompasses these administrative determinations, we explain below why they did
not have preclusive effect in the bad faith case.
panel‘s determination regarding Dr. Lawrence Lesnack‘s credibility, the first ALJ‘s statements regarding the
reason why Madalena did not proceed with surgery, and the second ALJ‘s statement regarding the anticipated
impact of such surgery on Madalena. The dispute in the bad faith case centered on whether the Zurich
defendants had unreasonably delayed covering Madalena‘s surgical expenses and, if so, whether such delay had
resulted in further injuries to Madalena. The parties did not contest in the bad faith case whether he was
entitled to coverage for such expenses—as noted above, in the first proceeding, the ALJ determined that the
Zurich defendants were liable for those expenses.
¶ 37 First, Madalena points to the testimony of Dr. Lawrence Lesnak, whom the Zurich defendants engaged to
conduct an independent medical examination of Madalena. During the workers’ compensation proceedings, the
ALJs and the ICAO panel rejected Dr. Lesnak‘s opinion testimony that Madalena‘s injury was not work related
and concluded, based on the testimony of other medical experts, that the “most credible explanation” was that
Madalena‘s injury was work related and compensable. At the trial in the bad faith case, Dr. Lesnak reiterated
his prior opinion testimony that Madalena‘s injury likely resulted from non-work-related causes.
preclusive effect on the issue for which he was called in the bad faith insurance case. Unlike in the workers’
compensation proceeding, the Zurich defendants did not proffer Dr. Lesnak‘s testimony in the bad faith case to
establish that Madalena‘s injury was not work related, but, rather, to establish that the Zurich defendants had
acted reasonably by initially disputing that the injury was compensable under the Act. In the bad faith case, the
Zurich defendants sought to establish that Madalena‘s entitlement to workers’ compensation benefits was “fairly
debatable” at the time they investigated Madalena‘s claim, even if the subsequent outcome of the workers’
compensation proceedings showed that the Zurich defendants had been mistaken regarding compensability.
Zolman v. Pinnacol Assurance , 261 P.3d 490, 496–97 (Colo. App. 2011) (quoting Savio , 706 P.2d at 1275 ).
Thus, the Zurich defendants did not offer Dr. Lesnak‘s opinion in the bad faith case to establish an issue that
had been “actually litigated and necessarily adjudicated” in the workers’ compensation proceedings. See Villas
at Highland Park Homeowners Ass‘n , ¶ 29 (quoting Stanton , 222 P.3d at 307 ).
¶ 39 Further, the Zurich defendants did not have “a full and fair opportunity” in the workers’ compensation
proceedings to litigate their good faith basis for initially challenging Madalena‘s entitlement to workers’
compensation benefits, because that issue was outside the scope of the workers’ compensation proceedings.
Accordingly, the ALJs’ findings regarding Dr. Lesnak‘s credibility have no preclusive effect under the first and
fourth elements of the test for issue preclusion.
argument in the bad faith trial that they did not deny Madalena‘s request for coverage for surgical expenses
because neither Madalena nor his doctors properly made such a request. Madalena alleges that these assertions
contradicted the first ALJ‘s finding that Madalena “has been unable to gо forward with the surgery” because
“the case was on a denial from the Insurer” and “the surgery was not authorized.“[*787]
¶ 41 However, whether Madalena properly requested that the Zurich defendants authorize surgery was not an
issue “necessarily adjudicated” in the workers’ compensation proceedings because it was not determinative of
the limited issues before the ALJ—whether his injury was compensable under the Act and what benefits he
would receive. Thus, the ALJ‘s finding on this issue has “the characteristics of dicta” rather than those of a
binding determination. Messina , 874 P.2d at 1062 (quoting Restatement (Second) of Judgments § 27 cmt. h).
fair opportunity to litigate, or “sufficient incentive to litigate vigorously,” whether Madalena had properly
requested coverage for the cost of surgery because the determination of that issue was of no consequence to the
ultimate determination of his entitlement to workers’ compensation benefits. Bebo Constr. Co. , 990 P.2d at 87.
