Court Opinion

ID: 9789760
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:40:50.873322+00
Date Added: 2024-06-11T15:34:08.948246
License: Public Domain

Chief Justice ROYIRA
dissenting:
The majority holds that one clause of the limits of liability provision contained in the policy issued by American Family Mutual Insurance Company (“American Family”) is void and thus, American Family may not set off Gale Barnett’s Social Security Disability Insurance (“SSDI”) benefits against the uninsured/underinsured motorist (“UM/UIM”) award. Maj. op. at 1309. The majority also holds that the collateral source statute is inapplicable to this case. Maj. op. at 1309-10. I dissent.
I
Gale Barnett was injured when the car she was riding in was struck by a vehicle operated by Robert Scott Minson. Minson was an underinsured motorist driving a car *1311owned by Lulubelle Morton. As a result of these injuries, Gale Barnett was unable to continue working and thus, filed an application for SSDI benefits. On September 22, 1988, an Administrative Law Judge ruled that Gale Barnett was disabled and awarded her SSDI benefits. The Barnetts also initiated a personal injury lawsuit against Minson which resulted in a settlement of $50,000 — the liability limit under Morton’s casualty policy.
The Barnetts gave American Family notice they would be initiating a claim for underinsured motorist benefits under the policy they had contracted for with American Family. The Barnetts’ policy provided UM/UIM coverage for bodily injury for a maximum amount of $100,000 for each person and a maximum amount of $300,000 for each accident. American Family then filed a declaratory judgment action seeking a determination of whether the SSDI benefits could be set off from the underinsured motorist benefits otherwise available to Gale Barnett. The Barnetts did not dispute American Family’s contention that the $50,000 settlement with Minson could be set off from the $100,000 ceiling for UM/ UIM coverage — leaving a maximum possible recovery of $50,000 under the UM/UIM provision. Thus, the precise question before us is whether American Family may further reduce Gale Barnett’s UM/UIM coverage from the already reduced $50,000 ceiling.
II
The limits of liability provision contained in the American Family policy issued to the Barnetts provides, in pertinent part, that
[a]ny amounts payable will be reduced by:
1. A payment made by the owner or operator of the uninsured motor vehicle or organization which may be legally liable.
2. A payment under the Liability coverage of this policy.
3. A payment made or amount payable because of bodily injury under any workers’ compensation or disability benefits law or any similar law.
(Emphasis omitted.) The majority finds only a portion of subsection 3 to be unenforceable and void as contrary to “public policy.” More specifically, the majority holds unenforceable the clause pertaining to disability benefits. I am not convinced, however, that any of the public policies identified by the majority in fact support a finding that subsection 3’s disability clause is void and unenforceable in this case.
A
In Newton v. Nationwide Mutual Fire Insurance Co., 197 Colo. 462, 594 P.2d 1042 (1979), we held that “[bjecause the [set-off] provision purports to allow an insurance carrier to provide less than the statutorily required minimum coverage of uninsured motorist coverage ... it is contrary to the legislative intent [of the statute] .... Thus the provision is invalid and unenforceable.” Id. at 465, 594 P.2d at 1043. After reiterating the bases of our decision in Newton, the majority concludes that Newton should be expanded to cases in which enforcement of a set-off provision may not result in lowering the amount of UM/UIM coverage below the statutorily required minimum. Maj. op. at 1307. This expansion of Newton is warranted, the majority argues, on the basis of “subsequent amendments to the uninsured motorist statute and this court’s holding in Krai ....” Id. I am of the opinion that the rationales offered by the majority in support of its expansion of Newton do not justify such a holding. Rather, I would hold at the very least, that Newton should be limited to circumstances where a set off against UM/UIM coverage would result in coverage below the statutorily required minimum.
B
The majority first asserts that subsection 3’s disability clause is void and unenforceable because it violates the public policy that *1312UM/UIM coverage “provide an insured with benefits to the extent necessary to recover for loss caused by a negligent and financially irresponsible motorist, subject to policy limits.” Maj. op. at 1305 (citing Kral v. American Hardware Mut. Ins. Co., 784 P.2d 759 (Colo.1989)). I fail to see how this public policy can support the majority’s holding in this case in light of the fact that at present, there has been no final determination of the extent of Barnett’s losses resulting from the auto accident. Consequently, it is pure speculation for this court to assert that a set off of SSDI benefits would violate the public policy of providing benefits that are adequate to cover the losses caused by an uninsured or underinsured motorist. Therefore, this public policy cannot support the majority’s holding in this case.
