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COLORADO SUPREME COURT

Following yet another year of pro-plaintiff legislative activity and a failure by the Colorado Supreme Court to push back on liability-expanding decisions by lower courts, the Centennial State is yet again on the Judicial Hellholes Watch List. The legal climate in Colorado continues to deteriorate with the playing field becoming more unfair and unbalanced in 2019.

LIABILITY EXPANDING DECISIONS BY COLORADO COURTS

While the Colorado Supreme Court has been consistently inconsistent with its civil justice rulings, the Colorado Court of Appeals is making the high court’s job even more challenging with rulings that creatively expand liability on many fronts. In 2019, the high court denied the petitions for certiorari in troubling lower court cases, allowing the decisions to stand.

In Walmart v. Forfar, the Court of Appeals ruled that a plaintiff was able to “recover” medical expenses for the full amount billed by the plaintiff ’s Medicare provider, although that amount was far in excess of the actual amount the provider may legally recover under Medicare. This case is the latest in a long list of “phantom damages” rulings in which the Colorado Supreme Court ruled that juries cannot consider the actual amount paid for medical expenses, creating a windfall for plaintiffs and their lawyers.

In a similar ruling, the Court of Appeals found that the state’s collateral source rule barred evidence of the medical expenses actually paid by a workers’ compensation insurer, while allowing the plaintiff to present evidence of the higher amounts initially billed by medical providers. The case arose after the plaintiff was injured while driving a luggage tug that collided with another at the Denver International Airport. Before filing the lawsuit, the plaintiff received workers’ compensation benefits that covered his medical expenses and some of his lost wages arising from the incident. The ruling reversed the trial court, which had allowed the jury to consider the amounts actually accepted as payment for medical expenses and not allowed plaintiff ’s lawyers to present inflated invoiced amounts that no one ever paid.

The high court also is considering a case that will have a significant impact on businesses and nonprofits across the state. In Wagner v. Planned Parenthood, the Court of Appeals ruled that a Planned Parenthood affiliate could be held liable for the premeditated acts of a mass shooter. The decision reversed a trial court ruling that placed the blame on the shooter and dismissed the case. The appellate ruling expands liability and upends settled Colorado premise-liability law. It creates third-party civil liability on the part of landowners for premeditated criminal acts of others and effectively mandates security measures that are impossible to attain as a practical matter. The Colorado Supreme Court granted review in September 2019.

LEGISLATORS CONTINUE TO EXPAND LIABILITY FOR COLORADO EMPLOYERS

Prior to the 2018 elections, Colorado’s legislature remained balanced due to its bipartisan composition – with Republicans controlling the Senate and Democrats controlling the House of Representatives and Governor’s mansion. While the trial bar consistently pushed an aggressive liability-expanding agenda in the House, it stalled in the Senate. That changed in November 2018. The 2018 elections brought a significant shift in the legislature and the offices of the governor and AG that empowered the plaintiffs’ bar.

The most troubling employment bill passed in 2019 was S.B. 85. While the bill’s intended goal of addressing pay disparities is noble, legislators rejected a provision that would have allowed employers to show a jury that a wage disparity was due to a legitimate factor other than gender. They also refused to provide employers with an opportunity to address a disparity before an employee files a lawsuit. Business groups across the state fear an onslaught of frivolous lawsuits. Most Colorado small businesses do not have a legal department and the risk of bankruptcy due to litigation is very real.

Another new law, H.B. 1267, makes individual employees, officers and directors personally liable for company errors in wage disputes. The legislature sought to overturn the Colorado Supreme Court’s decision in Leonard v. McMorris. Wage theft now will be considered a felony when the amount in controversy is greater than $2,000. It also removes the exemption from criminal penalties for an employer who is unable to pay wages or compensation because of a bankruptcy action or other pending court action resulting in the employer having limited control over its assets.

Yet another problematic bill, H.B. 1289, amends Colorado’s consumer law in a way that will lead to more lawsuits. Most significantly, the act includes a vague, new catchall prohibition outlawing “any unfair, unconscionable, deceptive, deliberately misleading, false, or fraudulent act or practice.” In addition, for certain violations of the act, the new law lowers the standard for liability. Rather than requiring a showing that a business knew it was engaging in a deceptive practice, a showing of reckless conduct will be sufficient. The new law also will lead to more lawsuits by the state attorney general and district attorneys. It eliminates a requirement that enforcement actions brought by the state’s attorney general or district attorneys address business’ practices that have a significant public impact. It also spikes the potential penalties for violations of the act from $2,000 to $20,000 and from $10,000 to $50,000 when a deceptive practice affects elderly individuals.

The Legislature also enacted a bill that will allow higher awards for subjective noneconomic damages, like pain and suffering, in personal injury lawsuits, as well as larger awards in other types of actions. The amount permitted for noneconomic damages is expected to rise from $468,000 to $584,210 in 2020. As one plaintiffs’ law firm put it, the “even better news” is that these amounts will automatically go up every two years. This law will result in insurance policyholders facing the choice of either paying higher premiums to protect themselves against higher awards and settlement demands or seeing their coverage simply erode due to an act of the legislature.

The Colorado Legislature considered several other problematic bills this session, and while they failed to pass in 2019, the trial bar is expected to aggressively pursue them again next year. For example, S.B. 237 would have moved Colorado toward the type of consumer class action abuse seen in Judicial Hellholes. The bill would have explicitly authorized class actions in this context. In addition, the bill would have authorized larger awards for people who experienced no financial loss. The proposal would have allowed a minimum damage award of $500 to be multiplied “per violation” in individual lawsuits.

In addition, the Legislature considered S.B. 217, which would have legitimized medical lien companies. These companies make their money from “the spread” between the amount billed for medical services and the much lower amount that is ultimately paid to the doctor or specialist. The bill prohibited discovery and introduction of evidence of an existing medical lien for any purpose, including for proof of the reasonable value of medical services. The bill would have allowed medical lien companies to set their own prices for medical services.