Benson v. Allstate Fire and Casualty Insurance Company

Filing 98

ORDER denying 84 Plaintiffs Motion for Summary Judgment Pursuant to F.R.C.P. 56, by Magistrate Judge Kathleen M. Tafoya on 1/27/2020.(jgonz, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Kathleen M. Tafoya
Civil Action No. 17–cv–00866–KMT
AUSTIN BENSON,
Plaintiff,
v.
ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY,
Defendant.
ORDER

This matter is before the court on Plaintiff’s “Motion for Summary Judgment Pursuant to
F.R.C.P. 56.” (“Motion,” [Doc. No. 84].) Defendant has responded in opposition to the Motion,
and Plaintiff has replied. (“Response,” [Doc. No. 88]; “Reply,” [Doc. No. 93].)
STATEMENT OF THE CASE
On April 2, 2015, Plaintiff Austin Benson was involved in a single-vehicle car accident,
which was caused by the actions of a passenger in the car. (Mot. 4 at Undisputed Fact (“UF”) ¶
1; Resp. 5.) Plaintiff reportedly suffered various injuries as a result of the accident.
(“Complaint,” [Doc. No. 4] at ¶ 9.) After settling the liability portion of his claim against the atfault party for the maximum limits of that individual’s insurance policy, Plaintiff now seeks
damages under his own underinsured motorist (“UIM”) coverage from Defendant Allstate Fire
and Casualty Insurance Company (“Allstate”). (Id. at 3-8 ¶¶ 11-67.) In his Complaint, Plaintiff
asserts the following causes of action: (1) unreasonable delay and denial of insurance benefits,

pursuant to C.R.S. §§ 10-3-1115 and 10-3-1116; (2) declaratory judgment regarding entitlement
to insurance benefits; and (3) bad faith breach of an insurance contract. (Id.)
The record shows that Defendant relied, at least in part, on a report from Mitchell
Decision Point (“MDP”), a software program used by Allstate adjusters as part of their valuation
process, to evaluate Plaintiff’s UIM claim. (Mot. 5-6 at UF 9; Resp. 5.) MDP is said to provide
a recommended value concerning the appropriate reimbursement rate for medical treatment
deemed reasonable and necessary for a claimant, among other things. (Resp. 1.) Allstate
contends that its adjusters are not required to use the MDP reimbursement rate as the correct and
reasonable value of a claimant’s medical treatments. (Id. at 2.) According to Defendant, its
adjusters may, instead, “consider a number of other factors unique to each individual claim and
other relevant information in reaching their claim valuation.” (Id.) In making that argument,
Defendant points to evidence that its adjuster’s computation of value here was greater than the
MDP valuation. (Resp. 2, 20, Ex. C at 101:13-21.)
As part of discovery, Plaintiff submitted Interrogatories directed at learning how the
MDP software is programmed for Allstate, how it works, and from what underlying information
the master database is compiled. (See Mot. Ex. 4.) Allstate refused to provide the information,
claiming that it was not relevant to this lawsuit, because MDP “is simply an aid in assessing the
reasonableness of medical bills[,] . . . [and] is merely one factor among many that the adjuster
considers in deciding amounts to offer.” (Id. at 15-16 ¶ 14.) Allstate also argued that the
discovery request was “not proportional to the needs of the case.” (Id. at 16 ¶14.) In addition,
Defendant argued that its compliance with the discovery request would potentially violate the

2

confidentiality provisions of its licensing contract with the entity that owns MDP.1 (Id.) To
date, Allstate has not disclosed the information sought by Plaintiff. (Mot. 16.)
Plaintiff now moves for summary judgment on all claims, contending that “the
undisputed evidence shows that Allstate failed to consider the required bill amount of medical
expenses in evaluating Plaintiff’s claim, as required by Colorado law.” (Mot. 1.) Plaintiff
contends, specifically, that Allstate’s reliance on the MDP program to value his UIM claim was
“unreasonable on its face,” because it was “in direct contravention of Colorado law which
mandates that an insured in this situation is entitled to the billed amounts for medical bills.”2 (Id.
at 1-2, 19.) Plaintiff is adamant that “the use of MDP is, per se, a violation of [Colo. Rev. Stat.
§§ 10-3-1115 and 10-3-1116] as well as a breach of the insurance contract.” (Id. at 2.)
STANDARD OF REVIEW
Summary judgment is appropriate if “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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial

