Insurance Bad Faith, And The Bad Faith Statute

There are multiple forms of bad faith remedies for Colorado consumers, which include "common-law bad faith" for emotional pain and suffering, frustration, grief, etc., if an insurance company intentionally or recklessly violates industry standards. The Colorado legislature has also provided remedies in C.R.S. §10-3-1115/1116 that applies when an insurer "unreasonably delays or denies" a claim under the policy, which brings about a penalty of two times the amount delayed or denied, in addition to the benefit itself, plus attorney's fees.

The Law Office of Samuel G. Livingston, P.C., has repeatedly litigated cases involving application of both common law and statutory bad faith claims, which has resulted in this firm being the insured's attorney in most appellate cases in Colorado that have interpreted C.R.S. 10-3-1115/1116. Since the statute was enacted, insurance companies have argued that the penalty provision only amounts to a dollar figure equal to the amount of wrongfully delayed or denied benefits, as opposed to the statutory wording. The Law Office of Samuel G. Livingston, P.C., in Rabin v. Fidelity ­­­­­­ 863 F.Supp.2d 1107 (2012) ­­ before federal Judge Lewis Babcock, argued that C.R.S. 10-3-1115/1116 required doubling of delay or denial benefits, and obtained the first published decision in favor of the insured on this issue, a case that was later cited in further Colorado appellate decisions.

Attorney Livingston presented the same issue in the trial of Jennifer Hansen v. American Family, Denver District Court case 10CV6246 where American Family paid an uninsured motorist benefit only weeks before trial. The court entered judgment increasing the amounts wrongfully delayed by a factor of two times as a penalty contrary to the insurance company's position. The case was affirmed by the Colorado Court of Appeals in the first published appellate decision in Colorado interpreting the penalty provisions of the bad faith statute in favor of the insured's interpretation that penalties arising from delay or denial were twice what the insurance industry argued were intended under the statute. The Colorado Supreme Court later granted Certiorari (hyperlink) in Hansen to decide how the bad faith statute operates as to penalty provisions, although the matter was decided on other grounds without interpretation of the bad faith statute.

In the matter of Barriga v. American Family, again presented by our firm that was retained by co-counsel, the insureds sued over the carrier wrongfully subtracting $7,000 from an appraisal award of over $130,000, although it was revealed during the course of depositions and other discovery that the appraisal process had been manipulated by American Family in retaliation for the insured not using a preferred remediation contractor who worked closely with the insurance company as opposed to providing independent bids. The appraisal process took roughly one year and was delayed by American Family secretly attempting to control who would be the umpire in the case, and directly controlling all activities of its appointed appraiser. Even though the appraisal benefit of over $130,000 had been paid prior to the case being filed, the jury found that American Family delayed payment of the benefits awarded in arbitration because American Family manipulated the arbitration process, and the insureds were awarded a penalty of over $260,000 under the bad faith statute.

The court's final judgment (hyperlink) also included $200,000 for "common-law" bad faith damages for pain and suffering, $200,000 in punitive damages, as well as over $400,000 in attorney's fees with a gross $1.2 million awarded against American Family. American Family appealed the decision, and the court again affirmed that the bad faith statute, C.R.S. 10-3-1115/1116, resulted in a penalty of two times the amount that was delayed as opposed to the insurance company's argument that penalties were half that amount.

The Colorado Supreme Court again granted certiorari in Barriga case to address penalty provisions in the bad faith statute that is presently pending. (hyperlink). Oral argument was presented by The Law Office of Samuel G. Livingston, P.C., to the court on September 20, 2017, and resolution of the question of penalties under the bad faith statute will be resolved shortly.

Bad faith claims can potentially involve most forms of insurance when the insurance company unreasonably or recklessly or intentionally denies a claim that should, in good faith, be paid. The Law Office of Samuel G. Livingston, P.C., has repeatedly and successfully handled homeowners claims, HOA claim denials and disputes, as well as commercial losses arising from fires, storms and other events causing covered damages. Frequently, insurance companies attempt to overly control and/or manipulate how repairs take place following the loss, and in some instances these activities may violate the Colorado contractor of choice statute, C.R.S. 10-4-120 that allows the insured to exclusively select contractors to work on a home following the loss and also provides guidelines and disclosure requirements for insurance companies recommending its "preferred vendors" following a loss. A "preferred vendor" is typically a contractor aligned with the insurance company that operates to effectuate only repairs listed on the insurance company's estimate, as opposed to preparing its own estimate of necessary repairs.

Insurance disputes following property losses also sometimes involve issues surrounding asbestos testing and remediation, which is again something insurance companies sometimes attempt to avoid as a cost-saving measure following a loss. The Law Office of Samuel G. Livingston, P.C., has litigated multiple homeowners and HOA losses involving asbestos. We have a working knowledge of Xactimate and other insurance industry-standard estimating systems and provisions of insurance policies that frequently come into play following a loss such as code upgrade disputes and other issues that can delay claims or serve as a basis for denial. The Law Office of Samuel G. Livingston, P.C., has received multiple significant settlements involving situations where the insurance company wrongfully exposed its insureds to asbestos during the remediation process, and has also handled multiple coverage disputes arising from the language of the policy, or disputes surrounding the extent of loss necessary to justify replacement of property under the policy.

The Law Office of Samuel G. Livingston, P.C., also addresses claims involving uninsured motorist coverage wherein claims are either denied or minimal offers extended to resolve injuries from a covered accident, and has also extensively dealt with life and disability claim delays or denials as well. The firm also pursues medical claim denials, delays or failures to provide authorization for requested care, and has a working knowledge regarding URAC's (Utilization Review Accreditation Committee standards) surrounding medical authorizations and other rules and statutes governing review of medical care.

Our firm handles all types of insurance bad faith claims, including claims involving:

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