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Sometimes it’s not the amount of money at stake but the principle involved that makes a particular case worth fighting for. In the case of Calderon v. American Family Mutual Insurance, the attorneys of Franklin D. Azar & Associates went to bat for a client in a $5,000 dispute — but the landmark ruling handed down by the Colorado Supreme Court has a ripple effect on thousands of drivers in the state, allowing them to receive the full value of the insurance benefits they’ve paid for.

The basic facts of the case were never in dispute. In 2010 an uninsured driver ran a stop sign and collided with a vehicle driven by our client. The client submitted claims to his own insurer, American Family Mutual Insurance, under his medical payments (“MedPay”) coverage as well as his uninsured/underinsured motorist (“UM/UIM”) coverage. American Family paid the MedPay policy limit of $5,000 to the client’s medical providers but contested the amount of the uninsured motorist claims. Azar & Associates sued the insurance company on our client’s behalf for breach of contract, and a jury returned a verdict of $68,338.97 in his favor. However, the trial judge reduced the award by $5,000, granting American Family an “offset” for the MedPay payment it had already made.

Acting for the plaintiff, we appealed the reduction in the amount of his award — all the way to the Colorado Supreme Court. Such setoffs are a common insurance industry practice, but we took the position that they aren’t permitted by specific provisions in state law. And, as Colorado Supreme Court Justice Allison Eid observed in her 2016 opinion on the case, allowing the setoffs unfairly penalizes drivers who are injured by uninsured motorists:

“Here, no one disputes that had Calderon been injured in an accident caused by an insured driver, he would have received benefits from American Family pursuant to his MedPay coverage, as well as medical expenses from the other driver’s insurance company. In other words, under the construction advocated by American Family, Calderon would receive $5,000 less in compensation because he was injured by an uninsured or underinsured driver. We see no indication from the language of the setoff prohibition that the legislature intended such disparate treatment….Permitting an insured who purchased both UM/UIM and MedPay coverage to recover benefits equal to those obtainable for injury caused by an adequately insured motorist simply guarantees that insureds like Calderon get what they paid for.”

The upshot of the case? Thanks to Eid’s majority opinion, the MedPay setoff used in this case has been found to be prohibited by state law. Colorado drivers who are conscientious enough to obtain MedPay and UM/UIM coverage, in order to protect themselves from drivers who don’t carry insurance, can finally get the benefits of the insurance they paid for.


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