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Lorenzen v. Pinnacol Assurance

Court of Appeals of Colorado, First Division

April 18, 2019

Richard Lorenzen, Plaintiff-Appellant,
Pinnacol Assurance, Defendant-Appellee.

          City and County of Denver District Court No. 15CV32703 Honorable Michael A. Martinez, Judge

          Bisset Law Firm, Jennifer E. Bisset, Denver, Colorado, for Plaintiff-Appellant

          Vaughan & DeMuro, David R. DeMuro, Richard K. Rediger, Denver, Colorado, for Defendant-Appellee

          The Gold Law Firm, LLC, Michael J. Rosenberg, Greenwood Village, Colorado, for Amicus Curiae Colorado Trial Lawyers Association

          Taubman and Rothenberg [*] , JJ., concur


          HARRIS JUDGE

         ¶ 1 In this bad faith breach of an insurance contract case, plaintiff, Richard Lorenzen, sued defendant, Pinnacol Assurance, his employer's workers' compensation insurer, after Pinnacol initially denied his request for surgery to treat a work-related injury. Pinnacol's denial resulted in a thirteen-day delay between the date of the request and the date Lorenzen underwent surgery.

         ¶ 2 Before trial, Lorenzen disclosed four doctors as experts who intended to opine that the delay in approving the request caused Lorenzen to suffer permanent nerve damage. The experts relied on a theory that prolonged nerve compression from a herniated disc leads to nerve damage and, therefore, surgery must be performed sooner rather than later. As one of the doctors explained the theory, "timing matters."

         ¶ 3 The district court concluded that the theory relied on by the doctors - for patients with a disc herniation causing neurological deficits, prompt surgery is preferable to delayed surgery to preserve nerve function - was not a scientifically reliable theory of medical causation and disallowed the expert testimony. Without his experts' testimony, Lorenzen could not prove causation or damages, and so the district court granted summary judgment in favor of Pinnacol.[1]

         ¶ 4 On appeal, Lorenzen contends that the district court erred in excluding his expert testimony. He maintains that the court imposed too stringent a causation standard and that, even under the standard applied by the court, he presented a reliable and relevant theory of causation that satisfies CRE 702.

         ¶ 5 Lorenzen also contends that the district court erred in entering judgment for Pinnacol, as he retained a claim for noneconomic damages that did not require expert testimony.

         ¶ 6 We reject his contentions and therefore affirm.

         I. Background

         A. Factual Background

         ¶ 7 On February 3, 2014, while Lorenzen was working as a groundskeeper for a country club, he injured his back and suffered a herniated disc with an extruded caudally migrated fragment.[2]Lorenzen's employer reported the injury to Pinnacol the next day.

         ¶ 8 Lorenzen was referred to Dr. Tracey Stefanon. She placed Lorenzen on work restriction, recommended over-the-counter anti-inflammatories, ordered an MRI, and referred Lorenzen to an orthopedic surgeon, Dr. Douglas Beard.

         ¶ 9 On February 6, Dr. Beard advised Lorenzen that he would likely need surgery, but, because Lorenzen wanted to avoid surgery if possible, Dr. Beard prescribed steroids with further monitoring. Lorenzen returned to Dr. Beard on February 10, still experiencing pain and foot weakness, and they decided that Lorenzen should have surgery as soon as possible.

         ¶ 10 Lorenzen spoke with a claims adjuster on February 12 and discovered that Dr. Beard had not submitted a request for authorization of the surgery. He called Dr. Beard's office with a reminder to submit the request to Pinnacol, and Dr. Beard faxed a request to Pinnacol marked "urgent." According to Dr. Beard, an urgent request does not denote an emergency.

         ¶ 11 On February 17, Pinnacol verbally advised Lorenzen that it would not authorize surgery, and the next day, it formally denied his request on the ground that Lorenzen's injury was not work related.

         ¶ 12 On February 20, Lorenzen, now proceeding under his private health insurance, consulted with Dr. William Biggs, an orthopedic surgeon, and Dr. Biggs performed the surgery on February 25. After the surgery, Lorenzen continued to experience right foot weakness due to permanent nerve impairment.

         ¶ 13 On June 20, 2014, Pinnacol changed its position and determined that Lorenzen's injury was work related. It reimbursed him for his medical costs and paid other workers' compensation benefits.

         B. Procedural History

         ¶ 14 Lorenzen filed this action against Pinnacol, asserting a claim for bad faith breach of an insurance contract. He alleged that "[a]s a result of the delay in receipt of surgical intervention, Lorenzen has permanent weakness and loss of control over his foot with loss of strength and stability, which affects his work, his activities of daily living and his hobbies . . . ."

         ¶ 15 In support of his claim, Lorenzen disclosed four medical experts (Drs. Stefanon, Beard, and Biggs, and Dr. Rebeka Martin) who intended to opine that the delay in authorizing surgical intervention for Lorenzen resulted in his permanent nerve damage.

         ¶ 16 Pinnacol filed a pretrial motion to exclude the experts' testimony on the issue of medical causation, contending that their opinions were not scientifically reliable and were therefore inadmissible at trial.

