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ADVANCE SHEET HEADNOTE
March 14, 2022
2022 CO 12
No. 21SA187, Skillett v. Allstate Fire & Cas. Ins. Co.—C.A.R. 21.1, Certified
Questions of State Law —Insurance —Companies and Persons Liable —
Statutory Bad Faith
In this case, the supreme court accepted jurisdiction under C.A.R. 21.1 to
answer a certified question of law from the United States District Court for the
District of Colorado to decide whether an action for unreasonably delayed or
denied insurance benefits under sections 10-3-1115 to -1116, C.R.S. (2021), may
proceed against an individual claims adjuster. Compare Riccatone v. Colo. Choice
Health Plans, 2013 COA 133, 315 P.3d 203, with Seiwald v. Allstate Prop. & Cas. Ins.
Co., No. 20-cv-00464-PAB, 2020 WL 6946563 (D. Colo. Nov. 24, 2020). Under
section 10-3-1116(1), an insured whose claim for insurance benefits has been
“anreasonably delayed or denied may bring an action in a district court to recover
reasonable attorney fees and court costs and two times the covered benefit.” The
supreme court holds that, given the plain language of sections 10-3-1115
to -1116—read in context and in their entirety — an action for unreasonably delayed
or denied insurance benefits proceeds against an insurer, not an individual
adjuster.
The Supreme Court of the State of Colorado
2 East 14th Avenue * Denver, Colorado 80203
2022 CO 12
Supreme Court Case No. 21SA187
Certification of Question of Law
United States District Court for the District of Colorado Case No. 21-cv-956-MEH
Plaintiff:
Alexis Skillett,
V.
Defendants:
Allstate Fire and Casualty Insurance Company, d/b/a Allstate Insurance
Company and Collin Draine.
Certified Question Answered
en banc
March 14, 2022
Attorneys for Plaintiff:
Franklin D. Azar & Associates, P.C.
Dylan Unger
Joseph A. Sirchio
DezaRae D. LaCrue
Aurora, Colorado
Ogborn Mihm, LLP
Thomas D. Neville
Denver, Colorado
Attorneys for Defendant Allstate Fire and Casualty Insurance Company:
Campbell, Wagner, Frazier & Dvorchak, LLC
Colin C. Campbell
Rebecca K. Wagner
Kirstin M. Dvorchak
Greenwood Village, Colorado
Attorneys for Defendant Collin Draine:
Spencer Fane LLP
Terence M. Ridley
Evan Stephenson
Kayla Scroggins-Uptigrove
William M. Brophy
Denver, Colorado
Attormeys for Amici Curiae American Property Casualty Insurance Association
and National Association of Mutual Insurance Companies:
Betts Patterson & Mines
David G. Eckberg
Seattle, Washington
Attorneys for Amicus Curiae Chamber of Commerce of the United States of
America:
Holland & Hart LLP
Stephen G. Masciocchi
Nicholas W. Katz
Denver, Colorado
Attorneys for Amicus Curiae Coalition Against Insurance Fraud:
Greenberg Traurig, LLP
Harriet M. Retford
Denver, Colorado
Attorneys for Amici Curiae Colorado Civil Justice League and Colorado
Defense Lawyers Association:
Sutton Booker P.C.
Katie B. Johnson
Lily E. Nierenberg
Denver, Colorado
Attorneys for Amicus Curiae Colorado Claims Association:
Tucker Holmes, P.C.
Winslow R. Taylor, Il
Robert S. Hunger
Centennial, Colorado
Ruebel & Quillen LLC
Jeffrey Clay Ruebel
Westminster, Colorado
Attorneys for Amicus Curiae State Farm Mutual Automobile Insurance
Company:
Lehotsky Keller LLP
Katherine C. Yarger
Aurora, Colorado
JUSTICE HART delivered the Opinion of the Court, in which CHIEF JUSTICE
BOATRIGHT, JUSTICE MARQUEZ, JUSTICE HOOD, JUSTICE GABRIEL,
JUSTICE SAMOUR, and JUSTICE BERKENKOTTER joined.
JUSTICE HART delivered the Opinion of the Court.
41 We accepted jurisdiction under C.A.R. 21.1 to answer a certified question of
law from the United States District Court for the District of Colorado regarding
the potential liability of insurance adjusters under sections 10-3-1115 to -1116,
C.R.S. (2021). Specifically, the certified question asks:
Whether an employee of an insurance company who adjusts an
insured’s claim in the course of employment may for that reason be
liable personally for statutory bad faith under Colorado Revised
Statutes Sections 10-3-1115 and -1116 (“Statutes”).
Given the plain statutory language, we answer that question in the negative. An
action for unreasonably delayed or denied insurance benefits under Colorado law
may be brought against an insurer, not against an individual adjuster acting solely
as an employee of the insurer.
I. Facts and Procedural History
92 On July 3, 2020, Alexis Skillett was involved in a car accident. At the time
of the accident, Allstate Fire and Casualty Insurance Company (“Allstate”) insured
Skillett under a policy that included underinsured motorist coverage. Skillett
settled with the at-fault driver and his insurer and also filed a claim with Allstate
for underinsured motorist benefits.