Accordingly, this finding fails to satisfy the first and fourth elements of the test for issue preclusion.
¶ 42 Third, Madalena points to the testimony of Dr. Donald Corenman, whom the Zurich defendants called at
the bad faith trial to testify that Madalena‘s symptoms, aside from a limp, are inconsistent with his claimed
work-related injury. Madalena asserts that this testimony contradicts the second ALJ‘s finding that one of
Madalena‘s doctors said that “if surgery had been performed earlier, [Madalena] would have gotten better, and
that [Madalena] is unable to work now and will endure ongoing and permanent chronic pain. Because of this,
[Madalena] will need help with the activities of daily living ... for the remainder of his life.”
surgery attributable to the Zurich defendants’ coverage decisions exacerbated Madalena‘s injury. To determine
Madalena‘s entitlement to workers’ compensation benefits, the ALJ did not “necessarily adjudicate[ ]” this
specific issue. See Villas at Highland Park Homeowners Ass‘n , ¶ 29, 394 P.3d at 1152 (quoting Stanton , 222
P.3d at 307 ). For the same reason, the Zurich defendants lacked a sufficient incentive to vigorously litigate this
point. The only issue concerning the nature of Madalena‘s injury properly before that ALJ was “whether
[Madalena] is ... PTD ... because of a compensable back injury.”
¶ 44 Thus, the ALJ in the second proceeding only “necessarily adjudicated” that Madalena “is unable to work
now” and “will need help with the activities of daily living ... for the remainder of his life.” See § 8-40-201(16.5)
(a), C.R.S. 2022 (PTD “means the employee is unable to earn any wages in the same or other employment.“).
The ALJ‘s reference to the doctor‘s opinion regarding the timing of surgery was dicta rather than a “nеcessarily
adjudicated” finding; it did not determine whether Madalena‘s PTD resulted from Zurich‘s bad faith denial of
Madalena‘s claim. Causation based on “an injury ... arising out of and in the course of the employee‘s
employment” is distinct from causation based on an insurer‘s bad faith denial of or delay in approving a claim.
Compare § 8-41-301(1)(c), with Schuessler , ¶ 36, 310 P.3d at 161, and Lorenzen , ¶ 22, 457 P.3d at 104. Thus,
this issue lacks preclusive effect under the first and fourth elements of the test for issue preclusion.
and benefit determinations could have had a preclusive effect in the bad faith case, Madalena does not explain
how the court‘s failure to instruct the jury as to those findings prejudiced him. See Gasteazoro v. Cath. Health
Initiatives Colo. , 2014 COA 134, ¶ 12, 408 P.3d 874, 877 (“In a civil case, a properly preserved objection to a
particular instruction is subject to the harmless error rule,” which “permits reversal only if a jury ‘probably
would have decided a case differently if given a correct instruction.’ ” (quoting Harris Grp., Inc. v. Robinson ,
209 P.3d 1188, 1195 (Colo. App. 2009) )).
¶ 46 For example, the Zurich defendants’ counsel specifically told the jurors during her opening statement and
closing argument that they were “never going to be asked in this case to determine whether or not [Madalena]
had a work-related injury” or whether he “should receive workers’ compensation benefits.” [*788]
reasonable, based on the information ... [they] knew at the time.” Moreover, as noted above, the jury found that
the Zurich defendants acted in bad faith in denying Madalena‘s claim and that Madalena suffered damages.
