Over my nearly 20 year legal career, there always seems to be a small, but vocal, group of attorneys who try to convince the rest of us that the "sky is falling." "The laws are against injured people," "Colorado jurors do not compensate auto accident victims," and, of course, my favorite Dooms-Day comment, "the government and the insurance industry are going to eventually make injury recovery impossible."
I have always navigated through this negativism with an understanding that though lawyers are often pessimistic in their outlook on the future, they are also pretty bad at predicting the future. In my view, the legal climate for bringing claims has gotten better, not worse, in Colorado. After all, the jury sentiments about the cases WE take to trial have generally remained quite favorable. Our verdicts and settlements have been larger and larger, and I certainly would rather go to court today than 15 years ago. However, the "Negative Nancys" continue to bang their doomsday drums.
But a recent case came down from the Colorado Court of Appeals that is going to give these "Dooms-Dayers" something to chat about for a long time. The Colorado Court of Appeals recently issued a ruling in a case calledDeHerrera v. American Family Mutual Insurance. This case has the potential to change the an accident victim's recovery for his/her losses.
This case originally made me start to wonder if maybe the "Negative Nancys" are right. But the question I continue to ask is: "Can a good person who gets injured in a car crash and is permanently injured get a fair shake in Colorado?" This article will explore this recent Colorado Court of Appeals decision and its far- reaching implications for Colorado residents who become injured and need their insurance company to step up to the plate.
A) WHAT DID THE COURT SAY IN THE DEHERRERA CASE?
In Deherrera, the facts were as follows. Deherrera was injured in an auto accident in September 2004. He used his American Family $5000 MedPay coverage to pay for needed medical treatment he received following his accident. The Colorado Springs District Court and then the Court Of Appeals rejected Mr. DeHerrera's claim that American Family should not be entitled to be paid back from his ultimate settlement the MedPay coverage they fronted him since his settlement money did not fully compensate him for his losses.
B) IN WHAT WAY IS THIS CASE A CHANGE IN THE LAW?
Basically, the argument DeHerrera made was not substantially different than similar arguments made in the past by other injured people who were, by Court Order, compassionately relieved of the payback obligation of a subrogation clause in an insurance contract requiring the injured person to reimburse his insurance company upon settlement or judgment from the at-fault driver's insurance company. Colorado courts have traditionally relied on what is commonly referred to as the "Make Whole" Doctrine.
To begin to understand the issue, assume that settlement or judgment was obtained by an injured party against the insurance company of the person who caused the injury. Secondly, assume that BEFORE this settlement occurred, the injured person took some form of insurance benefit from his own insurance company (e.g. disability money, medical bill reimbursement, etc). Third, assume that once the injured person settled his injury case, his own insurance company, based on a language in their own insurance policy with him, started asking for THEIR money back from the settlement. Lastly, assume that the settlement or judgment was inadequate to pay back his own insurance company and yet still have enough money to adequately compensate him for the losses he sustained in the accident. Basically, there just isn't usually enough money to go around.
Before DeHerrera, when Colorado courts had faced this issue, the Courts had effectively said, "back off insurance man- stop trying to put your hand in this poor injured person's pocket!"
In cases known as Marquez and Krall, the courts had reasoned that people who buy insurance do so with the intent that they are willing to pay a premium to better assure that they will not be less than "whole" after an injury or accident. The courts further reasoned that any language in an insurance policy suggesting that the insurance company should get paid back BEFORE their insured was "made whole," would run contrary to the reasons people buy insurance.
So, prior to DeHerrera, the courts had come down on the side of the consumer. The courts said the injured person should be made whole BEFORE the insurance company gets any money back. The Courts said this was proper EVEN when the insurance policy contract stated that the insurance company was to be paid back FIRST. In other words, the courts simply refused to enforce the insurance company's subrogation clause because it ran contrary to public policy.
C) SO WHAT DID THE DEHERRERA CASE DO?
Well, along came the DeHerrera case. Contrary to the couple of cases that ruled on the side of the consumer nearly 30 years ago, this case says that the insurance policy language is the insurance policy language. The DeHerrera court went on to suggest that the Marquez case was based on a now repealed Auto Reparations statute, and therefore, was not applicable. DeHereara completely ignored the similar ruling or rationale in Krall (related to uninsured motorist subrogation), and declared that "Colorado does not have any law suggesting that the "Make Whole" doctrine has ever been the law in Colorado."
One wonders if the court would have been so quick to disavow long regarded rights of consumers in battles with greedy insurance companies if the plaintiff "Gomcindo DeHerrera" was instead named something like "Spencer Larson." That being said, a great society is judged by how it treats its weakest members. In that regard, the Colorado Court of Appeals did much to question Colorado's place in a great society.
D) DID THE RULING IN DEHERRERA HURT YOUR CHANCES OF KEEPING A FAIR AMOUNT OF YOUR SETTLEMENT?
The answer is, PERHAPS.
First, MedPay and the obligation to pay it back, is no longer the way it was when Mr. DeHerrera had his accident on September 24, 2004. Thus, a strong argument can be made that the court's silly rationale in DeHerrera will have little effect on Colorado consumers' lives, except for poor Mr. DeHerrera. In fact, MedPay became a mandatory requirement of Colorado auto insurance policies in 2009, and by state law the insurance companies are NOT allowed to request to be paid back from any eventual settlement. So the DeHerrera case does not affect MedPay obligations at all.
However, the concern is how other courts might look to DeHerrera for guidance when issues come up related to health insurance subrogation, uninsured motorist subrogation, or frankly, any occasion when the court will be asked to consider giving an insured compassionate relief from inequitable provisions of insurance policy language.
E) CONCLUSION: How it might affect you.
For as long as I can recall, attorneys have known that they could argue the applicability of the "Make Whole" doctrine to get insurance companies to agree to take less than what their actual subrogation interest was.
Now, for the first time in Colorado, it is possible that insurance companies will be less likely to agree to a money distribution that results in the injured person getting more and the insurance company getting less. It is likely that insurance companies will feel they have the upper hand. If this happens, it will require attorneys representing these victims to be MORE willing to take on these issues by bringing the issue to the courts.
Therefore, it our duty as a profession to be more creative and astute than to simply stand up in front of the judge and say the words "make whole." Those days of simply using the magic words are gone. I can assure you that the lawyer who comes into court not understanding the perceived erosion of the "Make Whole" doctrine in Colorado will find a cool and uninviting reception at the courthouse.
For years, our firm has argued the "Make Whole" doctrine, but we have always continued to include attacks on the insurance companies' policy language, the vagueness of its provisions, and the ambiguity of the subrogation language. These types of arguments will now have to be the cornerstone of our future battles to make sure our clients get appropriate disbursements from settlements.
I am fond of saying, "it isn't what you settle for, it's what you get to keep." When looking for an attorney to represent you for a motor vehicle accident, I would suggest that you find one with the knowledge and "can-do" to deal with these ever-changing issues. Also, make sure THEY fully understand how important the "...what you get to keep" part of the settlement is to you.
At Anderson, Hemmat & McQuinn, we regularly and successfully resolve issues favorably with insurance companies that maximize the recovery for our clients. DeHerrera did not help our fight. But a good lawyer can always make an argument, and our job is to convince judges and jurors of our point of view. I would simply say that people injured in motor vehicle collisions need the help of good legal counsel more than ever.