93 Allstate assigned one of its employees, Collin Draine, to handle Skillett’s
claim. Draine was not a party to the insurance contract between Skillett and
Allstate, and he handled Skillett’s claim solely in his capacity as an Allstate claims
adjuster. He concluded that Skillett was not entitled to underinsured motorist
benefits. Accordingly, Allstate denied Skillett those benefits.
94 Skillett filed suit in Denver District Court, naming both Allstate and Draine
as defendants. Her claims against Allstate included breach of contract, statutory
bad faith, and common law bad faith. As to Draine, she alleged that he had
personally violated section 10-3-1116, which creates a cause of action for insureds
whose insurance benefits have been unreasonably delayed or denied.
95 Draine and Skillett are both Colorado residents, which ordinarily requires
that the case remain in state court because federal courts lack jurisdiction over
most exclusively state law claims. See 28 U.S.C. § 1332(a)(1) (allowing federal
courts to exercise diversity jurisdiction over state law claims in suits by citizens of
different states). Allstate nonetheless removed the case to federal court, arguing
that Draine had been fraudulently joined to thwart diversity jurisdiction, see
Dutcher v. Matheson, 733 F.3d 980, 988 (10th Cir. 2013), and that the federal court
did in fact have jurisdiction. According to Allstate, Skillett could not possibly
recover from Draine under section 10-3-1116, as that section only provides a cause
of action against a claimant’s insurer —not against an insurer’s employees. Thus,
if the complaint included only the proper parties (Skillett and Allstate), it would
satisfy federal jurisdictional requirements.
96 The federal district court determined that Allstate raised an important,
unsettled question of Colorado law, and it certified that question to this court. In
doing so, the court noted that uncertainty about the proper interpretation of the
statute had been created by a conflict between the court of appeals’ decision in
Riccatone v. Colorado Choice Health Plans, 2013 COA 133, 315 P.3d 203, and the
decision in Seiwaldv. Allstate Property & Casualty Insurance Co.,
No. 20-cv-00464-PAB, 2020 WL 6946563 (D. Colo. Nov. 24, 2020). In Riccatone, a
division of the court of appeals concluded that the Statutes provided a cause of
action only against an insurer and not against individual employees of an insurer.
4 43-45, 315 P.3d at 210-11. In Seiwald, the federal district court found that the
Statutes could plausibly be interpreted to create a cause of action against an
individual insurance adjuster. 2020 WL 6946563, at *3. Recognizing the need to
resolve this conflict, we accepted jurisdiction.
II. Analysis
97. We begin by discussing the applicable standard of review. We then analyze
the plain language of the statute, concluding that a statutory claim for
unreasonable delay or denial of insurance benefits is available against the insurer,
not an individual adjuster.
A. Standard of Review and Canons of Construction
{8 Under C.A.R. 21.1(a), we may answer questions of law certified to this court
by a federal court when they “may be determinative of the cause then pending in
the certifying court and as to which it appears to the certifying court that there is
no controlling precedent in the decisions of the supreme court.” Our review of
such questions is de novo. Gale v. City & Cnty. of Denver, 2020 CO 17, F 13,500 P.3d
351, 354.
49 When interpreting a statute, we aim to give effect to the intent of the General
Assembly, looking first to the plain and ordinary meaning of the text. Am. Fam.
Mut. Ins. Co. v. Barriga, 2018 CO 42, 4 8, 418 P.3d 1181, 1183. In so doing, we
consider the statute in context and in its entirety; give “consistent, harmonious,
and sensible effect to all of its parts[;] and avoid[ | constructions that would render
any words or phrases superfluous or lead to illogical or absurd results.”
Pineda-Liberato v. People, 2017 CO 95, § 22, 403 P.3d 160, 164. If the statutory
language is clear, “we need look no further.” Id.
B. An Action for Unreasonable Delay or Denial of
Insurance Benefits Proceeds Against an Insurer
q10 In 2008, the General Assembly enacted “An Act Concerning Strengthening
Penalties for the Unreasonable Conduct of an Insurance Carrier.” Ch. 422, sec. 5,
§§ 10-3-1115 to -1116, 2008 Colo. Sess. Laws 2171, 2172-74. The law created, inter
alia, two new provisions: (1) section 10-3-1115, which prohibits the unreasonable
delay or denial of payment for a claim for insurance benefits, and
(2) section 10-3-1116(1), which establishes a cause of action for an insured whose
claim for insurance benefits has been unreasonably delayed or denied.
q11 Specifically, section 10-3-1115(1)(a) announces the following prohibition: “A
person engaged in the business of insurance shall not unreasonably delay or deny
payment of a claim for benefits owed to or on behalf of any first-party claimant.”
