Insurers may attempt to defeat a statutory bad faith claim by submitting an unpublished opinion, Alarcon v. American Family Mutual, to support their arguments. But Alarcon predates Kisselman, a published opinion, and thus the court need not attempt to reconcile the cases. C.A.R 35(f) provides: “Those opinions designated for official publication shall be followed as precedent by the trial judges of the state of Colorado.” The implication is that those opinions not designated for official publication shall not be followed as precedent by trial courts. In any event, the Alarcon court noted that the insured’s damages were “undocumented,” but that does not mean that the statutory claims should be fully documented by way of a prior adjudication.
In any event, Schuessler, Vaccaro, and Kisselman, are all published opinions and thus authoritative by law, while Alarcon is neither. In Vaccaro, 275 P.3d at 753, the court expressly noted that “plaintiff submitted a claim to defendant seeking $75,000 in UIM benefits” then filed a statutory action. There was no prior arbitration or court judgment as to the “benefits owed”
Insurers will likely simply ignore Kisselman and Vaccaro, and tediously argue that the same facts that support summary judgment on a plaintiff’s common law bad faith claim also support summary judgment on his or her claim under §§ 10-3-1115-1116. But as the Vacarro court found, legal standards
derived from common law bad faith cases do not necessarily govern plaintiff’s claim under the Statutes. This is particularly true because the ‘fairly debatable’ defense goes as much to the knowledge or recklessness prong of common law bad faith as it does to unreasonable conduct. By contrast, the only element at issue in the statutory claim is whether an insurer denied benefits without a reasonable basis. Even if plaintiff’s claim for UIM benefits were ‘fairly debatable’ in the common law context, that would not alone establish that defendant's actions here were reasonable as a matter of law.
Vaccaro, 275 P.3d at 760 (internal citations omitted). And the Kisselman court added this explanation: a “claim brought under sections 10–3–1115 and 10–3–1116 and a common law bad faith claim” are not the same. The “statutes create a new private right of action for insureds in addition to and different from a common law bad faith claim. And the insured’s burden of proving that statutory claim is less onerous than that required to prove a claim under the common law for breach of the duty of good faith and fair dealing.”
If anything, statutory standards can prove up a common law bad faith claim. Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 344 (Colo. 2004) (the Unfair Claims Practices Act “may be used as valid, but not conclusive, evidence of industry standards. . . . If the reasonable investigation and denial of an insured’s claim is within the common knowledge and experience of ordinary people, then expert testimony is not required.”).
Contact my office if you have any questions about the importance of pleading both common law bad faith and statutory bad faith when an insurer wrongfully denies or delays a claim on your policy.