The Colorado Supreme Court made a ruling on November 5, 2018, which is consistent with most other jurisdictions with regard to the bad faith arena. Plaintiff was injured when another car failed to stop at a stop sign. The driver’s insurance company settled for the policy limits ($25,000). The injured party made a demand on her uninsured/underinsured motorist benefits. After months of correspondence and the review of an MRI which occurred in April of 2015, GEICO offered the policy limits in April of 2017. GEICO’s claims journal reports that GEICO “conceded that peer review would not be necessary.”
The injured party then filed a lawsuit asserting bad faith in the unreasonable delay in paying covered benefits. GEICO denied liability and said that causation for the knee replacement surgeries the injured party endured was “fairly debatable” because of existing arthritis, etc. GEICO requested an IME and the district court allowed the IME. The Supreme Court said that GEICO’s decision had to be evaluated based on the evidence before it when it made its coverage decision, and should not be allowed to create new evidence in order to defend its earlier coverage decision.