Colorado Supreme Court: ALLSTATE INS. CO. v. COLLINS, 805 P.2d 431 (1991), Supreme Court of Colorado, En Banc.
N/AOUTCOME: Client prevailed. Allstate stamped “DENIED” on my client’s $700 medical bill, causing this lawsuit. Based upon this case, and another extensive case, new law emerged making it much harder for Colorado auto insurers to DENY payment of medical bills.
LANDMARK CASE ALLSTATE INS. CO. v. COLLINS, 805 P.2d 431 (1991) Supreme Court of Colorado, En Banc. Outcome: Client prevailed. Allstate stamped “DENIED” on my client’s $700 medical bill, causing t ... his lawsuit. Based upon this case, and an extensive companion case noted below, new law emerged making it much harder for Colorado insurers to DENY payment of medical bills arising from motor vehicle collisions. Description: This lawsuit arose when my client’s auto insurer, Allstate Insurance Company, denied payment for his $700 cervical MRI bill. The MRI image revealed that the client had suffered a broken neck when another driver ran into him causing the collision. Allstate refused to pay for the critical MRI, claiming that MRIs were not “scientifically sound” diagnostic procedures. This case arose under the then-existing Colorado “no-fault” auto insurance laws. From these humble beginnings, we never lost focus over the years. The matter progressed slowly up to the Colorado Supreme Court, after being initially tried in arbitration (lost), then on to the Boulder County District Court (lost), then on to the Colorado Court of Appeals (won), and finally up to the Colorado Supreme Court (won). The final result was an extraordinary, state-wide strengthening of Colorado law for those injured in motor vehicle collisions at the time. The Court of Appeals ruled in this case, and in a related companion case, that auto insurers were required to pay for their insured’s collision-related medical bills as then required by law, or face additional bad faith tort claims. Up until these cases, auto collision insurers regularly denied required medical bill payments (some quite large) merely because state law limited the consequences for their unreasonable denials to a very small penalty, essentially a slap on the wrist. This case and another lead to overturning the “small penalty” limitation by allowing an injured person to present claims in Court showing the full consequences of their insurer’s payment denials including bad faith breach of insurance contract, loss of credit rating, and many other foreseeable damages stemming from the unreasonable denials. Auto insurers, for the first time, faced serious consequences for non-payment of medical bills and − in short order − they started paying up, statewide. See also: Farmers Group, Inc. v. Williams, 805 P.2d419 (1991) which was argued after Allstate v. Collins, above.