And_ section 10-3-1116(1) creates a cause of action under the following
circumstances: “A first-party claimant as defined in section 10-3-1115 whose claim
for payment of benefits has been unreasonably delayed or denied may bring an
action in a district court to recover reasonable attorney fees and court costs and
two times the covered benefit.”
q12 Skillett argues that these provisions allow first-party claimants to bring suit
not only against their insurers, but also against individual insurance adjusters. In
support of this argument, she points out that section 10-3-1115(1)(a) refers to “[a]
person engaged in the business of insurance.” (Emphasis added.) She then looks
to section 10-3-1102(3), C.R.S. (2021), which defines “person” in part 11 of Title 10
to include “adjusters.” Although the court of appeals had previously rejected this
argument, see Riccatone, 9] 43-45, 315 P.3d at 210-11, a federal court recently
accepted it, Seiwald, 2020 WL 6946563, at *3, leaving uncertainty for both state and
federal courts as to the proper interpretation of the Statutes.
13 In resolving that uncertainty, we note that Skillett is correct that
section 10-3-1102(3) includes “adjusters” among “persons.” But that section does
not make its definitions absolute. Rather, those definitions apply “unless the
context otherwise requires.” § 10-3-1102. Throughout sections 10-3-1115 and
10-3-1116, the context makes clear that first-party claimants whose insurance
claims have been unreasonably delayed or denied may bring suit against their
insurers, but not against individual claims adjusters.
q14 Most importantly, section 10-3-1115(2) establishes the standard by which a
cause of action for unreasonable delay or denial of insurance payments is
measured, explaining that, “for the purposes of an action brought pursuant to this
section and section 10-3-1116, an insurer’s delay or denial was unreasonable if the
insurer delayed or denied authorizing payment of a covered benefit without a
reasonable basis for that action.” (Emphases added.) In other words, insureds
may bring suit under section 10-3-1116(1), and section 10-3-1115(2) explains what
they must show to prove unreasonable delay or denial; namely, that the insurer's
delay or denial was “without a reasonable basis.” § 10-3-1115(2); see also Am. Fam.
Mut. Ins. Co., 99, 418 P.3d at 1184 (explaining that sections 10-3-1115 and
10-3-1116 “operate concomitantly through cross-reference”).
415 Reading these provisions to allow for adjuster liability leaves unnecessary
statutory gaps. Under such a reading, section 10-3-1115(2) would explain what
standard applies when assessing whether an insurer's delay or denial was
unreasonable, but it would offer no guidance for evaluating an adjuster’s conduct.
That, presumably, would be left for judicial development, but without legislative
guidance. Moreover, section 10-3-1115(2) refers to instances where the insurer
“delayed or denied authorizing payment of a covered benefit.” (Emphasis added.)
Because the insurer—not any individual employee—authorizes payment, this
language indicates that an action for unreasonable delay or denial of insurance
benefits is triggered by a decision of the insurer, not the adjuster.
qi6 Similarly, section 10-3-1116(1) allows first-party claimants to bring suit
when their “claim for payment of benefits has been unreasonably delayed or
denied.” (Emphasis added.) The “payment of benefits” is made by and on behalf
of the insurer —not the adjuster. Likewise, “first party-claimants” are those who
“assert[] an entitlement to benefits owed...under an insurance policy.”
§ 10-3-1115(1)(b)(I) (emphasis added). Insurers and insureds — not adjusters — are
the parties to an insurance policy. They are the ones who undertake obligations
under such policies, and it is the insurer — not the adjuster — who may be obligated
to pay insurance benefits. And section 10-3-1116(1) allows first-party claimants
whose claims for benefits are unreasonably delayed or denied to recover
“reasonable attorney fees and court costs and two times the covered benefit.”
(Emphasis added.) It would seem odd to allow an insured to recover two times
10
the covered benefit from an adjuster, who is not a party to the insurance policy
that establishes the covered benefit and has not otherwise undertaken any
obligation to pay the covered benefit.
q17 Other parts of the statutory context likewise indicate that an action for
unreasonably delayed or denied insurance benefits proceeds against the insurer.
Under the statute’s child support enforcement exemption, for example,
sections 10-3-1115 and 10-3-1116 “do not apply to any claim payment that is
delayed or denied because of the insurer’s participation in the child support
enforcement mechanism established in section 26-13-122.7, C.R.S.” § 10-3-1115(7)
(emphasis added). And under section 10-3-1118(5), C.R.S. (2021), “[a]n insurer is
not liable for a claim . . . under sections 10-3-1115 and 10-3-1116 because the insurer
solely provides the insured with the required amount of time” to respond to its
written requests or to cure alleged failure to cooperate. (Emphases added.) These
provisions carve out exceptions for the liability of insurers, yet make no reference
to adjusters.
gis The only language in the Statutes that supports Skillett’s argument is the
use of the word “person” in section 10-3-1115(1)(a) and the attendant inclusion of
“adjusters” as “persons” in section 10-3-1102(3). Given the statutory command
that the definitions included in section 10-3-1102 only apply “unless the context
11
otherwise requires,” we conclude that individual adjusters are not personally
subject to suit under the Statutes.
Ill. Conclusion
qi9 We thus conclude that an action for unreasonably delayed or denied
insurance benefits proceeds against an insurer, not an individual adjuster. The
plain language of sections 10-3-1115 and 10-3-1116 requires this result.
Accordingly, we answer the certified question in the negative and return this case
to the United States District Court for the District of Colorado for further
proceedings.
12