Court Opinion

ID: 5158071
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:27:37.929287+00
Date Added: 2024-06-11T08:25:29.023166
License: Public Domain

Judge TERRY
concurring in part and dissenting in part.
I concur in the parts of the majority's opinion holding Levy was not entitled to recover prejudgment interest, and that she was entitled to recover postjudgment interest.
Because I believe the majority's holding, permitting the insurer to take a setoff against the insured's uninsured/underinsured (UM/UIM) coverage for payments it made under the medical payments coverage, is at odds with applicable Colorado Supreme Court precedents, I respectfully dissent from the remainder of the majority's opinion. See Newton v. Nationwide Mutual Fire Insurance Co., 197 Colo. 462, 594 P.2d 1042 (1979); Kral v. American Hardware Mutual Insurance Co., 784 P.2d 759 (Colo.1989); Barnett v. American Fomily Mutual Insurance Co., 843 P.2d 1302 (Colo.1993).
The majority begins its analysis of the setoff issue by discussing Quinones v. Pennsylvania General Insurance Co., 804 F.2d 1167 (10th Cir.1986). That case was not decided under Colorado law, and, in my view, is inconsistent with the Newton-Kral-Bar-nett trilogy.
Quinones was cited in Colorado Permanente Medical Group, P.C. v. Evans, 926 P.2d 1218 (Colo.1996). However, Evans did not overrule Newton, Kral, or Barnett, either explicitly or by implication. Evans did not decide the issue of whether a setoff is permitted under UM/UIM coverages, as those previous cases did, and as we do today. Because here such a setoff issue was squarely presented to the trial court and to us, we must address it in the manner directed by those precedents.
I. Newton, Kral, and Barnett
I respectfully disagree with the majority's reading of the supreme court's holding in Barnett. Because that case relied on New-torn and Kral, I begin my discussion with those earlier precedents.
In Newton, three persons were injured in a car accident with an uninsured driver. The injured parties, as occupants of a car owned by Newton, were all insured under the UM coverage of her insurance policy. A policy provision purported to give the insurer the right to reduce the amounts payable under UM coverage by any amounts that were payable to the insureds for any personal injury protection (PIP) benefits The supreme court held that policy provision to be contrary to public policy, because it could have resulted in the insurer providing less than the statutorily mandated minimum UM coverage.
*52The Newton court explained that, while, "generally speaking, the 'No Fault statute does not favor 'double recovery' of PIP benefits by the insured," there was no such prohibition against double recovery provided in the UM statute. 197 Colo. at 468, 594 P.2d at 1045. It stated, "[If the General Assembly in adopting the 'no fault' provisions and the [UM] coverage statute had intended to prevent a 'double recovery' by an automatic dollar-for-dollar [setoff] of PIP benefits against amounts payable under [UM] coverage, it would have been simple to expressly so provide." Id.
As a result of the supreme court's ruling in Newton, the insureds could have gotten a double recovery by receiving PIP payments that, at least in part, compensated them for medical expenses, as well as receiving UM coverage payments that would have compensated them for the same elements of damage.
Kral expanded on the holding of Newton. In Kral, the decedent was killed in a car accident with an uninsured motorist. His widow sought payment of benefits from the insurer under the decedent's UM coverage. A policy provision stated that if the insured recovered from any other party, the insured would be required to reimburse the insurer for any amount it had paid. The widow also signed a separate "release-trust" agreement to repay the insurer fifteen percent of any monies she received in her suit against the uninsured driver and others.
In Kral, the supreme court stated:
Enforcement of the subrogation clause and release-trust agreement would place Kral in the position of having no greater protection against her loss than if uninsured motorist coverage had not been purchased. This result would contravene the strong policy adopted by the General Assembly to enable an insured who purchases uninsured motorist protection to receive the benefits of that coverage to the extent necessary for full compensation for loss caused by the negligent conduct of a financially irresponsible motorist.
784 P.2d at 764. The court therefore found the policy provision to contravene public policy, and held it to be unenforceable.
However, the court also spoke to the possibility of double recovery by the widow:
[The General Assembly did not intend to grant windfall profits to insureds by authorizing them to obtain double recovery for the same loss. To the extent payment of all or part of the authorized uninsured motorist benefit to Kral would, when added to the settlement proceeds she received, result in her receiving sums in excess of her total loss, the insurer should be entitled to enforce the terms of the release-trust agreement.
Id. at 766 (emphasis added). Thus, according to the Kral court, a double recovery by the insured was to be avoided, if at all, only by enforcing the separate release-trust agreement, and not by allowing the setoff provided for in the insurance policy. That ruling has implications here, as well.
