Carnival v. Geico Casualty Company
ORDER. ORDERED that Defendant's Motion for Partial Summary Judgment (F.R.C.P.56(a), or, in the Alterntive, [sic] Motion for Determination of Law Concerning Interplay Between Plaintiff's Underinsured Motorist Benefits Tort-based Claim and Pl aintiff's Statutory Workers' Compensation Claim (F.R.C.P. 7(b)) 26 . ORDERED that Defendant's Motion In Limine Re: Evidence of Workers' Compensation Disability Rating and Payments for Temporary Partial Disability and Permanent Partial Disability (F.R.C.P. 7(b)) 27 is GRANTED in part to theextent it requests exclusion at trial of evidence of plaintiffs workers compensation disability rating. Signed by Judge Philip A. Brimmer on 03/28/17. (jhawk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 15-cv-02581-PAB-MEH
GEICO CASUALTY COMPANY,
This matter is before the Court on defendant’s motion for partial summary
judgment [Docket No. 26] and defendant’s motion in limine [Docket No. 27]. The Court
has jurisdiction pursuant to 28 U.S.C. § 1332.
A. Factual Background1
Plaintiff Nicholas Carnival is a Colorado State Patrol officer. Docket No. 26 at 2,
¶ 1. On May 12, 2014, he was injured in a motor vehicle accident while working. Id.
As a result, he was entitled to workers’ compensation benefits. Id., ¶ 3. The driver of
the other vehicle, who was at fault, had a motor vehicle insurance policy with a limit of
$100,000. Id., ¶ 2. Plaintiff had purchased an automobile insurance policy from
defendant GEICO Casualty Company that included underinsured motorist (“UIM”)
The following facts are undisputed by the relevant parties unless otherwise
coverage with a $50,000 limit per individual. Id. at 3, ¶ 5 (citing Docket No. 26-3 at 3).
Such UIM policies provide additional insurance that “cover[s] the difference, if any,
between the amount of the limits of any legal liability coverage and the amount of the
damages sustained . . . up to the maximum amount of the coverage obtained.” Colo.
Rev. Stat. § 10-4-609(1)(c).
Plaintiff received $97,882.07 in workers’ compensation benefits. Docket No. 26
at 2-3, ¶ 3 (citing Docket No. 26-2 at 1, 8-9). On June 22, 2015, Dr. T heodore
Villavicencio performed a medical examination as part of the workers’ compensation
process. Id. Using the statutorily required criteria, Dr. Villavicencio found that plaintiff
had a whole body impairment rating of 15%. Id. This 15% disability rating was used as
part of a statutory formula to arrive at the $74,585.79 benefit for permanent partial
disability (“PPD”). Docket No. 26-2 at 1. Additionally, plaintiff’s workers’ compensation
benefits included $21,043.33 for medical expenses and $2,252.95 for temporary partial
disability (“TPD”). Docket No. 26-2 at 1.
On August 21, 2015, plaintiff settled his claims against the at-fault driver for the
$100,000 policy limit. Docket No. 26 at 2, ¶ 2 (citing Docket No. 26-1 at 4, 79:23-80:4).
That same day, plaintiff sent a letter to defendant offering to settle for the UIM policy
limit. Docket No. 26-5; see also Docket No. 26-3 at 3.
Defendant’s claims adjuster evaluated plaintiff’s claim and, without reference to
the workers’ compensation settlement funds, considered plaintiff to be “well
compensated” by the $100,000 settlement with the at-fault driver’s insurance company
despite the 15% whole person impairment rating. Docket No. 36-8 at 3. Defendant
sent plaintiff a letter with a “nuisance offer” of $1,000 without explaining how defendant
arrived at that figure. Id. at 1; Docket No. 36-5 at 1. Settlement negotiations ensued.
Plaintiff’s counsel responded with a letter noting the workers’ compensation
evaluation indicated permanent physical impairment and stating, “any money my client
receives from the bodily injury provider, which only has a $100,000 insurance policy, he
has to return in subrogation [to the workers’ compensation insurer], at this moment,
approximately $95,000.” Docket No. 36-4 at 1. Defendant asked for documentation of
the subrogated claim, stating “it is our position that Mr. Carnival was well compensated
by the bodily injury carrier’s policy limits of $100,000.00,” and again offering $1,000.
