                                                                 FILED
                                                     United States Court of Appeals
                      UNITED STATES COURT OF APPEALS         Tenth Circuit

                                    TENTH CIRCUIT                        November 18, 2013
                                                                         Elisabeth A. Shumaker
                                                                             Clerk of Court
 LAWRENCE COUNTRYMAN, on
 behalf of himself and all others similarly
 situated,

        Plaintiff - Appellant,

 v.                                                          No. 12-1456
                                                (D.C. No. 1:10-CV-01075-REB-KMT)
 FARMERS INSURANCE EXCHANGE,                                  (D. Colo.)
 an insurer, and owner of MID-CENTURY
 INSURANCE COMPANY, a California
 corporation; MID-CENTURY
 INSURANCE COMPANY, a California
 company,
        Defendants – Appellees.


                                 ORDER AND JUDGMENT*


Before KELLY, McKAY, and MATHESON, Circuit Judges.


       Colorado enacted a statute in 2008 that requires motor vehicle liability insurance

policies to include coverage for medical payments. This case asks us to determine

whether this statute forbids an insurer from limiting such coverage to two years. We hold

it does not.



       * This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
                                        I. BACKGROUND

       Farmers Insurance Exchange and Mid-Century Insurance Company

(“Defendants”) issued policies in Colorado that cover “Med-pay” benefits with the

following limitations: “reasonable and customary expense[s] for necessary medical

services furnished within two years from the date of the accident.” Countryman v.

Farmers Ins. Exch., 865 F. Supp. 2d 1108, 1110 (D. Colo. 2012) (emphasis added).

       Lawrence Countryman bought one of these policies with Med-pay benefits

coverage up to $25,000. He suffered serious injuries from a car accident that required

care for several years. Defendants paid $14,920 in benefits for two years and then

refused to pay further claims based on the policy’s two-year limit.

       Mr. Countryman filed a putative class action in state court for breach of contract

and related claims. He alleged the two-year limit in Defendants’ policies was void and

unenforceable under C.R.S. § 10-4-635(1)(a) (the “Med-pay statute”), which provides in

relevant part:

                 [N]o . . . motor vehicle liability policy insuring against loss
                 resulting from liability imposed by law for bodily injury or
                 death suffered by any person arising out of the ownership,
                 maintenance, or use of a motor vehicle shall be . . . issued . . .
                 in this state unless coverage is provided . . . for medical
                 payments with benefits of five thousand dollars for bodily
                 injury, sickness, or disease resulting from the ownership,
                 maintenance, or use of the motor vehicle.

A separate provision of the Med-pay statute requires insurers to prioritize payments for

medical services provided by trauma care providers. Id. § 10-4-635(2)(b).




                                               -2-
       Defendants removed the case to federal court by satisfying the Class Action

Fairness Act’s diversity and amount-in-controversy requirements. See 28 U.S.C.

§ 1332(d). They then successfully moved under Fed. R. Civ. P. 12(b)(6) to dismiss the

claims regarding the two-year limit. The district court entered final judgment dismissing

all claims. This appeal concerns only the two-year policy limit. We have jurisdiction

under 28 U.S.C. § 1291.

                                        II. DISCUSSION

                          A. Governing Law and Standard of Review

       “In diversity cases like this one, the substantive law of the forum state governs the

analysis of the underlying claims . . . .” Stickley v. State Farm Mut. Auto Ins. Co., 505

F.3d 1070, 1076 (10th Cir. 2007). We review de novo a district court’s statutory

interpretation. Coffey v. Freeport McMoran Copper & Gold, 581 F.3d 1240, 1245 (10th

Cir. 2009). “We review de novo a district court’s [Rule 12(b)(6)] dismissal . . . applying

the same legal standards as the district court.” Jordan-Arapahoe, LLP v. Bd. of Cnty.

Comm’rs, 633 F.3d 1022, 1025 (10th Cir. 2011).