In Barnett, the supreme court further expanded the holdings of the previous two cases. Barnett made a claim against her UIM coverage for injuries she received in an accident with the tortfeasor. She had $100,000 in UM/UIM coverage. After suing the tortfeasor, she recovered a judgment and was paid the $50,000 limits of the tortfeasor's liability insurance policy. This $50,000 recovery was set off against the $100,000 UM/ UIM limits of her own policy, and that setoff was not contested.
Barnett then tried to collect the remaining $50,000 in policy limits from her insurer. Her UM/UIM insurance policy allowed the insurer to take a setoff against UM/UIM coverage for payments the insured received under any disability benefits law. Because Barnett had received Social Security disability insurance (SSDI) benefits as a result of her injuries sustained in the accident, the insurer filed a declaratory judgment action, seeking a determination that it was entitled to the setoff provided for in the policy.
In rejecting the insurer's position, the supreme court expanded on its more limited holding in Newton "as a result of subsequent amendments to the uninsured motorist statute and this court's holding in Kral, 784 P.2d at 765." Barnett, 843 P.2d at 1307. No longer was the concern whether the insured's recovery might fall below statutorily mandat*53ed minimum coverages. Id. Instead, the court reasoned that there might be a disincentive for an insured to buy UM/UIM coverage if he or she might receive less than the limit of such coverage if a setoff were to be taken for benefits received from elsewhere. The court stated:
The General Assembly's decision to require insurers to offer $100,000 in UM/ UIM coverage, and our reaffirmation of this obligation in [Alistate Insurance Co. v. Parfrey, 880 P.2d 905 (Colo.1992) ], are significant because they mandate that $100,000 in UM/UIM coverage shall be available to an insured who elects to pay the additional premium for such coverage. An individual who pays for increased coverage should receive the additional benefits which the insurer agreed to provide. There is no incentive for an individual to purchase $100,000 in UM/UIM coverage if the insurer is only obligated to pay $25,000 in benefits.
843 P.2d at 1308.
In my view, Barnett, when read together with Kral and Newton, cannot be reconciled with the majority's paramount concern of preventing a double recovery to the insured. Quite the opposite of showing concern that the insured might get a windfall if she were to receive both SSDI benefits and UM/UIM benefits, the supreme court in Barnett noted a concern that the insurer might get a windfall:
[Insurers may not absolve their lability under UM/UIM provisions by reducing the amount of UM/UIM coverage they contracted to provide by payments received for separate and distinct insurance benefits. As in Newton, the ... set-off clause at issue here could eliminate entirely [the insurer's] liability under the UM/UIM coverage. Allowing [the insurer] to receive such a windfall at the expense of Barnett undermines the purpose of UM/UIM coverage.
Id. at 1807.
The court further stated:
[The insurer] argues that, if Barnett's SSDI benefits are not set off, she will receive duplicative benefits This court has expressed concern regarding the prospect of granting an insured windfall profits by allowing double recovery for the same loss. Alliance Mut. Casualty Co. v. Duerson, 184 Colo. 117, 518 P.2d 1177 (1974); Newton, 197 Colo. 462, 594 P.2d 1042; Kral, 784 P.2d 759. In Duerson, we held that the uninsured motorist statute does not contemplate double recovery. Duerson, 518 P.2d at 1181. In Newton, however, we found that an overlap of benefits is distinguishable from double recovery. Newton, 197 Colo. at 465-66, 594 P.2d at 1048-44. In refusing to set off PIP benefits from the available uninsured motorist coverage, the Newton court found that, although an overlap of benefits existed, double recovery would not result because:
[tlhe minimum benefits required to be covered by PIP include medical expenses, rehabilitation and occupational training costs, lost wages, and, to some extent, loss of essential services that the injured person would have performed without being paid. In contrast, uninsured motorist coverage compensates for [any loss] arising from bodily injury or death up to the policy limits.
843 P.2d at 1308 (emphasis added) (quoting Newton, 197 Colo. at 465-66, 594 P.2d at 1043-44).
I understand the supreme court's distinction between an overlap in benefits and a double recovery to mean that it will not find a double recovery unless the insured would receive precisely the same benefits from the other benefits source as the insured would receive under UM/UIM coverage. Here, the benefits Levy received under the medical payments coverage were only one element of an array of damages available to her under the UIM coverage, so that, under Newton and Barnett, the two benefits must be viewed as overlapping, and not entirely duplicative.