Docket No. 36-5. Plaintiff’s counsel responded by citing Colo. Rev. Stat. § 10-4-609
and arguing that the entire $97,882.07 was subrogated. Docket No. 36-6 at 1.
Defendant gave permission for plaintiff to settle with the at-fault driver’s insurance and
requested plaintiff’s counsel make contact “once settlement is reached regarding the
underinsured motorist claim.”2
Correspondence between GEICO claims handlers indicates there was
uncertainty about whether plaintiff would be required to repay the entire amount of his
workers’ compensation settlement from the proceeds of his settlement with the at-fault
driver. Docket No. 36-8. Defendant’s claims adjuster expressed doubt that plaintiff
would have to repay the full amount, but nevertheless reasoned that plaintiff received
“$100k from the [at-fault driver’s insurance] carrier, and $97,882.07 from work comp, so
$197,882.07 total. Even if he has to pay back work comp 100%, he’s still walking away
Plaintiff refers to this response as “nonsensical,” but it is unclear that plaintif f
ever told defendant that he had already settled this claim. Neither party provided
documents showing that defendant had been informed of the settlement with the atfault driver before the date of this letter. See Docket Nos. 26-5, 36-4, 36-6.
with $102k, not just $2k like [plaintiff’s] attorney is trying to allege.” Id. at 1. Further
exchanges resulted in defendant raising its settlement offer to $5,000, but maintaining
that plaintiff’s damages were compensated by his settlement with the at-fault driver.
Docket No. 36-9 at 1. Defendant stated, “it is our position that Mr. Carnival’s $100,000
liability settlement fully covered his claimed specials3 of $43,995.70 and over $55,000
for any subjective non-economic losses, which may already fully compensate him for
his claimed losses.” Id.
B. Procedural History
Plaintiff filed suit on October 26, 2015 in the District Court for Jefferson County,
Colorado. Docket No. 1-7. Plaintiff alleges claims for breach of contract and
unreasonable delay or denial in payment of insurance benefits under Colo. Rev. Stat.
§§ 10-3-1115, 10-3-1116. Docket No. 5 at 4-5. Def endant removed the case to this
Court on November 24, 2015. Docket No. 1.
Plaintiff seeks damages for “‘past, present and future medical expenses, for
past, present and future pain and suffering, for personal injuries, for emotional distress,
and for other non-economic damages.’” Docket No. 26 at 4, ¶ 9. Plaintiff claims
$49,470.90 in medical expenses resulting from the accident. Id., ¶ 10. Despite
plaintiff’s injuries, he has continued to work full time after the accident and does not
claim any lost wages through this case. Id. at ¶ 8 (citing Docket No. 26-4 at 2 (“Plaintiff
is not claiming a wage loss”)).
On March 29, 2016, defendant filed the pending motions. Defendant’s motions
“Specials” presumably refers to “special damages.” See Black’s Law Dictionary
419 (8th ed. 1999).
address the interaction between the workers’ compensation insurance benefits received
by plaintiff and the UIM coverage provided by defendant. The summary judgment
motion requests the Court to enter “partial summary judgment on Plaintiffs tort-based
UIM claim for the TPD and PPD benefits paid by the workers’ compensation insurer, as
well on as any aspect of Plaintiffs extra-contractual claim based upon those same TPD
and PPD amounts.” Docket No. 26 at 10. On March 15, 2017, def endant filed a notice
stating that it “withdraws its request for exclusion of evidence at trial of Plaintiff’s
workers’ compensation temporary partial disability (TPD) and permanent partial
disability (PPD) payments.” Docket No. 57 at 1, ¶ 1. Accordingly, defendant only
requests “exclusion of evidence of Plaintiff’s workers’ compensation disability rating.”
Id., ¶ 2.