1

In its Response, Allstate references MDP’s use of Medicare guidelines concerning reasonable
costs of medical care, which has apparently been learned through discovery in other cases. (See
Resp. 2.) This information, however, was not generated in this case, and therefore, the court will
not rely on representations of counsel for either side concerning the manner or functioning of
MDP. In this case, the Allstate adjuster testified that she used the MDP program, in addition to
other evaluative tools, including her own experience, to determine the value of Plaintiff’s claim.
(Mot. Ex. 3 at 95:14-97:2.) The adjuster conceded that she did not know how the MDP software
worked, or what data the program used, to make its evaluation recommendations. (Id. at 99:23100:6; 116:15-120:1.)
2

Plaintiff also argues that Allstate’s adjusters failed to follow their own standards and
procedures, failed to conduct a proper liability investigation, and failed to adequately document
the claim file. (Mot. 2, 19.) Based on the summary judgment record, there appear to be disputed
material facts precluding summary judgment on these claims. Therefore, summary judgment is
inappropriate outside the one issue regarding use of MDP.
3

burden of showing an absence of evidence to support the nonmoving party’s case. Celotex, 477
U.S. at 325. “Once the moving party meets this burden, the burden shifts to the nonmoving party
to demonstrate a genuine issue for trial on a material matter.” Concrete Works, Inc. v. City &
County of Denver, 36 F.3d 1513, 1518 (10th Cir. 1994) (citing Celotex, 477 U.S. at 325). The
nonmoving party may not rest solely on the allegations in the pleadings, but instead, must
designate “specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at
324; see also Fed. R. Civ. P. 56(c).
“A ‘judge’s function’ at summary judgment is not ‘to weigh the evidence and determine
the truth of the matter but to determine whether there is a genuine issue for trial.’” Tolan v.
Cotton, 572 U.S. 650, 656 (2014) (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 249
(1986)). Whether there is a genuine dispute as to a material fact depends upon “whether the
evidence presents a sufficient disagreement to require submission to a jury,” or conversely,
whether the evidence “is so one-sided that one party must prevail as a matter of law.” Carey v.
U.S. Postal Service, 812 F.2d 621, 623 (quoting Anderson, 477 U.S. at 251-52). A disputed fact
is “material” if “under the substantive law it is essential to the proper disposition of the claim.”
Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998) (citing Anderson, 477 U.S. at
248). A dispute is “genuine” if the evidence is such that it might lead a reasonable jury to return
a verdict for the nonmoving party. Thomas v. Metropolitan Life Ins. Co., 631 F.3d 1153, 1160
(10th Cir. 2011) (citing Anderson, 477 U.S. at 248). “Where the record taken as a whole could
not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for
trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing First
Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

4

In evaluating a motion for summary judgment, a court may consider admissible evidence
only. See Johnson v. Weld Cnty., 594 F.3d 1202, 1209–10 (10th Cir. 2010). The factual record
and reasonable inferences therefrom are viewed in the light most favorable to the party opposing
summary judgment. Concrete Works, 36 F.3d at 1517. However, this standard does not require
the court to make unreasonable inferences in favor of the non-moving party. Carney v. City &
Cnty. of Denver, 534 F.3d 1269, 1276 (10th Cir. 2008). The nonmovant must establish, at a
minimum, an inference of the presence of each element essential to the case. Hulsey v. Kmart,
Inc., 43 F.3d 555, 557 (10th Cir. 1994).
ANALYSIS
Plaintiff asserts a claim for breach of an insurance contract, as well as a claim for
unreasonable delay or denial of insurance benefits, which is a statutory penalty under §§ 10-31115 and 10-3-1116 of the Colorado Revised Statutes. (Compl. 3-9 ¶¶ 11-54, 61-67.) Plaintiff
alleges, specifically, that Defendant acted unreasonably by delaying the investigation of his UIM
claim, by “refus[ing] to explain the basis of [its] valuation” of the claim, and ultimately, by
denying the payment of benefits. (Id. at 6 ¶¶ 49-52, 7 ¶¶ 63-64.) Plaintiff argues that
Defendant’s use of MDP software to evaluate his claim amounted to a per se violation of the
statutory bad faith provisions, as well as a per se breach of contract. (Mot. 2.)
Under Colorado law, the required elements of a breach of contract claim are: (1) the
existence of a contract; (2) performance by the plaintiff or some justification for
nonperformance; (3) failure to perform the contract by the defendant; and (4) damages suffered
by the plaintiff as a result of the defendant’s breach. W. Distrib. Co. v. Diodosio, 841 P.2d 1053,
1058 (Colo. 1992).

