Frank Patterson and Karl Chambers received a successful ruling from the Court of Appeals in Donna Roulston v State Farm (18CA1600, ann’d 2/13/20) on issues that arise frequently in bad faith/unreasonable delay cases. The great majority of these cases are nothing more than disagreements over the value of the claimants injuries and damages. The unreasonable delay statute, C.R.S. 10-3-1115, creates a tremendous incentive for claimants and their attorneys to create value disputes and to file suit alleging unreasonable delay. Following the Supreme Court’s ruling in Schultz v Geico, many claimants argue in litigation that the insurance carrier’s decisions are frozen in time as of its pre-suit evaluation. They argue the carrier is forbidden from obtaining post-suit medical examinations and that it is precluded from introducing any evidence it did not explicitly rely upon prior to suit. Fortunately, the Court of Appeals in Roulston recognized that when a contract claim is unresolved at the time suit is filed, the carrier continues investigating and evaluating it. The carrier is allowed to continue its investigation and to introduce evidence at time of trial as to its ongoing evaluation. The Court also recognized that the act of evaluating a claim is not a one-time event, that it occurs over time as information is received. Unfortunately, the Court’s opinion was not selected for official publication. If anyone wants a copy, we would be happy to provide one.
Frank and Karl note there are a couple of caveats to keep in mind in similar situations. First, Colorado law is still that the insurance company’s actions or decisions must be judged by the information known to the company at the time of the act or decision. A claimant can still ask the jury to consider what the insurer actually knew at an earlier time and ask the jury to conclude the insurer lacked the information it should have had. They can also argue the insurance company was trying to back-fill information after suit was filed.