In an important victory for consumers, earlier today the Colorado Supreme Court unanimously decided that insurance companies cannot delay paying benefits owed under a policy just because the payment of other benefits is disputed. The case is State Farm vs. Fisher. Mr. Fisher had several policies in place with State Farm with underinsured motorists (“UIM”) coverage when he was injured in a 2-car accident caused by the other driver. Because the other driver’s limits were much less than the total of his UIM limits with State Farm, Mr. Fisher was entitled to make a claim against State Farm for UIM benefits, including paying his medical expenses that were not covered by the other driver’s limits. State Farm admitted Mr. Fisher’s medical expenses were properly owed under Mr. Fisher’s UIM coverage, but refused to pay those medical expenses because is disputed the value of the rest of Mr. Fisher’s UIM claim. At trial, the jury decided State Farm had violated Colorado Revised Statute 10-3-1115 by failing to pay benefits owed without a reasonable basis, and the trial court then entered judgment against State Farm for double the amount of the medical expenses State Farm owed but had not paid. The Colorado Supreme Court affirmed the decision by the Colorado Court of Appeals that the language of Colorado Revised Statute 10-3-1115 imposes on insurance companies the duty not to unreasonably delay or deny payment of covered benefits, even though other parts of the insured’s claim may still be reasonably in dispute.
Part of the Court’s opinion may have given a forecast as to how it will rule on the currently pending question of whether the remedies provided in Colorado Revised Statute 10-3-1116 are the benefit owed plus two, or only plus one, when it stated, with respect to the trial court’s entry of judgment that included double the amount of the unpaid medical expenses, that double medical expenses “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.”
Thomas Henderson, a shareholder at Burg Simpson that focuses his practice on suing insurance companies for bad faith, commented: This is a very significant victory for insureds. Today, the Colorado Supreme Court sent the message to the insurance industry that, in Colorado, they are not allowed to delay paying benefits owed to their insureds, and they cannot escape this responsibility by claiming other disputes allow them to delay paying what is owed.