(1) (a) A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.
(b) For the purposes of this section and section 10-3-1116:
(I) First-party claimant means an individual, corporation, association, partnership, or other legal entity asserting an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy. First-party claimant includes a public entity that has paid a claim for benefits due to an insurer's unreasonable delay or denial of the claim.
(II) First-party claimant does not include:
(A) A nonparticipating provider performing services; or
(B) A person asserting a claim against an insured under a liability policy.
(2) Notwithstanding section 10-3-1113 (3), for the purposes of an action brought pursuant to this section and section 10-3-1116, an insurer's delay or denial was unreasonable if the insurer delayed or denied authorizing payment of a covered benefit without a reasonable basis for that action.
(3) If any provision of this section or its application to any person or circumstance is held illegal, invalid, or unenforceable, no other provisions or applications of this section shall be affected that can be given effect without the illegal, invalid, or unenforceable provision or application, and to this end the provisions of this section are severable.
(4) The general assembly declares that this section is a law regulating insurance.
(5) This section and section 10-3-1116 shall not apply to insurance issued in compliance with the Workers' Compensation Act of Colorado, articles 40 to 47 of title 8, C.R.S.
(6) This section and section 10-3-1116 shall not apply to title insurance issued pursuant to article 11 of this title or to life insurance issued pursuant to article 7 of this title.
(7) The provisions of this section and section 10-3-1116 do not apply to any claim payment that is delayed or denied because of the insurer's participation in the child support enforcement mechanism established in section 26-13-122.7, C.R.S.
Source: L. 2008: Entire section added, p. 2172, � 5, effective August 5. L. 2016: (7) added, (HB 16-1165), ch. 157, p. 490, � 1, effective January 1, 2017.
10-3-1116. Remedies for unreasonable delay or denial of benefits - required contract provision - frivolous actions - severability - definition - rules. (1) A first-party claimant as defined in section 10-3-1115 whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees and court costs and two times the covered benefit.
(2) An insurance policy, insurance contract, or plan that is issued in this state and that offers health or disability benefits shall not contain a provision purporting to reserve discretion to the insurer, plan administrator, or claim administrator to interpret the terms of the policy, contract, or plan or to determine eligibility for benefits. If an insurance policy, contract, or plan contains such a provision, the provision is void.
(3) An insurance policy, insurance contract, or plan that is issued in this state shall provide that a person who claims health, life, or disability benefits, whose claim has been denied in whole or in part, and who has exhausted the person's administrative remedies:
(a) Is entitled to have the person's claim reviewed de novo in any court with jurisdiction; and
(b) Is entitled to a trial by jury.
(4) The action authorized in this section is in addition to, and does not limit or affect, other actions available by statute or common law, now or in the future. Damages awarded pursuant to this section shall not be recoverable in any other action or claim.
(5) If the court finds that an action brought pursuant to this section was frivolous as provided in article 17 of title 13, C.R.S., the court shall award costs and attorney fees to the defendant in the action.
(6) If any provision of this section, or of any subsection or portion of this section, or its application to any person or circumstance is held illegal, invalid, or unenforceable, no other provisions or applications of this section shall be affected that can be given effect without the illegal, invalid, or unenforceable provision or application, and to this end the provisions of this section are severable.
(7) The general assembly declares that this section is a law regulating insurance.
(8) As used in this section, issued in this state refers to every health and disability insurance policy, insurance contract, insurance certificate, and insurance agreement existing, offered, issued, delivered, or renewed in the state of Colorado or providing health or disability benefits to a resident or domiciliary of the state of Colorado and every employee benefit plan covering a resident or domiciliary of the state of Colorado, whether or not on behalf of an employer located or domiciled in Colorado, on or after August 5, 2008, notwithstanding any contractual or statutory choice-of-law provision to the contrary.
Source: L. 2008: Entire section added, p. 2173, � 5, effective August 5. L. 2020: (2), (3), and (6) amended and (8) added, (SB 20-176), ch. 301, p. 1499, � 2, effective September 14.
Cross references: For the legislative declaration in SB 20-176, see section 1 of chapter 301, Session Laws of Colorado 2020.