                            B. Statutory Interpretation in Colorado

       We take guidance from case law on interpreting Colorado statutes. “When

interpreting a statute,” a court’s “task is to give effect to the intent of the general

assembly.” Klinger v. Adams Cnty. Sch. Dist. No. 50, 130 P.3d 1027, 1031 (Colo. 2006)

(en banc). “When interpreting the general assembly's intent,” a court should “turn first to

the language of the statute,” reading the “words and phrases in context and constru[ing]

them literally according to common usage unless they have acquired a technical meaning

                                              -3-
by legislative definition.” Id.; see also People v. Yascavage, 101 P.3d 1090, 1093 (Colo.

2004) (en banc).

       If the statutory language is “clear and unambiguous,” our analysis ends. Slack v.

Farmers Ins. Exch., 5 P.3d 280, 284 (Colo. 2000) (en banc). If the language is

ambiguous, we turn to “other factors such as legislative history, the consequences

of a given construction, and the end to be achieved by the statute.” Klinger, 130

P.3d at 1031; see also Yascavage, 101 P.3d at 1093.

       In Colorado, “a contractual provision is void if the interest in enforcing the

provision is clearly outweighed by a contrary public policy.” FDIC v. Am. 21 Cas. Co.,

843 P.2d 1285, 1290 (Colo. 1992) (en banc). Colorado courts emphasize this principle in

insurance cases, asking whether an insurance provision undermines legislative intent or

offends public policy. E.g., Huizar v. Allstate Insur. Co., 952 P.2d 342, 344 (Colo. 1998)

(en banc) (Colorado “courts have assumed a heightened responsibility to scrutinize

insurance policies for provisions that unduly compromise the insured’s interests and have

concluded that any provision of an insurance policy which violates public policy and

principles of fairness is unenforceable.” (quotations omitted)); see also Allstate Ins. Co. v.

Avis Rent-A-Car System, Inc., 947 P.2d 341, 346 (Colo. 1997) (en banc); Meyer v. State

Farm Mut. Auto. Ins. Co., 689 P.2d 585, 589 (Colo. 1984) (en banc).

                          C. Interpretation of the Med-Pay Statute

       This case requires us to determine whether the Med-pay statute permits

Defendants’ two-year medical coverage limit. Applying the principles of statutory



                                            -4-
construction described above, we begin by examining the statutory language and then

turn to legislative history and public policy.

1. Statutory Language

       The Med-pay statute does not say whether an insurer may place time limits on

Med-pay coverage. The silence could indicate intent to disallow any time limits or to

allow whatever time limit an insurer may choose. Because the statute is susceptible to at

least two reasonable interpretations, it is ambiguous. See Grant v. People, 48 P.3d 543,

548 (Colo. 2002) (en banc).

       Mr. Countryman relies on DeHerrera v. Sentry Insur. Co., 30 P.3d 167 (Colo.

2001) (en banc), which addressed an insurance statute that allowed a particular restriction

in one of its parts but omitted the restriction in another part. The Colorado Supreme

Court “presume[d] from the absence of this restriction that the legislature did not intend

for it to apply.” Id. at 173. But in Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748

(Colo. 1990) (en banc), the court said that “[i]n the absence of statutory inhibition, an

insurer may impose any terms and conditions consistent with public policy which it may

see fit.” Id. at 750.

       The Med-pay statute has no express inhibition on time limits. It does not

authorize a restriction in one part but not another part. Chacon is therefore a better fit

than DeHerrera for interpreting the Med-pay statute’s silence. The better interpretation

would allow time limits because the legislature could have forbidden them expressly if it

had chosen to do so. Additionally, the Med-pay statute’s minimum coverage limit of

$5,000 is not large enough to be expected to cover significant or long-term medical care

                                             -5-
after trauma care has been paid. This suggests the legislature did not intend to require all

coverage to include open-ended time frames.1 Nonetheless, because the statute is

ambiguous, we examine legislative history and public policy to determine whether either

points to a ban on time limits.