As the majority notes, the benefits payable to Levy were not reduced because some were paid by the tortfeasor's insurer (USAA), while the rest were paid by Levy's insurer (American Family). According to the majority, "the practical effect of this is that [the tortfeasor's insurer] paid the medical payments." However, the same can be said of *54the situation in Barnett: the practical effect there was that SSDI payments compensated her for her physical impairment, which was also an element of damages available to her under UIM coverage.
It is true that Barnett involved another benefit obtained under SSDI, and not from the same insurer that provided the UM/UIM coverage; thus the insured there did not face the prospect of a double recovery coming from the same source. But I do not perceive that would make any difference here, given that the supreme court had a similar holding in Newton, where both sets of benefits were payable by the same insurer under different coverages in the same policy. As I read Newton, it did pose the prospect of a double recovery coming from the same insurer.
While the majority relies on certain language from Newton discussing a method the insurer could use to eliminate the possibility of double payments to the insured, 197 Colo. at 468, 594 P.2d at 1046, Barnett demonstrated that when it comes to UM/UIM coverages, double recovery is tolerated in certain circumstances. Reading Newton together with Kral and Barnett, I conclude the supreme court would now hold that Newton is not limited to situations involving UM coverage; would apply its holding to UIM coverage; and would allow the insured here to retain the benefit she received under the medical payments coverage without any set-off against her recovery under the UM/UIM coverage. Consequently, in my view, the holdings of those three cases, and particularly that of Barnett, compel the conclusion that no setoff can be permitted here.
II. Evans
The majority indicates that the collateral source rule is the primary concern here. The supreme court in the Newton-Kral-Bar-nett trilogy did not address the collateral source rule. Because the court did address that rule in Evans, I must try to reconcile that case with the trilogy.
I conclude that, because Evans did not involve UM/UIM coverages (which are subject to Colorado statutory provisions), and did not address the holdings of Newton, Kral, or Barnett in any way, it does not control the analysis of the setoff issue presented here.
Evans's citation to Quinones is troubling, considering that Quinones, which dealt with UM coverage, reaches the opposite result as would have been reached under our supreme court's trilogy. See Quinones, 804 F.2d at 1171-72. Quinones did not involve Colorado law and did not discuss the holdings of Newton, Kral, or Barnett. Evans cites Quinones only as support for its conclusion that the collateral source statute allowed the insurer (Kaiser) to take a partial setoff from benefits payable to its insured. Evans, 926 P.2d at 1230-32.
The only issue in Evans that is in any way pertinent to the present case is its holding concerning the contract exception to the collateral source statute. Even that holding, however, is readily distinguished from the present case.
In Evans, the decedent was an insured of Kaiser's, but also was treated by Kaiser doctors and nurse-employees. The decedent's widow sued the doctors and nurse-employees for medical malpractice, and won. She was awarded $46,000 for decedent's medical expenses. Of that amount, Kaiser, as his medical insurer, had already paid $40,000. The trial court set off the $40,000 medical benefit against the $46,000 malpractice damages award, and that ruling was challenged on appeal.
Evans presented an unusual situation where Kaiser, the party financially responsible for damages awarded against some of the tortfeasors (the nurse-employees), was also the decedent's insurer. The supreme court distinguished the Evans case from the usual case involving the contract exception to the collateral source rule, where the tortfeasor would get a windfall if the injured party's insurer paid for that party's damages, and then the tortfeasor would be relieved from having to pay those same damages. Instead, in Evans, because the party liable for the judgment against some of the tortfeasors (Kaiser) was also the insurer, allowing a setoff for its payments to the widow would not give it a windfall, because it had already paid the damages. 926 P.2d at 1230-82.
*55We do not have a situation here like the one in Evans, where the tortfeasor and the insurer are related in some way.
It is notable here that the supreme court held that Kaiser was not entitled to a setoff for the entire $40,000 medical payments benefit, but only for the portion of that amount that Kaiser was found liable to pay on behalf of the nurse-employees for whom it was vicariously liable (thirty-five percent). The supreme court did not permit a setoff against the portion of the medical expenses award that was attributable to the non-employee doctors who treated the decedent (and for whom Kaiser was not vicariously liable), because the award against the doctors fell within the contract exception of the collateral source statute. 926 P.2d at 1231-82.
IIL Conclusion
In summary, I conclude that American Family was not permitted to take a setoff against the UIM benefits it paid to Levy. Consequently, I would reverse the order that allowed American Family to deduct previously paid medical payments from the arbitration award.