5

To prevail on a statutory bad faith claim, a plaintiff need only prove that a benefit to
which he was entitled under an insurance policy was unreasonably delayed or denied. Schultz v.
GEICO Cas. Co., 429 P.3d 844, 847 (Colo. 2018) (quoting Vaccaro v. Am. Family Ins. Grp., 275
P.3d 750, 756 (Colo. App. 2012)); see C.R.S. § 10-3-1115(1)(a) (“[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.”). If the statutory requirement is met, a plaintiff is
entitled to receive a penalty payment of two times the benefit (in addition to the benefit itself),
plus reasonable attorney’s fees and costs. C.R.S. § 10-3-1116(1); see Vaccaro, 275 P.3d at 756
(noting that, because of the lesser liability burden and the onerous penalty provision, a statutory
bad faith claim is “arguably . . . more financially threatening to the insurer than a traditional
common law bad faith claim”).
The gravamen of Plaintiff’s argument—that the use of MDP is per se unreasonable—is
rooted in Colorado’s collateral source rule. Under that rule, “compensation or indemnity
received by an injured party from a collateral source, wholly independent of the wrongdoer and
to which the wrongdoer has not contributed, will not diminish the damages otherwise
recoverable [by the injured party] from the wrongdoer.” Forfar v. Wal-Mart Stores, Inc., 436
P.3d 580, 583 (Colo. App. 2018) (quoting Colo. Permanente Med. Grp., P.C. v. Evans, 926 P.2d
1218, 1230 (Colo. 1996)); see also Colo. Rev. Stat. § 10-1-135(10)(a). This is because “making
the injured plaintiff whole is solely the tortfeasor’s responsibility. Any collateral benefits
obtained by the injured plaintiff accrue solely to the plaintiff’s benefit and are not deducted from
the amount of the tortfeasor’s liability.” Volunteers of Am. Colo. Branch v. Gardenswartz, 242
P.3d 1080, 1083 (Colo. 2010). Indeed, a tortfeasor cannot be allowed to receive a windfall, by

6

way of a reduction of legitimately owed damages, simply because the victim had the prudence to
arrange for protection against wrongdoing by others.
Generally, “the correct measure of damages is the necessary and reasonable value of the
[medical] services rendered, rather than the amount . . . paid for such services,” although
amounts paid can give “some evidence” of reasonable value. Kendall v. Hargrave, 349 P.2d
993, 994 (Colo. 1960); Rooney v. Allstate Fire & Cas. Ins. Co., No. 17-CV-03132-STV, 2019
WL 1897651, *2 (D. Colo. Apr. 29, 2019). “Amounts paid” evidence is inadmissible in a
collateral source case, including for determining reasonable value of medical services, only
because of the “unjustifiable risk that the jury will infer the existence of a collateral source—
most commonly an insurer—from the evidence, and thereby improperly diminish the plaintiff’s
damages award.” Wal-Mart Stores, Inc. v. Crossgrove,276 P.3d 562, 567 (Colo. 2012); see
Kendall, 349 P.2d at 994; Forfar, 436 P.3d at 583. However, the fact that certain evidence may
be inadmissible at trial does not necessarily render that evidence irrelevant in other contexts,
such as its use by an insurer to attempt to determine the reasonable value of an insured’s claimed
medical expenses.
In this case, clearly, disputed issues of material fact exist with respect to the assessment
of Allstate’s claims practices during its adjustment of Plaintiff’s UIM claim. Most centrally,
there are disputed issues of material fact as to whether Allstate’s decision to deny the claim was,
as Plaintiff contends, a decision based on software about which the insurer provided no
substantive discovery, or as Defendant contends, a decision reached by a fair review of the entire
claims file. Plaintiff has provided no evidence from which the court could conclude that the use
of MDP software as part of the evaluation process engaged in by Allstate adjusters is per se

7

unreasonable, especially given the testimonial evidence that use of MDP was only a part of the
overall process. Moreover, the issue of reasonableness, whether in a bad faith context or not, is a
mixed question of law and fact that is, by its very nature, almost always a normative judgment to
be made by fact-finders. See Vaccaro, 275 P.3d at 759 (“What constitutes reasonableness under
the circumstances is ordinarily a question of fact for the jury.”).
Ultimately, the jury must determine whether Allstate’s methodology for evaluating
Plaintiff’s injuries and required medical care was reasonable, including its use of the MDP
software program. This central factual dispute cannot be resolved on summary judgment.
Accordingly, it is
ORDERED that Plaintiff’s “Motion for Summary Judgment Pursuant to F.R.C.P. 56”
[Doc. No. 84] is DENIED.
Dated January 27, 2020.

8