Tenth Circuit Affirms Statutory Disclosure Penalty for Insurer Who Failed to Produce Copies of Automotive Policies for Vehicles Not Involved in Subject Claim

In Fogel v. Shelter Mutual Insurance Co., the Tenth Circuit Court of Appeals affirmed a summary judgment ruling finding that an insurer violated Colorado’s statutory insurance disclosure law by responding to a policy information request with a letter containing excerpts from all four automotive policies covering its insured, but only providing a complete copy of the one policy covering the car involved in the subject accident.

Like certain other states, Colorado has an insurance disclosure statute, codified at Colorado Revised Statutes section 10-3-1117. Colorado’s auto-insurance statute requires each insurer that “provides or may provide” commercial automobile or personal automobile liability coverage to pay all or a portion of a pending or prospective claim to provide to the claimant or their attorney within 30 calendar days after receiving a written disclosure request a statement setting forth the following information with regard to each known policy of insurance of the named insured, including excess or umbrella insurance, that is or may be relevant to the claim: (i) the name of the insurer; (ii) the name of each insured party, as the name appears on the declarations page of the policy; (iii) the limits of the liability coverage; and (iv) a copy of the policy.

Under section 10-3-1117(3), failure to comply with the disclosure statute subjects the insurer to a $100 per day penalty, beginning on the 31st day after the disclosure request is received and accruing until the disclosure is provided. An insurer is also responsible for attorneys’ fees and costs incurred by a claimant in enforcing the non-disclosure penalty.

This case arose after John Catalano struck Carl Fogel with his truck while Fogel was cycling. Following the accident, Fogel contacted Catalano’s insurer, Shelter Mutual Insurance Co., to request Catalano’s policy information. Catalano was listed on four policies with Shelter: one for the Ford Ranger he drove during the accident, plus three other policies, each covering different vehicles that were not involved in the accident.

On February 1, 2022, Fogel requested copies of all four policies pursuant to section 10-3-1117. Less than a week later, Shelter responded by quoting language that it said appeared in all four of Catalano’s policies. It then analyzed the language to explain its position that the non-Ranger policies did not cover Fogel’s claim. Shelter produced a copy of the Ranger policy but did not produce copies of the other three policies until February 23, 2023.

Fogel sued to collect the $100 per day statutory penalty under section 10-3-1117(3). Shelter argued that the three non-Ranger policies were not policies that “[are] or may be relevant to the claim,” but, even if they were, it met its disclosure obligations by excerpting the four policies’ relevant language. Fogel, on the other hand, argued that because Shelter failed to produce copies of three policies, Shelter owed him $300 per day for every day after the initial 30 days that it had not produced them.

The district court granted partial summary judgment to Fogel and found that Shelter needed to produce the three non-Ranger policies to Fogel, not just excerpted language. As for Shelter’s penalty, the court held that section 10-3-1117 applied penalties per insurance claim, not per unanswered request; therefore, a $100 per day penalty applied. The court calculated Fogel’s penalty award at $35,600 — $100 per day for the 356 days from March 4, 2022 (31 days after Fogel’s policy requests) to February 23, 2023 (when Shelter produced the copies of the non-Ranger policies).

Both sides appealed. Shelter appealed both liability and the penalty, arguing that it was not liable under the disclosure statute and, even if it were, any penalty stopped accruing as of its July 2022 letter to Fogel containing the relevant policy language excerpts. Fogel appealed the penalty only, arguing that section 10-3-1117 multiplies the $100 per day penalty by the number of unanswered requests.

The appellate court relied heavily on the recently decided case of Bohanan v. Esurance Property & Casualty Insurance Co., the only appellate decision analyzing section 10-3-1117’s requirement that insurers disclose “each known policy of insurance ... that is or may be relevant to the claim.” In that case, the court rejected an insurer’s argument that it was excused from producing a policy that did not go into effect until after an accident based on its unilateral decision that the policy did not provide coverage. The Bohanan court held that whether a policy “is or may be relevant” does not depend on whether the policy ultimately applies; instead, it is sufficient to simply observe that a policy was or may have been relevant to the claim.

Following this broad interpretation of the disclosure statute, the Tenth Circuit held that Shelter was required to produce complete copies of the non-Ranger policies to Fogel. The court observed that the July 2022 letter to Fogel took multiple pages to explain why the non-Ranger policies did not apply, quoting and interpreting intricate policy language. Thus, there was a fundamental question of whether the polices provided coverage for the loss, which is “enough to trigger the disclosure requirement, no matter whether a policy ultimately covers the claim.” The court also noted Shelter’s failure to comply with the statute’s plain text requiring insurers to produce a “copy” of each potentially relevant policy, not excerpts from a different policy.

With respect to the statutory penalty, the court noted that section 10-3-1117(3) refers to “[t]he penalty” of “one hundred dollars per day” when “[a]n insurer ... violates” the statute. Based on this plain langauge, the court agreed that the statute authorizes just one penalty of $100 per day, not multiple. Had the Colorado legislature intended to authorize multiple penalties, the court observed, it could have easily said so. Moreover, the court cautioned that Fogel’s interpretation could lead to the illogical result of allowing claimants to “file unnecessary requests simply to run up the penalty.”

Thus, the court agreed with Shelter that section 10-3-1117(3) authorized just one penalty per claim, not one penalty per unanswered request. The court affirmed the district court’s partial grant of summary judgment to Fogel for a $35,600 penalty award and deemed Fogel entitled to appellate fees and costs for successfully defending the penalty against Shelter’s appeal.