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Colorado Case Law Update

Author: Rachel Donnelly

Guest Editor: Jillian Stanley

August 7, 2019 10:00am

William Scholle v. Delta Air Line, Inc. (March 25, 2016, JVR No. 1605310035)

Background

In this case, William Scholle, a United Airlines employee was driving a luggage tug in the course of his employment at the Denver International Airport in 2012 when the incident occurred. Mr. Scholle was stopped when Daniel Moody, a Delta employee also driving a luggage tug collided with Mr. Scholle. Mr. Scholle sustained injuries and missed work.

United Airlines, a self-insured employer under Colorado’s workers’ compensation system, paid for Mr. Scholle’s medical expenses and some of his lost wages. To the extent of those payments, United Airlines was subrogated to Mr. Scholle’s rights to recover economic damages from Delta and Mr. Moody for causing Mr. Scholle’s injuries.

In 2014, United Airlines sued Delta Airlines and Mr. Moody to recover the amounts United Airlines had paid to or on behalf of Mr. Scholle. Shorty thereafter, Mr. Scholle also sued Delta Airlines and Mr. Moody to recover for injuries related to the tug collision. The trial court consolidated the actions. Delta Airlines eventually settled United Airlines’ claim, and the court dismissed United Airlines’ case with prejudice. Mr. Scholle’s claims against Mr. Moody were later dismissed with prejudice as well, leaving only Mr. Scholle and Delta Airlines as parties. Delta admitted liability but disputed Mr. Scholle’s claimed damages so the case went to trial on damages.

In 2016, a jury returned a damages verdict for Mr. Scholle totaling approximately $1.5 million. The court, however, granted Delta Airlines’ motion for a new trial due to misconduct by Mr. Scholle’s attorney. The case went to trial again in 2017, this time without a jury and before a new judge. The court considered evidence of the amounts paid by United Airlines for Mr. Scholle’s medical treatment but the court excluded evidence of the higher amounts billed by medical providers. The court awarded Mr. Scholle $259,176, including $194,426 in economic damages. In light of Delta’s settlement of United Airlines’ claim, the court later entered a setoff order reducing Mr. Scholle’s economic damages award by the amount that United Airlines had paid in workers’ compensation, effectively reducing the amount owed to Mr. Scholle for economic damages to zero.

Mr. Scholle appealed the aforementioned setoff order. Mr. Scholle contended that the trial court erred by admitting evidence of the amount of medical expenses paid by his workers’ compensation insurer (United Airlines), rather than the amounts billed by his medical providers. He further argues the payments were collateral source benefits and therefore the pre-verdict evidentiary component of the collateral source rule prohibited their admission into evidence.

Holding/Reasoning

The court reversed the damages regarding Mr. Scholle’s past medical expenses because it determined the trial court misapplied the collateral source rule. Colorado’s collateral source rule consists of two components: 1) a post-verdict setoff rule and 2) a pre-verdict evidentiary component, established by common law. The collateral source rule prevents a tortfeasor from standing in the plaintiff’s shoes and enjoying the same discounted medical rates as the plaintiff’s insurance company receives. To hold otherwise, would allow the tortfeasor to receive a windfall in the amount of the benefit conferred to the plaintiff from a source collateral to the tortfeasor. The Appellate Court determined the amounts paid by Mr. Scholle’s workers’ compensation insurer should have been excluded because the workers’ compensation benefits paid to or on behalf of Mr. Scholle were collateral source payments. Thus, when calculating Mr. Scholle’s damages, the fact finder should not have reduced them by considering the amounts paid by United Airlines.

Takeaway

In Colorado, the law prohibits a fact finder from considering medical expenses paid by a workers’ compensation insurer in determining a damages award. Such payments are collateral source benefits.

 

Kent Ryser v. Shelter Mutual Insurance Company (June 13, 2019)

Background

Kent Ryser suffered serious injuries in a one-car accident. Sherri Babion owned the car. Linda Forster was driving with Ms. Babion’s permission. Mr. Ryser was a passenger, also with permission. When the accident occurred, all three occupants of the vehicle were Walmart employees acting in the course and scope of their employment. According to Mr. Ryser, Ms. Forster’s negligence caused his injuries. Ms. Babion maintained an auto insurance policy written by Shelter Mutual Insurance Company. The policy provided UM/UIM coverage. Because Ms. Forster was driving with Ms. Babion’s consent and Mr. Ryser was a permitted passenger, they were both insured under the policy. But the policy’s UM/UIM coverage applied only where “the owner or operator of an uninsured/underinsured motor vehicle is legally obligated to pay damages.” As well, the policy excluded from the definition of uninsured/underinsured motor vehicle “[t]he described auto,” i.e., Ms. Babion’s car.

Mr. Ryser received workers’ compensation benefits He also obtained UM/UIM benefits under his own auto policy on the basis that the co-employee immunity rule rendered Ms. Forster an uninsured motorist. He claimed UM/UIM benefits from Shelter Mutual Insurance Company to the extent that Ms. Babion’s UM/UIM coverage had a higher limit than his own policy. When Shelter rejected the claim, Mr. Ryser brought this action for UM/UIM benefits. Shelter moved for summary judgment on the basis that Ms. Forster’s co-employee immunity precluded the claim, as did the exclusion of Ms. Babion’s car from UM/UIM coverage. The trial court ruled for Shelter and against Mr. Ryser on co-employee immunity.

Mr. Ryser appealed the summary judgment entered in favor of Shelter based on the exclusivity provision of the Workers’ Compensation Act of Colorado and the related co-employee immunity rule.

Holding/Reasoning

The Colorado Court of Appeals had to decide whether this immunity bars a person who was injured in the course and scope of employment by a co-employee’s negligence in driving a car from receiving UM/UIM benefits under an insurance policy maintained by another co-employee who owned the car. The Court of Appeals ultimately concluded that because of the tortfeasor’s coworker immunity, Mr. Ryser could not satisfy the UM/UIM statutory requirement of being “legally entitled to recovery.” On this basis, the Court of Appeals affirmed the summary judgment.

Takeaway

In Colorado, the co-employee immunity law will bar an individual from recovering UM/UIM benefits.

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