C. Legal Background
Workers’ compensation in Colorado is governed by the Colorado Workers’
Compensation Act, Colo. Rev. Stat. § 8-42-101, et seq. The Act “requires an
evaluation of ‘permanent medical impairment’ to determine the amount of benefits to
which a claimant is entitled.” Gonzales v. Advanced Component Sys., 949 P.2d 569,
573 (Colo. 1997) (quoting Colo. Rev. Stat. § 8-42-107(1)). The physical impairment
ratings used in determining compensation are “based on the revised third edition of the
‘American Medical Association Guides to the Evaluation of Permanent Impairment’, in
effect as of July 1, 1991.” Colo. Rev. Stat. § 8-42-107(8)(c). PPD benefits “are
determined by multiplying the impairment rating by a statutory age factor and
multiplying that by 400 weeks, at a certain percentage of the injured employee’s
average weekly wage.” Boardman v. Hauck, No. 11-cv-01934-DME-BNB, 2012 WL
3545681, at *3 (D. Colo. Aug. 16, 2012) (citing Colo. Rev. Stat. §§ 8-42-107(d), 8-42105). With exceptions not relevant here, a workers’ compensation claimant’s claims
against the at-fault party are assigned and subrogated to the workers’ compensation
insurer up to the amount paid out for economic, physical impairment, and disfigurement
damages. Colo. Rev. Stat. § 8-41-203.
Colorado has codified the common law rule precluding the admission of
collateral source payments. Colo. Rev. Stat. § 10-1-135(10)(a) provides:
The fact or amount of any collateral source payment or benefits shall not
be admitted as evidence in any action against an alleged third-party
tortfeasor or in an action to recover benefits under section 10-4-609
Colorado courts have held that evidence of workers’ compensation, Medicaid, PERA
disability, and health insurance are inadmissible at trial. See Combined Commc’ns
Corp. v. Pub. Serv. Co. of Colorado, 865 P.2d 893, 902 (Colo. App. 1993) (workers’
compensation); Volunteers of Am. Colorado Branch v. Gardenswartz, 242 P.3d 1080,
1083 (Colo. 2010) (health insurance); Smith v. Kinningham, 328 P.3d 258, 262-63
(Colo. App. 2013) (Medicaid); Dep’t of Human Servs. v. State Pers. Bd., 371 P.3d 748,
757 (Colo. App. 2016) (PERA disability). After a verdict is reached, the amount of
damages is subject to setoff by certain collateral source payments. Combined
Commc’ns Corp. v. Pub. Serv. Co. of Colorado, 865 P.2d 893 at 901 (citing Colo. Rev.
Stat. § 13-12-111.6). Workers’ compensation benefits, however, are not subject to
setoff. Id. at 902.
A. Summary Judgment Motion
1. Standard of Review
Summary judgment is warranted under Federal Rule of Civil Procedure 56 when
the “movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). A disputed f act is “material” if
under the relevant substantive law it is essential to proper disposition of the claim.
Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). Only disputes
over material facts can create a genuine issue for trial and preclude summary
judgment. Faustin v. City & Cty. of Denver, 423 F.3d 1192, 1198 (10th Cir. 2005). An
issue is “genuine” if the evidence is such that it might lead a reasonable jury to return a
verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir.
Defendant presents a legal dispute that arises from the facts, but does not
depend on any disputed facts. Defendant argues that it is not responsible for repaying
the plaintiff’s subrogated workers’ compensation claims. Defendant argues that the
amounts potentially due by plaintiff to the workers’ compensation insurer are irrelevant
to plaintiff’s potential recovery of tort-based damages under the UIM policy; that is,
“such statutory reimbursement obligation is ultimately a matter between Plaintiff and the
workers’ compensation insurer.” Docket No. 26 at 7.
Plaintiff does not contest these arguments with respect to his first claim, for UIM
benefits under the policy, but does contest them with respect to his second claim, for
bad faith breach of the insurance contract. Docket No. 36 at 1. Plaintif f argues that the
defendant improperly used the workers’ compensation payment to offset its potential
liability in evaluating his claim. Id. at 10-11. In plaintiff’s view, “Defendant’s conduct
during its evaluation to offset UIM benefits by the amount Plaintiff received in workers’
compensation benefits provides evidence that Defendant acted unreasonably.” Id. at 2.
Plaintiff relies principally on two cases, Toy v. Am. Family Mut. Ins. Co., No.
12-cv-01683-PAB-MJW, 2014 WL 321213 (D. Colo. Jan. 29, 2014), and Adamscheck
v. Am. Family Mut. Ins. Co., 818 F.3d 576 (10th Cir. 2016). 4
In Toy, the insured settled with both the at-fault driver and the workers’
compensation insurer before proceeding against his UIM insurer. 2014 WL 321213, at
*1. The UIM policy at issue stated: “We will not pay for any element of ‘loss’ if a person
is entitled to receive payment for the same element of ‘loss’ under any workers'
compensation, disability benefits or similar law.” Id. (citation omitted). Under this
provision, the UIM insurer took into account the compensation paid by Mr. Toy’s
workers’ compensation carrier when making its settlement offer and sought summary
judgment that such conduct could not be considered bad faith as a matter of law. Id.
