We just learned this morning that Governor Ritter signed into law House Bill 1407 yesterday afternoon which has the ability to dramatically assist beneficiaries/insureds of insurance contracts, including those governed by ERISA. Generally speaking, the bill provides specific rights and remedies to insureds under insurance contracts whose claims have been unreasonably delayed or denied. Specifically, such a finding can result in the recovery of reasonable attorney’s fees and up to two times the actual damages sustained. See C.R.S. §10-3-1116, as now amended.
Additionally, the law bans the use of “discretionary clause” provisions within any insurance policy, including group policies. Similar laws exist where insurance commissioner regulations had been adopted in a few other states. Colorado now joins that list. Banning discretionary clauses, and specifically stating that all claims being reviewed in court must be done on a “de novo” basis, means that the typical deference which a court has previously had to give to an insurance company/claim administrator’s decision no longer exists. The court must now perform its own review and decide whether the administrator’s decision was right or wrong, with no deference given. This is a major step forward, and greatly increases the chances of success of our clients’ claims. It places the claimant on equal footing with the insurance company, finally.
Because this new law is specifically a “law regulating insurance,” it should survive any claim by insurance companies that it is pre-empted by federal ERISA laws. I am certain this issue will eventually make it to the 10th Circuit Court of Appeals. We will wait to see if this Colorado state law survives claimed pre-emption in the minds of the typically conservative 10th Circuit Court judges.
This law has the potential to impact all of our clients’ insurance claims, including disability, life, health, accidental death and dismemberment (AD&D), homeowners, uninsured/underinsured motorist coverage, and more.
Visit our ERISA page to learn more about ERISA appeals in Colorado.