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Liability-expanding decisions by the Colorado Supreme Court coupled with the prospects of a pro-plaintiff legislative agenda has created an unfair and unbalanced environment for those who face lawsuits in the Centennial State. The state appears to be moving in a dangerous direction and if it does not correct course, the Colorado Supreme Court or the state may find itself in unwanted company on next year’s Judicial Hellholes list.


Four Colorado Supreme Court decisions issued in 2018 have exposed insurers to expanded liability, which will lead to higher rates for consumers.

Each of these decisions addressed the responsibility of insurers to promptly pay valid insurance claims. That is a reasonable and common requirement, however, Colorado takes an outlier approach. Under Colorado’s bad faith law, a person can recover the amount of the covered benefit that was improperly delayed or denied, plus two times that value (essentially, triple damages), plus attorneys’ fees and costs.

On May 21, the Colorado Supreme Court ruled that insurers must pay undisputed portions of a claim even when the total value of the claim is disputed. The court’s decision in State Farm v. Fisher imposes an obligation on insurers to promptly make piecemeal payments of medical or other expenses or face a lawsuit. That type of system is inefficient and costly, and it has already led to a spike on the premiums Colorado drivers pay for insurance.

One week later, the court issued a trio of rulings under the statute. The first subjected insurers to higher damage awards under the statute. In American Family Mutual Insurance Co. v. Barriga, the court held that damages awarded to a plaintiff as a result of a lawsuit alleging an unreasonable delay or denial of a claim should not be reduced by money the insurer later paid the policyholder. The court reasoned that the text of the statute provides no basis for such a reduction and found that “the general rule against double recovery for a single harm” does not apply.

The second ruling expanded the amount of time plaintiffs have to bring a lawsuit against insurers. Several federal judges interpreting Colorado law had found that the statute was “penal” in nature and therefore subject to a one-year statute of limitations period. In Rooftop Restoration, Inc. v. American Family Mutual Insurance Co., however, the Colorado Supreme Court disagreed, concluding that while the statutory penalties “clearly carry a punitive element,” the one-year period for “[a]ll actions for any penalty or forfeiture of any penal statutes” does not apply to unreasonable delay and denial claims. The decision will allow these types of claims to be filed for two years.

In the third case, Guarantee Trust Life Ins. Co. v. Estate of Casper, the court ruled that since damages and attorneys’ fees awarded under the insurance law are not considered penalties, but rather as actual damages, these amounts can be considered when calculating punitive damages. Colorado law permits recovery of punitive damages in an amount equal to actual damages awarded to a party. Thus, as Colorado lawyers representing policyholders observed: “So, if the standards for punitive damages are met, then the actual damages a policyholder could receive under [the insurance law] — twice the covered benefits plus attorney fees — would be doubled. This means the policyholder could recover four times the covered benefit and twice the attorney fees!”

Colorado lawyers observe that “[t]aken together, these four decisions suggest that insurers operating in Colorado should not expect favorable decisions in statutory bad-faith cases for the foreseeable future.”

Colorado lawyers observe that “[t]aken together, these four decisions suggest that insurers operating in Colorado should not expect favorable decisions in statutory bad-faith cases for the foreseeable future.”

These decisions provide further incentive for gamesmanship that occurs in Colorado. Plaintiffs’ lawyers may submit medical bills or damage information piecemeal to see if they can confuse the insurer or cause a mistake, opening up the potential for a lucrative lawsuit. Greater liability for insurance companies will lead to an increase in rates for consumers as the companies look to absorb the additional costs.

The Colorado Supreme Court did provide a small ray of light for insurers in a year clouded with liability-expanding rulings. In Munoz v. American Family Insurance, the court ruled that lawyers representing policyholders cannot demand that insurers pay them prejudgment interest, which is calculated at 9% annually, when settling claims. In a September 2018 decision, the court found that prejudgment interest is only available when a complaint is actually filed, litigated, and results in a damage award.

Colorado lawyers observe that “[t]aken together, these four decisions suggest that insurers operating in Colorado should not expect favorable decisions in statutory bad-faith cases for the foreseeable future.”


The Colorado Supreme Court has recently skewed court procedures to favor plaintiffs.
An amended rule of civil procedure, Rule 16.1 “Simplified Procedure for Civil Actions,” eliminates most discovery when a plaintiff ‘s claim for damages is less than $100,000. While many states are experimenting with discovery in lower-exposure cases, they generally are not as extreme as this Colorado rule.

The rule requires each party to (1) take no more than six hours of deposition testimony, (2) make no more than five requests for production of documents, and (3) only disclose medical records that are related to the injuries and damages claimed; and even then, only for a period of five years prior to the accident. While Rule 16.1 was initially adopted in 2004, prior to September 2018 this system was voluntary and most parties opted out of it.

This rule restricts a defendant’s right to due process by significantly constraining the ability to obtain information necessary to mount a fair defense. The plaintiff also gets to keep the full amount of the verdict if a jury awards more than $100,000, which is a change from the prior version of the rule.


Confirmation of conservative Colorado Supreme Court Justice Allison Eid to the U.S. Court of Appeals for the Tenth Circuit in November 2017 to fill the vacancy left by Justice Neil Gorsuch and her replacement by a pro-plaintiff law professor, Melissa Hart, means that liability-expanding precedent may continue to build. However, in May 2018, Governor John Hickenlooper nominated his fifth judge to the seven-member Supreme Court bench after the retirement of Chief Justice Nancy Rice. The appointment of Justice Carlos Armando Samur was uniformly praised and he is expected to be a solid jurist.


Colorado’s legislature has remained balanced in recent years due to its bipartisan composition – with Republicans controlling the Senate and Democrats controlling the House of Representatives and Governor’s mansion. While the trial bar has consistently pushed an aggressive liability-expanding agenda in the House, it has stalled in the Senate. That changed in November 2018, when Democrats gained the Governor’s seat, obtained control of the Senate, expanded their majority in the House, and took the state attorney general’s office.

The consolidation of power could open the door to liability-expanding laws. Colorado legislators may revive several bills that did not advance during the 2017 session. For example, plaintiffs’ lawyers have repeatedly attacked the state’s limit on noneconomic damages. Before the limits were adopted over 20 years ago, pain and suffering awards were completely subjective and unpredictable, making insurance rates unaffordable. In 2017, the Senate rejected H.B. 1254, which would have chipped away at the limit by removing it in cases alleging the wrongful death of a minor. If enacted, this bill would reintroduce uncertainty and have a “catastrophic impact” on Colorado businesses.

Colorado legislators also are expected to reintroduce a bill that would create a mandatory family and medical leave insurance program to provide wage-replacement benefits to individuals who take leave from work. This bill creates several “litigation traps” for employers by providing a private right of action if an employer rejects an employee request to take leave, treating such a decision as an “adverse employment action.” The law would permit a court to impose on the employer liquidated damages in the amount equal to the plaintiff ‘s denied compensation and attorney’s fees and costs.

Additionally, legislators are likely to revive their effort to enact the “Ban the Box” bill, which does not allow employers to inquire into a job applicant’s criminal history on an application or indicate that a person with a criminal history is ineligible for a position. If enacted, this bill would open employers up to liability, as negligent hiring claims alleging that an employer knew or should have known that a person was prone to violence or misconduct, have become common in lawsuits. Any “ban the box” legislation should not expose employers to additional liability or create a new private cause of action.

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