Articles Posted in Insurance Law

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The Colorado Supreme Court concluded here that nothing in the language of the Colorado uninsured/underinsured motorist statute, 10-4-609 C.R.S. (2016) precluded an agent from exercising either apparent or implied authority to reject UM/UIM coverage on behalf of a principal. In line with this reasoning, the agent’s rejection of UM/UIM coverage was indeed binding on the principal. Respondent Brian Johnson tasked a friend with purchasing automobile insurance for the new car that he and the friend had purchased together. The friend did so, and in the course of that transaction, she chose to reject uninsured/underinsured motorist (UM/UIM) coverage on the new car. After an accident in that car with an underinsured motorist, Johnson contended that his friend’s rejection of UM/UIM coverage was not binding on him. View "State Farm v. Johnson" on Justia Law

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A provision of the mandatory form settlement document promulgated by the Director of the Division of Workers’ Compensation (“Director”) did not waive an injured employee’s statutory right under section 8-43-204(1), C.R.S. (2016), to reopen a settlement based on a mutual mistake of material fact. Petitioner Victor England was a truck driver for Amerigas Propane. He filed a workers’ compensation claim after sustaining a serious injury to his shoulder in December 2012 while making a delivery for Amerigas. England’s claim was governed by the Colorado Workers’ Compensation Act, which required that settlements between employer and employee must be written, signed by both sides, and approved by the Director or an administrative law judge (“ALJ”). Pursuant to section 8-43-204, the Director promulgated a form settlement agreement (“Form”), which the parties are required to use to settle all claims. In this case, the parties’ settlement agreement was consistent with the Form. England’s pain continued after the settlement agreement was signed and approved. In October 2013, he sought further medical evaluation, which revealed a previously undiagnosed stress fracture in the scapula (shoulder blade) of England’s injured shoulder. Up to this point, no one was aware that this fracture existed. England claims that if he had been aware of this fracture, he would not have settled his claim. England filed a motion to reopen the settlement on the ground that the newly discovered fracture justified reopening his workers’ compensation claim. An ALJ agreed, and the Industrial Claim Appeals Office (ICAO) affirmed. The court of appeals reversed, concluding that the Form waived England’s right to reopen. The Colorado Supreme Court held that because provisions of the form document must yield to statutory rights, the court of appeals erred in its conclusion. View "England v. Amerigas Propane" on Justia Law

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The issue this matter presented for the Supreme Court's review centered on a discovery dispute between plaintiff Stephen Rumnock and defendant American Family Mutual Insurance Company. After being ordered to produce documents that Rumnock requested, American Family disclosed some and simultaneously moved for a protective order. The motion sought to preclude Rumnock from using or disclosing the documents (alleged to be trade secrets) outside of this litigation. The trial court granted in part and denied in part, ordering that the alleged trade secrets not be shared with American Family's competitors, but declining to further limit their use. American Family petitioned the Colorado Supreme Court to direct the trial court to enter the protective order. The Supreme Court declined to do so, finding that American Family failed to present to the trial court evidence demonstrating the documents were trade secrets or otherwise confidential commercial information. View "In re Rumnock v. Anschutz" on Justia Law

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Petitioner Arnold Calderon was injured in a vehicle accident with an uninsured motorist. At the time, petitioner was insured with respondent American Family Mutual Insurance. American Family paid the policy limit to petitioner's medical providers; it denied payment with respect to his uninsured/underinsured (UM/UIM), disputing the amount of petitioner's damages. A jury returned an award in petitioner's favor. The trial court offset the amount of the jury award by the amount already paid to the medical providers. Petitioner argued on appeal of that offset, that the "MedPay" coverage was separate from the UM/UIM coverage, and that the MedPay amount should not have been deducted. The Supreme Court reversed, finding that the amount of UM/UIM coverage, as listed in petitioner's policy, in this case should not have been reduced by the MedPay amount. View "Calderon v. American Family Mutual Insurance Company" on Justia Law

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Norma Hoff owned a home she rented through a property management agency. The roof sustained hail damage, and she contracted with Alliance Construction & Restoration, Inc. (Alliance) to make the repairs. Alliance subcontracted the roof repairs to MDR Roofing, Inc. (MDR). MDR employed Hernan Hernandes as a roofer. While working on Hoff's roof, Hernandez fell from a ladder and suffered serious injuries. He filed a workers' compensation claim against MDR, but MDR's insurer, Pinnacol Assurance, denied the claim because MDR's insurance coverage had lapsed. The issue this case presented for the Supreme Court's review was whether Pinnacol had a legal obligation to notify MDR of a certificate of insurance when the policy evidenced by the certificate was cancelled. Based on the certificate at issue in this case and the applicable statute, the Colorado Supreme Court concluded that the insurer had no such obligation. Therefore, the Court reversed the appellate court's judgment to the contrary. View "Pinnacol Assurance v. Hoff" on Justia Law

