INSURANCE-RELATED COURT CASES
Digested from case reports published online
Bad day for driver
In 2018, Marcus Fear was involved in a rear-end collision for which he was not at fault. As a result of the accident, he suffered injuries and received medical treatment. At the time, Fear held an underinsured motorist (UIM) policy issued by GEICO. With GEICO’s permission, he settled with the at-fault driver’s insurer for his policy limit of $25,000.
He thereafter sought compensation for additional damages through his UIM policy.
In April 2020, GEICO offered to settle Fear’s UIM claim for $2,500 in exchange for a release of any claims relating to the accident. In June 2020, after Fear submitted documentation of additional medical bills, GEICO extended a new settlement offer of $4,004 to reflect the amount of those bills. GEICO again requested a release in exchange for any settlement.
Fear did not accept either of these offers or communicate a demand for any particular amount, and GEICO ultimately did not make any partial payments to Fear. Fear then filed suit against GEICO alleging statutory bad faith under section 10-3-1115 of the Colorado insurance code in the handling of his UIM claim. This section prohibits an insurer from unreasonably delaying or denying payment of a covered benefit by failing to pay undisputed non-economic damages before final settlement.
The case proceeded to a bench trial during which experts retained by each party disagreed about whether GEICO had acted reasonably in its handling of Fear’s claim. The adjuster who had handled Fear’s claim did not testify at trial, and the district court declined to admit her deposition testimony for purposes of proving the truth of any matters asserted therein. The court allowed the parties’ experts, however, to rely on the adjuster’s testimony as a basis for their opinions.
The court also admitted, pursuant to the parties’ stipulation of admissibility, GEICO’s claim file, which included a claim evaluation summary prepared by GEICO in its handling of Fear’s claim. This evaluation designated $6,500 as a “reserve”; $2,500 as “evaluated” general damages (which both experts referred to as non-economic damages); and $7,243-$12,239 as a “negotiation range” for those general damages, which, when combined with Fear’s medical expenses and then offset by the $25,000 that Fear had collected from the tortfeasor’s insurer, resulted in a final “negotiation range” of $2,500-$9,000.
At the conclusion of the bench trial, the district court concluded that the holding of a previous case extended to undisputed non-economic damages. The court then found that $3,961 of Fear’s non-economic damages was undisputed (the court arrived at this number by subtracting the $25,000 paid by the at-fault driver’s insurer from the $28,961 that the court determined to be the undisputed total of Fear’s economic and non-economic damages). The court stated that in reaching this conclusion, it had disregarded GEICO’s settlement offers and “settlement range,” which the court deemed to be distinct from the “evaluation range” that the court found to be probative of GEICO’s understanding of the actual value of Fear’s claim. The court thus determined that GEICO had violated section 10-3-1115. Fear appealed.
The Colorado Court of Appeals reversed, concluding that noneco-
nomic damages are inherently subjective and that admitting GEICO’s claim evaluation as evidence of undisputed benefits violated CRE 408 of the Colorado Insurance Code.
The Colorado Supreme Court affirmed the appellate court’s judgment, finding that Fear did not provide admissible evidence to show that any portion of his non-economic damages was undisputed or not subject to reasonable dispute.
Fear v. GEICO Casualty Co.—Supreme Court of Colorado—No. 23SC333—December 23, 2024.