This Court held that the policy provisions providing for offset were void as against public
policy under Colorado law exempting workers’ compensation claims as a basis for
Plaintiff also argues that defendant’s entire course of conduct in reviewing his
claims is relevant to whether defendant acted in bad faith [Docket No. 36 at 9, 12-13],
but this point does not bear on whether defendant’s treatment of the workers’
compensation payment was itself proper.
setoff. Id. at *9. The Court found that there was insufficient basis “upon which to
conclude that defendant’s conduct in offsetting its settlement offers by the amounts Mr.
Toy received from workers’ compensation insurance was reasonable as a matter of
In Adamscheck, the insurer similarly sought summary judgment that its
settlement offer, which included a setoff of workers’ compensation benefits, could not
be considered bad faith. 818 F.3d at 582. The Tenth Circuit found the UIM policy
provision providing for a setoff of workers’ compensation benefits was void as against
public policy and held that denial of summary judgment was proper. Id. at 583.
Both of these cases are distinguishable from the situation here. Plaintiff points to
no evidence that defendant set off or otherwise took into account the workers’
compensation benefits to reduce its settlement offers. Conversely, in the cases plaintiff
relies on, the insurers used the workers’ compensation benefits as a portion of the
recovery necessary to make the insureds whole in their evaluations of the insureds’
claims and settlement offers. Toy, 2014 WL 321213, at *8 (“Defendant does not
dispute that its initial settlement offer took into account additional compensation for lost
wages paid by Mr. Toy’s workers’ compensation carrier and that its adjusters offset the
amount of workers’ compensation benefits received by Mr. Toy pursuant to the UIM
endorsement’s exclusion language.”); Adamscheck, 818 F.3d at 580 (insurer offered
$65,000 that was specifically limited to lost wages that had not been compensated by
workers’ compensation). Even in the internal communications cited by plaintiff,
defendant’s claims adjuster states that her evaluation was that plaintiff was well-
compensated by his $100,000 settlement with the at-fault driver’s insurance carrier,
which did not consider his workers’ compensation settlement. Docket No. 36-8 at 1.
Notwithstanding her discussion of whether plaintiff might have to reimburse the workers’
compensation insurer for his workers’ compensation settlement, the claims adjuster
ignored the workers’ compensation benefit in making her evaluation of plaintiff’s claim.
Instead, she compared the $100,000 settlement to her evaluation of the amount of
plaintiff’s injuries without regard for the workers’ compensation payment. Id.; Docket
No. 38 at 6. Thus, she did what is permissible under Colorado law, evaluate whether
there were “damages in excess of any amount paid by a tortfeasor in settlement or of
any judgment against the tortfeasor.” Adamscheck, 818 F.3d at 585 (quoting Jordan v.
Safeco Ins. Co. of Am., Inc., 348 P.3d 443, 448 (Colo. App. 2013)).
Plaintiff does not dispute that, if he were to repay the workers’ compensation
insurer for the amount of his subrogated claim, he would retain more than $100,000,
just as defendant’s claims adjuster calculated in making her evaluation. Docket No. 368 at 1. Plaintiff simply disagrees that $100,000 is sufficient to compensate him for his
injuries. He claims damages greater than the total of his medical bills and other
economic damages plus $55,000 that defendant’s claims adjuster provided for in her
evaluation based on the $100,000 settlem ent amount he had already received.
Compare Docket No. 36-9 at 1 (“Mr. Carnival’s $100,000 liability settlement fully
covered his claimed specials of $43,995.70 and over $55,000 for any subjective
non-economic losses, which may already fully compensate him for his claimed losses.”)
and Docket No. 36-8 at 3 with Docket No. 36-4 (plaintiff’s counsel writing to defendant
that “pain and suffering damages in Colorado has a cap of no less than $468,010” and
“a jury could award $2,000,000” for plaintiff’s “permanent physical impairment”).