¶ 47 Although the jury found in favor of the Zurich defendants on the element of causation, that finding did not,
as Madalena contends, create “a major inconsistency” (or any inconsistency) with the administrative orders
because the causation questions were different. As explained above, the ALJs’ analysis of whether Madalena‘s
injury was work-related under the Act differed from the jury‘s analysis of whether the Zurich defendants’ bad
faith exacerbated that injury. We fail to see how, as Madalena contends, the jury “probably would have decided”
that the Zurich defendants’ bad faith denial of Madalena‘s claim caused him damages had the jury been
instructed to accept the ALJs’ finding that an accident on the job—not the Zurich defendants—caused
Madalena‘s underlying injury. Harris Grp., Inc. , 209 P.3d at 1195. Even if the court had given such an
instruction, Madalena would still have been required to prove that the Zurich defendants’ actions (or inaction)
exacerbated the injury.
appeal had preclusive effect.
2. Admissibility of the Administrative Orders
¶ 49 Madalena next contends that the trial court erred by ruling that the аdministrative orders and “anything
pertaining to the administrative hearing process” were inadmissible under CRE 403. We first address the Zurich
defendants’ argument that Madalena did not preserve this issue.
a. Preservation
¶ 50 “It is axiomatic that in civil cases, issues not raised in or decided by the trial court generally will not be
addressed for the first time on appeal. If a party raises an argument to such a degree that the court has the
opportunity to rule on it, that argument is preserved for appeal.” Brown v. Am. Standard Ins. Co. of Wis. , 2019
COA 11, ¶ 21, 436 P.3d 597, 600 (citations omitted). “No talismanic language is required to preserve an issue.”
Owens v. Dominguez , 2017 COA 53, ¶ 21, 413 P.3d 255, 261–62. If a party “presented to the trial court the sum
and substance of the argument it now makes on appeal, we consider that argument properly preserved for
appellate review.” Berra v. Springer & Steinberg, P.C. , 251 P.3d 567, 570 (Colo. App. 2010). A party may timely
object to, and thus preserve for appeal, the admission of evidence through a motion in limine without a later
trial objection sо long as “the issue of the admissibility of the specific evidence was fully argued to the trial
court on the same grounds argued by the non-prevailing party on appeal.” Uptain v. Huntington Lab, Inc. , 723
P.2d 1322, 1330–31 (Colo. 1986).
that he “fully intend[ed] to present evidence concerning the ALJ determinations in his workers compensation
case.” And Madalena argued in the trial court that the administrative orders were admissible in the bad faith
case.
¶ 52 A special master recommended that the court hold that the administrative orders were inadmissible under
CRE 403 because “the admission of such orders will confuse the jurors and potentially mislead them.” However,
the special master did not address whether specific “findings and conclusions within the ... administrative
orders” might be admissible and suggested that the court make that determination “on a finding by finding,
conclusion by conclusion basis.” Thе special master also rejected Madalena‘s argument that “he needs to have
the actual written orders admitted in order to cross examine certain witnesses” and instead stated that
Madalena could “use the administrative orders to impeach ... without admitting the ... orders into evidence.”
[*789]
¶ 54 The Zurich defendants correctly assert that, although the trial court denied the admission of the ALJs’
orders into evidence, it permitted Madalena to use the orders for impeachment. The Zurich defendants argue
that, because Madalena never attempted to use the administrative orders to impeach witnesses, “the trial court
was not given the opportunity to decide whether the [administrative] orders could be used for a particular
impeachment purpose actually attempted at trial,” and thus the issue was not preserved.
admissibility of the ALJs’ orders into evidence. However, we agree with the Zurich defendants that the trial
court‘s order allowed Madalena to use the administrative orders for impeachment and note that Madalena does
not cite to any instance at trial where he attempted to use them for such purpose. Although Madalena cites to
the trial court‘s broad language that “the contents of [the administrative orders] are off limits” and the
“expectation would be that we not talk about any of the specifics of that decision by the administrative law
judge,” the court never made such statements in the context of the possible use of portions of the ALJs’ orders
for impeachment. Thus, we decline to address Madalena‘s argument that the court erred by not permitting him
to use the ALJs’ orders for impeachment.
b. Relevant Law and Standard of Review
¶ 56 A сourt may exclude relevant evidence “if its probative value is substantially outweighed by the danger of
... confusion of the issues” or “misleading the jury.” CRE 403.
