PERA and Govermental Immunity in Colorado

A nice win in a case against Standard Insurance and PERA.

On Friday, May 16, 2008, the Colorado Court of Appeals issued a decision of first impression which addresses Standard Insurance Company’s long pursued argument that it is entitled to governmental immunity in administering claims for disability retirement benefits for the Colorado Public Employees Retirement Association (PERA). Our office has handled many of these claims and faced this argument by Standard on more than one occasion. Until now, the Court of Appeals had not been presented with the legal question of immunity, but, now that it has, it has answered the question correctly. Standard Insurance does not have immunity and may be sued directly.

In the case of Moran v. Standard Insurance Co., No. 06CA2081, the Plaintiff appealed the trial court’s finding that Standard was an “instrumentality” of PERA and thus entitled to immunity under the Colorado Governmental Immunity Act (CGIA). Standard’s argument was based on the fact that the applicable statutes require PERA to contract with a third party administrator to administer the PERA disability retirement program. Standard Insurance is the third party administrator hired by PERA. Under the administrative services agreement entered into between Standard and PERA, Standard determines whether a person is eligible to obtain or continue to receive PERA benefits, while PERA is actually responsible for paying any such benefits. The court ruled that Standard is a private corporation and there is no express indication by the Colorado legislature which expanded the scope of immunity under the CGIA to include a private corporation which it entered into a contract with the public entity known as PERA.

We wait to see if Standard/PERA appeals this decision to the Colorado Supreme Court. If it does, this office would expect the Supreme Court to follow the reasoning of the Court of Appeals and conclude that Standard’s arguments are incorrect. We hope this finally settles the issue which we have to battle in each and every lawsuit we file on behalf of claimants seeking disability benefits from Standard/PERA. At the Law Office of Shawn E. McDermott, LLC we have extensive experience in handling disability insurance claims, whether individual policies, those ERISA or those pursuant to PERA mandated disability benefits. We are here to answer your questions and to make recommendations on your claim.

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