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Adams v. Farmers Insurance Group6/28/1999
Certiorari to the Colorado Court of Appeals
EN BANC AND CASE REMANDED
JUSTICE MARTINEZ specially concurs, and JUSTICE KOURLIS joins in the special concurrence.
The petitioners, Michelle Adams and Chris Williams, seek review of a court of appeals opinion denying them statutory attorney fees following an action in which they were awarded personal injury protection (PIP) benefits under the Colorado Auto Accident Reparations Act, sections 10-4-701 to 10-4-726, 3 C.R.S. (1998) (No-Fault Act or Act). Specifically, the petitioners argue that the court of appeals erred in holding that a trial court may not grant attorney fees to a successful party absent a predicate factual finding that the PIP benefits were "overdue." Petitioners further emphasize the fact that the merits of the underlying PIP benefits claim were not appealed in the instant case. The petitioners argue that the court of appeals' holding not only disregards the plain language of the attorney fees provision of the Act which gives the trial court discretion to grant fees to a "successful" party, but also controverts the beneficent legislative purpose of the Act which favors liberal construction of the Act in favor of insureds. Given our agreement with the petitioners' arguments, we reverse the holding of the court of appeals and remand to that court with directions to reinstate the trial court's judgment of attorney fees.
I.
In April 1992, the petitioners, who were insured under a policy with the Farmers Insurance Group (respondent), were injured in an automobile accident. The respondent failed to pay a number of medical and rehabilitation bills submitted by the petitioners. On April 6, 1994, the petitioners filed suit against the respondent, asserting inter alia a claim for statutory PIP benefits pursuant to the No-Fault Act. The petitioners also requested attorney fees pursuant to section 10-4-708(1.7)(c), 3 C.R.S. (1998), of the Act.
As the trial court later noted in its attorney fees order, the discovery phase of this case was particularly contentious. Notably, the petitioners' insurance policy was among the first policies offered by the respondent which allowed for the processing of claims for medical and rehabilitation treatment by a managed care arrangement. See 10-4-706(2)(a), 3 C.R.S. (1997). Farmers utilized a Preferred Provider Organization (PPO) and hired Sloans Lake Managed Care (Sloans Lake) to administer its PPO arrangement. Significant administrative difficulties marked the initial stages of the respondent's PPO relationship with Sloans Lake. As a result, the petitioners' claims were processed by four of the respondent's employees and seven Sloans Lake employees. Despite these difficulties, the respondent refused to admit responsibility for the actions of Sloans Lake in processing the petitioners' PIP claims. As the trial court noted, this refusal increased the attorney fees involved in this action because it forced the petitioners to move for a continuance, undertake extensive discovery of the seven Sloans Lake employees involved with the petitioners' files, and file a motion for summary judgment on a novel legal issue: the responsibility of the insurer for the actions of the managed care providers in the denial of PIP benefits.
At trial, the petitioners claimed medical bills totaling $58,120.54; however, the jury only awarded them $22,000. This award represented thirty-eight percent of the total PIP benefits sought. Over the respondent's objection, the petitioners requested that the jury answer a series of special interrogatories on the verdict form. The first four interrogatories asked the jury to assess the total amount of the petitioners' medical,
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