2. Legislative History

       The legislative history of the Med-pay statute supports allowing the time limit at

issue here.2 The legislature started with bill SB 08-211, which provided minimum

coverage of $25,000 and a minimum time limit of five years. It ended with another bill,

SB 08-011, which became § 10-4-635 and provided minimum coverage of $5,000,

prioritized payment for trauma care,3 and was silent on a time limit. Elimination of the

five-year time limit alone does not indicate whether the legislature authorized or

prohibited time limits. But the reduction of minimum coverage to $5,000 and the

prioritization of payment to trauma care providers point to allowing time limits sufficient

to cover trauma care services and leaving any remaining coverage amount for follow up



       1
         Mr. Countryman counters that § 10-4-635 imputes default coverage without time
limits when a policy fails to provide Med-pay benefits and therefore implies time limits
are forbidden. But this default provision does nothing to fill in the silence as to whether
an insurer can write a policy with time limits.
       2
        Mr. Countryman moved this court to take judicial notice of legislative history
material that he wishes to supplement the record on appeal. We grant the motion. See
Territory of Alaska v. Am. Can Co., 358 U.S. 224, 226-27 (1959).
       3
        The statute requires the insurer to “reserve five thousand dollars of the medical
payments coverage for the payment of trauma care,” C.R.S. § 10-4-635(2)(b), and the
trauma care providers must be paid first, id.

                                            -6-
medical care.4 Nothing in the legislative history indicates that Med-pay was intended to

provide coverage for indefinite care. In short, the legislative history supports reading the

language to allow time limits.

3. Public Policy

       The legislative history reflects the following public policy considerations for the

bills that were eventually enacted as the Med-pay statute: (1) coverage for trauma care;

(2) protection of accident victims who lose employer-provided health insurance;5 and (3)

keeping insurance premiums low. Colorado courts have identified two further policy

interests relevant to the Med-pay statute: (4) “heightened responsibility” to protect the

insured’s interests “[b]ecause of both the disparity of bargaining power between insurer

and insured and the fact that materially different coverage cannot be readily obtained

elsewhere,” Huizar, 952 P.2d at 344; and (5) freedom of contract, Shelter Mut. Insur.

Co.v. Mid-Centry Ins. Co., 246 P.3d 651, 662 (Colo. 2011) (en banc).

       If the statute’s only public policy goal were coverage for trauma care, then

allowing a time limit for coverage would be a reasonable interpretation because trauma

care occurs immediately following an accident. The second goal of providing protection

       4
         Mr. Countryman contends that such an interpretation is problematic because it
could be extended to allow insurers to issue policies with limits as short as 72 hours.
Such a short time frame would be more likely to conflict with the legislative purpose and
public policy goals of the statute than does the two-year limit. But we do not face that
issue here.
       5
          The district court emphasized that SB 08-011, which eventually became the
Med-pay statute, originally focused on payment for first responder trauma care. But the
final statute went beyond trauma care to include “all medically necessary and accident-
related health care and rehabilitation services.” C.R.S. § 10-4-635(2)(a), (5)(e). The
statute covers medical expenses for non-trauma treatment. Id. (2)(c).
                                            -7-
for accident victims goes beyond coverage for trauma care but does not answer whether

Med-pay was supposed to be an indefinite substitute for health insurance. The third goal

of keeping premiums low suggests it was not. The final two public policies articulated in

Colorado case law—protecting the insured against unequal bargaining power and

protecting freedom of contract—conflict with one another.

       Taking these policy goals together, they do not provide clear direction whether the

statute’s silence is meant to allow or prohibit time limits. None of these policy goals is

wholly inconsistent with the two-year time limit on Med-pay coverage. Moreover, “a

policy term is not void as against public policy simply because it narrows the

circumstances under which coverage applies.” Farmers Ins. Exch. v. Chacon, 939 P.2d

517, 520 (Colo. App. 1997).

                                          * * *

       We conclude that the statutory language, though ambiguous, is more amenable to

allowing time limits than prohibiting them. The legislative history leans in the same

direction. The multiple public policy considerations lend support to both sides but do not

determine the issue. We therefore hold that Defendants’ policy does not violate

Colorado’s Med-pay statute, C.R.S. §10-4-635(2)(a).




                                            -8-
                             III. CONCLUSION

We affirm the district court’s judgment.

                                  ENTERED FOR THE COURT



                                  Scott M. Matheson, Jr.
                                  Circuit Judge




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