New Legislation introduced in the Colorado General Assembly seeks to overturn Calderon v. Am. Family Mut. Ins. Co., 2016 CO 72, 383 P.3d 676 (Colo. 2016), which held a policy provision prohibiting double recovery of the same medical expenses twice unenforceable.
By Jacquelyn Booker, Partner, Sutton | Booker | P.C.
On March 7, 2017, I testified in the Senate Judiciary Committee at the request of an insurance client in favor of Senate Bill 182 (SB17-182). The Bill seeks, in part,[1] to clarify the legislative intent behind the 2007 amendments to the Colorado Uninsured Motorist (“UM”) Statue, C.R.S. section 10-4-609 and is in direct response to the decision reached by a divided Colorado Supreme Court in Calderon v. Am. Family Mut. Ins. Co., 2016 CO 72, 383 P.3d 676 (Colo. 2016). Calderon requires the insurance company to pay the same damages twice: 1) once under the medical payments coverage; and 2) once under the UM coverage even if the result is to overcompensate the insured for his or her actual losses sustained in an automobile accident caused by an uninsured motorist.
SB17-182 adds an exception to the UM/UIM Statute which generally prohibits a setoff from any other coverage including legal liability insurance, medical payments coverage, health insurance, or other uninsured or underinsured motorist vehicle insurance. The exception states “insurers are not required to pay damages or benefits under coverage available under this section and benefits paid under any type of medical coverage that together exceed the amount of the insured’s injury or loss for any one accident causing damage.”
In Calderon, the insured carried medical payments coverage in the amount of $5,000. He carried UM coverage in the amount of $300,000. A jury determined that Calderon’s total damages caused by the uninsured motorist were $68,338.97. The Court offset the $5,000 in medical bills already paid under the medical payments coverage because the exact same bills were being claimed as damages in the UM litigation. The insurer paid this amount plus prejudgment interest. The net result was that Calderon received every penny of the actual damages the jury determined he was owed as a result of the negligence of the uninsured motorist.
The Supreme Court’s 4-3 decision held that the insurance company could not offset the exact same medical bills it had already paid. In effect, the Supreme Court required the insurance provider to pay the same medical bills twice and to overcompensate its insured for his actual damages caused by the uninsured motorist.
Colorado’s insurance statutes as a whole and the purpose of insurance in general does not contemplate the result reached by the Colorado Supreme Court in the Calderon case. After all, insurance is purchased to protect against a risk or to compensate for a loss. There is no risk that an insured will have to pay his medical providers twice for the same care, and there is no loss to compensate once an insured’s actual damages are all reimbursed by his insurer.
Practically speaking, the General Assembly probably did not intend to require insurers to make duplicative payments for the same damages. SB17-182 clarifies the original intent of the law and ends the practice of requiring the insurer to overcompensate the insured’s actual damages.
1The Bill also seeks to change the requirements regarding stacking multiple uninsured/underinsured motorist policies and to redefine what constitutes and uninsured motorist. These aspects of the Bill are beyond the scope of this blog. The entire text of the bill can be found at http://leg.colorado.gov/sites/default/files/documents/2017A/bills/2017A_182_01.pdf.