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Respondent Jennifer Hansen was injured in a motor vehicle accident in late 2007. Four months later, she presented an underinsured motorist (“UIM”) claim to petitioner American Family Mutual Insurance Company (“American Family”), insurer of her vehicle. As proof of insurance, Hansen offered lienholder statements issued to her by American Family’s local agent that identified her as the named insured at the time of the accident. American Family’s own records, however, indicated that the named insureds on the policy at the time of the accident were Hansen’s stepfather and mother, William and Joyce Davis (the “Davises”). In reliance upon the policy as reflected in its own records, American Family determined that Hansen was not insured under the policy and denied coverage. Hansen filed an action against American Family asserting claims for breach of contract, common law bad faith, and statutory bad faith for unreasonable delay or denial of benefits under sections 10-3-1115 and -1116, C.R.S. (2015). Prior to trial, American Family reformed the contract to name Hansen as the insured, and the parties settled the breach of contract claim, leaving only the common law and statutory bad faith claims for trial. The trial court ruled that the deviation in the records issued by American Family’s agent and those produced by its own underwriting department created an ambiguity in the insurance policy as to the identity of the named insured, and instructed the jury that an ambiguous contract must be construed against the insurer. The jury found in favor of Hansen on the statutory bad faith claim, indicating on a special verdict form that American Family had delayed or denied payment without a reasonable basis for its action. The trial court awarded Hansen attorney fees, court costs, and a statutory penalty. American Family appealed the judgment and award of statutory damages, arguing, among other things, that the trial court erred in finding that the lienholder statements created an ambiguity in the insurance contract as to the identity of the insured and that, at the very least, the contract was arguably unambiguous such that the company had a reasonable basis to deny coverage and could not be liable for statutory bad faith. The court of appeals affirmed, finding that the lienholder statements created an ambiguity and that, even assuming American Family’s legal position was a reasonable one, American Family could still be held liable for statutory bad faith. After its reverse, the Supreme Court reversed. Because the insurance contract unambiguously named William and Joyce Davis as the insureds at the time of the accident, the trial court and court of appeals erred in relying on extrinsic evidence to find an ambiguity in the insurance contract, "[a]n ambiguity must appear in the four corners of the document before extrinsic evidence can be considered." Accordingly, American Family’s denial of Hansen’s claim in reliance on the unambiguous insurance contract was reasonable, and American Family could not be held liable under sections 10-3-1115 and -1116 for statutory bad faith. View "Am. Family Mut. Ins. Co. v. Hansen" on Justia Law

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Travelers Property Casualty Company of America (Travelers) petitioned for review of a court of appeals judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon Corporation. Stresscon, a subcontracting concrete company, filed suit against Travelers, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a serious construction accident in July 2007, which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Although there was much dispute over the factual and legal import of Travelers’ reservation of rights and other of its communications with both Stresscon and Mortenson concerning Mortenson’s claim, there was no dispute that by December 31, 2008, Travelers had not paid the damages asserted by Mortenson. The appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorato Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court found that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence in Colorado, and because the Court declined to extend notice-prejudice reasoning in Friedland to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers, the judgment of the court of appeals was reversed. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

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Stresscon Corporation, a subcontracting concrete company, filed suit against Travelers Property Casualty Company of America, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a 2007 serious construction accident which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Travelers petitioned for review of the court of appeals’ judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon. Much as the district court had done, the appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorado Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled the Court's prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court reversed, finding that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence. The Court declined to extend a notice-prejudice reasoning to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

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Allstate Insurance Company petitioned for review of a court of appeals' judgment that reversed the dismissal of a breach of assignment claim brought by Medical Lien Management (MLM). The district court effectively construed MLM's Lien and Security Agreement with a motor vehicle accident victim (upon which the underlying complaint was premised), as failing to assign the victim's right to the proceeds of his personal injury lawsuit against Allstate's insured. The court of appeals found a valid assignment to MLM all rights to the future proceeds from the personal injury claim in an amount equal to the costs of medical services paid for by MLM, as well as a sufficient allegation in the complaint of an enforceable obligation by Allstate to pay the assigned sums to MLM. The Supreme Court reversed, finding that the court of appeals erred in finding the purported assignment in this case. View "Allstate Insurance Co. v. Medical Lien Management, Inc." on Justia Law

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The Tenth Circuit Court of Appeals certified a question of Colorado law to the Colorado Supreme Court. An insurer issued a policy that provided directors and officers of a company liability coverage. The policy required the insured to give prompt notice of a claim, specifically, notice "as soon as practicable" after learning of the claim. The policy also required the insured to give notice of the claim by a date certain (not later than 60 days after the expiration of the policy). Near the end of the one-year policy, a company officer was sued for alleged misrepresentations he made during a merger. Unaware of the insurance policy, the officer defended himself against the suit. When he learned of the policy, approximately sixteen months after the policy had expired, he contacted the insurer. The underlying suit was settled. The officer then sued the insurer for denying coverage under the policy. The insurer removed the case to the federal district court, and then moved to dismiss on grounds that the officer's claim was untimely. The issue of Colorado law before the Tenth Circuit centered on the "notice-prejudice" rule to claims-made insurance policies: (1) whether the notice-prejudice rule applied to claims-made liability policies in general; and (2) if so, whether the rule applied to both types of notice requirements in those policies. The Colorado Court answered the certified questions more narrowly than originally presented because the parties agreed that the prompt notice requirement of the claims-made policy in this case was not at issue. The Colorado Court's analysis was restricted to the date-certain notice requirement. The Court held that the notice-prejudice rule did not apply to date-certain notice requirement in a claims-made insurance policy. In a claims-made policy, the date-certain notice defines the scope of coverage ("to excuse late notice in violation of such a requirement would rewrite a fundamental term of the insurance contract.") The Court reframed the certified questions as a single question: whether the notice-prejudice rule applies to the date-certain notice requirement of claims-made policies, to which the Colorado Court answered in the negative. View "Craft v. Phila. Indem. Ins. Co." on Justia Law