Plaintiff may be able to show that defendant’s evaluation was made in bad faith based
on other evidence, but defendant has shown that there is no genuine issue of material
fact about whether its claims adjuster properly disregarded the workers’ compensation
settlement amount in evaluating the claim. Accordingly, the Court will grant defendant’s
motion for partial summary judgment.
B. Motion in Limine
Federal Rule of Evidence 403 provides that the Court “may exclude relevant
evidence if its probative value is substantially outweighed by a danger of one or more of
the following: unfair prejudice, confusing the issues, misleading the jury, undue delay,
wasting time, or needlessly presenting cumulative evidence.”
Defendant argues that the statutory framework used to evaluate and
compensate workers’ compensation claims uses confusingly different methods for
computing remedies and provides compensation for injuries that are not cognizable as
economic damages in tort. Docket No. 27 at 3-5. Relying on Boardman, 2012 WL
3545681, at *3, defendant argues that the “generic calculations and formulations” used
to determine and compensate permanent disability in the workers’ compensation
system “were exclusively created for the workers’ compensation system, and have no
application to the normal tort-based compensation system.” Docket No. 27 at 5. As
such, defendant argues, the “probative value of evidence of the statutory workers’
compensation impairment rating [of 15%] is minimal and is substantially outweighed by
the danger of unfair prejudice under F.R.E. 403 and the risk of misleading the jury as to
the significance of the disability rating.” Id. at 6 (citing Boardman, 2012 WL 3545681, at
In response, plaintiff argues that the Colorado Court of Appeals’ decision in
Carter v. Rodriguez, No. 00-CA-1094, slip op. at 3 (Colo. App. Aug. 30, 2001)
(unpublished) (Docket No. 34-2), overruling a district court’s decision to exclude an
Army disability evaluation that the plaintiff was 10% disabled, shows that such
percentages should be treated as admissible. Docket No. 34 at 11. Plaintiff also cites
several Colorado district court decisions permitting such evidence. Id. at 13 (citing
Docket No. 34-5 (collected orders)).
The Court finds that the danger of jury confusion and unfair prejudice
substantially outweighs the relevance of the disability rating here. Fed. R. Evid. 403.
The probative value of the rating itself is minimal and, as plaintiff acknowledges, even if
“the impairment rating itself is excluded from introduction, Dr. Villavicencio could still
testify to Plaintiff’s permanent injuries without referring to the numeric impairment
rating.” Docket No. 36 at 13. Such evidence would serve the same purpose as the
potentially confusing impairment rating itself. Further, due to Colorado’s rule excluding
evidence of the workers’ compensation payments themselves,5 the potential for jury
confusion is increased. Boardman, 2012 WL 3545681, at *3. The Court disagrees that
Boardman is distinguishable because it did not involve bad faith claims. The relevance
of Boardman is that it involved issues, like this case, regarding the extent of plaintiff’s
damages. Id. Conversely, the Court finds Carter is distinguishable because Carter did
Defendant’s notice of partial withdrawal [Docket No. 57] indicates it plans to
address these benefits at trial, but does not indicate what evidence it intends to present
or why it believes Colo. Rev. Stat. § 10-1-135(10)(a) does not exclude that evidence.
Id. at 2, ¶ 4.
not address issues of potential prejudice or confusion and did not involve collateral
payments subject to Colorado’s exclusion rule. Docket No. 34-2 at 3. The other
Colorado state court decisions provided by plaintiff similarly lack relevant analysis.
Docket No. 34-5. Therefore, the Court will grant defendant’s motion in limine to the
extent it requests exclusion of the workers’ compensation impairment rating. See
Docket No. 57.
For the foregoing reasons, it is
ORDERED that Defendant’s Motion for Partial Summary Judgment (F.R.C.P.
56(a), or, in the Alterntive, [sic] Motion for Determination of Law Concerning Interplay
Between Plaintiff’s Underinsured Motorist Benefits Tort-based Claim and Plaintiff’s
Statutory Workers’ Compensation Claim (F.R.C.P. 7(b)) [Docket No. 26] is GRANTED.
It is further
ORDERED that Defendant's Motion In Limine Re: Evidence of Workers’
Compensation Disability Rating and Payments for Temporary Partial Disability and
Permanent Partial Disability (F.R.C.P. 7(b)) [Docket No. 27] is GRANTED in part to the
extent it requests exclusion at trial of evidence of plaintiff’s workers’ compensation
DATED March 28, 2017.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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