CO 82, ¶ 12, 500 P.3d 1130, 1134. We reject Madalena‘s argument that we should review the court‘s order
barring the admission of the administrative orders under the standard for mixed questions of law and fact. As
we explain below, the special master, and thus the court, applied the correct legal standard— CRE 403 —to
determine the admissibility of evidence. Therefore, there is no question of law for us to review de novo. Rather,
we only review the court‘s application of CRE 403 for an abuse of discretion.
c. The Court Did Not Abuse Its Discretion by Excluding the Administrative Orders in the Bad Faith Case
¶ 58 We agree with the trial court (and the special master) that, even though “some of the findings and
conclusions contained in the four administrative orders” mаy be “relevant to [Madalena‘s] claims that [the
Zurich defendants] continued to breach[ ] their duty of good faith and fair dealing,” the risk of confusing or
misleading the jury by admitting the “actual paper orders” substantially outweighed the orders’ probative value.
defendants acted unreasonably, “with knowledge of or reckless disregard for the fact that no reasonable basis
existed for [their] action.” Schuessler , ¶ 36, 310 P.3d at 161. In other words, the jury had to consider what
information was available to the Zurich defendants at the time of the challenged conduct. State Farm Mut. Auto.
Ins. Co. v. Reyher , 266 P.3d 383, 390 (Colo. 2011).
¶ 60 Because Madalena argued that the Zurich defendants breached their duty of good faith and fair dealing not
only when they initially denied Madalena‘s claim, but also when they continued to dispute it during the
pendency of the workers’ compensation proceeding, several different time periods are relevant in this case. The
trial court reasoned that each administrative order would be irrelevant to establish the Zurich defendants’
knowledge of the facts supporting Madalena‘s workers’ compensation claim before the date of such order. “For
instance, ... [the] February 21, 2018 Order is not relevant to whether [the Zurich defendants] acted
unreasonably more than a year earlier in appealing [the November 21, 2016] Supplemental Order, and thus is
not admissible, but [it] is relevant to whether [the Zurich defendants] acted unreasonably after February 21,
2018.” [*790]
erroneously—that the findings in any one of the orders reflected what the Zurich defendants knew about
Madalena‘s workers’ compensation claim weeks, months, or years earlier.
¶ 61 Thus, the trial court did not abuse its discretion when it concluded thаt the “risk of the admission of the
four actual administrative orders confusing and misleading the jury is apparent.”
¶ 62 We also reject Madalena‘s contention that the exclusion of the orders allowed the Zurich defendants to
“advance[ ] multiple false narratives” during trial. Admission of the orders would have risked the jury giving
preclusive effect to the administrative determinations, which, as explained above, would have been improper.
The jurors could have assumed that they were not at liberty to disagree with the contents of an order signed by
a judicial officer.
evidence.
3. Claim Preclusion and Jurisdiction Over the Surgery Request Issue
¶ 64 Madalena next contends that the Zurich defendants’ “arguments that Madalena failed to properly request
surgery should have been barred for lack of jurisdiction and claim preclusion.” We review decisions on
jurisdiction and claim preclusion de nоvo. Colo. Jud. Dep‘t, Eighteenth Jud. Dist. v. Colo. Jud. Dep‘t Pers. Bd. of
Rev. , 2022 CO 52, ¶ 18, 519 P.3d 1035, 1039 ; Foster , ¶ 10, 394 P.3d at 1122.
whole rather than review of discrete issues. See People v. C.O. , 2017 CO 105, ¶ 24, 406 P.3d 853, 858
(explaining that subject matter jurisdiction “concerns the court‘s authority to deal with the class of cases in
which it renders judgment, not its authority to enter a particular judgment within that class“); Foster , ¶ 12, 394
P.3d at 1122 (“[C]laim preclusion prevents the perpetual re-litigation of the same claim or cause of action .“)
(emphasis added).