The majority next argues that enforcing the disability set-off provision would violate public policy because “[ajllowing American Family to receive such a windfall at the expense of Barnett undermines the purpose of UM/UIM coverage.” Maj. op. at 1307. Irrespective of which public policy the majority is referring to, I disagree with the majority’s characterization that enforcing the SSDI set-off provision would result in a “windfall” to American Family. The cost of purchasing the type of UM/UIM coverage the Barnetts obtained surely reflects the fact that exposure to liability on the part of American Family is narrowed by the limits of liability provision contained in the policy. Conversely, economic reality would dictate that if the Barnetts purchased UM/UIM coverage subject to absolutely no limits of liability, they would have paid a significantly higher premium for such broad coverage. Consequently, it is entirely misleading to characterize enforcement of the disability set-off as a windfall to American Family. I prefer to characterize the enforcement of this provision and its consequences with the truism; “you get what you pay for.”
In any event, I fail to see the logic in asserting, on the one hand, that the set off of SSDI benefits results in a “windfall” to American Family and thus, is contrary to public policy and holding, on the other hand, that the $50,000 set off for the Min-son settlement is not contrary to public policy. How can the “savings” enjoyed by American Family resulting from the set off of SSDI benefits result in a windfall, but not the $50,000 “savings” resulting from the Minson settlement. Clearly if the enforcement of one set-off results in a windfall, so too must the other.'
The majority, however, does not attempt to explain the distinction between the two as they relate to avoiding a “windfall” to American Family. Rather, it is held that the Minson set off does not violate public policy “because both UM/UIM benefits and payments by the uninsured/underinsured motorist serve the same purpose of ‘protection against financial loss caused by negligent and financially irresponsible motorists.’ ” Maj. op. at 1309 n. 5. I have already expressed my view as to why, given the posture of this case, invocation of this public policy is based on pure speculation and thus, cannot be said to support the majority’s holding. With respect to adequate coverage for loss, the speculation pertains to whether or not Barnett’s losses will prove to be in excess of the amount of coverage provided under the American Family policy after coverage is set off for the Minson settlement ?,nd, hypothetically, the SSDI benefits. Invocation of this public policy in the context of the Minson set-off is similarly speculative since Barnett’s losses may be determined to be in excess of $100,000. Assume, for example, that Barnett’s losses are determined to be $150,000. Under those circumstances, the $50,000 Minson set-off could not be seen as promoting the public policy of adequate coverage for loss because the set off under those circumstances would result in a coverage shortfall of $50,000. Consequently, a determination that the Minson set-off is permissible because it is consistent with the public policy of protection against financial loss is based entirely on speculation and thus, lends no support to the majority’s holding here.
*1313Next, the majority argues that the 1983 amendments to the uninsured motorist act supports the expansion of Newton. Maj. op. at 1307-08. The 1983 amendments increased the statutory minimum coverage that insurers must offer to $100,000. See § 10-4-609(2), 4A C.R.S. (1987). It is correctly noted by the majority that this amendment “mandate[s] that $100,000 in UM/UIM coverage shall be available to an insured individual who elects to pay the additional premium for such coverage.” Maj. op. at 1308. I am at a complete loss as to why such an increase warrants expanding Newton to cases where a set off would not result in coverage below the statutory minimum. It is my opinion that this increase reflects nothing more than the General Assembly’s determination that motorists in Colorado should be provided the opportunity to purchase UM/UIM coverage which will more likely cover the losses incurred as a result of accidents with uninsured or underinsured motorists. Such an assessment on the part of the General Assembly says absolutely nothing, however, regarding the question whether set-off provisions as applied to UM/UIM coverage violate “public policy.”
The majority next cites to Parfrey v. Allstate Insurance Co., 815 P.2d 959 (Colo.App.1991), in support of expanding Newton. The majority notes that the Parfrey court held the “statute imposes a duty upon insurers to offer UM/UIM coverage in definite and specific terms so as to allow the consumer to make an intelligent decision regarding whether to accept or reject this coverage.” Maj. op. at 1307-08 (citing Parfrey, 815 P.2d at 962). I do not dispute that the statute imposes such duties on insurers. As with the 1983 amendments, however, I fail to see the relevance this observation has to the question whether Newton should be expanded to cases where enforcement of a set-off provision will not result in coverage below the statutorily mandated minimum.