         ¶ 17 The district court held a hearing on the motion at which it reviewed the deposition testimony and heard argument from counsel. None of the doctors testified at the hearing. Thereafter, the district court made detailed findings and issued an order disallowing the doctors from testifying at trial that the thirteen-day delay caused by Pinnacol resulted in Lorenzen's permanent impairment.

          ¶ 18 Pinnacol then moved for summary judgment, arguing that without the expert testimony, Lorenzen could not prove his bad faith claim. Lorenzen responded by filing a motion to reconsider the order prohibiting his experts' testimony. He attached to his motion additional ex parte "deposition" testimony of Dr. Beard and an affidavit by Dr. Martin. His motion for reconsideration continued to assert the theory that prompt surgical intervention is generally indicated for patients suffering from nerve compression, but it also raised a new theory of causation.[3]

         ¶ 19 The district court denied Lorenzen's motion for reconsideration, denied as moot Pinnacol's motion to strike the doctors' new testimony, and granted Pinnacol's motion for summary judgment.

         II. Exclusion of Expert Evidence on Causation

         ¶ 20 Lorenzen argues that the district court applied an overly stringent but-for causation test rather than a more lenient "substantial factor" test. But in any event, he says, his expert evidence satisfies a but-for test and, therefore, the district court erred in excluding the experts' testimony. We disagree. A. The Applicable Standard of Causation

         ¶ 21 The issue of the correct standard of causation is a legal one. Reigel v. SavaSeniorCare L.L.C., 292 P.3d 977, 985 (Colo.App. 2011). Therefore, our review of that issue is de novo. Id.

         ¶ 22 To prevail on a common law claim of bad faith breach of an insurance contract, the plaintiff must prove that the insurer acted unreasonably and that the insurer's unreasonable conduct caused the plaintiff's injury or damages. See Bankr. Estate of Morris v. COPIC Ins. Co., 192 P.3d 519, 523 (Colo.App. 2008).

         ¶ 23 Damages for bad faith breach of an insurance contract are based on traditional tort principles. City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 484 (Colo.App. 2003). Under traditional tort principles, the plaintiff must show that the defendant's conduct "proximately caused" the claimed injury. Reigel, 292 P.3d at 985; see also June v. Union Carbide Corp., 577 F.3d 1234, 1238 (10th Cir. 2009) ("In Colorado, as elsewhere, a party seeking recovery in tort must demonstrate that the defendant's conduct caused the alleged injury.").

         ¶ 24 Proximate cause has two components: causation in fact and legal causation. Moore v. W. Forge Corp., 192 P.3d 427, 436 (Colo.App. 2007). Legal causation - which refers to the scope or foreseeability of liability, see June, 577 F.3d at 1240 - is not at issue here; Lorenzen only challenges the test for causation in fact.

         ¶ 25 As to causation in fact, the test is "whether, but for the alleged [tortious conduct], the harm would not have occurred." Reigel, 292 P.3d at 985 (quoting N. Colo. Med. Ctr., Inc. v. Comm. on Anticompetitive Conduct, 914 P.2d 902, 908 (Colo. 1996)). Alternatively, the plaintiff can show factual causation by establishing that the defendant's conduct was a "necessary component of a causal set that would have caused the injury." Id. at 987; see also Restatement (Second) of Torts § 432(1), (2) (Am. Law Inst. 1965). Thus, Lorenzen had to present evidence that, but for the thirteen-day delay between the request for authorization and the surgery, the permanent nerve damage would not have occurred, or that the delay was a necessary component of a causal set that would have caused his impairment.

         ¶ 26 Relying on Sharp v. Kaiser Foundation Health Plan of Colorado, 710 P.2d 1153 (Colo.App. 1985), aff'd, 741 P.2d 714 (Colo. 1987), Lorenzen argues that he could instead establish causation under the "substantial factor" test by showing that Pinnacol's conduct was a substantial factor in increasing the risk that he would have a less optimal surgical outcome.

         ¶ 27 In Sharp, the division held that the jury could decide causation where the plaintiff presented expert testimony that the defendants' conduct was a substantial factor in causing the injury in that it "substantially increased plaintiff's risk of the resulting harm or substantially diminished the chance of recovery." 710 P.2d at 1155. On review, the supreme court did not reach the issue of whether the substantial factor theory was a cognizable, less stringent standard of causation because the court concluded that the plaintiff had met her burden to show but-for causation. Sharp, 741 P.2d at 720.

         ¶ 28 However, as the Tenth Circuit explained in June, the "substantial factor" and but-for standards of causation are not alternatives; but-for causation is a prerequisite to establishing the substantial factor test. 577 F.3d at 1241.

         ¶ 29 In explaining the substantial factor test, section 432 of the Restatement (Second) of Torts, which the Sharp division did not consider, imposes a causation requirement at least as stringent as the but-for standard consistently applied by our supreme court:

(1)Except as stated in Subsection (2), the actor's negligent conduct is not a substantial factor in bringing about harm to another if the harm would have been sustained even if the actor had not been negligent.
(2)If two forces are actively operating, one because of the actor's negligence, the other not because of any misconduct on his part, and each of itself is sufficient to bring about harm to another, the actor's negligence may be found to be a substantial factor in bringing it about.

         Thus, "the allegedly negligent conduct of the defendant must satisfy" a but-for test "before it can even qualify as a substantial factor under the other Restatement ...

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