¶ 66 Whether Madalena properly requested coverage for surgery is not a claim; it is a discrete factual issue
subsumed within the broader claim. Compare Black‘s Law Dictionary 275, 311 (11th ed. 2019) (defining “cause
of action” as “[a] group of operative facts giving rise to one or more bases for suing” and cross-referencing the
synonym “claim,” defined as “[a]n interest or remеdy recognized at law“) (emphasis added), with Restatement
(Second) of Judgments § 27 cmt. c (explaining that an “issue on which relitigation is foreclosed” under the
doctrine of issue preclusion “may be one of evidentiary fact, of ‘ultimate fact’ ..., or of law“).
VI, § 9 (1) (vesting district courts “with general jurisdiction,” including original jurisdiction in all civil cases),
with § 8-43-201(1) (vesting ALJs who decide workers’ compensation matters with “original jurisdiction to hear
and decide ... matters arising under” the Act).
¶ 68 The Zurich defendants could not have asserted a defense to Madalena‘s bad faith breach of insurance
contract claim in the workers’ compensation proceedings because ALJs in workers’ compensation cases lack
jurisdiction over bad faith claims. § 8-43-201(1) ; Savio , 706 P.2d at 1268 (“[A]n order securing benefits [under
the Act] does not and cannot remedy separate injuries caused by a prior bad faith delay or denial of benefits.“).
The manner in which the Zurich defendants reviewed and processed Madalena‘s claim was not relevant to the
Zurich defendants’ arguments regarding compensability and benefits—the only issues properly before the ALJs
and the ICAO panel.
workers’ compensation “claim or cause of action” as a whole. Foster , ¶ 12, 394 P.3d at 1122. The doctrine
applies when “(1) the judgment in the prior proceeding was final; (2) the prior and current proceedings involved
identical subject matter; (3) the prior and current [*791] proceedings involved identical claims for relief; and
(4) the parties to the proceedings were identical or in privity with one another.” Gale , ¶ 14, 500 P.3d at 354
(quoting Meridian Serv. Metro. Dist. v. Ground Water Comm‘n , 2015 CO 64, ¶ 36, 361 P.3d 392, 398 ). Because
the two proceedings involved neither “identical subject matter” nоr “identical claims for relief,” the second and
third elements of the claim preclusion test are not satisfied.
¶ 70 Thus, the scope of the trial court‘s jurisdiction over Madalena‘s bad faith claims and the doctrine of claim
preclusion did not bar the Zurich defendants from litigating in the bad faith insurance case whether Madalena
sought their authorization for surgery.
¶ 71 Madalena contends that the court erred by limiting the testimony of urologist Jeffrey Snyder. Madalena
sought to call Dr. Snyder at trial to provide an opinion regarding the cause of Madalena‘s urological conditions.
Before trial, the Zurich defendants moved to exclude Dr. Snyder‘s testimony, in part because Madalena had not
properly disclosed his opinions pursuant to C.R.C.P. 26(a)(2)(B). Specifically, the Zurich defendants argued that
Dr. Snyder “offered opinions on causation for the first time during [his] deposition,” including the opinion that
Madalena‘s urological problems were caused by cauda equina syndrome. (Cauda equina syndrome is caused by
compression of the cauda equina bundle of nerves. 1 J. E. Schmidt, Attorneys’ Dictionary of Medicine ,
LexisNexis (database updated Oct. 2022). Its symptoms include “pain in the lower limbs and in the perineum ...
, loss of sensation in the buttocks and thighs, and, occasionally, bowel and bladder disturbances.” Id. ) The
special master recommended partially granting the Zurich defendants’ motion to strike the causation opinion
that Dr. Snyder disclosed for the first time during his deposition. The trial court adopted the recommendation.
discretion.” Dorsey & Whitney LLP v. RegScan, Inc. , 2018 COA 21, ¶ 39, 488 P.3d 324, 333. We will reverse
only if an erroneous evidentiary ruling “substantially influenced the outcome of the case.” Id. (quoting Genova v.
