Arnold A. Calderon, Petitioner
American Family Mutual Insurance Company. Respondent
to the Colorado Court of Appeals Court of Appeals Case No.
Attorneys for Petitioner: Franklin D. Azar & Associates,
P.C. Robert O. Fischel Tonya L. Melnichenko Keith R. Scranton
Rosenberg PC Bradley A. Levin Nelson A. Waneka Denver,
Attorneys for Respondent: Sutton Booker, P.C. Debra K. Sutton
Jacquelyn S. Booker Katie B. Johnson Denver, Colorado
Attorneys for Amicus Curiae Colorado Defense Lawyers
Association: White and Steele, PC Joel N. Varnell Denver,
Attorneys for Amicus Curiae Colorado Trial Lawyers
Association: Ogborn Mihm, LLP Thomas Neville Denver, Colorado
Petitioner Arnold Calderon sustained injuries in a motor
vehicle accident with an uninsured motorist. At the time of
the accident, Calderon was insured under policies issued by
respondent American Family Mutual Insurance Company
("American Family") providing a total of $300, 000
in uninsured/underinsured motorist ("UM/UIM")
coverage and $5, 000 in medical payments ("MedPay")
coverage. Following the accident, American Family paid the
$5, 000 MedPay policy limits directly to Calderon's
medical providers. Calderon also made a claim for UM/UIM
benefits, but American Family disputed the extent of his
damages. Calderon sued for breach of contract, and the jury
returned an award of $68, 338.97 in his favor. However, the
trial court reduced the jury award by $5, 000 to set off the
MedPay benefits Calderon had already received.
Calderon appealed the order reducing his judgment, and the
court of appeals affirmed, Calderon v. Am. Family Mut.
Ins. Co., 2014 COA 70, ¶ 3, __ P.3d__, holding that
the setoff of MedPay coverage was not barred by the UM/UIM
setoff prohibition, which provides: "The amount of the
[UM/UIM] coverage available pursuant to this section shall
not be reduced by a setoff from any other coverage,
including, but not limited to, . . . [MedPay] coverage . . .
." § 10-4-609(1)(c), C.R.S. (2016). The court
interpreted "[t]he amount of the [UM/UIM] coverage
available" as referring to the amount available under
the policy in the abstract-that is, the UM/UIM coverage
limit. See Calderon, ¶ 2. Under such an
interpretation, an insurer may reduce the payment due under
the insured's UM/UIM coverage by amounts paid pursuant to
the insured's MedPay coverage as long as the UM/UIM
coverage limit (here $300, 000) is not reduced. Id.
at ¶¶ 2-3.
We granted certiorari and now reverse. We hold that
"[t]he amount of the [UM/UIM] coverage available
pursuant to this section" refers not to the coverage
limit but rather to the amount of UM/UIM coverage available
on a particular claim (here, $68, 338.97). Accordingly, we
reverse the court of appeals and remand the case for further
proceedings consistent with this opinion.
The material facts in this case are not in dispute. On August
22, 2010, an uninsured driver ran a stop sign and collided
with a vehicle driven by Calderon. Calderon sustained
injuries that left him unable to work for over a month. At
the time of the accident, Calderon was insured under American
Family policies providing $300, 000 in UM/UIM coverage and
$5, 000 in MedPay coverage, for which Calderon paid separate
premiums. The UM/UIM policy endorsement provided in part that
No one will be entitled to receive duplicate payments for the
same elements of loss. Any amount we pay under this Part to
or for an insured person will be reduced by any payment made
to that person under any other Part of this policy. In no
event shall a coverage limit be reduced below any amount
required by law.
the accident, Calderon made claims for MedPay and UM/UIM
benefits. American Family paid the $5, 000 policy limits of
Calderon's MedPay coverage to his medical providers, but
disputed the amount due under Calderon's UM/UIM coverage.
Calderon filed suit asserting breach of contract, common law
bad faith, and statutory bad faith under sections 10-3-1115
and -1116, C.R.S. (2016). The trial court bifurcated the
contract claim from the issue of bad faith, and the contract
claim was tried to a jury on December 17 and 18, 2012. The
jury returned a verdict of $68, 338.97 in Calderon's
favor, including $34, 394.65 for past medical expenses. The
trial court reduced the award by the $5, 000 American Family
had previously paid under Calderon's MedPay coverage, and
entered judgment against American Family for $77, 459, which
included prejudgment interest. American Family paid the
judgment. The trial court then entered summary judgment for
American Family on Calderon's bad faith claims.
