When an insurer improperly denies or delays a claim in Colorado, the preferred course of action has been to file suit for violations under the Unfair Competition-Deceptive Practices Act (UCDPA), breach of contract, and unreasonable delay and denial of benefits pursuant to C.R.S §§ 10-3-1115 and 1116. C.R.S §§ 10-3-1115 and 1116 which became effective in August of 2008 provide for a prevailing first-party claimant to be entitled to attorney fees and costs as well as two times the covered benefit. These statutes were enacted because of the perceived abuses taking place within the insurance industry and a desire to protect the public from these abuses. While these statues have obviously bolstered the first-party claimants’ arsenal in fighting improper practices within the insurance industry, it is not the only weapon at their disposal. In to these statutes, the common law theories of bad faith and fair dealing and the Colorado Consumer Protection Act (CCPA) offers additional statutory claims for relief.
Codified in C.R.S § 6-1-101, the CCPA offers additional remedies to “any successor in interest to an actual consumer who purchased the defendant’s goods, services…” who have suffered damages as a result of an insurer’s improper denial of a claim, or engagement in deceptive trade practices. The seminal case concerning the CCPA’s application to the insurance industry is Showpiece Homes Corp. v. Assurance Co. of Am., 38 P.3d 47 (Colo. 2001). In Showpiece, the Court conclude that “a private cause of action by an insured under the CCPA is not preempted by the UCDPA.” In fact, “the CCPA is meant to work in tandem with other regulatory provisions in the Colorado statutes, and as such, works in conjunction with, not to the exclusion of, the UCDPA.” Id. The insurance industry is not excluded from the provisions of the CCPA and insurance falls under the category of sale of goods, services, or property as contemplated by the CCPA. Just as importantly, the CCPA applies to an insurers post-sale or bad faith conduct, and unfair claims handling practices. Id. If bad faith is proven under the CCPA, claimants are eligible for treble damages.
The largest hurdle, at least in terms of a CCPA action against an insurer, appears to be proving that the challenged practice significantly impacts the public as actual or potential consumers of the defendant’s goods, services, or property. While public impact is just one of five elements laid out in Hall v. Walter, it is appears to be the most difficult to prove and there is no clear rule as to how many potential consumers must be affected, or potentially affected. 969 P.2d 224, 235 (Colo.1998). Unfortunately, the nature of the insurance industry is not, in and of itself, enough to prove public impact. In Coors v Security Life of Denver Ins. Co., it was found that 200 affected policy holders was insufficient to show public impact where there were approximately 20,000 policy holders that were not affected by the challenged practice. However, the CCPA remains a legal remedy worth pursing by those who have been affected by an insurer’s poor practices.