Longs Peak Emergency Physicians, P.C. , 72 P.3d 454, 458 (Colo. App. 2003) ).
¶ 73 We need not determine whether the trial court erred by excluding Dr. Snyder‘s testimony on causation
becаuse the court‘s ruling could not have “substantially influenced the outcome of the case.” Id. (quoting
Genova , 72 P.3d at 458 ). The jury heard substantially similar testimony to the opinion testimony that the court
excluded. For example, the court allowed Dr. Snyder to testify about Madalena‘s urological problems and to
opine that a “neurological deficit” caused them. Additionally, another expert linked Madalena‘s symptoms to
cauda equina syndrome.
opinions directly address[ed]” the causation element of his bad faith breach of insurance contract claim. Dr.
Snyder merely opined that Madalena‘s urological impairments indicate he “has a partial cauda equina
syndrome.” But to prevail on his bad faith insurance claim, Madalena needed to prove a different fact: that the
Zurich defendants’ actions or inactions caused his damages. See Goodson v. Am. Standard Ins. Co. of Wis. , 89
P.3d 409, 417 (Colo. 2004) (“Insureds ... should be able to proceed to the jury on all damages that flow from a
breach of the duty of good faith and fair dealing.“). As it turned out, that was the determinative issue. Madalena
does not explain how Dr. Snyder‘s struck testimony would have established this causal link. To the contrary, Madalena acknowledges that, during Dr. Snyder‘s deposition, the doctor “did not offer a causation opinion
related to [the Zurich defendants’] conduct and the denial of [coverage for] surgery.” Thus, Dr. Snyder‘s
testimony would merely have supported a finding that Madalena had incurred damages, an issue on which
Madalena prevailed.[*792]
judgment entered in favor of the Zurich defendants.
B. Issues Not Pertaining to Causation
¶ 76 Because we conclude that the court did not commit reversible error in its rulings on the causation-related
issues Madalena raises on appeal, we need not reach Madalena‘s remaining arguments. Those arguments
address elements of Madalena‘s claim on which the jury found in his favor. See Ajay Sports, Inc. v. Casazza , 1
P.3d 267, 275 (Colo. App. 2000) (declining to decide whether a jury instruction was erroneous where “the jury
ultimately found in favor of defendant with regard to [that] claim” and thus “any error was harmless“).
and ... striking all elements of his life care plan at trial,” “allowing [the Zurich defendants‘] economist to testify
that Madalena‘s loss of income was fully covered by his workers’ compensation benefits,” “denying Madalena‘s
motion to amend his complaint to add a claim for exemplary damages,” and “excluding a former Gallagher
Bassett employee from testifying at trial.” (Although the Zurich defendants argue that Madalena did not
preserve his argument regarding their еconomist‘s testimony, we need not reach such preservation issue in light
of our analysis below.)
¶ 78 Madalena does not explain how these alleged evidentiary and procedural errors could have “substantially
influenced the outcome of the case” by impacting the jury‘s finding of lack of causation, or how they otherwise
“impaired the basic fairness of the trial itself.” Bernache v. Brown , 2020 COA 106, ¶ 26, 471 P.3d 1234, 1240
(quoting Laura A. Newman, LLC v. Roberts , 2016 CO 9, ¶ 24, 365 P.3d 972, 978 ). These alleged errors may
have been relevant to the element of bad faith or calculation of damages. But the jury found in favor of
Madalena on the element of bad faith and found no causation. In light of our conclusion that the trial court did
not err in its rulings relevant to causation, we need not reach Madalena‘s argument regarding damages. See
Dunlap v. Long , 902 P.2d 446, 448 (Colo. App. 1995) (“[A] jury determination that a defendant is not liable
renders harmless any error that might have occurred with respect to the issue of the plaintiff‘s alleged
damages.“). Thus, we hold that these alleged errors do not require reversal.
¶ 79 The judgment is affirmed.
JUDGE FOX
and JUDGE SCHOCK concur.