Calderon appealed the order reducing his judgment, and the
court of appeals affirmed. Calderon, ¶ 3. The
court interpreted the language of the setoff prohibition
barring a reduction of "[t]he amount of the [UM/UIM]
coverage available" as referring to the amount available
under the policy in the abstract-that is, the UM/UIM coverage
limit. See id. at ¶ 2. The court reasoned that,
because an insurer may reduce the payment due under the
insured's UM/UIM coverage by amounts paid pursuant to the
insured's MedPay coverage as long as the UM/UIM coverage
limit (here, $300, 000) is not reduced, the setoff here was
permissible. Id. at ¶¶ 2-3. According to
the court, Calderon's argument to the contrary
"incorrectly equate[d] the term 'coverage' with
the term 'benefit, '" and improperly permitted
"double recovery." Id. at ¶¶ 12,
16-18, 25-26. We granted certiorari and now reverse.
Calderon argues that the setoff of the $5, 000 in MedPay
coverage in this case is contrary to section 10-4-609(1)(c),
C.R.S. (2016), which, as amended in 2007, provides: "The
amount of the [UM/UIM] coverage available pursuant to this
section shall not be reduced by a setoff from any other
coverage, including, but not limited to, legal liability
insurance, medical payments coverage, health insurance, or
other uninsured or underinsured motor vehicle
insurance." We agree that the setoff prohibition of
section 10-4-609(1)(c) bars the setoff of MedPay coverage in
this case, and accordingly reverse the court of appeals.
Echoing the court of appeals, American Family argues that the
setoff prohibition bars only those setoffs that would reduce
the coverage limit of a particular policy. It reads the first
portion of the statutory language-namely, "The amount of
the [UM/UIM] coverage available pursuant to this
section"-as referring to the amount of coverage
available in a particular policy in the abstract, or the
coverage limit (here, $300, 000). By contrast, Calderon reads
the same statutory language as referring to the amount of
coverage available under a particular claim (here, $68,
The question, then, is whether the "amount of the
[UM/UIM] coverage available pursuant to this section"
refers to the amount available under the policy in the
abstract, or in a particular case. When read in isolation,
the phrase might be read either way. However, we adopt the
latter construction because it makes sense of the entirety of
the provision at issue here. See In re Marriage of
Ikeler, 161 P.3d 663, 666-67 (Colo. 2007) ("[A]
statute must be read and considered as a whole.").
The second phrase of the prohibition provides that the amount
of UM/UIM coverage available "shall not be reduced
by a setoff from any other coverage, including, but
not limited to, . . . medical payments coverage." §
10-4-609(1)(c) (emphasis added). This portion of the
provision refers to a setoff of the amount actually paid
pursuant to a particular coverage, not simply the coverage
limit. This is true because a "setoff from any other
coverage" is a particular amount paid pursuant to that
coverage. See Setoff, Black's Law
Dictionary (10th ed. 2014) (defining "setoff"
as the "right to reduce the amount of a debt by any sum
the creditor owes the debtor"). The language covers all
setoffs, not just those where coverage limits have been
reached. Indeed, it would make little sense to prohibit a
setoff only for the coverage limit of other types of
insurance that the claimant might hold-for example,
"legal liability insurance, . . . health insurance, or
other uninsured or underinsured motor vehicle insurance,
" § 10-4-609(1)(c)-because the coverage limit of
those insurance policies would not generally be known, just
the amount paid pursuant to the coverage. In sum, reading the
first phrase in light of the second, we conclude that section
10-4-609(1)(c) bars the setoff of MedPay payments from the
amount actually paid pursuant to UM/UIM coverage.
This construction is consistent with our observation that
UM/UIM insurance is designed to put "an injured party
having uninsured motorist coverage in the same position as if
the uninsured motorist had been insured." Barnett v.
Am. Family Mut. Ins. Co., 843 P.2d 1302, 1308 (Colo.
1993) (quoting Kral v. Am. Hardware Mut. Ins. Co.,
784 P.2d 759, 764 (Colo. 1989)); see also USAA v.
Parker, 200 P.3d 350, 358-59 (Colo. 2009) (same); §
42-7-102, C.R.S. (2016) (under UM/UIM coverage,
"insurance benefits have been paid for by either the
negligent driver or the innocent victim for the purpose of
compensating the innocent victim for injuries or
losses"). Here, no one disputes that had Calderon been
injured in an accident caused by an insured driver, he would
have received benefits from American Family pursuant to his
MedPay coverage, as well as medical expenses from the other
driver's insurance company. In other words, under the
construction advocated by American Family, Calderon would
receive $5, 000 less in compensation because he was injured
by an uninsured or underinsured driver. We see no indication
from the language of the setoff prohibition that the
legislature intended such disparate treatment.
The court of appeals rejected the construction we adopt today
for two reasons, neither of which we find persuasive. First,
it concluded that such a construction confused the term
"coverage" with the term "benefit."