The Barnetts purchased UM/UIM coverage from American Family. Consequently, American Family clearly fulfilled its duty to offer such coverage to the Barnetts. Furthermore, it has neither been alleged nor determined that the American Family policy issued to the Barnetts is ambiguous. Thus, there is no reason to assume that American Family has not also fulfilled its duty to offer coverage in “definite and specific terms.” Similarly, there is no evidence to suggest that the Barnetts entered into this agreement based on a misunderstanding regarding what sort of coverage they were purchasing. Consequently, there is no reason to assume that American Family has not also fulfilled its duty “to allow the consumer to make an intelligent decision regarding whether to accept or reject this coverage.” More important than the question of whether American Family fulfilled the duties imposed on it by the uninsured motorist statute, however, is the question of what such duties have to do with the propriety of expanding Newton.
Finally, the majority argues that our holding in Kral v. American Hardware Mutual Insurance Co., 784 P.2d 759 (Colo. 1989), also supports the expansion of Newton. The majority argues that in Krai, we shifted our focus from set-off provisions which would reduce UM/UIM coverage below the statutorily required minimum to full recovery within policy limits. Thus, relying on Krai, the majority concludes that “allowing American Family to further reduce Gale Barnett’s contract for UM/ UIM coverage by the amount of her SSDI benefits would contravene the public policies of providing full recovery within policy limits, and placing ‘an insured party having uninsured motorist coverage in the same position as if the uninsured motorist had been insured.’ ” Maj. op. at 1308. This public policy rationale is closely related to the majority’s observation that the 1983 amendments evince an intent on the part of the General Assembly that “[a]n individual who pays for increased coverage should receive the additional benefits which the insurer agreed to provide.” Maj. op. at 1308. In short, the public policies of “full recovery within policy limits” as expressed *1314in Krai and the notion that an insured should “receive the additional benefits which the insurer agreed to provide” represented by the 1983 amendments render the disability set-off clause unenforceable.
There are two reasons why the shift in emphasis represented in Krai and the public policy identified in the 1983 amendments cannot support the majority’s holding here. First, I can find no support for the argument, implicit in the majority’s reasoning, that the limits on recovery under an insurance policy are the same thing as the numerical figures that might appear in isolated policy provisions. That is to say, simply because the policy purchased by the Bar-netts provides for “$100,000” UM/UIM coverage in one provision, it can hardly be said that this figure constitutes the only limit on recovery under such a policy or, that it represents the amount of coverage the insurer is obligated to provide. Rather, insurance contracts must be read as a whole in order to properly determine how relevant, complementary, and mutually related provisions impact one another. Kuta v. Joint Dist. No. 50 (J) of Counties of Delta, Gunnison, Mesa & Montrose, 799 P.2d 379 (Colo.1990) (meaning of contract is found by examination of entire instrument and not by viewing clauses or phrases in isolation). In so doing, any provisions which expressly limit liability must clearly be regarded as relevant in determining what the actual policy limits are and what the insurer has agreed to provide.
To determine policy limits and an insurer’s obligations based solely on the maximum allowable recovery — that is, when no limits of liability are considered applicable or, when provisions are read in isolation — is to turn a blind eye both to the intent of the contracting parties in addition to well-settled rules of contract interpretation. Moreover, identifying a public policy which seeks to allow “recovery within policy limits” or holding an insurer to its obligations has absolutely no bearing on the question whether set-off provisions run contrary to such policies. This is so because policy limits and an insurer’s obligations are defined, in part, by reference to and application of set-off provisions themselves.
Second, and perhaps more importantly, even if I were to accept the majority’s conception of “full recovery within policy limits” — i.e., $100,000 under the Barnetts’ policy — it is impossible for this “public policy” to be served here. American Family and the Barnetts agree that the $50,000 Minson settlement can be set off against the $100,000 ceiling for UM/UIM coverage. Because this set off is not disputed and thus, not an issue before this court, “full recovery within policy limits” (as understood by the majority) cannot be achieved in the present case because the parties only dispute the applicability of limits of liability as they relate to coverage which has already been reduced by 50% of the maximum possible coverage. In short, the parties to this action have already rendered “full recovery within policy limits” an impossibility. Thus, this court is incapable of rendering a decision which would effectuate the public policy which is purportedly served by the majority’s holding.
In sum, I am of the opinion that the authority relied on by the majority in support of its expansion of Newton is either irrelevant or based on pure speculation as it relates to the question whether Newton should be expanded to circumstances in which the application of set-off provisions might not result in UM/UIM coverage below the statutorily mandated minimum.
Ill
Finally, for the reasons stated in Justice Quinn’s dissenting opinion, I disagree with the majority’s holding that the collateral source statute is inapplicable to this case.
Therefore, I respectfully dissent.