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State Farm Mutual Automobile Insurance Co. v. Fisher

Supreme Court of Colorado, En Banc

May 21, 2018

State Farm Mutual Automobile Insurance Company, Petitioner
Dale Fisher, Respondent

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 13CA2361

          Attorneys for Petitioner: Hall & Evans, L.L.C. Alan Epstein Denver, Colorado Frank Patterson & Associates, P.C. Franklin D. Patterson Greenwood Village, Colorado Sweetbaum Sands Anderson PC Jon F. Sands Denver, Colorado

          Attorneys for Respondent: Bachus & Schanker, LLC J. Kyle Bachus Denver, Colorado

          Attorneys for Amici Curiae Colorado Civil Justice League, American Insurance Association, Property Casualty Insurers Association of America, and National Association of Mutual Insurance Companies: Wheeler Trigg O'Donnell LLP Terence M. Ridley Evan Stephenson Kayla Scroggins Denver, Colorado

          Attorneys for Amicus Curiae Colorado Defense Lawyers Association: Ruebel & Quillen, LLC Jeffrey Clay Ruebel Westminster, Colorado


          HOOD JUSTICE

          ¶1 An underinsured motorist struck a car driven by Dale Fisher, causing Fisher injuries requiring over $60, 000 in medical care. Fisher was not at fault, and he was covered under multiple State Farm underinsured motorist ("UIM") insurance policies. State Farm agreed that Fisher's medical bills were covered under the UIM policies, but it disputed other amounts Fisher sought under the policies, including lost wages. So, State Farm refused to pay Fisher's medical bills without first resolving his entire claim.

         ¶2 Fisher sued, alleging State Farm had unreasonably delayed paying his medical expenses. In response, State Farm argued it had no duty to make piecemeal payments, even for Fisher's undisputed medical expenses, when it disputed the rest of Fisher's UIM claim. A jury returned a verdict in Fisher's favor, finding that State Farm had violated section 10-3-1115, C.R.S. (2017), which provides that an insurer "shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party [insured] claimant." A division of the court of appeals affirmed.

         ¶3 We must decide whether auto insurers have a duty to pay undisputed portions of a UIM claim-like the medical expenses at issue here-even though other portions of the claim remain disputed. Like the court of appeals, we find our answer to this question in the plain language of section 10-3-1115. We hold that insurers have a duty not to unreasonably delay or deny payment of covered benefits, even though other components of an insured's claim may still be reasonably in dispute. Thus, we affirm the judgment of the court of appeals.

         I. Facts and Procedural History

         ¶4 In February 2010, a motorist crashed into a car driven by Respondent Dale Fisher. The motorist was solely at fault, but he carried only $25, 000 in liability insurance. Petitioner State Farm, however, covered Fisher under several insurance policies that provided a combined UIM coverage limit of $400, 000. Fisher presented claims to State Farm for UIM benefits under the various policies, and he settled his liability claim against the underinsured, at-fault motorist for the $25, 000 liability limit.

         ¶5 About a year after the accident, State Farm offered to settle Fisher's UIM claim for $59, 572.10. Fisher declined. A few months later, Fisher sued State Farm. Relevant to this appeal, he alleged State Farm unreasonably delayed or denied payment of covered benefits-that is, Fisher's medical expenses-under the UIM policies, thus violating sections 10-3-1115 and 10-3-1116, C.R.S. (2017), ("unreasonable-delay claim").

         ¶6 In a deposition, State Farm conceded that Fisher's $61, 125.16 in medical bills were reasonable, necessary, and causally related to the car accident. But it did not pay him.[1]

          ¶7 During a five-day jury trial, State Farm moved for a directed verdict on Fisher's unreasonable-delay claim. It asserted that, as a matter of law, it did not unreasonably delay paying Fisher, because even though State Farm didn't dispute his medical expenses, it disputed other portions of Fisher's UIM claim. Thus, it had no obligation to make piecemeal payments on the undisputed portions of Fisher's claim. The trial court denied State Farm's motion. In closing arguments, Fisher argued that State Farm had unreasonably delayed paying his undisputed medical expenses to extract a cheaper, global settlement of his UIM claim. For perspective, Fisher initially requested $1.35 million (including his medical expenses) from State Farm because he could no longer physically perform his line of work in contracting and carpentry. And at trial, Fisher maintained he was entitled to economic damages (including the medical expenses and lost wages), non-economic damages (for pain and suffering), and damages for permanent physical impairment.

         ¶8 In returning a verdict for Fisher, the jury specifically found that State Farm had unreasonably delayed paying Fisher's medical expenses. Thus, the trial court entered a judgment of the UIM policy limit ($400, 000), plus double medical expenses ($122, 250.32), which is the penalty under section 10-3-1116 when an insurer unreasonably delays or denies payment of a covered benefit under section 10-3-1115. State Farm appealed.

         ¶9 Holding that, "under section 10-3-1115, State Farm was legally obligated to not unreasonably delay or deny payment of Fisher's medical expenses, notwithstanding that other components of his UIM claim may have been subject to reasonable dispute, " a division of the court of appeals affirmed in a unanimous, published opinion. Fisher v. State Farm Mut. Auto. Ins. Co., 2015 COA 57, ¶ 36, P.3d . In reaching its holding, the court of appeals rejected State Farm's argument. To do otherwise, the court of appeals reasoned, would enable an insurer to unreasonably delay or deny a valid claim for medical benefits simply by disputing the total amount owed. Id. at ¶ 25. And the court further observed that neither the statute's plain language nor State Farm's policy require that all of a claim be established beyond reasonable dispute before a duty to pay some of the claim that is not in dispute arises. Id. at ΒΆ 27. Thus, because it ...

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