Calderon, ¶¶ 16-18. We agree with the
court of appeals that there is a distinction between the two
terms-coverage refers to the type of insurance, and benefit
refers to the amount paid out pursuant to that coverage,
id.-but disagree that the construction we adopt
today confuses the two terms. The setoff prohibition does not
use the term "coverage" in isolation. Rather, it
refers to "[t]he amount of the [UM/UIM] coverage
available pursuant to this section" and the fact that
such amount cannot be reduced "by a setoff from any
other coverage." § 10-4-609(1)(c). Under the
construction we adopt today, both uses of the term
"coverage" refer to the type of insurance. As noted
above, the question is whether the reference point for the
"amount . . . available" and "setoff
from" that type of insurance is in the abstract or in a
particular case. We believe it is the latter.
The court of appeals also expressed concern about preventing
double recovery. Calderon, ¶¶ 12, 25-26.
But there is no double recovery problem here. Rather, as this
court has recognized, benefits received under separate
coverages can substantially overlap without constituting a
double recovery. For example, in Newton, we observed
that while personal injury protection ("PIP") and
UM/UIM coverage substantially overlapped-the former covered
medical expenses, rehabilitation and occupational training
costs, lost wages, and, to a certain extent, loss of
essential services, and the latter covered any loss stemming
from bodily injury or death up to policy limits-the coverage
was not duplicative. Newton v. Nationwide Mut. Fire Ins.
Co., 594 P.2d 1042, 1043-44 (Colo. 1979) (holding that a
setoff of PIP benefits from UM/UIM coverage violated public
policy). Similarly, in Barnett, we concluded that
Social Security Disability Insurance ("SSDI")
benefits and UM/UIM benefits overlap but are not duplicative,
as the former is designed to compensate for a loss of income,
whereas the latter, again, covers any loss. 843 P.2d at 1309
(holding that a setoff for SSDI benefits from UM/UIM coverage
violated public policy). We affirmed the holding of
Newton that "an overlap of benefits is
distinguishable from double recovery." Id. at
1308 (citing Newton, 594 P.2d at 1043-44).
Like the PIP benefits at issue in Newton and the
SSDI benefits at issue in Barnett, Calderon's
MedPay and UM/UIM benefits overlap but are not duplicative.
MedPay coverage pays for reasonable medical expenses
regardless of fault. § 10-4-636(4)(a), C.R.S. (2016).
UM/UIM coverage, in contrast, compensates an insured for
"loss resulting from liability imposed by law for bodily
injury or death suffered by any person arising out of the
ownership, maintenance, or use of a motor vehicle."
§ 10-4-609(1)(a). Calderon's MedPay coverage thus
provided something his UM/UIM coverage did not-namely, the
quick reimbursement of medical expenses even where he was at
fault. It therefore provides overlapping, but not
Moreover, while double recovery is disfavored, so is payment
of duplicative premiums. Like the insured in Newton,
594 P.2d at 1043, Calderon paid separate premiums for the two
types of coverage at issue here. As this court observed in
Newton, "[i]t is unlikely that the legislature
intended that motorists pay twice for what would be in
essence a single coverage [were a setoff permitted]. While
duplicating benefits is not favored, neither is duplicating
premiums." Id. at 1045 n.8. Indeed, in
Barnett, this court expressed concern that the
insurer stood to receive a windfall by collecting two
premiums for one coverage. 843 P.2d at 1307 ("Allowing
American Family to receive such a windfall at the expense of
Barnett undermines the purpose of UM/UIM coverage.").
Permitting an insured who purchased both UM/UIM and MedPay
coverage to recover benefits equal to those obtainable for
injury caused by an adequately insured motorist simply
guarantees that insureds like Calderon get what they paid
To the extent that Calderon's insurance purports to allow
the setoff in this case, it is contrary to the setoff
prohibition of section 10-4-609(1)(c) and is unenforceable.
See State Farm Mut. Auto. Ins. Co. v. Kastner, 77
P.3d 1256, 1260 (Colo. 2003) (citing Peterman v. State
Farm Mut. Auto. Ins. Co., 961 P.2d 487, 492 (Colo.
1998)) ("Should the contract fail to conform to any
statute, it is unenforceable to that extent."). Because
we hold that the setoff prohibition of section 10-4-609(1)(c)
bars the setoff of Calderon's MedPay coverage, we do not
address Calderon's alternative arguments against the
We hold that the setoff of MedPay benefits in this case is
barred by the setoff prohibition of section 10-4-609(1)(c).
We therefore reverse and remand the case for further
proceedings consistent with this opinion.
JUSTICE GABRIEL dissents, and JUSTICE MÁRQUEZ and