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Hansen v. State Farm Mutual Automobile Insurance Co.5/18/1998
Certiorari to the Colorado Court of Appeals
EN BANC
This appeal arises out of a jury verdict for Petitioner, Linda Hansen, on her claims against State Farm Mutual Automobile Insurance Company (State Farm) for breach of contract for failing to pay Personal Injury Protection (PIP) benefits and for bad faith. One of the principal issues at trial was whether State Farm's request that Hansen submit to an examination by physicians of its choosing was reasonable, and whether Hansen's failure to do so defeated her request for coverage and her assertion of bad faith. The court of appeals reversed the trial court judgment and remanded for a new trial based upon jury instruction error. See Hansen v. State Farm Mut. Auto. Ins. Co., 936 P.2d 584 (Colo. App. 1996).
We granted review of the court of appeals' rulings on the claimed instructional errors. We now hold that the trial court satisfied its obligation to instruct the jury, both with respect to its decision not to give the tendered independent medical examination (IME) instruction and with respect to the inducement instruction as given. For these reasons, we reverse the judgment of the court of appeals.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Hansen was involved in two automobile accidents, on August 31, 1991 and April 25, 1992 respectively. She sustained multiple injuries in both accidents. At the times of the accidents, Hansen was insured with State Farm and claimed benefits under the no-fault provision of her policy. State Farm initially paid certain benefits under the policy and later declined to do so. Hansen filed suit for breach of contract and bad faith.
Hansen's policy with State Farm provided, in pertinent part:
REPORTING A CLAIM - INSURED'S DUTIES
4.
Other Duties Under No-Fault, Uninsured Motor Vehicle and Death, Dismemberment and Loss of Sight Coverages.
The person making the claim also shall: . . .
b. be examined by physicians chosen and paid by us [State Farm] as often as we reasonably may require . . . .
2. Suit Against Us.
There is no right of action against us:
a. until all the terms of this policy have been met . . . . (Emphasis in original.)
State Farm was concerned that Hansen's requests for medical expenses were not reasonable or necessary. At State Farm's request, Hansen underwent one IME in November of 1991 with a chiropractic orthopedist and another IME in April of 1992 with an ophthalmologist. In May of 1992, State Farm notified Hansen that she would need to attend another IME with an orthopedic surgeon. Hansen arrived at the doctor's office for the scheduled appointment with the orthopedic surgeon, but refused to be examined unless a nurse observer was also present. State Farm's surgeon would not agree to proceed with the examination in the presence of a third person, hence, no orthopedic examination took place. In September 1992, State Farm notified Hansen that she would be required to attend a psychiatric IME. Through counsel, Hansen requested a resume of State Farm's psychiatrist's qualifications and permission to have a nurse observer attend the exam. State Farm did not respond to the requests; hence, the psychiatric IME also never occurred.
The matter was tried to a jury in July 1994. At trial, State Farm took the position that Hansen had failed to satisfy a condition precedent to her coverage by not attending the orthopedic and psychiatric IMEs. According to State Farm, Hansen's conduct defeated her right to recovery on both the breach of contract and bad faith claims. In support of this position, State Fa
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